The ABL Management held a Corporate Briefing session today to discuss the bank’s performance post release of 9MCY20 results and its strategy going forward.

Brief Takeaways

·        ABL announced earnings for 9MCY20 at PKR 12.6bn (EPS: PKR 11.03), depicting a YoY surge of 31% and QoQ decline of 9% (3QCY20 EPS: PKR 3.63). Earnings in 9MCY20 depicted a healthy YoY NII jump showing a 29% uptick and capital gains bolstering earnings further, and countering a significant net provisioning charge during the period. No dividend was announced as per SBP directives for capital conservation.

·        The bank’s initiatives on the digital front helped its business majorly and supported the bank’s fee income. This trend is likely to continue next year too as the bank intends to continue investing in technology. This, they believe, will bring down the Cost to Income ratio of the bank.

·        The bank carries a healthy yield on its PIB portfolio and is confident that it will support NII going forward. Major proportion of the loan portfolio and floater bonds have re-priced already therefore NIMs suppression going forward will not be significant.

·        CAR stands at an impressive 27%. Risk-weighted assets are lower than total assets and a sizeable portfolio of assets includes government securities and less risky advances hence the bank has the potential for exploring riskier ventures going forward.

·        Treasury Single Account implementation will be in a phased manner but the bank does not see any material impact.

·        The bank’s deposit portfolio mix has strengthened CASA and optimized cost of deposits. CASA stands at 86% against 83% as at Dec’19. Bank will focus on adding more low cost deposits to the portfolio.

·        PKR 1.3bn worth of general provisioning charges have been booked during 9MCY20 out of a total of PKR 2.4bn. 

·        ABL expects policy rate to remain unchanged at 7% in CY21.

(AHL Research)