AIRLINK 61.90 Decreased By ▼ -0.58 (-0.93%)
BOP 5.34 Decreased By ▼ -0.02 (-0.37%)
CNERGY 4.47 Decreased By ▼ -0.11 (-2.4%)
DFML 15.40 Decreased By ▼ -0.10 (-0.65%)
DGKC 65.04 Decreased By ▼ -1.36 (-2.05%)
FCCL 17.12 Decreased By ▼ -0.47 (-2.67%)
FFBL 27.50 Decreased By ▼ -0.20 (-0.72%)
FFL 9.32 Increased By ▲ 0.05 (0.54%)
GGL 9.99 Decreased By ▼ -0.07 (-0.7%)
HBL 104.82 Decreased By ▼ -0.88 (-0.83%)
HUBC 121.10 Decreased By ▼ -1.20 (-0.98%)
HUMNL 6.54 Decreased By ▼ -0.06 (-0.91%)
KEL 4.41 Decreased By ▼ -0.09 (-2%)
KOSM 4.48 No Change ▼ 0.00 (0%)
MLCF 35.35 Decreased By ▼ -0.85 (-2.35%)
OGDC 122.25 Decreased By ▼ -0.67 (-0.55%)
PAEL 22.59 Decreased By ▼ -0.41 (-1.78%)
PIAA 31.54 Increased By ▲ 2.20 (7.5%)
PIBTL 5.78 Decreased By ▼ -0.02 (-0.34%)
PPL 106.77 Decreased By ▼ -0.73 (-0.68%)
PRL 27.03 Decreased By ▼ -0.22 (-0.81%)
PTC 18.19 Increased By ▲ 0.12 (0.66%)
SEARL 52.35 Decreased By ▼ -0.65 (-1.23%)
SNGP 62.73 Decreased By ▼ -0.48 (-0.76%)
SSGC 10.55 Decreased By ▼ -0.25 (-2.31%)
TELE 9.03 Decreased By ▼ -0.17 (-1.85%)
TPLP 11.35 Decreased By ▼ -0.09 (-0.79%)
TRG 69.95 Decreased By ▼ -0.91 (-1.28%)
UNITY 23.43 Decreased By ▼ -0.19 (-0.8%)
WTL 1.27 Decreased By ▼ -0.01 (-0.78%)
BR100 6,917 Decreased By -27.1 (-0.39%)
BR30 22,628 Decreased By -198.8 (-0.87%)
KSE100 66,841 Decreased By -301.5 (-0.45%)
KSE30 22,015 Decreased By -75.3 (-0.34%)

Much improved gross spreads and double-digit growth in top line would generally mean little to nothing if you have to provide for NPLs as much as Faysal Bank (FABL) had to. The recently-released 1H CY14 results show the banks after tax profits dipped slightly, as provisioning expenses trebled year on year. The loose end of administrative expenses further added to the trouble.
Faysal Bank boasts of one of the highest ADR in the mid-sized category. With higher advances comes the risk of NPLs, no matter how prudent the procedures are. The ADR was nearly 67 percent by the end of 1Q CY14, and the infection ratio was at a considerably high 15 percent. FABLs coverage ratio has lagged behind the peer average; but, it may well have improved by the end of 1H CY14.
FABL has been on a drive to rationalise its deposit mix and has had considerable success in reducing cost of deposits. The CASA had improved to 66 percent, but there is still a lot of catching up to do, especially when the asset side is exposed to high risk advances.
Most banks fall upon non-core income when things at the top are not rosy. Unfortunately for FABL, the non-mark-up income failed to live up to expectations, barely meeting the previous years number, let alone surpassing it. To make matters worse, administrative expenses swelled massively. A few one-off events such as payments to outgoing CEO did not help either.
Whether the managers are contemplating a change in strategy towards having more investments in the asset pie is anyone's guess. But, high NPLs and likely reversal in interest rates may well dictate terms in the near future. The hard work on cost efficiency needs to continue, if FABL is to show growth in bottom line.


===========================================================
FAYSAL BANK LIMITED (UNCONSOLIDATED P&L)
===========================================================
Rs (mn) 1HCY14 1HCY13 chg
===========================================================
Markup Earned 15,680 13,391 17%
Markup Expensed 9,000 8,913 1%
Net Markup Income 6,680 4,478 49%
Provisioning/(Reversal) 1,472 478 208%
Net Markup Income after provisions 5,208 4,000 30%
Non Mark-up / Interest Income 2,205 2,240 -2%
Operating Revenues 7,412 6,240 19%
Non Mark-up / Interest Expenses 6,544 5,316 23%
Profit Before Taxation 869 935 -7%
Taxation 129 173 -25%
Profit After Taxation 740 762 -3%
EPS (Rs) 0.71 0.73
-----------------------------------------------------------
Source: KSE Notice
===========================================================

Comments

Comments are closed.