ANL 34.00 Increased By ▲ 0.90 (2.72%)
ASC 14.90 Increased By ▲ 0.55 (3.83%)
ASL 25.10 Increased By ▲ 0.62 (2.53%)
AVN 92.20 Decreased By ▼ -0.30 (-0.32%)
BOP 9.14 Increased By ▲ 0.08 (0.88%)
BYCO 9.85 Increased By ▲ 0.15 (1.55%)
DGKC 134.70 Increased By ▲ 2.51 (1.9%)
EPCL 50.62 Increased By ▲ 0.52 (1.04%)
FCCL 24.63 Increased By ▲ 0.33 (1.36%)
FFBL 25.86 Increased By ▲ 1.46 (5.98%)
FFL 15.49 Increased By ▲ 0.47 (3.13%)
HASCOL 10.56 No Change ▼ 0.00 (0%)
HUBC 86.33 Increased By ▲ 1.23 (1.45%)
HUMNL 7.02 Increased By ▲ 0.27 (4%)
JSCL 25.65 Increased By ▲ 0.40 (1.58%)
KAPCO 41.55 Increased By ▲ 2.80 (7.23%)
KEL 4.02 Increased By ▲ 0.04 (1.01%)
LOTCHEM 14.45 Increased By ▲ 0.02 (0.14%)
MLCF 46.42 Increased By ▲ 0.54 (1.18%)
PAEL 37.25 Increased By ▲ 0.55 (1.5%)
PIBTL 11.70 Increased By ▲ 0.27 (2.36%)
POWER 10.25 Increased By ▲ 0.10 (0.99%)
PPL 90.90 Increased By ▲ 1.20 (1.34%)
PRL 26.86 Increased By ▲ 0.61 (2.32%)
PTC 8.71 Increased By ▲ 0.11 (1.28%)
SILK 1.35 No Change ▼ 0.00 (0%)
SNGP 42.71 Increased By ▲ 1.31 (3.16%)
TRG 146.10 Increased By ▲ 3.00 (2.1%)
UNITY 30.20 Increased By ▲ 0.41 (1.38%)
WTL 1.41 Decreased By ▼ -0.01 (-0.7%)
BR100 4,965 Increased By ▲ 76.98 (1.57%)
BR30 25,754 Increased By ▲ 477.72 (1.89%)
KSE100 45,837 Increased By ▲ 558.82 (1.23%)
KSE30 19,174 Increased By ▲ 275.54 (1.46%)

Allied Bank Limited (ABL) ended 2019 at a high note, sharing its success with the shareholders, doling out Rs2 per share as final dividend, taking the full year dividends to Rs8 per share. There was hardly a blot in an almost impeccable profit and loss statement for CY19, with ABL ticking all the right boxes, based on prudence and cognizance of the challenging macroeconomic developments in the country, throughout the period.

The stupendous increase in markup earned trickled down to the bottom to help ABL achieve a significant 15 percent year-on-year increase in pretax profits. The profit growth is well rooted in the rise in average in quantum and yields on average earning assets, which witnessed changes as the situation demanded.

The asset reprofiling in the prevalent interest rate scenario meant the investment portfolio needed active duration management and ABL’s focus on shorter-tenor government papers enabled a fat topline growth. The investment portfolio underwent reprofiling, as peak interest rates were anticipated. The economic slowdown and high interest rates meant there was not an abundance of private sector credit appetite, making ABL place liquidity in government securities. The treasury bills were the favored instrument, with Rs543 billion invested. The PIBs were entrusted with Rs155 billion, with an increased share of 20 percent in total investments, from 9 percent previously.

Allied Bank Limited
Rs (mn) CY19 CY18 chg
Markup Earned 122,637 73,274 67%
Markup Expensed 81,130 41,159 97%
Net Markup Income 41,507 32,115 29%
Non Mark-up / Interest Income 10,891 11,289 -4%
Total income 52,399 43,405 21%
Non Mark-up / Interest Expenses 27,610 23,478 18%
Provisioning/(Reversal) 547 -1,090
Profit Before Taxation 24,242 21,016 15%
Taxation 10,129 8,136 24%
Profit After Taxation 14,113 12,881 10%
EPS (Rs) 12.32 11.25
Source: PSX notice

The advances growth in the industry tapered owing to challenging economic environment. ABL stayed ahead of the curve, managing 10 percent growth in gross advances over December 2018, well over the industry growth of 4 percent in the same period. The loan book quality at ABL remains top notch with an infection ratio of 3.2 percent, adequately provided for with a coverage ratio north of 95 percent. These are well above the industry average, and ABL puts it down to proactive monitory and recovery efforts.

On the liabilities side, ABL is now in the trillion-rupee deposit club, although the overall deposit growth remained in check at 7 percent year-on-year. The quality of deposit growth remains excellent, with the growth in non-remunerative deposits at 17 percent over December 2018 outpacing growth in other high cost deposit categories.

The interest rates may take more time to start easing, than earlier anticipated, which suggests the investment portfolio may not be massively tinkered in the first half of CY20.  The economy still lacks an apparent growth stimulus to suddenly start a massive genuine quality credit appetite. ABL would not mind consolidating its balance sheet on prudence, even if lending options are far and few between.