During the year under review, the bank changed its name to Allied Bank Limited (ABL) from Allied Bank of Pakistan Limited, after approval from the SECP and the SBP on January 12, 2005 and March 28, 2005, respectively.
ABL, established in December 1942 as the Australasia Bank at Lahore, is incorporated in Pakistan as a scheduled bank engaged in commercial banking and related services. During 2004, as advised by the Privatisation Commission, the SBP undertook reconstruction of the bank's capital whereby the Ibrahim Group took over control of the bank by virtue of buying 325 million additional shares of the bank, representing 75.35% of the enhanced share capital at Rs 43.69 per share. It was decided during 2005 to merge Ibrahim Leasing Limited with ABL. The Board of Directors, in their meeting held on February 4, 2005, approved Scheme of Amalgamation with and into the bank.
The said scheme was adopted by the shareholders through a special resolution passed in the AGM held on March 28, 2005. The SBP, vide their Order dated May 9, 2005, sanctioned the Scheme of Amalgamation. This amalgamation was followed by the listing of the bank on all the stock exchanges of Pakistan. ABL shares these days are traded at prices nearly four times of the book value per share on December 31, 2005.
Allied Management Services (Private) Limited (AMSL), the Management Company of First Allied Modaraba, is a wholly-owned subsidiary of ABL. The Board of Directors of the bank in their meeting held on September 28, 2005 have approved its amalgamation into the bank under section 48 of the Banking Companies Ordinance, 1962.
The proposed amalgamation would take effect once it is approved by the SBP and the related legal formalities and the requirements of the Banking Companies Ordinance, 1962 have been fulfilled. Apparently recognising the momentum gathered by the bank, JCR-VIS, in December 2005, upgraded medium to long term entity rating from "A" (Single A) to "A+" (Single A Plus) and short term rating from "A1" to "A1+". On December 31, 2005 ABL network was of 741 branches (2004: 735 branches) and 100 Automatic Teller Machines. The bank at the end of 2005 had 6,909 employees (2004: 6,768 employees).
The authorised capital of the ABL is Rs 5 billion, comprising 500 million shares of Rs 10 each. As on December 31, 2005 the paid up capital was Rs 4.405 billion, which was held by 7,400 shareholders. Ibrahim Group including associated companies holds over 75% shares. The SBP holding was over 10% whereas other large shareholders include Askari Commercial Bank (3.7%), General public or 7,359 individuals (9.3%) and GOP (1.4%). The rest of the shares are distributed among a number of corporate entities including banks and DFIs. Total assets of ABL increased by 24% to Rs 192 billion on December 31, 2005 compared to Rs 155 billion on December 31, 2004. Increase in assets has been largely financed through 28% increase in Deposits to Rs 162 billion (84% of Total Assets) as on December 31, 2005 (2004: Rs 126 billion) as well as through increase in equity. As on December 31, 2005 Investments decreased 22% to Rs 45 billion (23% of TA) compared to Rs 57 billion (37% of TA) as on December 31, 2004. Of the total, ABL has 80% investments in Held to Maturity Securities (2004: 99%). ABL's Advances as on December 31, 2005 were Rs 111 billion (58% of Total Assets), registering 87% increase over previous year Advances at Rs 59 billion (38% of TA). On December 31, 2005, 98% Advances (2004: 100%) were in local currency, while 68% (2004: 82%) of the total Advances were for short term. Major exposure of the bank by way of Advances is in Financial (8%), Sugar (3%), Food Manufacturing (7%), Textiles (14%), Personal (4%), Real Estate (6%) and Public / Government (14%).
ABL's equity including Surplus on Revaluation of Assets on December 31, 2005 stands at Rs 13.035 billion (6.8% of Total Assets) whereas gross NPLs on this date are Rs 12.58 billion (2004: Rs 15.38 billion). In percentage terms gross NPLs for 2005 are 11% of gross Advances (2004: 22% of GA). ABL has made full provision against gross NPLs according to the SBP criteria. However, as some doubtful loans have the tendency to stay under cover for sometime due to different reasons, a prudent policy for ABL would be that the management remains extra vigilant in the appraisal and monitoring of all loans. Total revenues of ABL for 2005 increased 69% to Rs 11.777 billion compared to Rs 6.985 billion for the previous year.
Total mark up-interest expense represented only 21 % of total mark up income for 2005 (2004: 15%). There has apparently been no marked improvement in the payout by the bank to the Depositors. ABL's net interest income after provisions for 2005 increased by 148% to Rs 7.2 billion from Rs 2.9 billion for 2004. Non-mark up income for 2005 was Rs 4.4 billion as against Rs 4.1 billion for the previous year.
