Bank Alfalah Reports 53% YoY Growth in 2Q2024 EPS, Announces Rs2 Dividend

Staff Report: Bank Alfalah (BAFL) announced its 2Q2024 result, where the bank recorded consolidated earnings of Rs11.97bn (EPS of Rs7.59), up 53% YoY and 20% QoQ. The result came higher than industry expectations due to a higher-than-expected gain on securities. Alongside the result, the bank also announced a second interim cash dividend of Rs2/share in 2Q2024, taking the 1H2024 dividend to Rs4/share.Bank Alfalah Targets Deposit Growth Rate Up to 20% in 2024

BAFL recorded a gain on securities of Rs2.3bn in 2Q2024 compared to Rs65mn in 2Q2023 and Rs66mn in 1Q2024. This increase is mainly due to gains on sales of T-Bills and PIBs. Net Interest Income (NII) for 2Q2024 settled at Rs30.6bn, down 2% YoY and 1% QoQ. The decline is due to a lag in repricing, as asset yields decreased earlier than the cost of borrowing.

BAFL’s FX Income clocked in at Rs3.0bn in 2Q2024, up 70% YoY and 32% QoQ. The bank recorded a provision reversal of Rs25mn in 2Q2024 compared to a provision charge of Rs4.48bn in 2Q2023 and a reversal of Rs112mn in 1Q2024. Operating expenses saw an increase of 24% YoY and 6% QoQ, driven by inflationary pressure.

BAFL’s cost-to-income ratio was 47% in 2Q2024, compared to 43% in 2Q2023 and 49% in 1Q2024. The effective tax rate was 47% in 2Q2024, down from 54% in 2Q2023 and 50% in 1Q2024.

We maintain a buy stance on BAFL, with the stock currently trading at a 2024E PE ratio of 2.6x and a PBV ratio of 0.6x,” Topline said in a report.