Bank Alfalahs liability gatherers must be rejoicing on their performance in the first quarter ending March 2011. Thanks to their efforts that kept mark-up expense quite literally unchanged at the last years levels, the bank was able to increase its net mark-up income by 49 percent year-on-year in 1QCY11. The topline had grown by 16 percent over the same period.
In the absence of detailed accounts at the moment, this means that sustained efforts to improve the deposit-mix is bearing fruits for the bank and the ratio of current and saving accounts to total deposits must have improved further in the first quarter. The CASA ratio had improved to 61 percent by the end of 2010 up from 53 percent over 2009.
Although, growth in the banks earning asset portfolio was a tad negative over December 2010, both net advances and net investments cumulatively stretched to Rs319 billion at the end of March 2011, against Rs291 billion at the end of the same period last year.
The banks deposit base accumulated to around Rs339 billion in 1QCY11, a jump of 7 percent from Rs316 billion at the end of 1QCY10. In comparison to December, however, the deposit base registered a mild drop of 4 percent - one that can be attributed to the typical first quarter trends seen industry-wide.
On the back of higher provision against loans and advances (net) and diminution in value of investments, provisions trebled to Rs905 million in 1QCY11 as against Rs312 million in the year ago period.
Improvement in other income and commission and brokerage income helped the bank register growth in total non mark-up income, while both dividend income and income from dealing on foreign currencies slightly dwindled year-on-year.
The banks administration expenses also surged well above the inflation rate, recording 17 percent growth. But this is justifiable considering the banks continuous efforts to expand the number of its branches.
Higher administrative expense is something that is likely to continue in the near future as the bank is expected to continue increasing its presence and therefore increase its client base. However, if the liability gatherers keep costs on the downside, as they did this quarter, Bank Alfalah could start giving sleepless nights to competitors.
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Bank Alfalah Limited
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Rs(mn) 1QCY11 1QCY10 Chg
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Mark-up earned 10,694 9,225 16%
Mark-up expensed 6,247 6,247 0.0%
Net mark-up income 4,447 2,978 49.3%
Provisioning 906 312 190.4%
Net mark-up income after provisions 3,541 2,666 32.8%
Other income 1,247 1,034 20.6%
Operating revenues 5,694 4,012 41.9%
Other expenses 3,349 2,852 17.4%
Profit before taxation 1,439 848 69.8%
Profit after taxation 930 586 58.5%
EPS (Rs) 0.69 0.43
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Source: Company Accounts