ABL_Safe play in jittery waters, (AKD Daily, Mar 16, 2020)
AKD Daily
ABL: Safe play in jittery waters
- Updating our estimates post CY19 detailed accounts release, our Dec’20TP for Allied Bank Limited (ABL) stands at PkR110.4/sh (Previous: PkR117.5/sh) where slower than expected deposit growth pulls down our longer run earnings forecast (CY22-24F Δ in earnings: -ve 8.0-10.0%).
- Strong capitalization of ABL with Tier-1 Capital standing at 17.3% as of CY19, positions the bank to absorb possible credit risks, particularly in the aftermath of current domestic as well as global slowdown, while also maintaining its dividend payouts.
- We have assumed dividends to be in line with the bank’s 5y avg. dividend payouts relative to the Tier-1 capital base of the preceding year (CY14-19 avg: 12.5%) where recent performance (ABL: -8%CYTD) has turned DY to 10.3% - highest since CY13.
- Consequent to a deliberate strategy of the bank to increase retail deposits (43.5% share in CY19 vs. 40.6/23.0% in CY16/13), costs are likely to swell in the medium run countered by high interest rate environment as well as accumulation of PIBs, keeping earnings momentum healthy (CY20/21F: +15.5/18.7%YoY).
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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