In times of squeezing spreads, to have a 24 percent year-on-year growth in NIM is indeed commendable. Bank Al-Habib Limited (KSE: BAHL), one of the soundest mid-tier banks, reported its 1H CY14 financial results yesterday, showing sizeable profit growth, mainly on account of a smart asset and liability mix strategy.
Like all its peers, BAHL’s asset mix is tilted towards investments and with PIBs in fashion, BAHL is most certain to have had its fair share in the second quarter. From the look of things, it appears the ADR may have slid further, as the top line growth could well be entirely investment-driven. There is no stopping the bank to go lend aggressively, but hardly any need is felt, especially when deposit rationalisation is doing the trick.
BAHL proudly has the lowest infection ratio and in return, the highest coverage ratio amongst peers, which speaks volumes of its asset quality. Sufficient support was lent by the banks’ favourite son, i.e. the non-mark-up income, as dividend income and currency-related earnings escalated during the period.
The rapidly increasing administrative expense seems the only blot on an otherwise clean sheet, but the positives will be seen later. BAHL has been steadily expanding its branch and sub-branch networks which would soon start translating into top line.
The banking industry’s latest spreads are at a 9-year low, but the margins are still decent enough. There is still some way to go before the panic button is pressed. Should a good lending opportunity arise, BAHL may be the first one to pounce on, given its astonishingly low NPLs, although there appears little need for it, if the profits remain the core objective.


====================================================
Bank Al-Habib Limited ( Unconsolidated P&L)
====================================================
Rs (mn) 1HCY14 1HCY13 chg
====================================================
Markup Earned 20,598 19,209 7%
Markup Expensed 11,921 12,198 -2%
Net Markup Income 8,677 7,011 24%
Provisioning/(Reversal) 121 254 -52%
Net Markup Income
after provisions 8,556 6,757 27%
Non Mark-up/
Interest Income 2,049 1,810 13%
Operating Revenues 10,605 8,567 24%
Non Mark-up/
Interest Expenses 6,095 4,871 25%
Profit Before Taxation 4,510 3,696 22%
Taxation 1,570 1,263 24%
Profit After Taxation 2,940 2,433 21%
EPS (Rs) 2.65 2.19
====================================================

Source: KSE Notice

Comments

Comments are closed.