Bank Alfalah : Transmission of Quarterly Report for the Period Ended September 30, 2023

Q U A RT E R LY R E P O RT - S E P T E M B E R 3 0, 2 02 3

( U N - A U D I T E D )

The Way Forward

Contents

Company Information	2
Directors' Review - English	6
Directors' Review - Urdu	11
Unconsolidated Condensed Interim Financial Statements	12
Unconsolidated Condensed Interim Statement of Financial Position	13
Unconsolidated Condensed Interim Prot and Loss Account (Un-audited)	14
Unconsolidated Condensed Interim Statement of Comprehensive Income (Un-audited)	15
Unconsolidated Condensed Interim Statement of Changes in Equity	16
Unconsolidated Condensed Interim Cash Flow Statement (Un-audited)	17
Notes to and Forming Part of the Unconsolidated Condensed Interim Financial
Statements (Un-audited)	18
Consolidated Condensed Interim Financial Statements	51
Consolidated Condensed Interim Statement of Financial Position	52
Consolidated Condensed Interim Prot and Loss Account (Un-audited)	53
Consolidated Condensed Interim Statement of Comprehensive Income (Un-audited)	54
Consolidated Condensed Interim Statement of Changes in Equity	55
Consolidated Condensed Interim Cash Flow Statement (Un-audited)	56
Notes to and Forming Part of the Consolidated Condensed Interim Financial
Statements (Un-audited)	57

QUARTERLY REPORT SEPTEMBER 30, 2023	01

Company Information

Board of Directors

1. Sheikh Nahayan Mabarak Al Nahayan Chairman/Director

Abdulla Nasser Hawaileel Al Mansoori

Director

Abdulla Khalil Al Mutawa

Director

Khalid Mana Saeed Al Otaiba

Director

Khalid Qurashi

Director

Dr. Gyorgy Tamas Ladics

Director

Dr. Ayesha Khan

Director

Atif Aslam Bajwa

President/CEO and Director

02 BANK ALFALAH

Senior Management Team

Atif Aslam Bajwa

President and Chief Executive Ofcer

Aasim Wajid Jawad

Group Head, Strategy, Transformation and Customer Experience

Anjum Hai

Chief Financial Ofcer

Faisal Farooq Khan

Chief Human Resource Ofcer

Faisal Rabbani

Chief Risk Ofcer

Farooq Ahmed Khan

Group Head, Corporate, Investment Banking and

International Business

Haroon Khalid

Group Head, Compliance and Control

Khawaja Muhammad Ahmad

Group Head, Operations and Corporate Services

Mehreen Ahmed

Group Head, Retail Banking

Mohib Hasan Khan

Chief Information Ofcer

Muhammad Akram Sawleh

Company Secretary and Group Head, Legal and Corporate Affairs

Dr. Muhammad Imran

Group Head, Islamic Banking

Muhammad Yahya Khan

Group Head, Digital Banking

Pervez Shahbaz Khan

Group Head, Treasury and Financial Markets

Tahir Khurshid

Group Head, Audit and Inspection

Zahid Anjum

Group Head, Special Assets Management

Chief Financial Ofcer

Anjum Hai

Company Secretary

Muhammad Akram Sawleh

Chief Internal Auditor

Tahir Khurshid

Auditors

A. F. Ferguson & Co.

Chartered Accountants

Registered/Head Ofce

B. A. Building

I. I. Chundrigar Road Karachi, Pakistan bankalfalah.com

Share Registrar

F. D. Registrar Services (Pvt.) Limited

1705, 17th Floor, Saima Trade Tower-A

I. I. Chundrigar Road

Karachi, Pakistan.

