Pakistan Banks_9MCY17F Result Previews
Commencing this week, the AKD Banking Universe is scheduled to declare its 9MCY17F/3QCY17F results; first up being UBL (Oct 19'17), followed by HBL (Oct 20’17). As a group, we expect the Big-6 banks to post combined NPAT of PkR95.5bn (excluding fine on HBL) in 9MCY17F as compared to PkR97.2bn in 9MCY16- earnings decline of 2%YoY. Growth in core income (NII) is likely to remain constrained on account of lower yield on earning assets amid ongoing PIB substitution and lower banking spreads (2MFY18 spreads lower by 20bps YoY). While asset quality metrics can see improvement, capital gains utilization particularly from equities is expected to remain on the lower side (KSE-100 index lost 5% in 3QCY17). On a sequential basis, earnings are to improve growing by 15%YoY in 3QCY17F. This growth however is illusive, being a function of lower tax expenses (super tax expensed out in 2QCY17) as on a pre-tax basis profits are expected to remain flattish. The banking sector has lost 19%FYTD, underperforming the market by 6% in the process. While fundamental pressures linger on in CY17F, we expect recovery thereon citing interest rate reversal and higher loan growth. We prefer BAFL (TP: PkR48.4/sh, upside:17%) and MCB (TP: PkR232.5/sh upside:11%).
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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