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.