IGI Securities Limited – Flash Note

Karachi, August 19, 2019 (PPI-OT): Commercial Banks – Bank Al-Falah Limited – Held back by higher provisioning charge and Opex; EPS shows a timid recovery up by +3% to PKR 3.5/share; DPS PKR 2.0

On unconsolidated basis, BAFL posted earnings of PKR 3.1bn (or PKR 1.7/share) up by +11% y/y for 2q 2019, taking its 1h cumulative earnings to PKR 6.2bn (or PKR 3.5/share) an increase of +3% y/y from last year same period.

Keeping up with the payout trend, the bank announced a cash dividend of PKR 2.0/share, bringing 1h total payout to PKR 2.0/share compared to PKR 1.0/share last year same period.

For a second quarter in a row bank’s interest income continues to show impressive growth of +41% y/y to PKR 21.7bn during 1h compared to +4% y/y last year. Capital losses during the quarter restricted NFI to PKR 2.7bn and PKR 5.0bn in 1h (PKR 5.8bn during 1h 2018). However, on a positive note, fee income continues to trend up. Nevertheless, bank’s opex staying stubborn, up +22%YoY to PKR 14.3bn in 1h (C/I ~less than 50%) and provisioning charge of PKR 1.0bn were weak points.

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