Bank Al-Falah Limited (BAFL) announced 1H2014 profits of Rs 2.6 billion (EPS Rs1.9) compared to Rs 1.9 billion (EPS of Rs1.4) in 1H2013.
This shows an increase of 34.3 per cent against first half of last year. During the period, the bank’s Net Interest Income (NII) increased by 21.7 per cent YoY to Rs 9.6 billion. Though banking spreads averaged 6.1 per cent in 1H2014 against 6.3 per cent in 1H2013, NII got support from higher yield on increasing PIB portfolio of banks and rising credit growth.
The provision expense also declined during the period. In 1H2014, BAFL recorded provision against NPL of Rs203mn (Rs483mn in 1H2013) while provision for diminution in value of investments remained at Rs24mn (Rs390mn in 1H2013).
Plus, income from dealing in foreign currency also increased by 56 per cent to Rs984mn. On the other hand, gain on sale of securities declined by 31.5 per cent to Rs457mn in 1H2014. In 2Q2014, profits of the bank stood at Rs1.5bn (EPS Rs1.1) against 1Q2014 profits of Rs1.1bn (EPS Rs0.8), up 31.3 per cent .
“During the quarter, NII increased by 23.1 per cent to Rs5.3bn which is attributed to 10.1 per cent increase in interest income of the bank to Rs13.1bn,” said Zeeshan Afzal of Topline Research.
As a result, the analyst said, NIMs were estimated to have increased by approximately 90bps from 3.6 per cent in 1Q2014. Income from dealing in foreign currencies also increased by 59.6 per cent to Rs605mn which resulted in 12.8 per cent higher non-interest income to Rs2.3bn. On the negative side, Zeeshan said, 18 per cent rise in administrative cost to Rs5.1bn limited the profit growth in the quarter.
On year-on-year basis, BAFL profits increased by 59 per cent in 2Q2014. During the quarter, NII increased by 30.7 per cent while non-interest income increased by 14.4 per cent. High growth rate in also linked to abnormally high 2Q2013 provision against NPL to Rs549mn which have declined to Rs141mn in 2Q2014.