Bank AL Habib 4QCY20 earning per share up 12%YoY

Bank AL Habib (BAHL) posted consolidated earnings of Rs4.2/share for 4Q2020, up 12%YoY, albeit down 21% QoQ. The result was above expectations primarily due to higher than projected Net Interest Income (NII), which grew by 21%YoY, though down 20%QoQ. Along with result, the Bank also announced a cash dividend of Rs4.5/share.

NII decline QoQ was expected. The deposit mix of the Bank enabled it to reduce interest expense by 18%QoQ. However this was not enough to offset the decline in interest earned of 19% QoQ as re-pricing on lending and investment books continue.

Provisioning continued to the tune of Rs1.1 billion for the quarter. This can be attributed to: 1) maintaining above 100% coverage ratio and 2) as a precautionary measure in the general segment following suit from the previous quarter.

Fee Income increased by 12% QoQ followed by Forex Income (26% QoQ), leading to an overall increase in Non Funded Income by 13%QoQ.

Cost to Income for the quarter is up to 55% from 43% in 3QCY20. This was a function of both lower income and higher expenses. That said, the full-year Cost to Income has been reported at 51%.

Effective tax rate of the Bank was reported at 37% for the year 2020.


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