Legal Advisor

Mandviwalla & Zafar

Advocates and Legal Consultants

QUARTERLY REPORT SEPTEMBER 30, 2023	03

Board Committees

Board Audit Committee (BAC)	Board Risk Management Committee (BRMC)
Khalid Qurashi	Khalid Mana Saeed Al Otaiba
Chairman	Chairman
Abdulla Khalil Al Mutawa	Abdulla Khalil Al Mutawa
Member	Member
Khalid Mana Saeed Al Otaiba	Khalid Qurashi
Member	Member
Dr. Ayesha Khan	Atif Aslam Bajwa
Member	Member
Mr. Tahir Khurshid	Mr. Farhan Ali
Secretary	Secretary

Board Human Resources, Remuneration &	Board Compensation Committee (BCC)
Nominations Committee (BHR&NC)
Dr. Ayesha Khan	Dr. Ayesha Khan
Chairperson	Chairperson
Abdulla Khalil Al Mutawa	Abdulla Khalil Al Mutawa
Member	Member
Khalid Mana Saeed Al Otaiba	Khalid Mana Saeed Al Otaiba
Member	Member
Dr. Gyorgy Tamas Ladics	Mr. Muhammad Akram Sawleh
Member	Secretary
Khalid Qurashi
Member
Mr. Muhammad Akram Sawleh
Secretary

04 BANK ALFALAH

Board Committees

Board Strategy and Finance Committee	Board Crisis Management Committee
(BS&FC)	(BCMC)
Abdulla Khalil Al Mutawa	Abdulla Khalil Al Mutawa
Chairman	Chairman
Khalid Mana Saeed Al Otaiba	Khalid Mana Saeed Al Otaiba
Member	Member
Dr. Gyorgy Tamas Ladics	Khalid Qurashi
Member	Member
Dr. Ayesha Khan	Dr. Ayesha Khan
Member	Member
Khalid Qurashi	Dr. Gyorgy Tamas Ladics
Member	Member
Atif Aslam Bajwa	Atif Aslam Bajwa
Member	Member
Mr. Aasim Wajid Jawad	Mr. Muhammad Akram Sawleh
Secretary	Secretary
Board Information Technology	Board Real Estate Committee (BREC)
Committee (BITC)
Dr. Gyorgy Tamas Ladics	Mr. Abdulla Khalil Al Mutawa
Chairman	Chairman
Abdulla Khalil Al Mutawa	Mr. Khalid Mana Saeed Al Otaiba
Member	Member
Khalid Mana Saeed Al Otaiba	Mr. Atif Aslam Bajwa
Member	Member
Atif Aslam Bajwa	Mr. Muhammad Akram Sawleh
Member	Secretary
Mr. Aasim Wajid Jawad
Secretary

QUARTERLY REPORT SEPTEMBER 30, 2023	05

Directors' Review

On behalf of the Board of Directors, we are pleased to present the unconsolidated condensed interim nancial statements of Bank Alfalah Limited for the period ended September 30, 2023.

Economic Review

Pakistan's economy started showing positive signs after the IMF agreement towards the end of 1H'23. State Bank of Pakistan's (SBP) reserves went up signicantly, crossing the USD 8.0 billion mark by July 2023 against the critically low level of USD 4.47 billion a month earlier. During the period, the Rupee depreciated by approximately 36% against the greenback. However, due to key administrative measures taken by the caretaker government and gradually improving macro outlook, the Rupee improved in the third quarter against the USD and closed the quarter at around PKR 287.7 level.

Ination went down during Q3'23 after reaching a peak of 38% during 1H'23, due to the high-base effect and some improvements in food prices on a month-on-month basis. Overall, the average National CPI ination for the CY23 to date is 31.7%. Despite high ination readings and continued negative real interest rates, the SBP decided to maintain an unchanged policy rate of 22% in the last two monetary policy meetings with the expectation of a gradual decline in ination over the next few months.

During FY23, the Current Account Balance posted a decit of USD 2.4 billion compared to the same period last year when the decit clocked in at USD 17.5 billion, a substantial improvement of 86%. This jump came on the back of robust import controls by the administration as Pakistan faced dollar shortages due to debt servicing, delayed support from friendly countries, and a decline in exports and remittances. Domestic supply constraints due to import controls hampered industrial activity. However, post relaxation in import restrictions, economic activities revived. Accordingly, 2MFY24 current account decit reached USD 935 million as against USD 2.0 billion in the same period last year.

Pakistan posted a scal decit of PKR 6,521 billion (7.75% of GDP) which is higher than the budgeted estimate and

the previous year's decit. The Government eyes a decit of PKR 6,923 billion (6.5% of GDP) for FY 2023-24, which is an optimistic target considering that the economy is passing through a phase of slow growth with high ination and a stressed external account. The Government is also taking an optimistic view of GDP growth, projecting a growth rate of 3.5% in 2024 against 0.3% in 2023, emphasising the robust performance of the industrial sector, and targeting an industrial growth rate of 3.4% compared to the previous year's contraction of 2.1%.

