Dear Clients,

Askari Bank Limited (AKBL) held its conference call today to discuss financial performance of CY20 and company outlook going forward.

Key Highlights

– The bank’s PIB portfolio amounts to PkR282bn; roughly 27% is floater and the rest is fixed. As per the management, 20% of the portfolio would be maturing this year.

– AKBL does not see any concerns on asset quality since most of the sectors have started to perform level in post COVID scenario.

– With regards to the implementation of IFRS 9, the impact would not be that significant.

– Fee income was significantly higher in 4QCY20 as a result of annuity income and this would persist in every 4th quarter as per the management. However this would normalize in first 3 quarters.

– The bank foresees NIMs to come under pressure in CY21.

– The management expects hike of by 50-100bps in interest rate from Jul’21.

– The bank’s deposits increased by 17% and the bank expects to achieve a similar growth in CY21.

– AKBL’s prudent provisioning in CY20 contained the profitability that clocked in at PkR2.0bn. Out of this, COVID general provisioning was PkR374mn.

– SBP’s loan deferral COVID scheme was availed by 288 borrowers; PkR66bn principal deferments and PkR9bn rescheduled.

– The bank was ranked amongst top 5 banks for SBP Scheme to support Rozgar.

– The CAR improved to 15.5% in CY20 as opposed to 13.4% corresponding period last year and the bank intends to maintain it in CY21.

– With regards to the impact of TSA, the management highlighted that the bank closed 486 accounts before Dec 31, 2020 with aggregate balance of PkR108mn. Furthermore, the bank does not see any concern from implementation of TSA.

– AKBL does not see any threat on Srilankan Eurobond that would mature in 2022 and the bank is receiving payments on due dates.

– The bank plans to add 23 new branches this year to enhance its footprint in the country.

– Currently, the bank is focused on consumer asset book which would increase NIMs. Additionally, the bank is constantly improving yields on assets and achieving operational efficiencies which would be seen in CY21.

Regards,
KASB Research