Askari Bank Limited (AKBL) announced its Financial Results where net profits for 2020 increased by 54% YoY to Rs 10.85 billion compared to the profits of Rs 7 billion in 2019. AKBL’s earnings per share grew from PKR 5.58/share to PKR 8.61/share.

Bank also announced an unexpected dividend of PKR 3/Share.

In 2020 Bank’s aggregate net markup income increased by 36% to PKR 30.27 billion, due to effective and timely asset and liability management decisions amidst a sharp decline in interest rates and jump in average earning assets.

Non-markup income increased by 32% YoY with a strong contribution from capital gains realized from sale of securities (PKR 2.5 billion) due to favorable movements in both money and stock markets.

Fee-based income increased by 9% due to increased volume of retail and branch transactions post Covid-19 lockdown, and income from FX dealing mounted by 6.6% YoY, supporting the Bank’s profitability.

Non-markup expenses increased by 11% YoY while the cost to income ratio improved from 62% to 51% in CY20. Bank was successful during the year in reducing its over head costs.

AKBL also recognized net provisions of PKR 1.97 billion, which increased by from PKR 773.27 million recorded in 2019, However, despite higher provisionings, Bank was able to post record Profit.

PKR in ‘000Dec-20Dec-19% Change
Mark-up/return/interest earned                     77,335,131                     71,712,2117.84%
Mark-up/return/interest expensed                     47,059,350                     49,568,032-5.06%
Net mark-up/interest income                     30,275,781                     22,144,17936.72%
Fee and commission income                       3,991,285                       3,654,4179.22%
Dividend income                           273,524                           276,572-1.10%
Foreign exchange income                       2,673,493                       2,507,7076.61%
Income / (loss) from derivatives                                      –                                        –  
Gain on securities                       2,555,400                           739,918245.36%
Other income                           349,438                           266,10231.32%
Total non-mark-up/interest income                       9,843,140                       7,444,71632.22%
Total Income                     40,118,921                     29,588,89535.59%
Operating expenses                     20,217,974                     18,272,59110.65%
Workers’ Welfare Fund                             42,982                             42,1172.05%
Other charges                             48,149                             99,947-51.83%
Total non-mark-up/interest expenses                     20,309,105                     18,414,65510.29%
Profit before provisions                     19,809,816                     11,174,24077.28%
Provisions and write offs – net                       1,974,747                           773,275155.37%
Profit before taxation                     17,835,069                     10,400,96571.48%
Taxation                     (6,978,072)                     (3,368,395)107.16%
Total profit after taxation                     10,856,997                       7,032,57054.30%
Basic and diluted earnings per share                                  8.61                                  5.5854.30%

Askari Bank Ltd has been witnessing record profitability ever since Mr. Abid Sattar took charge of CEO of the bank in 2018. While Banking book of the bank has also grown significantly. Keeping in view low leverage ratio of the bank, dividend payout was not expected by analysts. However, keeping in vew increased cash requirements of Fauji group, AKBL announced higher dividends.

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