KARACHI: Allied Bank Limited (ABL) has announced a substantial 51% increase in its after-tax profit for the first quarter ended March 31, 2024, reaching Rs 11.6 billion.
This impressive year-on-year (YoY) growth contrasts with a slight 5% fall on a quarter-on-quarter (QoQ) basis, highlighting the bank’s strong performance amid fluctuating market conditions.
The bank reported earnings per share (EPS) of Rs 10.14 for the quarter, signaling robust growth and financial health. Alongside these financial results, ABL has declared a cash dividend of Rs 4.0 per share, reflecting its commitment to delivering value to shareholders.
Financial analysts at Arif Habib Limited attribute the slight QoQ earnings decrease primarily to reductions in both markup and non-markup income. However, on a YoY basis, significant gains were driven by higher income levels and notable provisioning reversals.
In the first quarter of 2024, ABL recorded a net interest income of Rs 29.2 billion, marking a substantial 43% rise from the same period the previous year. Despite this annual increase, the bank experienced a 10% decline in net interest income compared to the last quarter of 2023. Interest earned during this period surged by 28% YoY and showed a modest increase of 1% from the previous quarter. Conversely, interest expenses rose by 22% YoY and 7% QoQ.
Non-markup income didn’t fare as well, seeing a 4% decline YoY and a more pronounced 16% drop QoQ. This downturn was largely due to a sharp 61% decrease in foreign exchange (FX) income both YoY and QoQ. Additionally, gains from securities decreased by 28% QoQ, totaling Rs 303 million. Despite these challenges, the bank experienced a strong performance in fee income, which surged by 45% YoY and 20% QoQ, amounting to Rs 4 billion.
ABL also reported a positive shift in its provisioning, with a reversal of Rs 163 million in the first quarter, a significant improvement from the provisioning charge of Rs 2.3 billion recorded in the same quarter last year.
Operating expenses for the bank totaled Rs 13.6 billion in the first quarter of 2024, up 16% YoY and 10% QoQ. Despite these increases, the bank’s cost-to-income ratio improved, standing at 39.9% for the quarter, down from 42.9% in the same period last year, indicating enhanced operational efficiency.
The bank’s effective tax rate was reported at 49% for the first quarter, showing an increase from 43% in the corresponding period last year, reflecting higher taxable income due to its increased profitability.
Allied Bank’s robust financial performance in the first quarter of 2024 demonstrates its resilience and strategic prowess in navigating the complex dynamics of the financial sector. With a clear focus on enhancing operational efficiencies and capitalizing on income-generating opportunities, ABL is well-positioned to maintain its growth trajectory and continue delivering substantial returns to its stakeholders. As the year progresses, the market will closely watch how Allied Bank adapts to evolving economic conditions and regulatory environments to sustain its competitive edge.
