Allied Bank Limited saw its bottom-line tank year-on-year in 9MCY17. That should not come as a surprise, given how the interest rates have panned out all this while. The spreads have been squeezed to the limits and it is showing in suppressed top lines, even with decent growth in earning assets, across the industry.

Interest rates have been under pressure for quite some time now. The reason why the bottom-line is also feeling the pinch is that income from non-core sources is not what is used to be, and there is only this much that can be done on limiting the cost of deposits. Thanks to ABL’s continuous risk management efforts, considerable reversal in provisions against NPLs, helped it recover some lost ground. The gain on sale of securities, which had so often been the savior, has finally come back to earth. The drop in this account alone caused a difference of over Rs2 billion in non-core income year-on-year. ABL did a fantastic job to limit administrative expenses and kept it flat for the period, despite growing its retail and digital footprint across the country.

ABL’s asset growth, for a change, was driven by advances, for the period ended September, 2017. Advances portfolio jumped by a sizeable 14 percent over December 2016 taking the ADR from 40 percent to a healthier, near-industry average 45 percent. Meanwhile, investments continue to constitute the bulk of asset mix, inching up 2 percent over December 2016.

The liability side growth has remained steady, without being spectacular, growing 3 percent over December 2016. Much focus has been on adding the right kind of deposit, which is evident from a very high CASA ratio at ABL. The non-remunerative low cost deposits inched up by an impressive 20 percent over December 2016. ABL boasts of a clean book, with the lowest infection ratio amongst peers at 5 percent, and more than adequately provided for. There is not much room for the CASA ratio to move up further, which would leave ABL to up the ante on private sector lending to ensure higher yields.

ABL seems well poised to cash on any opportunity that may arise on the lending side. Surely, big banks cannot forever rely on investments in sovereign papers. Yields have dried up and will take nothing short of a comeback to lending for the likes of ABL to post profit growths again.