Yet another outstanding result by Askari Bank

Askari Bank announced the financial results for the second quarter and the half year ended on June 30, 2015, with a strong bottom line accretion. Profit after tax registered a notable increase of 42 percent to Rs.3.03 billion against Rs.2.14 billion of the corresponding period last year. This growth is after absorbing an additional 4 percent of super tax charge and the retrospective application of uniform tax rate on dividend and capital gains. Profit before tax increased by 77 percent. Earnings per share (EPS) were reported at Rs.2.41 against Rs.1.70 for the corresponding first half of the previous year. The Bank’s total asset base touched Rs.500 billion, a growth of 12 percent during the six months.

Askari Bank’s focus on building low-cost deposits has fared well for its net interest margins, which have seen remarkable improvement of 33 percent, despite pressure on net interest spreads owing to steep decline in benchmark rates. Customer deposits grew by 9 percent to Rs.422.5 billion, primarily in current and savings deposits. The cost effective deposit accumulation with a 23 percent increase in current accounts, has enabled the Bank to restrict the rise in interest expense to 9 percent. Non-fund income of the Bank also grew significantly by 56 percent over the same period last year, mainly contributed by the gains realized on equity and bond portfolio. Growth in administrative expenses was contained at around 8 percent, despite the additional cost of 89 branches that were opened during the period of one year from June 30, 2014. As a result, the Bank’s cost-to-income ratio improved significantly to 51 percent from 66 percent of June 30, 2014 level.
On the other hand, low credit charge against non-performing assets (NPLs), on the back of aggressive recovery efforts and consequential reduction in NPLs has also contributed well for the bottom line growth. Asset quality, as reflected by the ratio of NPLs to gross advances, improved to 14 percent, compared to 16 percent at the end of last year. The coverage ratio against non-performing loans for 2QCY15 improved to 92 percent, against 90 percent at end December 31, 2014. As of June 30, 2015, net advances increased by 13 percent to Rs.193 billion, while investments grew by 6 percent.
As a result, the first interim cash dividend of Re.1 per share (10 percent) for the year ending December 31, 2015, has been declared by the Bank.