Transmission of Quarterly Report for the Period Ended

Contents

Corporate Information

DIRECTORS' REVIEW

Dear Shareholders

The Directors present the unaudited condensed interim unconsolidated financial statements for the half year ended June 30, 2024.

Economy:

The new fiscal year is showing tentative signs of activity pick up and external pressure easing with declining inflation, negligible current account deficit, stable exchange rate and upgrade in sovereign rating. The recovery efforts supported by IMF's SBA, will gain traction as the government is engaged for a 37-month Extended Fund Facility Arrangement (EFF) program. Continued strong ownership remains critical to ensure that the momentum sustains and stabilization of Pakistan's economy becomes entrenched.

Inflation is moving towards a single digit range as CPI was recorded at 12.6 percent yoy in Jun and at 11.1 percent in Jul'24. The external account position continued to improve as reflected by build-up of reserves to US$ 9.4 bn, despite repayments of debt and other obligations. The rise in economic activity in line with growth outlook is likely to cause modest increase in imports, however improving trends of remittances and exports are expected to contain the current account deficit within acceptable range during the current fiscal year. Inflows under the IMF program will further help finance the deficit and strengthen reserve buffers.

After four years, SBP Monetary Policy Committee initiated monetary easing during the period in review with a 150bps cut in Jun, followed by another 100bps in Jul'24. The rate cut decisions were driven by receding inflation and aligns with several central banks that have already announced rate cuts. Further cuts are expected in near term as monetary policy remains focused on supporting disinflation and help protect real incomes. The stock market maintained steady growth during the six months period with the benchmark KSE100 Index recording an increase of 26 percent to close at 78,445 points, reflecting improvement in investor confidence.

Energy sector remains pivotal for the economic outlook and restoring its viability, minimizing fiscal risks through timely adjustment of energy tariffs, decisive cost-reducing reforms, and evading capacity expansion are key imperatives for the growth and stability of the energy sector. Alongside, promoting private sector and export dynamism by improving the business environment, removing state distortions, strong governance in SOEs and a level playing field are vital for improving investment landscape, particularly for projects channelled through the SIFC. The new IMF program is expected to cement macroeconomic stability and create conditions for a stronger, more inclusive, and resilient growth. Continued strong financial support from Pakistan's development and bilateral partners will be critical for the program to achieve its objectives.

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Financial Performance:

The financial results of the Bank for the half year ended June 30, 2024 are summarized as under:

Profit after tax for the half year ended June 30, 2024 is reported at Rs.8.1 billion, a decline of 9 percent yoy mainly due to reduction in markup income upon restructuring of loan to a large PSE during the current period. Earnings per share at Rs.5.57 for the current period compares with Rs.6.10 for same period last year.

Aggregate revenues for the half year at Rs.32.3 billion increased by 2 percent, net markup remained almost unchanged at Rs.24.8 billion as contributions by price and volume changes were largely offset by the above referred reduction in markup income. Non markup income increased by 11 percent reflecting increase in business momentum and better performance of stock market. Operating and other expenses at Rs.16.5 billion recorded increase an 18 percent increase over corresponding period last year in line with high inflation levels and cost of additional branches added to the network.

Customer deposits closed at Rs.1.4 trillion at June 30, 2024, a 9 percent growth during the period. Current and saving accounts constitutes 87 percent of the total deposit at the period end, an improvement from 84 percent. Advances registered a growth of 14 percent, from Rs. 681 billion at year end 2023 to Rs 754 billion. The Bank recognized a net credit loss allowance (provision reversal) of Rs.454 million compared to a net provision charge of Rs.617 million for the comparable period. During the period, IFRS-9 has been adopted as per regulatory guidance and requisite financial disclosures have been made in the annexed financial statements.

The Bank is well capitalized with adequate buffers over regulatory requirements. At June 30, 2024, CAR improved to 19.33 from 18.35 percent while common equity tier-1 ratio improved to 15.50 against 15.11 percent.

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The Bank's entity rating was reaffirmed at 'AA+' (Double A Plus) for the long-term by Pakistan Credit Rating Agency Limited (PACRA), with outlook assigned as 'Stable'. The Bank's strong brand and affiliation with Fauji Foundation are recognized as the key rating drivers, supported by Bank's experienced management team, prudent risk management policies, and deep-rooted relationship with clients. Lately, retention of profits in the Bank to bolster the capital structure is also a testimonial of support. The short-term rating was maintained at 'A1+' (A One Plus).

Askari Bank continues to expand its market positioning for sustainable growth and commitment to improve value proposition. Branch banking comprising of both conventional and Islamic segments, remains the core of the franchise with an aim to expand customer base, build deposit market share particularly retail and low-cost deposits, improve service levels and increased focus on trade. Risk management will remain the key across all lines of businesses as environment remains challenging. The Bank will continue to pursue strong governance and compliance discipline and will continue to invest in talent and technology enabling its teams to do more to help our customers achieve their ambitions and in-turn drive Askari Bank to grow in the future.

Acknowledgment:

On behalf of the Board, we would like to place on record our gratitude to our valued customers and shareholders for their continued patronage to the Askari brand; our profound thanks to the State Bank of Pakistan, Securities and Exchange Commission of Pakistan and other regulatory authorities for their guidance and assistance. We would also like to place on record our appreciation for the efforts of the Shariah Board for strengthening shariah compliance and governance framework for Askari Ikhlas Islamic Banking. Lastly, we express our deepest appreciation and gratitude to our staff for the hard work and dedication.

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119.3318.35CAR202430

15.5015.11

AA PACRA

A One Plus)A1+

202429

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