LAHORE: Allied Bank Limited (ABL) announced 3Q2016 consolidated earnings of Rs3.7 billion (EPS Rs3.2), down 18 percent YoY.
The bank also announced interim cash dividend of Rs2/share in addition to Rs3.5/share already paid by the bank. The results remained lower than market expectations. Net Interest Income (NII) of ABL was down 12 percent YoY to Rs8.2bn due to maturity of high yielding Pakistan Investment Bonds (PIBs) in 3Q2016 and its reinvestment at lower yields.
These PIBs were booked around 12-13 percent and now they are reinvested at lower rates to the tune of 6-7 percent. Non-interest income of ABL was also down 9 percent to Rs2bn in 3Q2016 that kept bottom-line in pressure. Non-interest income of the bank was down mainly due to lower dividend income which was down 45 percent YoY to Rs544mn. Income from dealing in foreign currency was down 11 percent YoY to Rs176mn as the currency remained stable during the period under review.
Non-interest expense was up 6 percent to Rs4.9bn in line with our expectations. The bank continued to see provisioning reversal of Rs472mn in 3Q2016 as compared to Rs75mn in the similar period last year.
On QoQ basis, earnings were down 4 percent however pre-tax profits were down 18 percent QoQ. Effective tax rate during 3Q2016 stood at 35 percent versus 48 percent in absence of super tax. Earnings were down mainly due to 11 percent QoQ decline in NII.
