Islamabad February 15 2023: Askari Bank’s profit before tax of PKR 27.5 billion for 2022 recorded an increase of 76 percent over last year, according to Bank filing with the Pakistan Stock Exchange.
Share price of the Bank drop 6.71 percent or PKR 1.38 after the announcement at Pakistan Stock Exchange.
“It has been recommended by the Board to issue Bonus Shares in the proportion of 15 ordinary shares for every 100 shares held. i.e. 15 percent” says Chairman Waqar Ahmed Malik.
“The record profit was delivered by strong performance on all key activity drivers amidst challenging market fundamentals” Waqar Ahmed Malik said.
Profit after tax increased by 45 percent, a lesser growth due to higher and excessive taxation on banking companies introduced in the Finance Bi II, which also included retrospective application.
The Bank is reporting earnings per share of PKR 11.16 for 2022 compared to PKR7.70 last year.
Revenues increased by 23 percent YoY, to PKR 5I.6 billion from PKR 4I.8 billion last year. Net markup income increased to PKR 40.0 billion from PKR 32.4 billion, a 23 percent YoY increase driven by a combination of solid growth in earning assets and well positioned asset liability book aligned with the changes in market rates. Fee, commission and brokerage income increased by 18 percent as the Bank recorded volumetric growth in trade flows while card revenues increased due to higher consumption levels. Foreign exchange income increased to PKR 5.5 billion attributable to increase in volume of large ticket transactions and active participation in interbank swap market.
The Bank continues to exercise prudent cost management while focusing on building revenue momentum through branch expansion and investment in new initiatives. Administrative expenses increased by 8 percent during the year mainly due to the impact of new branches, inflationary upsurge and Rupee devaluation. Compensation expense decreased by 2 percent during the year mainly due to implementation of human capital strategy. Overall cost to income ratio improved to 44.7 percent from 50.7 percent last year.
Total assets grew by 21.2 percent to PKRI.S3 trillion. Customer deposits increased by PKR127 billion during the year and closed at PKR1.14 trillion, a 12.5 percent growth. Low cost current deposit increased by 13 percent; current account mix was maintained at over 30 percent while CASA mix at 80 percent at December 31,2022. Advances grew by 21 percent YoY to PKR 615 billion as the Bank capitalized on lending opportunities while maintaining credit discipline and rigorous client selection. At the year end, gross advances to deposits ratio stood at 54 percent comfortably higher than the threshold of 50 percent which attracts higher taxation as levied in the finance bill 2023.
Managing asset quality remains a key priority particularly due to higher stress levels and challenging environment and was enabled by increased rigour and effectiveness of credit evaluation processes. Infection ratio improved to 5.07 percent from 6.14 percent last year while coverage against non-performing loans improved from 97 to 100 percent at December 31,2022.
The elevated market rates driven by inflation, economic stresses and eroding values of GoP Euro bonds, sharply increased the mark-to-market revaluation deficit on investments. Such deficit, coupled with higher taxation and balance sheet growth, had an adverse impact on Bank’s capital ratios. The Bank has been allowed a relaxation by the SBP to stagger the unrealized revaluation deficit over the next three quarters. The Bank is confident that sufficient capital will be created well within the prescribed timeframe.
At December 31,2022, the Bank is compliant with the regulatory capital ratios. Capital Adequacy Ratio is reported at 15.95 percent against the regulatory requirement of 11.50 percent (including capital conservation buffer of 1.50 percent of the total Risk Weighted Assets (RWA). Leverage ratio is reported at 3.18 percent including the impact of regulatory relaxation. The Bank is committed to maintain cushion in capital for increased risk absorption capacity.
The Bank wholly owned subsidiary Askari Securities Limited (ASL) is in the process of dissolution for which petition is pending in the Sindh High Court. The Board of Directors has already consented to expression of interest received by Askari Securities Limited from Foundation Securities (Pvt) Limited (FSL) to explore possibility of amalgamation of business of ASL into FSL and winding up thereafter for improved synergies and business prospects.
On a consolidated basis (i.e. with inclusion of share of profit from Bank’s wholly owned subsidiary ASL) Askari Bank posted profit after tax of PKR14.07 billion for 2022 (2021: PKR9.72 billion) translating into consolidated earnings per share of PKR 11.17 against PKR 7.71 last year.
