LAHORE - Allied Bank Limited (ABL) has announced its financial result for the period of CY11. The result is inline with expectations as the bank posted PAT of Rs10.27b translating into an EPS of RS11.92 in CY11 as compared to RS8.28b [EPS of Rs9.63] in the corresponding period last year, depicting a massive growth of 24 percent YoY. In addition to this, the company also announced a 25 percent final cash dividend and 10 percent bonus shares along with the result.

The increase in the bottom line can be explained by augment in net interest income and non interest income. Net interest income of the bank grew by 11 percent to Rs25.13bn in primarily on account of the higher earning assets. As far as non interest income is concerned, the bank earned Rs7.26bn as against Rs5.89bn in the same period last year mainly due to higher fee, commission & brokerage income and dividend income. In addition to this, the other major factor which supported earnings positively was provisioning expense, where the bank booked Rs3.01bn in CY11 which is 26 percent lower than last year.

Based on current market price, ABL is trading at CY11 and CY12 prospective PE of 5.3x and 4.6x and a prospective PBV of 1.3x and 1.1x respectively.  In 4Q alone, the bank reported profits of Rs2.4bn (EPS Rs2.8) – a decline of 11 percent QoQ. Also, the company announced a final cash dividend of Rs2.5/share, taking cumulative dividend for the year to Rs5 along with a 10 percent bonus issue.

Key highlights of 2011 results include 1) a 12 percent YoY rise in net interest income to Rs25.2bn, on higher YoY KIBOR (up by an average 65bps), 2) a 23 percent YoY surge in non interest income on increased fee (up 10 percent YoY) and dividend income (up 140 percent YoY) and 3) 25 percent YoY decline in provisions and write-offs.