PACRA Maintains Entity Ratings of Allied Bank Limited

The assigned ratings of Allied Bank Limited ("ABL" or "the Bank") reflect the Bank's sound and consistent financial profile, characterised by one of the lowest infection ratios in the industry, a stable low-cost deposit base, a prudent and selective approach to credit deployment, and a growing non-markup income base. ABL has navigated successive economic cycles without compromising on credit quality or capital adequacy, a track record that continues to distinguish it within Pakistan's commercial banking sector and supports its position at the highest end of the domestic rating scale. ABL sustains a diversified and deeply entrenched presence across corporate and investment banking, commercial and retail banking, Islamic banking, SME financing, trade finance, remittances, digital banking, and treasury operations — a breadth of business lines that supports earnings diversification and mitigates single-segment concentration risk. The Bank's deposit franchise remains a core rating support. The deposit base expanded 16% to PKR 2.35trln (CY24: PKR 2.02trln), driven by a 21% increase in current account deposits. The CASA mix of 83% (CY24: 86%) reflects a cost-efficient funding structure and compares favourably against industry peers, reinforcing ABL's competitive positioning in low-cost deposit mobilisation. The branch network was extended to 1,535 locations (CY24: 1,510), with dedicated Islamic banking branches nearly doubling to 302 (CY24: 160), demonstrating accelerated execution of the Bank's Shariah-compliant transition strategy in anticipation of the SBP's 2027 conversion deadline. The balance sheet demonstrated continued resilience, with total assets advancing to PKR 3.37trln (CY24: PKR 2.82trln). Gross advances declined by 25% to PKR 802bln (CY24: PKR 1,066bln), reflecting the Bank's prudent credit posture, selective lending stance in a declining interest rate environment, and deliberate portfolio optimisation following the withdrawal of the ADR-linked tax incentive. The investment portfolio expanded significantly by 89% to PKR 2.14trln (CY24: PKR 1.13trln), as the Bank strategically redeployed surplus liquidity into Pakistan Investment Bonds and Treasury Bills, enhancing balance sheet flexibility and reinforcing loss-absorption capacity. The Bank's digital transformation agenda continued to yield measurable progress. The bank holds a leading position in this realm. The myABL platform surpassed 2.6 million registered users and processed 121 million + transactions valued at PKR 3.9trln, while myABL WhatsApp Banking reached 2.1 million users. Notwithstanding a materially softer interest rate environment, non-markup income demonstrated resilience at PKR 28.6bln (CY24: PKR 27.9bln), underpinned by 17% growth in fee and commission income to PKR 16.5bln, driven by card-related fees, investment banking fees, and branch banking charges. Profit after tax moderated to PKR 35.2bln (CY24: PKR 43.1bln), primarily attributable to compressed benchmark rates, with the impact partially offset by credit loss reversals of PKR 7.6bln. The Capital Adequacy Ratio improved to 27.74% (CY24: 26.71%), positioning ABL among the most well-capitalised institutions within Pakistan's banking sector.
The management's continued efforts to broaden revenue diversification, reduce overall concentration, deepen retail deposit penetration, and sustain structural improvements in the cost base remain important rating considerations, going forward.

About the Entity
Ibrahim Group (IG), through Ibrahim Holdings (Private). Limited owns 90% of the shareholding in ABL. Apart from its interest in the financial sector, IG is also engaged in the manufacturing of polyester and yarn. ABL's Board of Directors comprises of eight Directors, which includes two sponsors/non-executive directors, three independent directors, one non-executive director, and two executive directors, including the CEO. Mr. Aizid Razzaq Gill has been the CEO since Jan-21. He has over 29 years of experience in financial management, risk analysis, research, and portfolio management.