EUR 8.55 For Business Accounts Only

Results Preview: MCB, ABL and BAFL, (AKD Daily, Oct 16, 2019)

• MCB’s 9MCY19 earnings likely to clock-in at PkR13.8/sh: MCB Bank (‘MCB’) is due to announce its 9MCY19 results tomorrow where we expect the bank to record NPAT of PkR16.3bn (EPS: PkR13.8), +20.1%YoY. The result is likely to be accompanied with a dividend of PkR4/sh (c. dividend CYTD: PkR12/sh). Higher provisioning expense due to impairment on equities (1HCY19: PkR1.7bn) alongside higher effective tax rate (9MCY19: 41.2% vis-à-vis 39.3% same period last year) is likely to offset impressive growth in NII (+32.5%YoY to PkR46.5bn). As a result, 3QCY19E earnings are likely to clock-in at PkR5.9bn (EPS: PkR5.0), +9.8%QoQ/43.1%YoY with NII providing the necessary punch (+11.4%QoQ/42.9%YoY) to the bottom line. From an investment perspective, we maintain a ‘Buy’ stance on the stock with a TP of PkR224.7/sh, offering an upside of 31.7% from last close, and one-year total return of ~41% (incl. dividend yield of 9.4%).
• ABL likely to report an NPAT of PkR9.4bn in 9MCY19: Allied Bank Limited (ABL) BoD is scheduled tomorrow to announce 9MCY19 results. In this regard, we expect the bank to announce 9MCY19 earnings of PkR9.4bn, down 6.7% YoY on the back of 54.8%YoY lower income from equities, lower provision reversal income as recoveries stall and higher effective tax rate (9MCY19:43.0% vs. 39.1% same period last year) absorbing the effect of robust NII growth (+22.5%YoY to PkR28.9bn). On a quarterly basis, NPAT of PkR3.1bn (EPS: PkR2.78) is likely to remain stable on a sequential basis however, +11.3% compared to same period last year. Alongside the result, we expect the board to announce a dividend of PkR2/sh (c. PkR6/sh CYTD). We have a ‘Buy’ stance on the stock with a Dec’20TP of PkR118.5/sh (Upside: 34.4% from last close). That said, the stock’s underperformance relative to the sector (underperformance vs. sector at 10.1%CYTD) could continue in the until resolution of circular debt payment, given bank’s higher exposure to the power sector.
• BAFL’s 9MCY19 earnings to jump 16.9%YoY: Bank Alfalah (BAFL) BoD is likely to be held on Oct 18th, 2019 to announce 9MCY19 results. We expect the bank to post an earnings of PkR5.83/sh during the period under review against PkR4.98/sh in the same period last year. For 3QCY19 alone, earnings are likely to clock-in at PkR2.2/sh, +19.8%QoQ/+46.2%YoY driven by, 16.7%QoQ jump in NII offsetting 8.6%QoQ decrease in NFI due to the seasonal impact on fee income base and absorbing possible higher credit costs given bank’s exposure to SME segment. The stock is currently trading at a CY20F P/B of 0.8x where ROE-led rerating (CY20-22F avg. ROE of 16.6% vs. avg. 14.3% in the past 3y) could push stock performance upward. We maintain ‘Buy’ stance on the stock with TP of PkR51.3/sh.

AKD Research