ABL: Shows steady fundamentals never go out of fashion, BUY
- We have a ‘BUY’ stance on Allied Bank Limited (ABL) with our Dec’19TP at PkR118.5/sh (Upside: 11.7%) and associated dividend yield of 7.5%. Our optimism is premised on, i) ABL’s PIBs/interest bearing liabilities standing at 12.2% in 1QCY19, lowest amongst peers, marking sensitivity to continued tightening, ii) contained risk of provisioning, and iii) stable contribution from NFI.
- To recall, ABL posted an NPAT of PkR3.1bn (EPS: PkR2.7) in 1QCY19 vs. and NPAT of PkR2.9bn (EPS: PkR2.6) /PkR3.8bn (EPS: PkR3.4) in 4QCY18/1QCY18, where both the result and accompanying payout (PkR2/sh) were inline with our estimates.
- We expect cost of provisioning to avg. at 0.1-0.2% lower than levels witnessed in the last downturn cycle of CY08-13 (avg. 0.8% during the period) as, i) comparably healthy coverage ratio of 98.0% as of 1QCY19 vs. 84.1% in CY08-13, and ii) the bank weighing risks over yield in the recent financing cycle, lending mostly to relatively low risk corporate sector.
- Resultantly, NIMs net of provisioning are likely to record a 3y forecasted avg. of 4.0% for ABL, falling only behind MCB. Additionally, the bank is expected to sustain stable contributions from NFI where weakness in fee income base is compensated by relatively resilient dividend income (dividend yield on bank’s equity investments stand at 12.1% in CY18, highest in our universe).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.