The asset yields of the banking sector may well be low but that has not stopped Askari Bank Limited (AKBL) posting a decent 9MCY15 performance. The banks top line grew reasonably well on the back of a fatter balance sheet. AKBL witnessed a decent deposit growth during the period - which was allocated well between advances and investments.
Investments continue to form the major chunk of the asset side, with the banks IDR now touching 64 percent (56 percent as at December 2014). Little marks for guessing that the repositioning of portfolio with more exposure in government treasury bills was the name of the game for most banks for much of the period - and AKBL was no different. The banks investments grew considerably by 25 percent over December 2014.
That said AKBL did not shy away from lending as the advances portfolio also grew by a healthy 11 percent during the period. AKBL has of late done well to curtail the growth of NPLs as the infection ratio is down and is well provided for at 92 percent. The growth of mark-up expenses was kept in check - a testament to AKBLs effort to further improve the deposit mix and increase the CASA ratio. The current accounts during the period registered a growth of 9 percent.
Gain on sale of securities has been a recurring theme in this seasons results and AKBL too pocketed decent sums on that account. The bulk of it came from cashing the government securities in the portfolio. The administrative expenses were kept well under control, resulting in a much improved cost to income ratio.
As rates are expected to remain low, and yields on government papers not so lucrative, it would be interesting to see, if the situation is desperate for the banks yet. The profit numbers tell otherwise and AKBL could well simply continue to manage costs and improve deposit mix - and still make good profits, without dwelling too much in advances.
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