The stock market, which remained relatively lackluster during the earlier part of the year, showed a strong resurgence amid IMF program sign-off and macro improvement. KSE 100, the benchmark index of the Pakistan Stock Exchange (PSX), recorded an increase of 14.4% during 9MCY23 to close at 46,233 index points.

Going forward, continuation of the IMF program is crucial for economic policy-making during a volatile political period. Securing external nancing for the mammoth debt repayments during the current year and beyond, managing inationary pressures and stimulating growth while securing a larger and stable IMF program for long-term structural reforms would be critical challenges for the new government post-elections.

06 BANK ALFALAH

Review of the Bank's Performance

Highlights of the Bank's nancial results for the period ended September 30, 2023, are presented as follows:

Financial Position	September 30, 2023	December 31, 2022
	Rupees in Millions
Shareholders' Equity	119,742	100,015
Total Assets	2,675,589	2,253,197
Deposits	1,821,313	1,486,845
Advances - net	665,596	732,375
Investments - net	1,506,084	1,114,407
Financial Performance	Period ended	Period ended
September 30, 2023	September 30, 2022
	Rupees in Millions
Net Interest Income and Non-Markup Income	109,504	71,467
Non-Markup Expenses	47,587	35,688
Provisions and write offs (net)	9,164	8,137
Prot before tax	52,753	27,643
Prot after tax	27,252	14,090
Basic and Diluted earnings per share - Rupees	17.28	7.93

Bank Alfalah continued its growth momentum during the third quarter, with prot after tax reaching 27.252 billion, which is 93.4% higher than the same period last year (SPLY). The Earning Per Share (EPS) for the nine-months period stands at Rs. 17.28 (Sept 2022: Rs. 7.93). The Bank also continued to make signicant investments in network, people and technology.

Revenue stood at Rs. 109.504 billion, showing an increase of 53.2% as compared to SPLY. Key contribution was from markup income which grew by 68.5% and closed at Rs. 90.985 billion. A combination of net earning assets growth and re-pricing of the asset book at higher rates led to the increase in markup income. Non-markup income is Rs. 18.519 billion, higher by 6.1% compared to SPLY. Higher fee and derivatives income were offset by lower FX and capital loss. The capital loss realised on government securities was due to rebalancing of the book in view of interest rate outlook.

Fee and commission income showed a robust growth of 32.8% year on year (YoY). Card (debit and credit) related fee is up due to higher customer spend by 50.4%.

Further, card acquiring income rose due to an increase in e-commerce spend and POS merchant sales by 46.0%. Branch banking, Trade, guarantees, credit-related fee

and remittance income also increased. Growth in digital transactions volume via Alfa / Internet Banking / ATMs & Cash Deposit Machines (CDMs) and upward revision in ATM withdrawal fee led to increase in alternate delivery channels income.

Expenses continue to be vigilantly monitored, and the Bank manages costs prudently while focusing on building momentum through expansion and investments in new ventures. The Bank's strategy to open new branches, invest in digital technologies and information technology platforms alongside ood relief efforts, marketing, PKR depreciation and ination related effects led to higher operating expenses. Since 2022, the Bank has opened over 160 new branches, which are helping us in customer acquisition, deposit mobilisation and hence revenue growth. Becoming an industry rst, the Bank has opened a state-of-the-art Digital Lifestyle branch, having innovative features including cash and cheque deposit machines, digital lockers and a Buy Now Pay Later (BNPL) store via AlfaMall along with lifestyle features such as dining and workspace sharing. The Bank's cost to income ratio improved to 42.2% as against 49.0% SPLY, taking support from strong revenue growth.

Deposits were reported at Rs. 1.821 trillion at the end of September '23, with YoY growth of 31.5%. The current

QUARTERLY REPORT SEPTEMBER 30, 2023	07

Atif Aslam Bajwa	Khalid Qurashi
President and Chief Executive Ofcer	Director
October 26, 2023
Dubai

08 BANK ALFALAH

QUARTERLY REPORT SEPTEMBER 30, 2023	09