ABL interest income surges by 15 percent

LAHORE: The ABL Rs 2.53b profit in 1QCY11 was mainly driven by the net interest income, which was surged by 15 percent on account of higher earning assets and provisioning expense.

The bank booked a provision of 311.65m in 1QCY11 which is 75 percent lower than last year. The bank’s NPL reached PKR19.39bn at the end of 1QCY11, depicting a rise of 4 percent QoQ.

Due to higher interest rates, average yield on earnings assets and interest bearing liabilities rose by 57bps and 39bps (QoQ) respectively. Consequently, average spread stood at 5.63 percent in 1QCY11, depicting an increase of 18bps.

Slow process of economic easing with higher interest rates has a negative impact on both the demand of private credit and bank’s reluctance to lend to private sector. As a result of this, In 1QCY11, the bank’s advances declined by 5 percent QoQ while investment (government securities) grew by the same.

A leading bank in the banking sector based on ROE which managed to maintain ROE of 26 percent in 1QCY11, due to 41 percent growth in its bottom line. In addition to the sustainable core income which grew by 12 percent YoY, other income also played a pivotal role in supporting the bottom line as it contributed 26 percent in CY10 attributable to capital gain. We are expecting a double digit growth in non interest income going forward.

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