HBL_UBL_BAHL_2QCY21 Result Previews, (AKD Daily, Jul 28, 2021)
AKD Daily
HBL, UBL & BAHL: 2QCY21 Result Previews
HBL to post earnings of PkR5.5/sh in 2QCY21: Habib Bank Limited (HBL) is due to announce its 1HCY21 result tomorrow where we expect the bank to post NPAT of PkR16.7bn (EPS: PkR11.1) compared to PkR15.2bn (EPS: PkR10.3) in the same period last year. For 2QCY21, we foresee earning of PkR5.5/sh, down 5.0%QoQ/26.6%YoY on the back of possible increase in provisioning costs (cost of provisioning assumed at 0.2%), seasonal uptick in administrative costs (+10.5%QoQ), and normalization in net FX income. Net Interest Income (NII) is expected to register a growth of 5.6%QoQ driven largely by balance sheet’s volumetric growth. Together with the result, we expect the bank to announce a dividend payout of PkR1.25/sh, given management focusing on building appropriate capital buffers (cumulative payout for CY21TD to PkR2.5/sh). HBL ’s performance has remained largely flat, underperforming market by 9.7ppts. We have a buy stance with TP of PkR174.6/sh where our liking emanates from, i) HBL being the largest play in banking space offering exposure to Pakistan’s macro story, ii) aggressive adoption of technology potentially yielding first-mover advantage, and iii) adequate buildup of loss reserves.
UBL earnings to stand at PkR4.82/sh in 2QCY21: United Bank Limited (UBL) has announced its BOD meeting for 1HCY21 result on Aug 6th, 2021 where we expect it to post earning of PkR13.4bn (EPS: PkR11.0) compared to PkR10.7bn (EPS: PkR8.9) in the same period last year. Together with the result, we expect a dividend of PkR3.5/sh, taking cumulative payout to PkR7.5/sh for 1HCY21. For 2QCY21, earnings are likely to clock in at PkR4.82/sh, down 22.8%QoQ/flat YoY where sequential decline is attributable to normalization in capital gains (PkR1.8bn recorded in 1QCY21 mostly related to power holdings), and absence of impairment reversals (PkR222mn in 1QCY21) pulling up cumulative provisioning possibly to PkR753mn compared to PkR115mn in 1QCY21. We have a Buy stance on the stock with TP of PkR142.5/sh whereas dividend yield stands at 9.5%.
BAHL to record EPS of PkR3.84 in 2QCY21: Bank Al Habib Limited (BAHL) is due to announce its 1HCY21 result on Aug 4th 2021. In this regard we expect bank to record earnings of PkR8.9bn (EPS: PkR8.0) compared to PkR7.2bn (EPS: PkR6.5) in the same period last year. For 2QCY21, earnings are likely to clock in at PkR3.84/sh, down 7.9/3.1% QoQ/YoY with sequential downtick coming through from potential normalization in provisioning costs (PkR396mn assumed in 2QCY21 vs. –ve 245mn in the previous quarter). Net Interest Income (NII) is expected to jump 5.8%QoQ given balance sheet’s volumetric growth amid stable NIMs whereas non-funded income is likely to grow 7.7%QoQ with impetus coming from bank’s robust trade franchise. We have a buy stance on the stock with TP of PkR91.5/sh with BAHL likely reaping benefits of aggressive branch expansion of yesteryears.
AKD Research
Habib Bank Limited is engaged in commercial banking and asset management related services in Pakistan and overseas. The Bank's segments include Branch Banking, which consists of loans, deposits and other banking services to agriculture, consumer, small and medium-sized enterprise (SME), and commercial customers; Corporate Banking, which consists of lending for project finance, trade finance and working capital to corporate customers and it also provides investment banking services, including services provided in connection with mergers and acquisitions; Treasury, which consists of trading, fixed income, equity, derivatives and foreign exchange businesses, and it also includes credit, lending and funding activities with professional market counterparties; International Banking, which is engaged in monitoring and reporting purposes and consists of its operations outside of Pakistan, and Head Office/Others. It operates in Pakistan; Europe, Middle East and America, and Asia and Africa.
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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