Allied Bank Limited’s top line and bottom line slid by 6 and 24 percent respectively, year-on-year. That is not how a bank’s performance should always be read. ABL’s balance sheet continued to grow at a healthy pace, and in the right direction. The bank’s ADR improved, cost of fund was kept in check, loan quality remained impressive, and deposit growth was steady. That is a much better way to look at a bank’s performance, as it offers more idea into what the future holds.

ABL’s asset growth, for a change, was driven by advances, for the period ended June 30, 2017. Advances portfolio jumped a massive 18 percent over December 2016, taking the ADR from 40 percent to a healthier, above-industry average 48 percent. Investments on the other hand witnessed a decline of 7 percent over December 2016, as PIBs and treasury bills seem to have lost quite some steam over the period.

The liability side growth has remained steady, without being spectacular. Much focus has been on adding the right kind of deposit, which is evident from a very high CASA ratio at ABL. Allied Bank, would certainly want the momentum to continue, but there is not much room for improvement in CASA, as it already sits at very high levels. The loan book is clean and well provided for. Infection and coverage ratio at 5 and 93 percent respectively, are way better than the industry average of 10 and 85 percent, respectively.

The bigger dent to the after-tax profits was caused by a major decline in income from sale of securities. That alone made a difference of over Rs2 billion to the non-core income. ABL has done extremely well to keep a tight lid on administrative expenses, despite continuous efforts to increase its branch network and improve the technology and risk management platforms.

All seems well for ABL at the moment. Advances have picked at the right time. Should the interest rates go up and spreads improve, ABL would be in a great position to make good return on earning assets.