Unusual high write-offs, provisions, dismal NPLs recovery performance
Askari Bank post tax profit dips by hefty 15.88pc
By M Jahangir Hayat
LAHORE: Askari Bank Limited (AKBL) profit after taxation (PAT) has declined by hefty 15.88 percent in 2018 against the calendar year 2017 due to the abnormal escalation in write-offs, and provisions and dismal NPLs recovery performance of the bank during the year under review, Daily The Business has learnt.
The consolidated profit after tax of the bank was recorded Rs 4.4 billion for the year 2018. The bank also witnessed a drop in consolidated profitability by 13.67 percent against a profit of Rs. 5.1 billion in 2017.
The bank report showed that bank earned a total income of Rs 24.23 billion in the year 2018 against the income of Rs 22.30 billion in 2017 which is more 8.65 percent when compared to the income of last year 2017.
The total non-mark/ interest expenses of the bank slightly went up by 4.95 percent to Rs 15.89 billion in 2018 from Rs 15.14 that resulted in Rs 8.34 billion before taxation profit of the bank from Rs 7.16 billion in 2018.
However, extraordinarily high provisions against the bad debts and write offs of over Rs 1.46 billion reduced the profit before taxation by 18.98 percent from Rs 8.49 billion in 2017 to Rs 6.87 billion in 2018.
The profit after taxation thus has to fall by 15.88 percent to Rs 4.43 billion in 2018 from Rs 5.26 billion in 2017.
As the overall profit after taxation declined thus the earning per share (EPS) was also hit-hard and stands at Rs 3.52 in 2018 sliding down from Rs 4.18.
The bank annual report explained that provision for diminution in value of investment was set at by Rs1.04 billion, provision against loans and advances which were not recovered stood at Rs 467,347, 000 and provision against off balance sheet obligations Rs 101,909,000. However, it was indicated that the bank recovered a nominal Rs 142,536,000 against bad debts and Rs 14903000 against assets. On the contrary, the bank recovered mega over Rs 1.18 billion against loans and advances during the year 2017.
A senior banker on the condition of anonymity told this scribe that following the appointment of AKBL President Abid Sattar, heads of major departments including the HR, Internal Audit, Compliance, Risk Management, Treasury and Consumer Division have been removed and the new heads including Alia Zafar, Irfan Johar, Syed Ali Raza, Amir Zubair, Pervez and Taha Afzal who mostly hail from Habib Bank Limited (HBL) have failed to perform respectively.
He said that one very obvious reason for the bank to have performed dismally is that the staffs trained in operational areas are being forced to work to collect business for the bank which has demoralized the employees.
Banking sector experts said that small bank like Habib Metro Bank, Bank Al Habib Limited and Bank Alfalah are posting over Rs 10 billion post taxation profit but AKBL’s profit is sliding downwards.
They said that that the bank enforcement department including Credit Division, SAM also seems to have failed to perform good as the bank is bearing the burden of over Rs 26 billion NPLs and not a single billion has been recovered.
Had the bank successfully recovered a few billions of the NPLs the bank may not have been showing such the poor performance dismantling the negative impact of decline in stock exchange investment, they said, adding that the bank needs to issue right share to tackle the issue of Capital Adequacy Ratio (CAR) which is presently at 12.57 percent.
When contacted to Askari Bank Limited President Abid Sattar said that this version of the story is wrong and unconfirmed and that he was very much disappointed by the story.
He was asked to send the exact facts, according to him, which he promised to send by email to this scribe but no mail was received till the filing of the news item despite the holding of the story for one more day.