ABL pursues strategy of consistent growth through robust risk management framework, enhanced digitization

LAHORE: Allied Bank Limited (ABL) remained fully aware of the high downside risks to the economic and operating environment and pursued its strategy of consistent growth through robust risk management framework, technology driven automation and enhanced digitization.

State Bank of Pakistan’s (SBP) accommodative policy measures continued keeping average benchmark rate at 7% to curtail the adverse impact of Covid-19 pandemic as compared to 10.90% in June 2020. Consequently, yield on investments, advances and Bank placements decreased as compared to the corresponding half year ended June 30, 2020. As a result, interest income decreased by 14% to reach at Rs 53,337 million during half year ended June 30, 2021.

Similarly, Markup expense also decreased by 18% to reach at Rs 30,319 million during half year ended June 30, 2021 as compared to 36,765 million during corresponding period last year. Resultantly, Net interest income (NIM) stood at Rs 23,018 million during the period under review, down by 9%.

ABL’s constant emphasis of capitalizing on the emerging digital financial avenues together with maintaining diversification of revenue streams facilitated a robust fee income growth of 17% to reach at Rs 3,256 million during half year ended June 30, 2021. Aforementioned surge is primarily driven by increased Card related fee from vigorous Debit card campaign.

Dividend income posted a growth of 53% to stand at Rs. 1,093 million during half year ended June 30, 2021 as compared to Rs 712 million during the corresponding period last year. The increase is primarily attributable to higher dividend announced by Banking Institutions subsequent to end of restriction on dividend distribution for the two consecutive quarters of 2020 under SBP directives.

Comparatively Stable Swap curve led to lower Foreign Exchange (FX) income by 4% to stand at Rs 663 million during half year ended June 30, 2021.

Attributable to prudent disposal of equity portfolio and fixed income securities, Allied Bank earned capital gain of Rs 2,652 million during the period under review; registering a growth of 9%. Resultantly, total non-markup income increased by 18% to reach at Rs 7,933 million during the half year ended June 30, 2021 as against Rs 6,698 million during corresponding period last year.

Despite multiple factors of; inflationary pressure, increased spending focused towards technological transformation and Corporate Social Responsibility (CSR) measures amid Covid-19, ABL restricted non-markup expense growth at 10% which stood at Rs. 16,550 million during half year ended June 30, 2021.

Allied Bank increased its focus towards catering to the evolving needs of “Digital Age” without compromising on branch banking operations. Resultantly Branch outreach was maintained at 1,402 including 1,278 conventional and 117 Islamic banking branches and 07 digital branches. Similarly, ABL exhibits a robust ATM network of 1,559 machines including 1,238 on-site, 318 off-site and 03 Mobile Banking Units (MBU) with ATM uptime average of 97% during the period ended June 30, 2021.

Profit Before tax stood at Rs 14,711 million during the half year ended June 30, 2021. Profit after tax reached at Rs 8,762 million as against Rs 8,414 million during the corresponding period last year, depicting a growth of 4%. Earnings per share (EPS) stood at Rs 7.65 during the period under review as compared to 7.35 during the corresponding period last year.

Allied Bank’s asset base exhibits a healthy growth of 16% to stand at Rs 1,845,063 million as on June 30, 2021. Asset growth is mainly driven by funds deployment in investments which were higher by 30% and stood at Rs 1,074,807 million as on June 30, 2021. The escalation is attributable to liquidity placement in Government securities causing the mix of government securities to total investments to increase to 96% in June 2021 as against 94% in December 2020.

Subsequent to the third wave of Covid-19, economic activity gained momentum thereby stimulating private sector credit offtake. Resultantly, ABL’s Gross advances increased by 4% to reach at Rs 530,063 million as on June 30, 2021. Net advances crossed Rs 500 billion mark to reach at Rs 516,723 million as on June 30, 2021.

ABL continued to pave the way for its low infection ratio and high overall coverage ratio which stood at 2.7% and 94.2% respectively, surpassing industry infection and ratio of 9.3% and 87.6% respectively. No FSV benefit was availed while determining the provision against Non-performing loans, allowed under guidelines of SBP.

Lending to financial institutions contracted by 59% during half year ended June 30, 2021 to reach at Rs. 7,369 million due to decrease in call money lending.

Deposit base posted a growth of 8% to reach at Rs 1,315,055 million as on June 30, 2021 as against Rs 1,216,678 million as at December 31, 2020. Allied Bank pivoted its concentration towards mobilization of low-cost deposits which resulted in an increase of 11% in current deposits. Consequently, current deposit to total deposit mix increased to 42% in June 2021 from 40% in December 2020. Current Account Saving Account (CASA) stood at 86% as on June 30, 2021.

ABL’s equity base stood at Rs 128,516 million as at June 30, 2021. Return on equity (ROE) and return on asset (ROA) stood at a robust level of 17.2% and 1.0% respectively. Capital Adequacy ratio of the Bank stood at 25.74% against statutory requirement of 11.5% which is indicative of strong Capital positioning of the Bank.—PR

Copyright Business Recorder, 2021