ABL's non-funded to funded income ratio deteriorated to 20% from 28% in 2004. The year 2005 was closed with pre-tax profit of Rs 4.777 billion (2004: Rs 0.482 billion). ABL closed 2005 with after tax profit of Rs 3.033 billion (2004: Rs 0.192 billion). ROE for the year is 27% (2004: 2%).
After getting reportedly all the necessary approvals, the bank has written off the accumulated losses as of December 31, 2004 amounting of Rs 6,324 million against the Share Premium Account. The bank proposed cash dividend of 25% for the year (2004: Nil). Performance statistics are given below. The bank appears to be poised for better performance in the coming years.
============================================================
Balance Sheet (Audited) (Rs million)
============================================================
As on Dec. 31, 2005 2004
============================================================
Total Assets: 192,170 154,926
Cash, balances with banks: 18,035 12,320
Lending to financial institutions: 5,777 16,175
Investments-Net: 44,830 57,321
Advances-Net: 110,947 59,485
Borrowing from fin. Institutions: 9,694 12,538
Deposits, other accounts: 161,907 126,392
Total Liabilities: 179,135 144,670
Net Assets: 13,035 10,256
Share Capital: 4,405 4,405
Share Premium: 4,316 10,640
Reserves, Un-app. Profit: 2,679 -5,597
Total Equity: 11,400 9,448
Surplus on Revalue, Assets: 1,635 808
Equity incl. Revalue Surplus: 13,035 10,256
Subordinated Loan: 0 0
Equity and Sub. Loans: 13,035 10,256
Advances-Gross: 119,506 69,949
Gross NPLs: 12,580 15,383
Total Provision: 8,559 10,464
Conting. & Commitments: 51,644 44,979
------------------------------------------------------------
Ratios:
------------------------------------------------------------
Cash & bank/Total Assets: 9% 8%
Investments/Total Assets: 23% 37%
Advance-Net/Total Assets: 58% 38%
NPLs/Advances-Gross 10.5% 22.0%
NPLs/Total Equity: 110% 163%
NPLs Prov./Advances-Gross: 7.2% 15.0%
Deposits/Total Assets: 84% 82%
Total Liabilities/Total Assets: 93% 93%
Total Equity/Total Assets: 6.8% 6.6%
Equity & S. loans/Total Assets: 6.8% 6.6%
Deposits/Equity-Times: 14.2 13.4
Advances/Deposits: 69% 47%
Investments/Deposits: 28% 45%
Contin. & Comm./Equity-Times: 4.53 4.76
Book Value Per Share: 25.88 21.45
Quoted Price (10-05-06) - Rs: 106.25 -
Price/Book Value Ratio: - -
------------------------------------------------------------
Income Statement 2005 2004
------------------------------------------------------------
Markup-interest earned: 9,847 5,245
Markup-interest expensed: 2,025 794
Net Markup-interest income: 7,822 4,451
Provisions and write offs: 585 1,537
Net mark up after provisions: 7,237 2,914
Total non-markup income: 1,930 1,740
Income before Admn. Exp.: 9,167 4,654
Admin Expenses, etc: 4,390 4,172
Profit before Taxation: 4,777 482
Current & deferred tax: 1,744 290
Profit after taxation: 3,033 192
------------------------------------------------------------
Ratios: (Annual Basis)
------------------------------------------------------------
Markup earned/Total Assets: 5.1% 3.4%
Net Markup Income/TA: 4.1% 2.9%
Net markup (aft. Prov.)/TA: 3.8% 1.9%
Non-Markup Income/TA: 1.0% 1.1%
Income before AE/TA: 4.8% 3.0%
Admin Expenses/TA: 2.3% 2.7%
Profit before Taxation/TA: 2.5% 0.3%
Profit after taxation/TA: 1.6% 0.1%
Profit after tax/Total Equity: 26.6% 2.0%
EPS - (year-end paid up) - Rs: 6.89 0.44
Price/Earnings Ratio: 15.43 -
Cash Dividend: 25% 0%
Bonus Shares: 0% 0%
------------------------------------------------------------
Cash flow Summary 2005 2004
------------------------------------------------------------
Net Cash flow, Operations: -5,886 4,523
Net Cash flow, Investing: 11,656 -17,183
Net Cash flow, financing: 0 14,176
Change in Net Liquidity: 5,770 1,516
Net Liquidity at beginning: 12,107 10,591
Net Liquidity at end: 17,877 12,107
============================================================