Allied Bank Limited (ABL), Profits Dip, but Stability Remains

Allied Bank Limited (ABL) recently announced its financial results for the second quarter of 2025. The numbers show a mixed picture; profits are lower compared to last year, but the bank remains on a steady footing. Let’s break it down in simple terms.

Key highlights

• Earnings per share (EPS): PKR 8.3 in 2QCY25, down from PKR 10.9 in the same quarter last year.
• Profit after tax (PAT): PKR 9.5 billion, a 24% decline YoY (year-on-year), but a 12% rise QoQ (quarter-on-quarter).
• Dividend: An interim cash dividend of PKR 4.0 per share was announced, taking the total payout so far this year to PKR 8.0 per share.

What’s behind the numbers?

• Net Interest Income (NII): Down 10% compared to last year. However, it improved slightly (4%) from the previous quarter due to better management of deposits.
• Non-Markup Income (NMI): Flat overall, with fee income improving but forex and dividend income declining.
• Operating Expenses: Rose by 12% YoY, which pushed the cost-to-income ratio higher to 50%.
• Support from Reversals: ABL recorded a PKR 3.2 billion reversal in credit losses, which helped the bottom line. Without this, profits would have been weaker.
• Taxation: The effective tax rate stood at a steep 53%.

The big picture

Overall, ABL is facing pressure from:

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• Lower interest income due to falling rates.
• Higher expenses are eating into profits.
• Heavy taxation.

But positives include:

• Strong dividend payouts (PKR 8.0 per share so far in 2025).
• Continued support from reversals in credit losses.
• Quarter-on-quarter improvement, showing some recovery momentum.

What does this mean for investors?

For shareholders, ABL remains a stable dividend-paying bank, even though profits are lower compared to last year. The high dividend yield is attractive, but the bank needs to keep an eye on expenses and income growth going forward.

Source: Taurus Securities Limited

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →

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