JCR-VIS Credit Rating Company Limited has maintained the ratings of Allied Bank Limited (ABL) at 'A+ / A-1+' (single A plus/ A-one plus) while outlook on the ratings has been revised upwards from 'Stable' to "'Positive'.
ABL's ratings derive significant strength from its widespread market presence and strong franchise value reflected in its low cost deposit base. During FY05 improvement has been witnessed in nearly all facets of the organisation, with the new management team having been in place for almost a year.
Strong growth was witnessed in the lending portfolio, which has had a positive impact on core earnings. Going forward, the portfolio mix may witness some change as the bank develops its consumer product line. Since the last review, a substantial reduction of about 16 percent was also seen in the bank's non-performing loans, due to write-off of old receivables against existing provisions and cash recoveries.
With the growth in advances being higher than the deposits, excess liquidity earlier carried on books has largely been absorbed. However, liquidity indicators appear adequate and profit retention along with the planned issue of subordinated debt is expected to keep the bank adequately capitalised.
A positive outlook has been assigned in expectation of continuation in growth trends and diversification of the business portfolio, over the near to medium term.
ABL is in the process of acquiring a core banking software, which will strengthen internal controls. In addition to its large branch network, the bank is working towards developing alternate delivery channels to better serve customers.
Comments
Comments are closed.