We initiate coverage of Allied Bank Limited (ABL), the fifth largest commercial bank in Pakistan in terms of asset base, with a Buy rating and a target price of PkR80/share (22.3% upside). We believe the bank is well positioned to leverage the ongoing U-shaped domestic economic recovery. ABL’s earnings have increased by 35%YoY in 9MCY09, in sharp contrast to a decline of 3%YoY posted by the sector. As a result, ABL has outperformed the banking sector by 55%CYTD. We base our expectations of further price performance on our forecasted 3-year (CY08-CY11F) EPS CAGR of 25%, the highest within the AKD Banking Universe.