FABL_The New Kid on the Shariah block (AKD Daily, Mar 27, 2023
AKD Daily
FABL: The New Kid on the Shariah block
- FABL demonstrated strong growth in its bottom line during CY22 with earnings of PkR11.23bn (EPS: PkR7.4), which is a 38%YoY increase, along with an impressive ~95% earnings payout during the period.
- The bank's total revenues increased by 43%YoY, driven by a 55% growth in NII income to PkR40.0bn, primarily due to a robust growth in its earnings assets (+24% YoY) and an improvement in overall spreads (4.32% vs. 3.27% in CY21).
- Our projected NIMs are expected to be at 6.31%/6.39% for CY23/24, particularly due to FABL's improving CASA mix during the outgoing year (79% vs. 76%/71% during CY21/20).
- We anticipate that cash payouts to continue in the future since the bank currently stands at comfortable capital levels with a total CAR of 15.51%.
- With the bank expanding its presence in the Islamic banking space, we anticipate increased demand from Shariah-based investors, which could potentially result in a significant re-rating of the stock in the near future.
- As a result, we have a 'Buy' stance on the stock, with a Dec'23 TP of PkR40/sh, which offers a potential upside of 86% from the last close.
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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