Bank Al Habib’s (BAHL) annual result and dividend impresses Investors

Key Takeaways

• ✅ Profit increased by 13% compared to last year
• ✅ Dividend payout was strong at PKR 6.5 per share
• ✅ Interest income remained stable, while fee income saw good growth
• ✅ Expenses were slightly higher, and tax payments increased

Bank Al Habib (BAHL) recently announced its financial results for the last quarter of 2024. The company reported an EPS of Rs. 6.8 per share for the quarter while giving a Rs. 6.5 dividend to shareholders. Let’s break down what these numbers mean in a simple way.

Earnings

The bank reported a profit of PKR 6.8 per share, which is 15.7% higher than the same time last year. However, compared to the previous quarter, profit fell by 40%. This decline is normal in banking, as earnings can fluctuate based on different financial conditions.

Dividend: A Big Surprise for Investors

The biggest news for investors is the PKR 6.5 per share cash dividend. This is higher than what analysts expected. For the full year, BAHL has now paid a total dividend of PKR 17 per share, which is great for shareholders looking for returns on their investments. At the current price, this corresponds to a dividend yield of just below 12%.

Banks generally make money in two main ways:

1. Interest Income – The money they earn from lending money to customers.
2. Non-Interest Income – Other sources, like service fees or investments.

Here’s how these two segments performed for BAHL:

• Interest Income remained the same compared to last year but dropped by 7% from the previous quarter. This happened because the bank lent money at lower rates to meet government targets for ADR tax. Eventually, the ADR tax was abolished but the measures taken to avoid this tax resulted in a slight decrease in interest income.
• Non-interest income increased by 3% year-on-year and 11% from the last quarter, helped by a 64% jump in fee income. The bank also booked Rs. 376 million in capital gains during the quarter.

Costs and Taxes

Bank expenses went up by 2% year-on-year and 7% from the last quarter. The bank also set aside PKR 3 billion for possible loan losses, which is lower than before. Taxes were higher, bringing the effective tax rate to 65%.

Bank Al Habib has shown steady performance despite some challenges. The strong dividend payout makes it an attractive choice for long-term investors.

For those investing in banking stocks, keeping an eye on future interest rates and economic policies will be important in determining BAHL’s growth potential.

What are the analysts saying?

Bank al Habib (BAHL) is currently covered by 7 different analysts in Pakistan. According to our database, JS Global has a target price of Rs. 200 on the stock while the lowest target price belongs to Pearl Securities at Rs. 158.

The average price target of Rs. 174 corresponds to a 22% upside from the current price of Rs. 143.

Here are the target prices of the different research firms that cover the stock.

Research Firm	Target Price
AKD	173
IGI	168
JS	200
Intermarket	160
Taurus	191
Foundation Sec.	167
Pearl Sec.	158