Bank Alfalah earns Rs 14.045 billion profit before tax

The Board of Directors of Bank Alfalah Limited met in Abu Dhabi under the chairmanship of Sheikh Nahayan Mabarak Al Nahayan, on Sunday to review the performance of the Bank and approved the financial statements of the Bank for the year ended December 31, 2017. The Bank's performance for the year was impressive, with profit before taxation reported at Rs 14.045 billion, improving by 7.9 percent from Rs 13.023 billion in 2016. Profit after tax was reported at Rs 8.367 billion for the year as against Rs 7.900 billion last year, improving by 5.9 percent. This translated into an EPS of Rs 5.21 per share for 2017 (2016: Rs 4.93 per share).
Despite pressure on interest margins due to a consistently low interest rate environment and maturities of high yielding bonds, total revenue for the year increased to Rs 39.174 billion as against Rs 37.899 billion last year, improving by 3.4 percent. growth in overall average earning assets, reduction in funding costs, and continued focus on core fee and commission, all contributed to this growth.
During the year, the bank continued with its focus on strategic cost control and optimization initiatives. The Bank went through an internal re-organisation, the cost of which has impacted the fourth quarter results. In order to improve efficiency and to remove redundancies, processes were centralized, and branches where management felt prospects were limited, were closed. Total non-mark up expenses were reported at Rs 25.389 billion as against Rs 23.692 billion last year, growing by 7.2 percent despite incurring significant non recurring cost.
With reversals against NPLs significantly in excess of the charge considered for the year, net reversals for the current year were recorded at Rs 434.16 million, as against a charge of Rs 1.083 billion considered last year, which further aided bottom line profitability. As of December 31, 2017, the Bank's non-performing loans (NPLs) ratio stood at 4.2 percent, and continues to remain one of the lowest infection ratios in the industry which is better than the industry average. The Bank's coverage ratio improved further to 89.2 percent as against 86 percent at end 2016.
The Bank's total assets at December 2017 stand at Rs 988.829 billion as against Rs 917.457 billion last year, while Deposits improved to Rs 653.406 billion from Rs 640.944 billion. The Bank has a gross ADR at 63.8 percent at year end 2017, one of the highest amongst peers. For the purposes of augmenting its capital base, the Bank is in process of issuing its first ever additional Tier-1 Capital instrument in the form of listed, perpetual, unsecured, subordinated, non-cumulative and contingent convertible debt instruments. The Pre-IPO of Rs 6.3 billion of the proposed issue has been successfully closed in January 2018.
The Board of Directors have recommended a final cash dividend of Rs 1.5 per share ie 15 percent for the year ended December 31, 2017, subject to approval of the shareholders in the upcoming annual general meeting.