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KARACHI: Allied Bank (ABL) continued its focus towards enriched technological infrastructures and digitally-induced financial offerings assisting in creating sustainable growth and value for the stakeholders. Thereby, contributing in achieving robust financial position with stable profitability.

Positive volumetric growth in average earning assets coupled with positive rate variance assisted in 64% increase in mark-up income to reach at Rs. 87,567 million during the half year ended June 30, 2022. Mark-up expense reached at Rs. 60,052 million showing a growth of 98% during the captioned period. The increase is mainly on account of higher cost of deposits due to increasing interest rate scenario. Net Interest Income (NII) was recorded at Rs. 27,515 million achieving a growth of 20% during the half year ended June 30, 2022.

Fee income increased by Rs. 677 million, recording a growth of 21% to reach at Rs. 3,932 million mainly on account of higher card related fees and branch banking customer fees.

There was an increase of 21% in dividend income to reach at Rs. 1,325 million during the half year ended June 30, 2022 as compared to Rs. 1,093 million in the corresponding period last year.

Foreign exchange income recorded a significant growth to reach at Rs. 4,296 million mainly attributable to effective management of the exchange risk and increased volume of large ticket transactions.

Resultantly, non-markup income increased by 35% to reach at Rs. 10,739 million during the half year ended June 30, 2022 as compared to Rs. 7,933 million for the corresponding period last year.

Administration expenses increased by 14% during the period under review as compared to 10% increase in the corresponding period last year.

ABL posted profit before tax of Rs. 20,118 million during the half year ended June 30, 2022 which is higher by 37% as compared to corresponding period last year.

Vide Finance Act 2022, for Banking companies, Corporate Tax rate is enhanced from 35% to 39%, Super Tax on high earning persons is levied for Tax Year 2023 (Income Year 2022) at 10% and subsequently at 4% and tax rate on attributable income from investments in Federal Government Securities is increased (49% for ADR 40% to 50%) retrospectively from Tax Year 2022 (Income Year 2021), which resulted in additional tax charge during the half year ended June 30, 2022.Consequently, effective tax rate increased to 65.8%, amounting to Rs. 13,231 million as compared to 40.4%in corresponding half year period.

Resultantly, profit after tax for the half year ended June 30, 2022 recorded at Rs. 6,887 million, lower by Rs. 1,875 million as compared to the corresponding half year ended June 30, 2021. In line with profit after tax, earnings per share (EPS) of ABL also decreased to Rs. 6.01 as compared to Rs. 7.65 against the same corresponding period.

ABL’s assets base showed a growth of 6% to reach at Rs. 2,131,359 million during the half year ended June 30, 2022. Main increase is witnessed in investments and balances with other banks.

Prudent fund deployment in investments resulted in increase of investments by Rs. 88,131 million to stand at Rs. 1,152,626 million as at June 30, 2022.

Effective risk management and prudent monitoring enabled ABL to further reduce gross non-performing advances portfolio by Rs. 563 million to reach at Rs. 13,038 million as on June 30, 2022. Gross advances and net advances reached at Rs. 657,990 million and Rs. 646,254 million respectively.

ABL continued to pave the way for its low infection ratio and strong coverage ratio which stood at 1.98% and 90.00% respectively, as on June 30, 2022. Whereas the industry infection ratio and coverage ratio stood at 7.8% and 91.5% respectively, as on March 31, 2022. No forced sale value (FSV) benefit was availed while determining the provision against Non-Performing Loans, allowed under SBP guidelines.

Balances with other banks significantly increased by 454% to reach at Rs.5,003 million during the captioned period as compared to Rs. 903 million as on December 31, 2021.

Total deposits of ABL demonstrated a growth of 11% to reach at Rs. 1,575,095 million as on June 30, 2022 as compared to Rs. 1,413,295 million as on December 31, 2021.ABL’s concentrated efforts towards low-cost deposits have resulted in increase of current deposits by 8%. Whereas, current deposit to total deposit ratio and current account saving account (CASA) to total deposit ratio stood at 42% and 82% respectively, as on June 30, 2022.

Return on Assets and Return on Equity were recorded at 0.7% and 12.7% respectively, as on June 30, 2022. Capital Adequacy Ratio (CAR) remained resilient at 20.76% against a statutory requirement of 11.5%.

ABL has a large ATM network of 1,569 machines including 1,295 on-site, 269 off-site and 5 mobile banking units (MBU).

Whereas, branch outreach closed at 1,429 branches comprising 1,305 conventional branches, 117 Islamic branches and 7 digital branches.

Copyright Business Recorder, 2022

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