KARACHI: Allied Bank is guided by its vision “to become a dynamic and efficient bank providing integrated solutions to be the bank of choice for customers” and has accelerated its efforts to create value for all stakeholders.
The lower yield on interest-bearing assets due to comparatively lower average benchmarks resulted in an unfavorable change in rates on investments, advances and bank placements in September 2021 compared to September 2020. This was partially overcome by generating higher average volumes, limiting the decline in interest income by two percent. As a result, interest income amounted to Rs 84,696 million during the nine months ended September 30, 2021.
Likewise, interest expense increased by 2% due to high borrowing charges attributable to higher average borrowing volumes. Interest expense amounted to Rs 50,014 million during the nine months ended September 30, 2021 against Rs 49,154 million during the corresponding period of last year. Therefore, the net interest income (NII) recorded at Rs 34,682 million during the nine months ended September 30, 2021 compared to Rs 37,476 million during the corresponding period of last year; down seven percent.
In an accommodative interest rate environment, Allied Bank ensured its focus on capitalizing emerging digital financial avenues while maintaining the diversification of revenue sources. As a result, commission income grew significantly by 23% in September 2021, compared to a 10% growth in September 2020.
Dividend income showed a remarkable growth of 112% to reach Rs 1,811 million in the nine months ended September 30, 2021 compared to a decline of 36% in the corresponding period last year. The increase is mainly attributable to the dividend announced by companies in the energy and petroleum sector and the lifting of the restriction on the distribution of dividends, imposed by SBP on banking institutions.
Foreign exchange income amounted to Rs 1,112 million during the nine months ended September 30, 2021 against Rs 1,295 million during the corresponding period of last year.
The cautious disposal of the portfolio of equities and fixed income securities enabled the Bank to realize a capital gain of Rs 3,523 million during the nine months ended September 30, 2021, compared to Rs 2,838 million during the nine months ended September 30, 2021. the nine months ended September 30, 2020; reflecting growth of 24 percent.
As a result, non-margin income amounted to Rs 11,729 million during the nine months ended September 30, 2021; depicting healthy growth of 28 percent versus 17 percent growth in the corresponding period last year.
ABL’s focus on optimization has kept operating expense growth to 10% despite increased inflationary pressures, the impact of currency devaluation and continued investments in technological modernization. The total expenses excluding mark-up amounted to Rs 25,000 million during the nine months ended September 30, 2021.
ABL posted a pre-tax profit of Rs 21,973 million in the nine months ended September 30, 2021, compared to Rs 21,443 million in the corresponding period last year. Profit after tax (PAT) grew five percent to Rs 13,070 million in the nine months ended September 30, 2021, from Rs 12,410 million as of September 30, 2020. Similarly, profit per share (EPS) amounted to 11.41 rupees. per share compared to Rs 10.84 per share during the corresponding period of last year.
ABL aims to achieve financial inclusion by promoting digital financial services, in order to provide uninterrupted and mobile banking services. Therefore, the Bank has adopted a hybrid expansion strategy comprising digital banking and banking. The total agency reach was 1,407, including 1,283 conventional agencies, 117 Islamic agencies and 7 digital agencies. The ATM network reached 1,557 including 1,248 on-site, 303 off-site and six Mobile Banking Units (MBUs). The average uptime of ATMs was recorded at 96.7% for the nine months ended September 30, 2021.
ABL’s total asset base reached Rs 1,963 billion as of September 30, 2021 compared to Rs 1,590 billion as of December 31, 2021; reflecting robust 23 percent growth well above industry growth of 14 percent for the captioned period.
The proactive review of the economic scenario led to prudent management of the investment portfolio to counter the pressures of a possible rise in key rates. As a result, investments increased by 44% to reach Rs.1197 billion as of September 30, 2021. The growth is mainly due to the deployment of funds in comparatively more liquid options of floating Pakistani investment bonds (GDP) and Market Treasury Bills (MTB). ).
The supply of credit to the private sector was boosted as the economic recovery gained momentum. As a result, gross advances reached Rs 536 billion as of September 30, 2021; five percent increase compared to a nine percent decline in the corresponding period last year. Net advances reached Rs 523 billion as of September 30, 2021 against Rs 496 billion as of December 30, 2020.
ABL continued its momentum towards a low infection rate and a high overall coverage rate, which stood at 2.6 percent and 93.9 percent, respectively. No FSV benefit was used in determining the allowance for non-performing loans, authorized under the guidelines of the SBP.
Deposit base reached at Rs 1,354 billion as of September 30, 2021; posing an 11 percent growth, in line with the industry. ABL has focused its efforts on mobilizing low-cost deposits, as evidenced by the 15% increase in current deposits to reach 564 billion rupees as of September 30, 2021 compared to 491 billion rupees as of December 31, 2020. The composition of deposits of total deposits increased to 42% in September 2021, compared to 40% in December 2020. The composition of current account savings accounts (CASA) stood at 85% as of September 30, 2021.
ABL’s equity stood at Rs 129 billion as of September 30, 2021. Return on equity and return on assets were 16.8% and 1.0% respectively. Allied Bank’s strong capital positioning is evident from the capital adequacy ratio (CAR) of 24.95% as of September 30, 2021 against a statutory requirement of 11.50%.
Copyright Business Recorder, 2021
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