Allied Bank Limited may be the smallest of the big five lenders in the country. But it shares the same level of benefits and privileges as enjoyed by the other four giant banks. Driven by a jump in operating revenues and lower provisioning cost, ABLs first-half net profit rose nearly 66 percent compared to same period last year. This month, two other big banks - MCB and UBL - have also reported profitability growth in the first-half. MCB reported a 33 percent increase in its first-half earnings over the same period last year, while UBLs bottom line was up 29 percent. The result of two other players - NBP and HBL - has not been announced yet. The banking industry has benefited from the high Kibor that averaged 13.73 percent during the first six months of CY11, nearly 140 bps higher than the corresponding period a year earlier. Moreover, the banks growing stake in government securities during the past one and a half year has been yielding it higher mark-up income. ABLs investments were up 18 percent to Rs143 billion in the first six months of CY11. The bank, which was generous in lending in CY10, joined the crowd this year, with its advances eroding by 4.5 to Rs242 billion during the first-half. Advances growth is at a standstill due to ample availability of high-paying sovereign instruments, subdued demand in the industrial and consumer sectors and growing unwillingness on the part of bankers to dole out risky loans on their balance sheet. As a result, the ADR eased by 9 percentage points to 60 percent in the first six months of the calendar year. However, even at this level, ABLs exposure in advances is higher compared to MCB and UBL. The business development officers remained successful in accumulating low cost deposits as deposits in the current and saving accounts surged by 13 percent and 9 percent, respectively, during the first six months. Hence, the total deposit level surged Rs406 billion in 1HCY11, marking a jump of around 9 percent - close to the industry average deposit growth - in the first six months. The banks CASA ratio enhanced by around 1.5 percentage points to 72 percent. This helped improve the net mark-up income, lifting gross spread ratio (Net mark-up income / gross mark-up income) to 50 percent from 48 percent the same period last year. The level of non-performing loans grew by around 10 percent to Rs20.5 billion, causing the infection ratio to surge to 8 percent in 1HCY11 from 7 percent in CY10. But it is not much of a concern since ABL still enjoys the low infection compared to the industrys (big banks) average of around 12 percent. However, growth in NPLs reduced the banks coverage ratio to 80 percent in 1HCY11 from 82.5 percent in CY10. Decline in provisioning cost also played a part in ABLs profitability growth. The provision against loans and advances fell to Rs1.03 billion in 1HCY11 from Rs1.8 billion in 1HCY10. Moreover, last year the bank also took a knock from higher provision for diminution against value of investments (TFCs) due to the banks heavy exposure of ailing Maple Leaf Cement on its books. The investment banking managers also performed better as they earned higher return from commission and brokerage activities, dividends and dealing in foreign currencies. ABL managed to fetter operating expenses, evident by a 17 percent jump in administrative expenses- slightly above 14 percent inflation rate. The better performance helped the mangers to reap an EPS of Rs5.85 in 1HCY11 and distribute cash divided of Rs2.5 per share.
============================================================= ALLIED BANK LIMITED ============================================================= Rs(mn) 1HCY11 1HCY10 Chg ============================================================= Mark-up earned 24573 21846 12.5% Mark-up expensed (12197) (11267) 8.2% Net mark-up income 12376 10579 17.0% Provisioning (992) (2128) -53.4% Net mark-up income after provisions 11384 8451 34.7% Other income 3008 2621 14.8% Operating revenues 15384 13200 16.5% Other expenses (6828) (5554) 22.9% Profit before taxation 7564 5518 37.1% Profit after taxation 5033 3620 39.0% EPS (Rs) 5.85 4.21 - ------------------------------------------------------------- Source: Company Accounts =============================================================
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