ABL,MEBL & BAHL_9MCY20 Result Previews, (AKD Daily, Oct 14, 2020)
ABL to post 9MCY20 EPS of PkR10.3/sh: Allied Bank Limited (ABL) is scheduled to announce its 9MCY20 result on Oct 21’20 where we expect it to post NPAT of PkR11.8bn (EPS: PkR10.3) vs. NPAT of PkR9.6bn (EPS: PkR8.42) in the same period last year as 3QCY20 earnings is expected at PkR2.90/sh (down 27.6%QoQ/2.2%YoY). The downtick in earnings on a sequential basis mostly relate to adjustments in core income, expected industry wide, compounded by one of the lowest holdings of PIBs vis-à-vis deposits (22.7% of total deposits). Non-funded contribution is unlikely to cover core income decline, despite recovery in fee income (+21.4%QoQ) however we do not rule out higher capital gain realization with unrealized gains standing at PkR12.2bn. On the other hand, some support to earnings could arrive from normalization in credit costs to meagre 0.07% in 3QCY20 vs. 0.33% in the previous quarter (highest since CY14) as the bank created loss reserve for potential headwinds in loan book. We have a Neutral stance on the stock with TP of PkR89.0/sh where dividend yield of 10.7% could entice some interest.
MEBL earnings to clock in at PkR12.14/sh in 9MCY20 with possible resumption in payouts: Meezan Bank Limited (MEBL) is scheduled to announce its 9MCY20 result on Oct 20’20 where we expect the bank to record earnings of PkR12.14/sh vs. PkR8.44/sh in the same period last year, signifying an increase of 44.0%YoY. The bank could resume dividend payouts, having skipped payouts in previous two quarters, where we expect dividend of PkR3/sh together with the results. For 3QCY20, we expect an NPAT of PkR4.1bn (EPS: PkR3.17), down 38.2%QoQ but 5.6% higher YoY where sequential decline in earnings is attributable to repricing of asset book and slowing down of BS volumetric growth (3QCY20E NIMs: 5.1% vs. 7.0% in the previous quarter). Non-Interest Income is expected to continue gaining traction (+26.2%QoQ/39.2%YoY) potentially driven by recovery in fee income. We have assumed credit costs on similar level seen in 2QCY20. MEBL has lost 11.8% since Sep’20 opening up valuation upside where a possible dividend announcement can drive stock performance in the near term.
BAHL 3QCY20 earnings to clock in at PkR2.2/sh: Bank ALHabib Limited (BAHL) is scheduled to announce its 9MCY20 results on Oct 21’20 where we foresee the bank announcing earnings of PkR9.72bn (EPS: PkR8.74) for the period vs. PkR7.0bn (EPS: PkR6.3) in the same period last year. 3QCY20 earnings are expected at PkR2.2/sh, down 43.8%QoQ/3.0%YoY influenced by, i) repricing of asset book though holding of PIBs (27.0% of total deposits) should negate some impact (3QCY20 NIMs: 4.2%, down 91bps QoQ), and ii) higher administrative costs as seen historically in 3Qs(+14.2%QoQ). Non-funded income (+10.0%QoQ) should gain from recovery in fee income at the back of uptick in trade activity as business activity resumes though still at nascent stages, pulling up NFI contribution in total income to 15.2% in 3QCY20 vs. 11.5% in the 2QCY20. We have a Neutral stance on the stock with TP of PkR65/sh..
AKD Research
Allied Bank Ltd. Allied Bank Limited is engaged in providing commercial banking and related services. The Bank's segments include Corporate & investment banking, Trading and sales (Treasury), Commercial & retail banking and Others. The Corporate & investment banking segment offers a range of financial services to medium and large sized public and private sector entities, and also covers overseas operation of the Bank. These services include providing and arranging tenured financing, corporate advisory, underwriting, cash management, corporate finance products and customer services. The Trading and sales (Treasury) segment undertakes the Bank's treasury and money market activities. The Commercial & retail banking segment provides services to commercial and retail customers, including agriculture sector. The Commercial & retail banking segment offers loans, deposits and other transactions to commercial and retail customers. Its other services include phone banking and utility bill payments.
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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