Allied Bank Limited (ABLL) ticked all the right boxes in 1HCY18. The bank’s balance continued to expand, with an asset base growth of a sizeable 18 percent over December 2017. The asset mix continues to be titled in favour of investments in primarily government securities, as the IDR was recorded at near 93 percent, with a 23 percent growth in the investments portfolio over December 2017.

The bank seems to have managed the movements in the interest rates rather well, in building the asset portfolio. The rapid growth in the investment side of the asset mix does not mean ABL was not looking to build the advances portfolio. The loan book expanded alright, at a healthy 14 percent rate over December 2017.

The bank’s top-line grew by a modest 3 percent year-on-year despite a sizeable expansion of the asset book, as the spreads on loans and yields on investments remained in check for much of the period. But the composition of mark-up earned slightly changed from a 34 percent contribution from advances in 1HCY17 to near 40 percent during the current period.

On the liability side, the deposit growth was steady, without being extravagant. Most big banks, of late have been trying to build a solid deposit base, instead of merely adding deposits of all kind. The CASA ratio for ABL improved from 79 percent in December 2017 to a very healthy 84 percent as at June end 2018. ABL in fact saw a sizeable drop in fixed deposits, and a considerable surge in non-remunerative current accounts, which spells good for the quarters to come.

Challenged with tight spreads, ABL played smart with the non mark-up income, and realized sizeable capital gains during the period, resulting in a healthy growth in non-funded income. Contributions from dividend income and foreign currency dealings also played part in improved non mark-up income, which resulted in ABL reporting better profits year-on-year, despite the one-off event of pension related payments.

ABL’s loan book is very clean and the infection ratio at under 4 percent and a coverage ratio of close to 100 percent is one to be envious of. The CASA ratio is ever improving, and wit the interest rate cycle changing, the bank seems well poised to leverage on its balance sheet strength.