Bank Alfalah on track

Bank Alfalah Llimited (BAFL) recorded Rs.3.5 billion in net profits in CY11, nearly 3.6 times higher than the previous year. BAFLs mark-up revenues jumped by 18 percent to Rs.44 billion in CY11 relative to the previous year although the detailed accounts are not available at the moment. It seems that the Bank has benefited from expansion in its asset base, stemming from growth in its investments portfolio. The Banks investment portfolio grew by 27 percent during the first nine months of CY11 to Rs.144 billion as on September 30, 2011, while its advances portfolio fell by 6 percent to Rs.195 billion. Growth in net interest income was attributable to expansion in the Banks asset base, coupled with the Banks continuing efforts to reduce the cost of funds. Since the growth in mark-up revenues outpaced that of mark-up expenses, the Banks gross spread ratio improved to 42 percent in CY11; nearly 5.6 percentage points higher than the previous year. Provisions against loans and advances eased down to around Rs.1.9 billion in CY11, from Rs.2.24 billion in CY10. As detailed annual financial notes are not available at the moment, a cue can be taken from September 30, 2011, financial accounts, which suggest that the Banks non-performing loans fell by 7 percent during the first nine months of CY11 to around Rs.17 billion at the end of September 30, 2011. On the heels of higher fees, commissions, brokerage income and other income, the lenders non-markup income accrued a gain of 14 percent. Hence, backed by growth in net interest income and non-mark-up income, the Banks operating revenues increased by 30 percent in CY11 relative to the last year. However, non-mark-up income accounted for nearly 22.4 percent of the total operating revenues in CY11, as opposed to its share of around 25.5 percent in CY10. BAFL has managed to check growth in its non-mark-up expenditure, with non-mark-up expenses up by 11 percent - close to the prevailing rate of inflation. As a result, the Banks operating revenues to expense ratio improved to 1.7 in CY11, up from around 1.44 in CY10. BAFL has largely outperformed the KSE-100 index since the start of CY12, with its share price up by around 29 percent, as opposed to 15 percent gain registered by the benchmark index.

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BANK ALFALAH LTD
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(Rs mn)                                CY11      CY10     chg
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Markup Earned                        44,298    37,530     18%
Markup Expensed                     (25,687)  (23,855)     8%
Net Markup Income                    18,611    13,675     36%
Provisioning                         (4,330)   (4,260)     2%
Net Markup income after provisions   14,281     9,414     52%
Other income                          5,368     4,708     14%
Operating revenues                   23,978    18,383     30%
Other expenses                      (14,215)  (12,754)    11%
Profit before taxation                5,434     1,369    297%
Profit after taxation                 3,503       968    262%
EPS (Rs)                               2.60      0.72
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Source: Company Accounts
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