As the result season sets in, the banks are going to announce their full-year earnings for the calendar year 12, said a report issued by the Arif Habib Research Tuesday.
“Among our banking sector sample, we are presenting our expectations for Bank Alfalah Limited (BAFL) where the bank is expected to post net profit of PKR 1,568mn (EPS: Rs 1.16) for 4QCY12, exhibiting a major improvement of 46% QoQ (3QCY12 EPS: PKR 0.80),” it said.
This will take the overall bottomline of BAFL to PKR 4,969mn (EPS: PKR 3.68) in CY12, a significant 42% jump YoY, as compared to PKR 3,503mn (EPS: PKR 2.60) recorded last year.
Lower provisioning and marked growth in non-interest income were expected to be the main reasons behind the bank’s impressive results in CY12. Expected improvement in net interest income (+6%) and non interest income (+30%) were among the positives during the quarter. However, these were expected to have partially offset by higher operating expenses (+13%).
The bank’s net revenue for CY12 was expected to have surged 6% YoY to PKR 47,089mn (CY11: PKR 44,298mn). Consequently, the net interest income was expected to have improved marginally by 2% YoY to PKR 19,005mn against PKR 18,611mn in CY11. This increase can be attributed to 10% YoY growth in average earning assets in CY12. In 4Q alone, the net interest income was forecast to be ~PKR 12,313mn, up 6% QoQ from PKR 11,599mn in 3QCY12. With this rise, bank’s net interest margin was expected to remain at 4.6%. However, rising interest expense (9% YoY) subdues spreads of the bank due to 15% YoY hike in average paying liabilities that was more than the growth in average earning assets. Non-interest revenues of PKR 6,974mn was expected to have grown 30% YoY from the prior year.
Well we should learn the underlying basics behind the residual income model and how it can be used to place an absolute value on a firm.
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