KARACHI: Bank Alfalah Limited, one of Pakistan’s prominent financial institutions, announced a slight downturn in its profits for the first quarter ended March 31, 2024, on Wednesday.
According to the financial results submitted to the Pakistan Stock Exchange (PSX), the bank recorded a profit of Rs 9.93 billion, marking an 8% decrease from Rs 10.77 billion reported in the same period last year.
Despite the decline, the bank has declared an earnings per share (EPS) of Rs 6.31 for the quarter, compared with Rs 6.83 in the corresponding quarter of the previous year. Alongside these results, the board of directors of Bank Alfalah recommended an interim cash dividend of Rs 2 per share, reflecting confidence in the bank’s liquidity and financial health.
A detailed analysis by Topline Securities Limited highlighted that Bank Alfalah’s consolidated earnings reached Rs 9.95 billion, with the EPS at Rs 6.31. This represents an 8% year-on-year decrease but shows a 10% improvement quarter-on-quarter. This performance was notably better than industry expectations, attributed to a significant provision reversal and higher-than-expected foreign exchange income.
In a notable recovery, Bank Alfalah reported a provision reversal of Rs 112 million in the first quarter of 2024, compared to a provision charge of Rs 522 million in the same quarter of the previous year, and a substantial Rs 1,160 million in the fourth quarter of 2023. The bank’s foreign exchange income for the quarter was reported at Rs 2.3 billion, a decrease of 31% year-on-year but an increase of 13% quarter-on-quarter.
The bank’s Net Interest Income (NII) for the first quarter stood at Rs 31 billion, showing a robust increase of 10% year-on-year. This was primarily due to a rise in asset yields. However, on a quarter-on-quarter basis, the NII saw a decline of 12%, with interest earned up by 2% to Rs 129 billion and interest expenses rising by 8% to Rs 98 billion.
Operating expenses of Bank Alfalah increased by 27% year-on-year, which analysts believe was driven by inflationary pressures. Despite this, expenses remained relatively flat compared to the previous quarter. The cost-to-income ratio for the bank worsened to 49% in the first quarter of 2024, up from 41% in the same quarter last year and 42% in the fourth quarter of 2023.
The effective tax rate for Bank Alfalah was significantly high at 50% in the first quarter, compared to 40% in the first quarter of the previous year and 66% in the last quarter of 2023.
