ABL_ Earnings below expectations on lower than anticipated core income, (AKD Off the Analyst's Desk Aug 17, 2022)
AKD, Off the Analyst's Desk
ABL: Earnings below expectations on lower than anticipated core income
Allied Bank Limited (ABL) announced its 1HCY22 results today where the bank reported consolidated NPAT of PkR6.8bn (EPS: PkR5.96) compared to PkR8.9bn (EPS: PkR7.75) in the same period last year. The result came in below our expectations as bank’s Funded Income missed our target. Along with the result, ABL announced a DPS of PkR2.0 which took the cumulative payout during 1HCY22 to PkR4.0/sh. Here are key takeaways from the result.
- Bank’s core income increased by 19.5%YoY during the period under review. The growth came in lower than what we had anticipated and what the general trend of growth had been in the industry so far and was the prime culprit behind the earnings miss.
- The non core income, meanwhile, posted a growth of 31%YoY during the same period to PkR10.9bn primarily driven by higher FX income (due to currency volatility) and growth in fee and commission income. Dividend income also made a significant contribution, clocking in at PkR1.4bn during 1HCY22, up 11.5%YoY.
- Bank recorded provisioning reversal of PkR~500mn during the quarter which took the total reversals made during the period to ~PkR749mn. This trend of provision reversal has been a recurring theme for the bank over the last 7-8 quarters.
- Administrative expenses grew by ~14%YoY during 1HCY22, lower than the general inflation in the country and also lower than our estimates and helped shore up the profitability.
- We have a Sell rating on the stock with a TP of PkR80/sh and offers an upside of 14% on the last close .
AKD Research
AKD Securities Ltd. is one of the leading securities firm in Pakistan, providing a comprehensive range of investor focused services, including equity brokerage, economic and securities research, investment banking and financial advisory services. AKD Securities accounts for more than 6% of the average daily value of the Karachi Stock Exchange. AKD Securities was the first brokerage house to launch an online trading platform in Pakistan in November 2002 and now has the largest market share with over 6000 customers. This has helped diversify and expand the retail investor base in the country and ushered in a whole new universe of investors to the stock market.
AKD Securities Ltd. caters to a diversified group of domestic and international institutional investors, high net worth individuals and upscale retail clients, including expatriate Pakistanis. With high quality research, unparalleled execution and distribution capability for both regular and large block trades, AKD Securities Ltd. has earned an outstanding reputation in the Pakistani securities industry.Outside of commercial banks, AKD Securities Ltd. is one of the biggest capital market firms in the country. AKD Securities is the leader in raising and providing risk capital in underwriting, market making and mergers and acquisitions in Pakistan. Good corporate governance and professionalism are emphasized throughout the firm and AKD Securities Ltd. is amongst the very few companies to have introduced a firm-wide comprehensive CODE of ETHICS, overseen by an independent compliance manager.Ultimately, our success is based on the quality of service we provide to our customers and the trust and confidence reposed in us by them. Our focus, therefore, remains on customer satisfaction at all levels in the company.
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