Allied Bank Limited (ABL) posted its full-year financial results for CY24, declaring an interim cash dividend of Rs4/share – taking the year-to-date payout to Rs16/share. The growth has now moderated as compared to the previous few quarters – as pre-tax profits went up by a modest 3 percent year-on-year. The asset base continued to expand but the yields were understandably much lower, especially towards the latter half of the year as interest rates started to come down. If it was not for savings on account of provisioning reversal, ABL would have been staring at a year-on-year decline in profits – something that has been a rare sight in the banking sphere of late.
The most obvious shift across the industry has come in the pace of advanced growth, most noticeably in the final quarter of CY24 and ABL was no exception. In the race to keep the Advances-Deposit Ratio (ADR) clear of 50 percent at the cut-off year-end date, ABL saw its advances portfolio jump a considerable 35 percent over December 2023, in the processing Rs1 trillion mark for the first time. Advances soared 24 percent from the previous quarter alone – which is the sharpest quarter-on-quarter jump in at least five years, as the ADR at the end of CY24 clocked around 52 percent, improving every quarter throughout the calendar year.
A significant strategy shift in asset mix meant the investments portfolio took a sharp 15 percent cut over September end 2024, as total investments at a little over Rs1.1 trillion stayed close to levels seen two years ago. The Investment to Deposit Ratio (IDR) came down to the mid-50s from the highs of 74 percent less than two years ago.
On the liabilities front, Allied Bank reported a healthy increase of 20 percent over December 2023, in a deposit base that crossed Rs2 trillion as of December end, 2024. Breaking away with the industry trend, ABL’s deposit growth is more than double the rate of industry deposit growth. Deposit mix details are yet to be out, and it remains to be seen if ABL recorded any improvement in the CASA ratio from the low 80s as it was left with much catching up to do toward the mid-year mark, as compared to peer banks.
Non-funded income grew 15 percent year-on-year, led by strong 32 percent year-on-year growth in fee and commission income, which constituted more than half the non-markup income. Income on capital gains nearly quadrupled from a year ago, mainly on the back of higher gains on Euro bonds and federal government securities. On the other hand, administrative expenses shot up 18 percent year-on-year – higher than the period average inflation of 12 percent. The cost-to-income ratio deteriorated by over 4 percentage points. The slide was arrested by reversal provisioning charges in excess of Rs2.7, making a year-on-year difference of more than Rs5.5 billion.
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