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Bank Alfalah Record earnings facilitated by hefty NII growth, unable to announce dividend

April 28, 2023 at 8:39 am | Economic Affairs

April, 27(E. A Report) —Bank Alfalah Limited (BAFL) reporting above expected earnings of Rs10.7Bn, 161% up on year on respectively.
However, Bank did not announce an interim dividend where Net Interest Income (NII) increased by a massive 96% to Rs 27.9 billion in fist quarter aided by NIMs accretion, robust CA ratio and hefty balance sheet growth.
Operating expenses of the bank increased by a sizable 44% to Rs 15.0 billion on the back of the management’s ongoing investment in the brick and mortar model, higher remuneration charges, IT related expenditure and inflation.
Bank’s well profiled investments book with greater exposure in short term paper and floating rate bonds has enabled the sizable top-line growth. Going forward, there are expections of top-line accretion to continue through the rest of this year as the asset books re-price.
Non-funded income of the bank of the bank surged to Rs 6.6 billion, undergoing a sizable 50/51% accretion.
The significant increase was aided by 34% YoY growth in fee income and 132% YoY growth in forex income, however, capital losses of Rs 416 million limited overall increase. Fee income growth can be linked to the bank’s improved market share in the remittance business alongside firmer foothold in the trade business.
Higher card related fee and improved commission income also facilitated the increase. On the other hand, massive increase in forex income can be attributed to Rs volatility and greater transactional flow.
Bank booked a provision charge of only Rs 522 million in end of quarter2023. Effective tax rate for the quarter clocked-in at 43.4%, still relatively higher than the 39% applicable rate for CY23 however, it slowed down from 50% booked in the previous quarter.

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