Allied Bank Limited (ABL) posted its financial results for 1hCY19, accompanied with an interim dividend of Rs2 per share, in addition to Rs2/share already paid. The pre-tax profits slipped a bit year-on-year, but the overall growth, keeping in view the challenging circumstances for the industry and overall economy, seems to be in the right direction, built on sustainable and smart balance sheet growth.
The asset mix of the industry has undergone a visible change lately, and ABL is no exception to the rule, as the reliance on massive investments as bulk of assets, has now gradually been shifted. Advances have continued to expand, albeit, slowly, but well in line with the industry wide growth. The massive jump in mark-up earned is reflective of both volumetric growth and significantly higher interest rates during the period, as compared to the corresponding period last year.
The non mark-up income continues to provide a solid hand to the bottom-line. That said, the contribution was slightly lower year-on-year, mainly at the back of much reduced gain on sale of securities. The strong cross-selling ability of ABL kept the fee and commission income coming, which grew from last year. The income from foreign exchange improved the most – almost doubling from last year – as the treasury arm capitalized on the opportunities on offer, while being prudent.
Reversals continued to be booked against NPLs, reflective of the bank’s proactive monitoring and recovery efforts. That said, the reversals were significantly lower than those booked in the same period last year, taking the post provisioning profits down by 6 percent year-on-year. On the liabilities front, the growth was solid without being exemplary, but the real deal was higher growth in current accounts. The non-remunerative deposits grew by 8 percent, as against 4.5 percent jump n overall deposit base, constituting 38 percent of the total deposits.
ABL’s balance sheet is one of the cleanest among the peers, with infection and coverage ratios at 3.4 and 99 percent, respectively, both improved from last year. The interest rates may well be nearing the peak, and ABL seems well poised to pounce on any opportunities that may arise, whenever the economy decides to wake up from the slumbers. The clean loan book gives it an edge over others in terms of lending, when the appetite is back.