In 9MCY24, Allied Bank Limited (ABL) saw a net profit of PKR 35.69 billion (EPS: PKR 31.17), a 25% YoY increase from the PKR 28.66 billion net profit (EPS: PKR 25.03) in the SPLY.
The bank’s 9MCY24 revenue reached PKR 110 billion, indicating a 13% YoY growth from the PKR 97.16 billion reported in the previous year.
During 9MCY24, NII increased by 11% YoY to PKR 90.16 billion, while non-markup income rose by 23% YoY to PKR 19.84 billion due to a 31% increase in fee & commission income, gain on securities (PKR 1.35 billion), primarily due to investment in Eurobnds, and other income (PKR 672.22 million). ABL operates 1,352 branches across Pakistan, including 140 Islamic and 14 digital branches.
The management aims to expand its Islamic branch network by opening and reaching 150 branches by the end of CY24. Total assets of the bank increased by 13% YoY to PKR 2,624 billion as of June 30, 2024. Cash, bank balances, and lending to financial institutions grew by 11% to PKR 186 billion, significantly higher than the industry’s decline of 7%. Investments saw a 16% increase to PKR 1,333 billion, compared to the industry’s 21% growth.
However, advances increased by 8% to PKR 848 billion, against the industry’s decline of 2% in 1HCY24. Total deposits increased by 15% YoY to PKR 1,924 billion, aligning with industry growth, with CASA standing at 82% in 9MCY24. Total equity grew by 18% YoY to PKR 230 billion, up from PKR 194 billion as of December 31, 2023. The CAR improved to 32.43% as of September 30, 2024, compared to 26.21% in CY23. Conversely, total liabilities increased by 12% YoY, reaching PKR 2,394 billion in 9MCY24.
The ROA and ROE were recorded at 1.50% (down from 1.78% in CY23) and 29% (compared to 29.40% in CY22), respectively. ABL’s gross ADR increased to 44.72% in 9MCY24, higher than the industry average.
Management aims to achieve a 50% ADR target by the end of CY24. The deposit composition of ABL is made up of 37% current deposits, 45% saving deposits, and 18% term deposits, giving the bank a 6% market share in deposits. Non-performing loans (NPLs) are reported at PKR 12.9 billion, reflecting a 1% YoY decline, with an NPL ratio of 1.50%. Specific NPL coverage stands at 93.9%, while overall NPL coverage is at 107.29%.
The key lending sectors include non-financial public sector enterprises, NBFIs, government, textiles, information & communication, and non-metallic minerals.
Management attributed the recent trend of provision reversals to the sale of Eurobonds. In 9MCY24, the investment portfolio comprises 81% in PIBs (with fixed PIBs under 10%), 12% in T-Bills, 1% in listed and unlisted shares, and 6% in other investments. Investment in PIBs rose by 6%, while investments in subsidiaries surged 200%. T-Bill investments increased by 161%, but listed and unlisted shares fell by 22%. Investments in fixed TFCs, bonds, and Sukuks declined by 5%. ABL’s app has registered 2 million users, with 3.4 million cards in circulation. Digital transactions now represent 83% of total transactions, supported by 23 digital touchpoints. Going forward, management anticipates improving current account deposits, with an expected deposit growth of 10-12% in CY24. However, ABL expects the trend of provision reversals to continue through CY24 and into the next year.
Additionally, ABL foresees pressure on margins due to an anticipated drop in interest rates, with a projected decline of 100-150 bps, reaching 13.5% by the end of CY24 and 11% by June 2025. Furthermore, management aims to achieve low-cost deposits moving forward. Current deposits are aimed to increase by 15-20%, focusing on sticky deposits. Management expects the advances to increase slightly, primarily for working capital requirements and auto finance.
Important Disclosures
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