By: InterMarket Securities Limited
On a consolidated basis, Bank Alfalah Limited has posted record-high NPAT of PkR2.31bn (EPS: PkR1.45) in 3QCY15 vs. NPAT of PkR1.46bn (fully-diluted EPS: PkR0.92) in 3QCY14, up by 58%YoY. The result beat our expected NPAT of PkR1.81bn (EPS: PkR1.14) on lower than expected interest expense and loan provisions; with the bank not yet touching its unrealized capital gains backlog.
Key 3QCY15 result highlights include: (i) 23%YoY NII growth driven almost entirely by a 15%YoY decline in interest expense, (ii) 72%YoY decline in total provisions, (iii) flattish non-interest income and (iv) just 6%YoY growth in non-interest expenses. On a sequential basis, NPAT escalated by an impressive 36%QoQ, supported by a steeper than expected fall in interest expense (-8%QoQ) and a 72%QoQ reduction in provisions.
During 9MCY15, BAFL’s NPAT clocked in at PkR5.98bn (EPS: PkR3.76) vs. NPAT of PKR 4.01bn (fully-diluted EPS: PkR2.53), thus implying impressive 50%YoY growth (pre-tax: +67%YoY). While we await management guidance, we believe that unlike the larger banks that are witnessing sequentially lower NII, BAFL is still experiencing liabilities’ re-pricing which is enabling it to outperform on a core basis. BAFL trades at a trailing P/B of 0.9x and annualized P/E of 5.5x where we expect the name to outperform larger banks in the near-term particularly as its full-year CY15F dividend has room to surprise on the upside.
|BAFL- Result Review|
|Post Prov NII||20,008||14,977||34%||7,185||5,469||31%||8%|
|Source: Company Accounts, IMS Research|