STAFF REPORTER KARACHI BAFL announced earnings Friday for CY19 below expectations at PKR 13bn (EPS: PKR 7.35), depicting a YoY uptick of 20%. On a sequential basis (4QCY19 EPS: PKR 1.87) the bank posted stagnant earnings. Stagnant quarterly NII, higher effective tax rate and a higher than expected provisioning charge kept earnings in check during 4Q. As per management, certain subjective classifications of NPLs during 4Q incurred heavy provisioning expenses, and adversely impacted interest income. A dividend of PKR 2.00/share was announced for 4Q taking total payout to PKR 4.00/share for the year. Net Interest Income of the bank settled at PKR 44.9bn, improving 41% YoY, while settling at PKR 11.6bn during 4Q, posting a 1% QoQ decline. NFI of the bank declined 3% YoY during CY19 due to drastically lower capital gains (-91% YoY). Ex-capital gains, NFI is up 5% YoY. The bank booked a heavy capital gain in 4Q (most likely on equities) worth PKR 521mn while income from FX/derivatives is up 25% YoY/35% QoQ. Provisioning expenses for the bank settled at PKR 3bn for CY19 vis-à-vis reversals of PKR 16mn SPLY. We view that the bank’s high exposure to consumer segment is the likely culprit behind hefty provisioning charges.