Karachi, September 01, 2022 (PPI-OT): AKBL: Corporate briefing session key takeaways

Askari Bank Limited (AKBL) announced its 1HCY22 financial results wherein the bank posted consolidated profit of Rs6,313mn (EPS: Rs5.01), 53% YoY. The bank did not announce any dividend alongside 1HCY22 results. AKBL held its corporate briefing today to discuss the half-year results and outlook, we present key takeaways from the session.

AKBL’s deposits witnessed a growth of 7% in 1HCY22 largely driven by growth in the retail deposits. The bank’s Current Account (CA) mix improved from 30% to 32.5% in the last six months while CASA mix grew from 80% to 82%.

The bank does not see any material impact due to the implementation of Treasury Single Account (TSA) as the bank is shifting its deposit mix towards retail deposits in effort to counter the impact. So far, the bank has closed 517 accounts with balances of Rs10bn as at Mar-2022.

AKBL’s investment book largely comprises of government securities with 80% of instruments having a duration of less than one year. The average yield on fixed rate PIBs stands at 10.1% while that of the floating rate PIBs and T-Bills is approx. 16%. The overall yield on the investment book is over 14%. Bank’s fixed PIB proportion has declined from 37% to 26% in the last six months while overall investment book witnessed a growth of 26%.

The bank’s advances witnessed a healthy growth of 15% during 1HCY22 taking ADR levels to 53%. The bank’s asset quality also improved from 6.1% to 5.2% during the half year. The management expects the recent flooding to have an impact on the overall banking sector, where magnitude is still ambiguous. However, AKBL is well positioned and is monitoring its credit exposure closely.

The bank plans to expand its branch network to 600 branches by the year-end with the addition of 36 branches including 14 Islamic branches.

Operating expenses of the bank declined by 3% during the period taking cost-to-income ratio down to 46%. The decline was recorded on account of cost rationalization initiatives. Going forward, higher energy costs, increased inflation, and additional new branches will fuel OPEX.

As per the management, given higher inflationary readings and recent macro-economic trends, further increase in the key rate cannot be ruled out.

The bank received a relaxation over classification of Investments that would support its adequacy levels.