Analyst Briefing: AKBL credits higher NII for its better-than-expected performance

September 4, 2020 (MLN): Askari Bank Limited held its analyst briefing on Thursday, wherein the management of the bank discussed the latest financial results and its future outlook.

The bank had posted net profits of Rs 4.97 billion (EPS: Rs 3.94) for the half-year ended June 30, 2020, showing an increase of 58.75 % against net profits of Rs 3.13 billion (EPS: Rs 2.48) recorded in the same period last year. As per the company’s financial report, the increase in profitability of the bank was mainly attributable to higher Net interest income (NII).

According to Arif Habib Limited, one of the major highlights of the financial results was the booking of provision expenses of Rs. 644.3 million, which is around 170% higher than in the same period last year. The majority of this expense was accounted for by general provisioning, which transpired due to the bank’s prudent approach to build a cushion against future possible NPL accretion similar to the industry trend.

The operating expenses were recorded at Rs. 9.9 million, i.e. 13.6% higher than the same period of last year. The management attributed this increase to mostly general inflationary pressure and HR costs.

Talking about its current endeavors and opportunities, the management expressed a desire to increase its exposure towards to cement and steel sector, as the various packages and reforms announced by the government for the recovery of these sectors will certainly lead to higher activity in the housing industry.

Sharing some insight on the upcoming monetary policy, the management said it expects the policy rate to remain unchanged as the State Bank would continue focusing on reviving growth and employment, as inflationary pressures would not be much of a concern.

Regarding digitalization, the management said it is making the maximum use of technology to expand its reach and provide better services to its customers. The plans by the management to open more branches in CY20 were disrupted by COVID-19, however, the expansion plans are expected to take place once the situation is back to normal.

Speaking about the Treasury Single Account, the management said it had received no direct instructions or any notification from the government so far. Even if it did, the management said it did not foresee any deposit risk associated with its TSA.  

Copyright Mettis Link News