Faysal Bank reports 25% YoY growth in profitability owing to higher NII and capital gains

MG News | October 22, 2020 at 03:04 PM GMT+05:00

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October 22, 2020 (MLN): Faysal Bank Limited (FABL)’s net income for the nine months period ended on September 2020 has clocked in at Rs 9 billion compared to the earnings of Rs 7.4 billion reported in the corresponding period last year, depicting a growth of 25% YoY.

This caused the Bank’s earnings per share to settle at Rs 3.64 as opposed to Rs 2.90 in the same period last year.

The growth in bank’s profitability was attributed to healthy 25.6% YoY growth in net interest income (NII). The YoY jump in NII was primarily owing to 3.26% YoY reduction in the bank’s interest expense.

The earnings further strengthened due to capital gains of Rs 1.7 billion this year against the loss of Rs 630 million last year, offsetting some of bank’s net provisioning expenses of Rs 2 billion during the period. As a result, FABL’s total non-interest income surged by 21% YoY.

On the other hand, the bank witnessed a notable decline in Fee Income, dividend income, FX income, income from derivative and Other income by 9.6%, 12%, 28.5%, 40% and 81% YoY respectively, which put a limit to bank’s profitability.

On the expense side, operating costs were up by 16% YoY and provisioning expense have soared over 186% YoY to Rs 2 billion against Rs 727.4 million reported in the same period last year. Moreover, the bank’s cost to income ratio for 9MCY20 settled at 56%.

Lastly, the bank witnessed 2ppts decline in affective tax rate from 41% to 39% during 9MCY20 which further supported bank’s earnings.

Consolidated Profit and Loss account for the nine months ended September 30th, 2020 ('000 Rupees)
	Sep-20	Sep-19	% Change
Mark-up/return/interest earned	44,300,287	41,268,289	7.35%
Mark-up/return/interest expenses	25,274,019	26,126,239	-3.26%
Net mark-up/interest income	19,026,268	15,142,050	25.65%
Non mark-up/interest income
Fee and commission income	2,727,888	3,018,383	-9.62%
Dividend income	283,825	322,998	-12.13%
Foreign exchange income	1,559,427	2,181,212	-28.51%
Income from derivatives	79,693	132,306	-39.77%
(Loss)/Gain on sale of securities - net	1,713,102	(630,136)
Other income	50,045	268,671	-81.37%
Total non-mark-up/interest income	6,413,980	5,293,434	21.17%
Total income	25,440,248	20,435,484	24.49%
Non mark-up/interest expenses
operating expenses	13,967,341	12,062,758	15.79%
Workers welfare fund	195,891	166,247	17.83%
Other charges	106,223	29,902	255.24%
Total non-mark-up/interest expenses	14,269,455	12,258,907	16.40%
Profit before provisions	11,170,793	8,176,577	36.62%
Provision and write-offs -net	2,081,759	727,425	186.18%
Extraordinary/unusual items	-	-
Profit before taxation	9,089,034	7,449,152	22.01%
Taxation	3,566,235	3,046,735	17.05%
Profit after taxation	5,522,799	4,402,417	25.45%
Basic and diluted earnings per share (Rupees)	3.64	2.90	25.52%

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