PACRA Maintains the Entity Ratings of Bank Alfalah Limited

Bank Alfalah Limited (BAFL) has maintained a strong and consistent growth trajectory since its inception nearly three decades ago. Evolving from a mid-sized institution into one of the country’s leading large banks, BAFL reported a substantial deposit base of PKR 2,136.9bln as of (Dec 2023: PKR 2,084.9bln). This growth reflects a deliberate and strategic shift in its deposit mobilization approach, with a clear focus on deposit quality and maintaining a positive spread—both of which are critical for long-term sustainability. The Bank’s sustained performance across multiple dimensions underpins its current credit rating. These include robust financial fundamentals, strategic execution, and a demonstrated ability to navigate a dynamic and competitive banking environment. The industry landscape remains challenging, and BAFL’s management is expected to remain agile and responsive to maintain its relevance and positioning among top-tier institutions. The Bank benefits from a strong ownership profile and sound governance practices, which provide critical support to its overall creditworthiness. Additionally, the rating reflects BAFL’s experienced management team, prudent risk management framework, expanding digital footprint, growing market share, diverse product portfolio, and a sizeable share in the remittances and trade business.
Key digital initiatives undertaken in 2024 include the revamp of the Bank’s mobile application ‘Alfa’ and its e-commerce platform ‘AlfaMall’, featuring enhanced user interfaces and upgraded banking functionalities. The materialization of the digital initiatives would be reflected going forward. On the lending side, BAFL reported gross performing advances of PKR 1,113.9bln (CY23: PKR 739.7bln), marking a significant increase over the prior year. Credit quality remained stable, with an infection ratio of ~3.7% (CY23: 4.8%). Despite the challenges posed by declining interest rates, increased taxation, and the lingering effects of elevated inflation, the Bank has successfully sustained its profitability. During CY24, BAFL recorded a net profit of PKR38.3bln, compared to PKR 36.5bln in CY23. The Bank's Capital Adequacy Ratio (CAR) improved to 17.96% (CY23: 16.74%), indicating a strengthened capital base. On the expense side, non-markup expenses to total income rose to 50.4% (CY23: 43.4%), primarily driven by inflationary cost pressure, branch expansion, and marketing activities for remittances. The Bank has also retained presence in allied financial services, including asset management, and insurance. Going forward, BAFL aims to enhance its SME footprint, expand in supply chain and cash management solutions, and further strengthen its home remittance corridor.
The ratings are dependent on the sustained strength of key performance and risk indicators in line with
'AAA' benchmarks. Any material weakening in these fundamentals may impact the ratings.

About the Entity
BAFL is majority-owned by the Abu Dhabi Group (The Group – sponsors of the Bank based in Abu Dhabi, UAE), with a stake of 56.06%. Other stakeholders include Mutual Funds, NBFCs, FIs, DFIs, individuals (43.82%), and executives (0.12%). The Abu Dhabi Group comprises prominent members of the UAE's ruling family and leading businessmen with global investments. BAFL's Board consists of nine members, including the President & CEO and eight Non-Executive Directors. Out of the eight Non-Executive Directors, four represent the Abu Dhabi Group, while the remaining three members serve as Independent Directors, including one female Director. In 2024, Mr. Efstratios Georgios Arapoglou, an accomplished corporate advisor and Chairman of Bank of Cyprus—joined the Board, bringing with him a wealth of international experience across banking, finance, and shipping. Mr. Atif Bajwa, Bank's President & CEO, brings 40 years of executive leadership experience in the banking sector.