Bank Al-Habib Limited announced a final dividend of PKR 7.0/sh

Bank Al Habib Limited (BAHL) announced its 4QCY21 results posting earnings of PKR 4.8Bn (EPS: PKR4.3), ↑2/↓2% YoY/QoQ respectively pulling CY21 earnings to PKR 16.8/sh (↑5% YoY). Along with the result, the bank announced a higher than expected final dividend of PKR 7.0/sh.

Key highlights of the result are summarized below:

NII in 4Q increased by 5% on a YoY basis as a result of NIMs expansion however, earlier re-pricing of liabilities particularly the rapidly increasing deposit base kept the overall increase in check. On a QoQ basis, the increase was limited to only 1%. On a full year, NII declined by 3% YoY primarily due to low interest rates for majority of the calendar year. Going forward, we expect NII accretion to drive earnings growth as the re-pricing element plays out aided by robust balance sheet expansion.

Non-funded income surged by a sizable 37/23% YoY/QoQ respectively to PKR 4.4Bn with primary impetus coming from fee income that surpassed PKR 2.7Bn and forex income that went past PKR 1.0Bn mark in 4Q. We opine the surge in fee income to be supported by greater card related fee, branchless banking income and trade related commissions. On the forex income side, we expect the rise to stem from greater transactional volumes and PKR volatility. As for CY21, total non-core income surpassed PKR 14.0Bn, up 37% YoY with positive contributions of 39% YoY each from fee and forex income respectively. Capital losses to the tune of PKR 41Mn in CY21 however, limited the overall increase in NFI.

Operating expenses clocked-in at PKR 10.3Bn in 4Q (↑15/8% YoY/QoQ) which we expect to be on the back of the bank’s aggressive branch expansion strategy as over 100 branches were added in the outgoing year as well as higher compensation expenses and greater IT related expenses. As for CY21, operating expenses increased by 14% YoY to PKR 38.8Bn.

Provisioning charge in 4Q was a mere PKR 86Mn compared to PKR 1.1Bn booked in the SPLY. The bank booked reversals of PKR 47Mn in CY21 against a charge of PKR 4.5Bn in CY20 primarily due to general provisioning reversals.

Courtesy – BMA Capital Management Ltd

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