KARACHI: Allied Bank posted a profit of Rs4.2 billion in the first quarter of 2015, which is up 30% from the same three-month period of last year.

According to quarterly results posted on the Karachi Stock Exchange website, the quarter-on-quarter jump in the bank’s earnings was 22%. The bank also announced a dividend of Rs1.75 per share.

According to Shajar Capital Research Analyst Hamza Kamal, the prime reason for growth in the bank’s profitability is the surge in its core income, which increased 46% year-on-year to Rs8.4 billion at the end of March.

“We attribute the increase to higher interest rate sensitive liabilities, which resulted in a 3% quarter-on-quarter decline in interest expense,” he said, adding interest income improved 1% on a quarterly basis owing to the bank’s heavy investments in the Pakistan Investment Bonds (PIBs).

ABL’s net interest income after provision (NII) jumped 33.7% in January-March to Rs7.7 billion compared to the same three months of previous year.

According to BMA Capital analyst Iqbal Dinani, the increase in NII should be attributed to higher interest income due to long-duration securities. However, a higher provision of Rs728.4 million versus a reversal of Rs37.1 million in the same period last year restricted the NII growth, he added.

As for the bank’s non-interest income, it increased 9.4% year-on-year to Rs3 billion on the back of higher fee income (up 18.3%) and dividend income (up 16.3%), he noted.

Bank Alfalah

Earnings of Bank Alfalah stood at Rs1.9 billion during January-March, up 75.6% from the same three-month period of last year.

According to quarterly results posted on the Karachi Stock Exchange website, the quarter-on-quarter jump in the bank’s earnings was 22%.

The increase in Bank Alfalah’s core income was 59% year-on-year, which resulted in the net mark-up income of Rs6.8 billion. According to Shajar Capital, the increase of 33% in interest income was because of the lagged impact of the discount rate cut and the expected expansion in consumer banking and SME segment.

On the other hand, interest expense decreased 1% on a quarterly basis that analysts attribute to the 100-basis-point cut in the discount rate in January.

“Provisions minimally dipped 13% on a quarterly basis but quadrupled on a year-on-year basis. We believe the downgrading of substandard non-performing loan (NPL)  has caused the bank to record a charge almost equivalent to Oct-Dec 2014,” it said.

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