KARACHI: Allied Bank is guided by its vision “to become a dynamic and efficient bank providing integrated solutions in order to be the first choice bank for the customers” and accelerated its efforts for value creation for all the stakeholders.
Lower yield on interest bearing assets on the back of comparatively lower average benchmark rates has led to an adverse rate variance on Investments, Advances and Bank Placements in September 2021 as compared to September 2020. This has been partially overcome by generating higher average volumes, restricting the decline in Interest Income by two percent. Resultantly, Interest Income stood at Rs 84,696 million during nine months ended September 30, 2021.
Likewise, interest expense increased by two percent on account of high borrowing expense attributable to surge in average borrowing volumes. Interest Expense stood at Rs 50,014 million during nine months ended September 30, 2021 as against Rs 49,154 million during corresponding period last year. Consequently, Net Interest Income (NII) recorded at Rs 34,682 million during nine months ended September 30, 2021 as compared to Rs 37,476 million during corresponding period last year; down by seven percent.
Amid the accommodative interest rate environment, Allied Bank ensured to emphasize on capitalizing emerging digital financial avenues along with maintaining diversification of revenue streams. As a consequence, fee income registered a significant growth of 23 percent during September 2021 as compared to 10 percent growth in September 2020.
Dividend income posted a remarkable growth of 112 percent to reach at Rs 1,811 million during nine months ended September 30, 2021 as against a decline of 36 percent during the corresponding period last year. Increase is primarily attributable to dividend announced by Power & Oil Sector Companies and uplift of restriction on dividend distribution, imposed by SBP on Banking Institutions.
Foreign exchange income stood at Rs 1,112 million during nine months ended September 30, 2021 as against Rs 1,295 million during corresponding period last year.
Prudent disposal of equity and fixed income portfolio enabled the Bank to earn capital gain of Rs 3,523 million during nine months ended September 30, 2021 as compared to Rs 2,838 million during nine months ended September 30, 2020; reflecting a growth of 24 percent.
Resultantly, non-markup income stood at Rs 11,729 million during nine months ended September 30, 2021; depicting a healthy growth of 28 percent as against 17 percent growth in corresponding period last year.
ABL’s emphasis on optimization helped restricting operating expenses growth to 10 percent despite hiked inflationary pressures, impact of currency devaluation and continuous investment towards technological upgradation. Total non-markup expense stood at Rs 25,000 million during nine months ended September 30, 2021.
ABL posted profit before tax of Rs 21,973 million during nine months ended September 30, 2021 as compared to Rs 21,443 million during the corresponding period last year. Profit after tax (PAT) manifested a growth of five percent to record at Rs 13,070 million during nine months ended September 30, 2021 as compared to Rs 12,410 million during September 30, 2020. Likewise, Earnings Per Share (EPS) stood at Rs 11.41 per share as compared to Rs 10.84 per share in the corresponding period last year.
ABL aims to achieve financial inclusion by promoting digital financial services, to provide uninterrupted and on-the-go banking facilities. Therefore, the Bank has adopted a hybrid expansion strategy comprising digital as well as branch banking operation. Total branch outreach stood at 1,407 including 1,283 conventional, 117 Islamic and 7 digital branches. ATM network reached at 1,557 including 1,248 on-site, 303 off-site and six Mobile Banking Units (MBUs). Average ATM uptime was registered at 96.7 percent for the nine months ended September 30, 2021.
Total asset base of ABL reached at Rs 1,963 billion as on September 30, 2021 as compared to Rs 1,590 billion as on December 31, 2021; reflecting a robust growth of 23 percent well above the 14 percent industry growth for the captioned period.
Proactive review of economic scenario led to prudent management of investment portfolio to counter the pressures from any probable policy rate hike. As a consequence, investments increased by 44 percent to reach at Rs 1,197 billion as on September 30, 2021. The growth is primarily driven by deployment of funds in comparatively more liquid options of Floating Pakistan Investment Bonds (PIBs) and Market Treasury Bills (MTBs).
Private sector credit off-take was stimulated as economic recovery gained momentum. Resultantly, Gross Advances reached at Rs 536 billion as on September 30, 2021; increasing by five percent as compared to a decline of nine percent during corresponding period last year. Net advances reached at Rs 523 billion as on September 30, 2021 as against Rs 496 billion as on December 30, 2020.
ABL continued its momentum towards low infection ratio and high overall coverage ratio which stood at 2.6 percent and 93.9 percent respectively. No FSV benefit was availed while determining the provision against non-performing loans, allowed under guidelines of SBP.
Deposit base reached at Rs 1,354 billion as on September 30, 2021; positing a growth of 11 percent, in line with industry. ABL directed its efforts towards mobilization of low-cost deposit, which is evident from increase of 15 percent in current deposits to reach at Rs 564 billion as on September 30, 2021 as compared Rs 491 billion as on December 31, 2020. Consequently, current deposit to total deposit mix increased to 42 percent in September 2021 as compared to 40% in December 2020. Current Account Saving Account (CASA) mix stood at 85 percent as on September 30, 2021.
ABL’s equity base stood at Rs129 billion as on September 30, 2021. Return on Equity and Return on Assets stood at 16.8 percent and 1.0 percent respectively. Strong capital positioning of Allied Bank is evident from 24.95 percent Capital Adequacy Ratio (CAR) as on September 30, 2021 as against a statutory requirement of 11.50 percent.
Copyright Business Recorder, 2021
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