Earnings Preview: Lower capital gains and higher operating cost likely to pull down BAHL’s profit

January 29, 2019 (MLN): The Board meeting of Bank Al Habib (BAHL) is scheduled to take place on Wednesday, January 30, 2019 to announce its financial results for CY18.

Based on market expectations, BAHL is expected to face a plunge in earnings, and the communal reasons that analysts are embracing include the lower capital gains and higher operating cost.

JS Global expects BHAL’s earnings to accumulate to Rs7.8bn (EPS: Rs.6.98), down 10% YoY.

Ms. Amreen Sorani at JS Global told Mettis Link News that the decline in profit is due to higher base effect from capital gains and reversals under provisioning expenses booked during CY17.

Moreover, for 4QCY18, BAHL’s Net Interest Income (NII) is expected to increase by 14% YoY. However, higher administrative expenses are expected to take the bottom-line down to Rs1.9bn (EPS: Rs1.67), down 17% YoY.

Another research house Taurus Securities expects BAHL to post profit after tax of PKR 7.6 billion (EPS: Rs.6.9), depicting a 12% decline YoY mainly due to surge in operating costs, fresh NPLs compared to net recoveries last year, and lower capital gains.

Whereas, on a quarterly basis, soaring deposit cost along with uptick in provisions is likely to push earnings down by 3% QoQ.

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