Home / This Week / Research / Bank Alfalah’s core fee, forex income move up in yoy in 3q19

Bank Alfalah’s core fee, forex income move up in yoy in 3q19

Presently, Bank Alfalah Limited in Pakistan holds dual regions of focus developing digital channels, payment products — migration of mothership customers to digital banking. Since the launch of digital banking in January 2019 greater than 30 new products and services have been introduced across all business verticals of digital lending, channels, payments products resulting in acquisition of 700 K+ new to bank customers. The company’s statistics showed that Bank Alfalah is the fifth largest private bank in the country with a network of over 600 branches in greater than 200 cities across Pakistan with an international presence in Bangladesh, Afghanistan, Bahrain and a representative office in the UAE.

The Bank is owned and operated by the Abu Dhabi Group. The International Finance Corporation (IFC) of the World Bank partnered with the Bank in 2014, and holds a 15 percent stake in Bank Alfalah. The management of the Bank offers financial solutions to consumers, corporations, institutions and governments through a broad spectrum of products and services, counting corporate and investment banking, consumer banking and credit, securities brokerage, commercial, SME, agri-finance, Islamic and asset financing.

Sources mentioned that Bank Alfalah was first commercial bank to launch Open App based on global trends of open apps the likes of Ali Express, Amazon, Booking com Expedia, PAYTM etc. The Bank introduced the country’s first bank agnostic cash deposit machine, which allows customers to deposit money into all bank accounts of Pakistan. It was introduced Pakistan’s first digital overdraft facility along with other instant digital lending facilities like (Personal Loan, e- Commerce Loan Merchant Financing). In order to increase payments lifestyle App positioning of Alfa, various features are launched such as (Food ordering, movie travel tickets, hotel booking etc.

Bank Alfalah is the first bank in Pakistan to launch P2P Chat features in the Alfa App for customers. The management also focuses the financial performance of the Bank as the net interest income (NII) grew 48 percent YoY in 3Q19 because of higher NIMs and average earning assets. Non interest income declined YoY because of capital gains booked on PIBs previous year against. losses realized on equities in 3Q19. In the corporate briefing report by the Bank Alfalah, statistics showed that core fee income depicts growth of 12 percent YoY, while forex income is up 33 percent YoY in 3Q19. 3Q net provision charge includes Rs 300 million net impairment on equities, while NPL provisions of Rs 700 million are mostly subjective/pre emptive. The report also showed that operating expenses are up 26 percent YoY. Investment in new initiatives and staff cost are key drivers. PAT for 3Q was up 7 percent YoY coming off a high base in end 2018, the loan book is down 6percent YTD and flat YoY.


Accumulation of PIBs has reflected in 24 percent YTD growth in investments. Interbank borrowings have seen a cyclical uptick and have doubled YoY, while up 8 percent YTD. Correspondingly a rise has also been seen in T-Bill holdings within the investment book. Furthermore, deposits have grown 5 percent YoY with CASA clocking at 79 percent as of 3Q19. Administration cost to income ratio while up from recent lows because of new initiatives is still better YoY at 54 percent CA mix reverted to 45 percent from the one off uptick to 50 percent seen last quarter. NPL ratio clocked in at 4.2 percent while coverage dipped to 81 percent, mostly because of subjective provisioning.

The report also showed that during 2018, the Bank inked a business transfer contract with the potential buyer for sale of the Afghanistan operations Accordingly, the aforesaid business was classified as ‘Asset held for sale’ However, during the period, the DAB (Da Afghanistan Bank) fell the application for approval and consequently Afghanistan operations are now classified as continuing resultantly, all assets and liabilities of the Bank’s Afghanistan operations have been presented as part of the actual balance sheet line items, rather than presented separately as ‘Assets held for sale’ while the balances at December end are still under ‘held for sale’ category as per the prospective treatment required under IFRS However, all the income and expenses for the Bank’s Afghanistan operations previously presented as a separate line item ‘profit after taxation from discontinuing operations’ have been reclassified and presented as part of the actual profit and loss line items for all prior periods presented.


Bank Alfalah has 61.20 percent shareholding in Alfalah Securities (Private) Limited, which is engaged in the business of stock brokerage, investment counseling and fund placements. The Bank has 40.22 percent shareholding in Alfalah GHP Investment Management Limited, which is registered as an Asset Management Company and Investment Advisor under the Non-Banking Finance Companies Rule. JCR-VIS has assigned an entity rating of ‘AA+’ (double A plus) for the long-term and ‘A1+’ (A one plus) for the short-term, with a stable outlook. PACRA has assigned Bank Alfalah ‘AA+’ (double A plus) entity rating for the long-term and ‘A1+’ (A one plus) for the short-term, with a positive outlook.

Check Also

Market Indicators

Market Indicators

Market indicators are a series of technical indicators used by traders to predict the direction …

Leave a Reply