During 2015, ABL focused on balance sheet growth without compromising on asset quality while optimising earning asset mix enabling maintenance of stable profitability. The Bank retained its focus on expanding its outreach and provision of customer centric solutions through utilisation of its superior technology platform and robust risk management framework.
Despite stiff competition within banking industry amid evolving regulatory and operating environment, ABL managed to post healthy Profit Before Tax of Rs 25,503 million during 2015 compared to Rs 22,202 million in 2014, registering a growth of 15 percent. Profit after Tax grew by one percent, despite implications of the reducing margins and promulgation of Finance Act 2015 which entailed one-off super tax at the rate of four percent on 2014 taxable income and uniform tax rate of 35 percent on entire income retrospectively from January 2014 leading to combined prior year tax charge of Rs 1,460 million. The resultant effective tax rate increased to 41 percent as compared to 32 percent for 2014. If we exclude the prior year tax charge of Rs 1,460 million, the PAT growth in 2015 comes to 12 percent. The Bank's EPS increased to Rs 13.20 per share in 2015 as compared to Rs 13.11 per share in 2014. Excluding impact of prior year tax charge, EPS for the year ended 2015 improves to Rs 14.48 per share reflecting an increase of 12 percent Return on Assets (RoA) and Return on Equity (RoE) during 2015 stood at 1.65 percent and 23.26 percent respectively as compared to 1.90 percent and 25.90 percent respectively during 2014
Due to limited credit opportunities mainly in view of subdued credit offtake by the private sector, gross advances growth remained constrained at five percent reaching Rs 340,769 million Investments increased to Rs 544,077 million up 27 percent from 2014. In a lowering interest rate environment, surplus net resources were diverted primarily towards Government Securities which increased by 28 percent to Rs 491,108 million. Despite stiff competition within banking industry for low/no cost deposits and impact of revised withholding tax regime for non-tax return filers affecting deposit growth in the second half of the year, deposits of the Bank increased to Rs 734,596 million at December 31, 2015 compared to Rs 667,878 million as at December 31, 2014, registering a healthy YoY growth of 10 percent. The overall Balance Sheet size of ABL stood at Rs 991,666 million as at December 31, 2015 posting a YoY robust growth of 18 percent. Total Equity of the Bank increased by Rs 8,013 million to Rs 88,904 million as at December 31, 2015 as compared to Rs 80,890 million at December 31, 2014.
The net mark-up income increased by Rs 7,953 million or 28 percent during 2015 and aggregated to Rs 36,140 million as compared to Rs 28,186 million in the corresponding period. The growth in Net Interest Margin (NIM) was driven by the strategic direction to enhance the volumetric growth in earning assets and optimise the asset mix.
ABL continued to maintain focus on Non-interest income with fee based income improving by eight percent during the year. Income from dealing in foreign currency also witnessed material growth of 84 percent during the year. Capitalising upon its primary dealer status, ABL earned Rs 768 million through trading of government securities during the year. Taking a view on the sustainability of low interest rate scenario and significant pressure on margins, in the short to medium term, ABL strategised to conservatively hold its investment portfolio to safeguard steady performance in future. Thus, during 2015, capital gains pertaining to equity securities reduced to Rs 65 million as compared to Rs 4,101 million, while dividend income was higher by Rs 15 million as compared to last year and stood at Rs 3,528 million. Overall Non mark-up/interest income decreased by Rs 2,981 million to reach Rs 9,755 million during the year ended December 31, 2015 as compared to Rs 12,736 million in 2014.
The overall administrative expenses increased by 7.2 percent in view of continuous investment in our outreach, alternate delivery channels and information technology platform. The net provision charge against advances and investments for the year amounted to Rs 1,524 million compared to Rs 1,609 million in 2014. Robust risk management and proactive monitory of the weak accounts resulted in reversal of provision against advances amounting to Rs 288 million.
The Bank's loan loss coverage and NPL ratio stood at 87.5 percent and 6.4 percent as at December 31, 2015; which remains much superior then the industry average. Significant volatility in international oil prices kept the overall stock markets sentiments bearish with major impact on the oil and gas sector throughout 2015; the Bank prudently recognised an impairment charge of Rs 1,800 million on its AFS portfolio despite management's view that the current oil prices may not sustain at such low levels in future. ABL remained fully compliant with CAR requirements of State Bank of Pakistan. CAR on standalone and consolidated basis under BASEL III stood at 20.85 percent and 21 percent respectively, against required percentage of 10.25 percent.-PR
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