Report
Team AKD Research
EUR 9.24 For Business Accounts Only

Pakistan Banks: 1QCY19_Super tax overshadowing PBT growth,

  • AKD banking universe is set to announce its 1QCY19 results where we expect the sector to post an NPAT of PkR22.8bn for 1QCY19, down 20.6/20.8% QoQ/YoY due to one-off super tax charge on CY17 earnings (effective tax rate: 57.0% in 1QCY18 vs. 35.1/36.3% in 4QCY18/1QCY18).
  • On a PBT basis, we expect earnings to register a growth of 19.8/17.2% QoQ/YoY driven by NIMs improvement (1QCY19 NIMs: 3.83% vs. 3.48/3.39% in 4QCY18/1QCY18), pulling-up NII by 8.3/22.7% QoQ/YoY.
  • Potentially lower provision charge (down 26.2%QoQ, taking cue from previous 1Qs we do not expect material accretion in NPLs) and normalization in administrative expenses (admin expenses are seasonally higher particularly for HBL, ABL, MCB and BAFL in 4Q) are likely to buttress sequential earnings growth.  
  • Our preference is tilted towards banks that, i) gain most from interest rate hikes, and ii) can maintain provisioning costs at a a manageable level in a fragile macro-economic environment. Best bets that fit in our recommended strategy are, MCB (Dec’19 TP: PkR224.7/sh), MEBL (Dec’19 TP: PkR115.8/sh), and BAHL (Dec’19 TP: PkR97.6/sh).  
Underlying
Bank AL-Habib

Bank AL Habib Limited is a banking company. The Bank operates through Retail banking, Commercial banking, Retail brokerage and geographical segments. Its Retail banking consists of retail lending, deposits and banking services to private individuals and small businesses. The retail banking activities include provision of banking and other financial services, such as current and savings accounts, and credit cards to individual customers, and small and medium enterprises (SMEs). Its Commercial banking represents provision of banking services, including treasury and international trade-related activities to corporate customers, multinational companies, and government and semi government departments and institutions. Its Retail brokerage activities include the business of equity, money market and foreign exchange brokerage, equity research, and corporate financial advisory and consultancy services. It operates in four geographic regions: Pakistan, the Middle East, Asia Pacific and Africa.

Provider
AKD Securities Limited
AKD Securities Limited

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.

Analysts
Team AKD Research

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