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Bank Alfalah 1QCY10 result review

On an unconsolidated basis, Bank Alfalah Ltd (BAFL) has posted NPAT of PkR586mn (EPS: PkR0.43) in 1QCY10 against NPAT of PkR448mn (EPS: PkR0.33) in 1QCY09, growth of 31%YoY. Reported NPAT is higher than our forecasted 1QCY10 NPAT of PkR488mn (EPS: PkR0.36).

Net Interest Income (NII) is up 8%YoY led by a decline in interest expense, as per expectations. Total provisions have tagged in significantly lower at PkR312mn in 1QCY10, lower by 46%YoY. We believe this is likely due to the bank availing further FSV benefit. Non-interest income is lower by 16%YoY, largely due to 32%YoY decline in fee income. Cost control efforts have continued with total non-interest expense up just 4%YoY.
BAFL trades at a CY10F Total Equity P/B of 0.7x and PER of 9.2x. Our target price of PkR14/share for BAFL implies upside of 22%. Buy!
AKD Research
29 April 2010

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