PACRA Maintains Entity Ratings of Allied Bank Limited

The assigned ratings reflect Allied Bank Limited's ("ABL" or the "Bank") standing as one of the leading commercial banks nationally, with its robust technology infrastructure serving as a notable advantage. This has facilitated swift and efficient decision-making processes, enabling the delivery of high-quality counter-banking and e-banking services to its customers. The core strengths of the Bank are displayed in its key business activities of lending, mobilizing low-and-no-cost deposits, prudent investing and transactional banking. A more focused digital drive is one of the pillars of the envisaged strategy. Furthermore reflecting the quality of its advances portfolio and effective risk management practices, the Bank has one of the industry’s lowest infection ratio at 1.64% in CY23. Additionally, the Bank improved its Coverage ratio to 96.2% by the end of CY23, (CY22: 90.4%). ABL's liquidity strength is its extensive branch network and expanding branchless banking touchpoints, enhancing its ability to attract deposits and maintain its market position. The bank's ability to generate deposits is evidenced by its funding costs. Over the years, the Bank's ability to handle risks, supported by its strong equity base, has steadily improved. The Bank has continued to make significant advancements in serving its customers using state-of-the-art technology and by enhancing its digital footprint so that customers are provided with all “digital and networked banking services” on the go. Driven by customer acquisition drives and marketing campaigns, the deposit base of the Bank increased by 10% in CY23. Focusing on low and no-cost deposits, CASA ratio of the Bank rose to 85% of total deposits as of CY23, (CY22: 79%). The Bank witnessed a significant growth of ~70% in the net markup income on the back of improved spreads, growth in earning assets, and effective investment duration management. The net profitability of the Bank reported a remarkable growth of 92% to ~PKR 41bln during CY23. The total equity of the Bank increased by 52% in CY23. Another reflection of this is ABL's significantly robust CAR of 26.2% as of CY23, the highest in the industry. The bank has achieved a significant milestone with over 1.6 mln myABL user registrations, indicating its dedication to offering modern and user-friendly banking solutions to the customers. Also, with a view to augment environmental safety Green Banking has remained an integral part of the Bank’s long-term strategy directing its financing towards environment-friendly projects and activities within the country. An enhanced focus on digitalization and process automation to enhance efficiency and reduce cost would augment the banking’s risk profile. Going forward, ABL is positioned to create long-term sustainable value for its stakeholders.
The management’s ongoing concerted efforts towards enhancing diversification in its revenue stream, achieving reduction in overall concentration, higher penetration in retail deposits and continuous improvement in cost structure remain important.

About the Entity
Allied Bank Limited’s franchise, spread over a network of 1,481 branches, has enabled sustainable footprints in the country’s deposit base. ABL is a large sized Bank with a system share of 5.9% as of end-Dec23 in the total deposits of the industry. Ibrahim Group (IG), through Ibrahim Holdings Pvt. Limited, owns 90% of shareholding in ABL. Apart from its interest in the financial sector; IG is also engaged in the manufacturing of polyester and yarn. The eight-member BoD includes the CEO, three sponsors/non-executive directors, three independent directors, and one non-executive director. Mr. Aizid Razzaq Gill has been designated as the CEO since Jan-21.