Bank Alfalah Limited (BAFL) - March 2023

Bank Alfalah Limited (BAFL) – March 2023

Research Team

Table of Contents

Corporate Briefing Notes

Bank Alfalah Limited (BAFL) held its corporate briefing session today to discuss its financial results for CY22 and it future outlook.

Key Highlights

● BAFL announced its financial results for CY22 wherein the bank posted profit of PKR8.4bn (EPS: PKR10.38/sh), up by 27% YoY. The Net Interest Income improved by 67% YoY on the back of solid growth in earning assets and margins expansion after repricing of the well positioned asset book.
● The bank announced a cash dividend of PKR2.5/sh, taking full year DPS to PKR5.00/sh.
● Non-interest income reported at PKR21.7bn up by 34% YoY during CY22. The bank witnessed an increase in forex income due to stronger trade/remittances flows and market volatility.
● During the CY22, BAFL’s provisioning expense surged due to general provisions floods, provision on Eurobonds owing to downgrade by S&P 500, Specific provision for textile related client and provision on investment in Afghanistan. Management informed that bank has equity investment of PKR 3.5bn in Afghanistan, which is now fully provisioned. Furthermore, the management informed that any provision related to Eurobond would depend on S&P rating to Pakistan.
● Investment portfolio comprises of mostly floaters with 85% share, while the rest 15% is fixed PIBs. The average yield of the portfolio is 11.5% with an average duration of 3-3.5 years.
● Market share for trade, deposits, advances and remittances business hovers at 7.9%, 6.0%, 6.1%, and 19.2%, respectively.
● Net advances up by 9% YoY driven by Corporate & Islamic, mostly SBP refinance. Whereas, ADR of the bank clocked in at 51.5% during CY22, due to cautious lending, but still remained above the threshold.
● Banks coverage remained strong at 107.6%, during the period, whereas NPL ratio stayed at 4%.
● The bank’s CAR stood at 13.83% during the outgoing year which is also above the SBP requirement. BAFL issued ADT-I instrument of PKR7bn in CY22.
● The consolidated performance of the Company remained solid with revenue growth of 18%, gross profit by 43%, EBITDA by 41%. Net profit by 43% and EPS of 84%.

Future Outlook

● BAFL currently operates 894 branches, including 285 Islamic branches. The bank plans to add approximately 140 branches in 2023 to surpass 1,000 branches. Moreover, the bank is of the view that higher NIMs could be witnessed in the upcoming quarters, reflected by recent 300bps increase in interest rates.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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