Bank Al Habib Limited (BAHL) announces Q1 financial results
Understanding BAHL’s 1QCY24 Financial Performance during the 1QCY24.
Akseer Research has recently shared insights into the quarterly performance of Bank AL Habib Limited (BAHL). Let’s break down the key points from the earnings announcement:
Positive Outlook for 1QCY24
BAHL is expected to announce its financial results for the first quarter of 2024, with an anticipated unconsolidated EPS of PKR 9.82, showing a 4% year-on-year increase. Additionally, the bank is likely to declare an interim cash payout of PKR 5.0 per share due to improvements in Common Equity Tier 1 (CET1) and minimal impact from the adoption of IFRS-9, amounting to approximately PKR 4.9 billion.
Strong Net Interest Income Growth
The bank is projected to achieve a significant growth of 50% year-on-year in Net Interest Income (NII) to PKR 37.0 billion during 1QCY24. This increase is attributed to pricing support from elevated interest rates and enhanced business volumes. However, the reliance on high-cost fixed deposits is expected to lead to a 61% year-on-year rise in interest expenses, surpassing the growth in interest income by 57%.
Expectations for Non-Interest Income and Provisions
Non-interest income is expected to decline by 4% to PKR 6.1 billion in 1QCY24, primarily due to a projected decrease in FX income by 48% year-on-year. Nonetheless, this decline may be partially offset by a 30% year-on-year increase in fee & commission income. Provisions are estimated to be PKR 1.1 billion, compared to a reversal of PKR 952 million in the same period last year.
Operating Expenses and Effective Tax Rate
Operating expenses are forecasted to increase by 27% year-on-year to PKR 19.5 billion in 1QCY24, primarily due to higher IT-related expenditures. However, the bank’s cost-to-income ratio is expected to improve by 420 basis points year-on-year to 45.3% in 1QCY24, driven by NII expansion. The effective tax rate is anticipated to be 52%, compared to 36% in the same period last year, mainly due to higher super tax and ADR-related tax.
Investment Recommendation
Akseer Research maintains a ‘BUY’ rating on BAHL’s stock, with a price target of PKR 112 per share by December 2024. This target reflects a potential capital upside of 24%, along with an attractive dividend yield of 20%.
Sure, here’s the information presented in a table format:
Financial Estimates (PKR mn)
| Metric | 1QCY23 | 1QCY24E | YoY Change |
|---|---|---|---|
| M/up Earned | 74,805 | 117,691 | 57% |
| M/up Expense | 50,181 | 80,715 | 61% |
| Net Interest Income | 24,625 | 36,976 | 50% |
| Non-Interest Income | 6,302 | 6,073 | -4% |
| Total Provisions | (952) | 1,037 | -209% |
| Operating Expenses | 15,322 | 19,513 | 27% |
| Profit Before Tax | 16,557 | 22,499 | 36% |
| Taxation | 6,018 | 11,585 | 93% |
| Profit After Tax | 10,539 | 10,913 | 4% |
| EPS | 9.48 | 9.82 | 4% |
| DPS | 0.00 | 5.00 |
Key Financial Ratios
| Ratio | CY21A | CY22A | CY23A | CY24E | CY25F | CY26F |
|---|---|---|---|---|---|---|
| EPS | 16.8 | 14.9 | 31.8 | 36.9 | 34.8 | 32.4 |
| EPS Growth | 5.0% | -11.4% | 113.1% | 16.1% | -5.6% | -7.0% |
| DPS | 7.0 | 7.0 | 14.0 | 18.0 | 18.0 | 18.3 |
| BVPS | 81.0 | 85.7 | 113.9 | 132.4 | 150.2 | 178.7 |
| PER | 5.4 | 6.0 | 2.8 | 2.4 | 2.6 | 2.8 |
| Dividend Yield | 7.8% | 7.8% | 15.6% | 20.0% | 20.0% | 20.3% |
| P/B | 1.1 | 1.1 | 0.8 | 0.7 | 0.6 | 0.5 |
| ROE | 22.0% | 17.9% | 31.8% | 30.0% | 24.7% | 19.7% |
Risk Factors to Consider
Potential risks to the investment thesis include a higher-than-anticipated increase in non-performing loans (NPLs), lower-than-expected growth in advances and deposits, and a greater-than-expected rise in the cost-to-income ratio.
Company Overview
Bank AL Habib Limited, incorporated in 1991 in Karachi, Pakistan, provides retail and commercial banking products and services across multiple regions. With an extensive network of branches and subsidiaries, the bank engages in various treasury and international trade activities.
Financial Highlights – BAHL
Income Statement (PKR mn)
| Metric | CY21A | CY22A | CY23A | CY24E | CY25F | CY26F |
|---|---|---|---|---|---|---|
| Mark-up/interest earned | 116,752 | 200,921 | 373,902 | 455,068 | 420,524 | 400,982 |
| Mark-up/interest expensed | 61,143 | 123,602 | 249,755 | 311,712 | 274,666 | 253,677 |
| Net interest income | 55,609 | 77,319 | 124,148 | 143,356 | 145,859 | 147,305 |
| Non-interest income | 14,027 | 21,196 | 23,227 | 25,380 | 25,476 | 26,556 |
| Provision charged | (47) | 12,871 | 4,200 | 4,845 | 4,669 | 2,909 |
| Operating expenses | 39,410 | 52,761 | 72,047 | 82,365 | 90,760 | 100,375 |
| Profit after tax | 18,702 | 16,570 | 35,319 | 41,017 | 38,712 | 35,994 |
Balance Sheet (PKR mn)
| Metric | CY21A | CY22A | CY23A | CY24E | CY25F | CY26F |
|---|---|---|---|---|---|---|
| Cash & Treasury Balances | 125,340 | 109,231 | 148,397 | 148,190 | 177,828 | 204,502 |
| Investments | 826,600 | 1,158,521 | 1,503,895 | 1,538,538 | 1,887,112 | 2,206,844 |
| Advances | 733,799 | 813,535 | 869,459 | 1,133,897 | 1,316,075 | 1,489,297 |
| Operating Fixed Assets | 55,961 | 62,440 | 79,697 | 79,159 | 79,159 | 79,159 |
| Other Assets | 107,952 | 128,342 | 139,572 | 139,862 | 167,834 | 193,010 |
| Total Assets | 1,849,652 | 2,272,068 | 2,741,020 | 3,039,646 | 3,628,009 | 4,172,812 |
| Borrowings from FIs | 302,213 | 418,989 | 477,438 | 525,182 | 630,218 | 724,751 |
| Deposits | 1,309,823 | 1,568,138 | 1,934,037 | 2,127,440 | 2,552,928 | 2,935,867 |
| Other Liabilities | 147,601 | 189,698 | 202,939 | 239,920 | 277,875 | 313,566 |
| Total Liabilities | 1,759,637 | 2,176,826 | 2,614,413 | 2,892,542 | 3,461,021 | 3,974,184 |
| Equity | 90,015 | 95,242 | 126,607 | 147,104 | 166,988 | 198,628 |
| Total Liabilities & Equity | 1,849,652 | 2,272,068 | 2,741,020 | 3,039,646 | 3,628,009 | 4,172,812 |
Disclaimer
The information in this article is based on research by Akseer Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.
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