Allied Bank posts Rs 14.427 billion profit

The Allied Bank Limited''s multi-faceted strategy of diversifying the business mix and sustained focus on deepening low-cost deposit base enabled steady performance despite challenges in operating environment. The Bank''s core retail business continues to grow steadily, supported by an expanding network of 1,150 online branches and ATMs. The investments in relevant technologies geared towards enhancing customer-centric approach, robust risk management framework and the right talent enabled sustained profitability during 2016. Focus on gradual introduction of digital banking products and services remain a key growth driver for future.
Despite the pressure on net spreads in an increasingly competitive market, volumetric growth of average earning assets along with increase in non-markup income enabled the Bank in posting Profit After Tax of Rs 14,427 million as compared to Rs 15,120 million in 2015. The promulgation of one-off Super Tax in Finance Act 2015 at the rate of 4 percent of previous year''s taxable income was unexpectedly maintained during the year, leading to additional prior year tax charge of Rs 950 million. Resultantly, effective tax rate stood at 39.5 percent. Excluding the impact of prior year tax charge, Profit After Tax amounts to Rs 15,377 million. The EPS of the Bank stood at Rs 12.60 per share as compared to Rs 13.20 per share in 2015. Excluding the impact of prior year tax charge, the Bank''s EPS improves to Rs 13.43 per share. During 2016, Return on Assets (ROA) and Return on Equity (ROE) stood at 1.4 percent and 20.3 percent respectively; excluding prior year tax charge, the ROA and ROE improves to 1.5% and 21.6% respectively. The Bank''s ROA and ROE remained well-above September 2016 industry''s average of 1.3 percent and 14.2 percent respectively.
Quality credit opportunities still remain elusive amidst intense competition due to relatively stagnant private sector credit appetite. The Bank''s Gross Advances accordingly grew by Rs 8,245 million to close at Rs 349,015 million. Surplus net resources were diverted towards investments which increased to Rs 589,865 million.
Despite the intense competition for low/no cost deposits and the sectoral challenges due to withholding tax regime for non-income tax return filers, the Bank posted healthy growth in deposits of 10 percent which reached Rs 805,111 million at end-December 2016 while at the same time improving the CASA percentage to 78 percent as at December 31, 2016 as compared to 73 percent as at December 31, 2015.
The overall Balance Sheet size of the Bank surpassed Rs 1,000 billion mark and reached Rs 1,070 billion - an increase of 8% against 2015. Total Equity of the Bank also crossed the Rs 100 billion milestone and increased by 13 percent to close at Rs 100,674 million as compared to Rs 89,256 million as at December 31, 2015.
Despite perpetual pressure on interest rate spreads and significant maturities in high yielding government bonds, the net mark-up income stood at Rs 33,261 million. The focused approach towards expansion in low/no cost deposit base contributed significantly towards stemming the possible higher deterioration in Net Interest Margin.
The Bank''s non-interest income increased by 15% in 2016 to close at Rs 11,210 million. Fee based income increased by 12 percent to reach Rs 4,014 million. The Bank''s blue-chip equity portfolio continued to yield significant revenue streams with the dividend income increasing by 7 percent to reach Rs 3,776 million. Further capitalizing from Bank''s "Primary Dealer" status, capital gains of Rs 2,598 million were realized from active interbank trading in government securities during 2016; as compared to Rs 769 million realized in 2015. The healthy growth in fee income and capital gains also compensated for lower income from dealing in foreign currency due to relatively stable Swap curve and lower other income due to booking of compensation for delayed tax refund of Rs 820 million in 2015respectively.
The Bank''s continuous investment towards expansion of outreach, innovative technologies, Digital Banking platforms and Alternate Delivery Channels along with related human resources costs resulted in administrative expenses to close the year at Rs 20,309 million.
Utilising the technology driven robust Risk Management Framework, the Bank secured reversal in provision against advances of Rs 335 million during 2016 as compared to reversal of Rs 288 million in 2015. No benefit of FSV was taken while determining the provision against NPLs as allowed under BSD Circular No. 01 of 2011 dated October 21, 2011. The Loan Loss Coverage ratio of the Bank improved from 87.5 percent as at December 2015 to 91.9 percent as at December 31, 2016 while the infection ratio also reduced from 6.4 percent as at December 2015 to 5.9 percent as at December 2016. The asset quality ratios of the Bank remain one the best within industry and well above the September 2016 average industry coverage ratio of 82.7 percent and infection ratio of 11.3 percent respectively. Net provision charge against investments amounted to Rs 75 million as against Rs 1,812 million last year; which was mainly on account of impairment against oil stocks.
The Bank''s Capital Adequacy Ratio (CAR) remains well above the requirements stipulated by State Bank of Pakistan. CAR under Basel III convention on standalone and consolidated basis stood at 20.84 percent and 20.88 percent respectively, against requirement of 10.65 percent. The Bank''s well capitalized position is reflected by strong Common Equity Tier ratio (CET) and Tier 1 ratio (CET1) which stood at 16.36 percent against requirement of 6.0 percent and 7.5 percent respectively.-PR