Karachi, August 23, 2021 (PPI-OT): ABL: 1HCY21 Analyst Briefing Takeaways

Allied Bank Limited (ABL) conducted its analyst briefing today to discuss 1HCY21 results. To recall, the bank announced 1HCY21 earnings of PkR8.9bn (EPS: PkR7.8). The result was higher than our and consensus estimates on account of i) higher than anticipated non funded income and ii) lower than forecasted effective tax rate.

The key takeaways from the briefing are as follows:

The realized balance sheet growth of ABL during CY21TD stood at 16% versus industry average growth of 12% over the same period. Deposits are up 8% and market share of deposits stand at 6.6%.

Focus on cheap deposits has continued to remain sharp where CASA was recorded at 86%.

ABL’s investment portfolio remains heavily concentrated in GoP based assets which stand at 96% of portfolio. Within the investments portfolio, 56% are T-Bills and 39% are PIBs whereas Sukuks and TFCs accounted for 4%.

The Bank’s ADR currently stands at 40% (industry average: 45%) whereas the infection ratio stood at 2.7% and the coverage stood at 94%. The implementation of ADR related tax is unlikely to force the bank to increase its ADR as the management is unwilling to compromise on the book quality.

The admin cost grew by 10%YoY owing to investments in digital platform and general inflation in the country.

Bank’s CAR stood at whopping 25.7% which is well above the industry’s average. This can potentially result in a higher payouts in the future, or conversely, allow the bank to take a little more aggressive approach in lending.