Bank Alfalahs biggest problem is its lower advance-to-deposits ratio that had worsened with mild erosion in deposits base in the first quarter of this year. Although it bounced in the second quarter, latest profit and loss numbers show that growth has become stagnant again. The low ADR amid higher proportion of fixed deposits limits the banks return-on-equity to single digits in nine months ending September.
The bank lost 76 basis points in deposits market share to stand at 7.2 percent in the first half CY09, however after steeply falling in first quarter its deposit base increased by 8 percent in the second. With similar trend expected in last quarter, the banks net mark up income growth was restricted to just one percent for 9MCY09.
Although, BAFLs relatively clean book speaks volumes about its niche in the consumer segment; the three times increase in provisioning pushed its net-of-provisioned core income 17 percent lower year-on-year. However, the good thing is that while the bank has covered 58xx percent of its bad loans, its otal bad loans to gross loans ratio is virtually half. And lower provisioning in last quarter, indicates further improvement.
Meanwhile, lack of economic activity in the country plagued BAFLs strength to earn fee commission, dividend and other income which edged only 3 percent up year-on-year. Cost cutting is the order of the industry; and correspondingly the bank managed to trim its growth in administrative expense to ten percent in first nine months 2009. Still, better administration could not rescue its bottom line, given the damage done by line managers, with net profits down 36 percent in 9MCY09.
=================================================================================
Bank Al-Falah Profit and Loss accounts
=================================================================================
RS (MN) 3Q-09 3Q-08 GROWTH 9M-09 9M-08 GROWTH
=================================================================================
Mark-up earned 8,727 8,067 8% 26,639 21,829 22%
Mark-up expensed (5,917) (5,327) 11% (18,562) (13,862) 34%
Net mark-up Income 2,811 2,740 3% 8,076 7,966 1%
Provisioning (727) (428) 70% (2,228) (940) 137%
Net mark-up income
after provision 2,084 2,313 -10% 5,848 7,026 -17%
Non-mark-up income 1,245 1,163 7% 3,989 3,855 3%
Operating revenues 4,055 3,903 4% 12,065 11,821 2%
Non-mark-up expenses (2,753) (2,548) 8% (7,858) (7,175) 10%
Profit before taxation 575 928 -38% 1,979 3,706 -47%
Profit after taxation 452 633 -29% 1,562 2,452 -36%
EPS 0.34 0.48 1.17 1.84
=================================================================================
Comments
Comments are closed for this article.