PACRA Maintains Entity Ratings of Allied Bank Limited

Allied Bank Limited is one of the top five banks of the country in terms of its deposit share. The bank’s franchise, spread over a network of 1,395 branches, has enabled sustainable footprints into the country’s deposit base. The bank’s risk absorption capacity, as reflected in its sound equity base, has grown over the years. Another reflection of this is ABL's significantly robust CAR (22% as at Dec19), beyond the industry average. While ABL has realistic approach towards lending, increased attention is being diverted towards deepening of current business relationships and an enduring emphasis is laid on building trade business. The bank’s technology platform is a strength. This has facilitated fast and effective decision making while extending quality counter banking and e-banking services to its customers, additionally this also has enabled itself to operate with high efficiency and capacity even in current pandemic situation. The related benefits would continue to unfold over the years. The ratings recognize the management's concerted efforts in sustaining the sound asset quality, which covered the high advances concentration comparatively to financially sound groups; ensuring that aggregate risks are within Bank’s overall risk appetite. The low infection ratio and good coverage ratio are considered positive. The continued strengthening in retail deposit market would enable further improvement in deposit granularity in terms of concentration as well as funding cost as CA has reported significant growth during the year. The market share needs to be harnessed. At the same time, achieving efficiency in terms of utilization of its healthy CAR may help in further boosting ABL’s market share and profitability. As due to ongoing COVID-19 pandemic, profits are expected to take slight dip however, overall costs would not experience much growth.
Covid-19 has posed challenges to the banking sector, as almost all segments of the economy, worldwide & domestically, are getting negatively impacted. The ramifications would continue to unfold, warranting vigilance and timely actions where needed.
The management’s ongoing concerted efforts towards enhancing diversification in its revenue stream, enrichment of customer profile, further penetration in retail deposits and continuous optimization in cost structure remain important.

About the Entity
ABL is a large sized Bank with a system share of 6.7% as at end-Dec19 in the total deposits of the industry. Ibrahim Group (IG), through Ibrahim Holdings Pvt. Limited, owns ~85% of shareholding in ABL. Apart from interest in financial sector; IG is also engaged in manufacturing of polyester and yarn. ABL has a growing subsidiary - ABL Asset Management Company (AUM close to PKR 57bln at end-Mar20). The eight members BoD include the CEO, three sponsoring directors, three independent directors and one non-executive director. Mr. Tahir Hassan Qureshi, associated with ABL for the last eleven years, has been designated as the CEO since Jan-17. He has previously been serving as the Chief Operating Officer, Chief Financial Officer and Chief Audit and Risk Review Group of the Bank. He is supported by a management team of experienced executives.