BAFL: Key takeaways of 1HCY14 conference call Bank Alfalah Limited (BAFL) held a conference call today to discuss its 1HCY14 result. Key takeaways of the call were as follows: BAFL reported robust accretion in 1HCY14 earnings to PKR2.6bn (EPS: PKR1.9), up 34%YoY. The growth in earnings can primarily be attributed to core income where NIM expansion and lower provisions bolstered NII by 34%YoY to PKR9.3bn. NIM during the period improved by 60bpsQoQ to 3.9% due to shift in investment mix and asset re-pricing post 100bps hike in DR during 2HCY13. The bank’s loan book during 1HCY14 expanded by 18%YoY as loan to deposit ratio remained stable at flat at 52% in Jun’14 compared to the same period last year. Energy sector was the primary contributors to credit growth. At the same time, management expects private sector credit demand to gradually pick pace depending upon the energy and security situation within the country. Management has stated its intention to continue with its branch expansion plan with the bank potentially adding 75 branches by CY14 end. The bank’s admin cost registered a 20%YoY growth to PKR9.7bn due to heavy branch expansion while higher income led improvement in cost to income ratio to 67% in 1HCY14. The management also provided its view on Islamic Banking, highlighting the great potential within the area. At the same time, however, management captioned the deployment of excess liquidity because of the contracting Ijarah Sukuk market as a key challenge facing the industry. On-going political turmoil has led to a broad based correction in the KSE100, however, we continue advocating strong fundamentals of the bank and reiterate our ‘BUY’ call with a TP of PKR36/sh. #BMA #KSETIPS
Posted on: Wed, 27 Aug 2014 04:44:42 +0000
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