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BAFL, ABL & MEBL_CY20 Result Previews, (AKD Daily, Jan 29, 2021)

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BAFL, ABL & MEBL_CY20 Result Previews

• BAFL 4QCY20 earnings likely to clock in at PkR1.53/sh: Bank Alfalah Limited (BAFL) is scheduled to announce CY20 results on Feb 3’2021 where we expect the bank to post earnings of PkR11.4bn (EPS: PkR6.4), down 16.7%YoY mainly on account of higher provisioning costs (+2.4x to PkR7.2bn) which BAFL booked to mitigate potential credit costs from COVID-19. On a quarterly basis, 4QCY20 earnings are expected to stand at PkR1.5/sh, down 5.8%QoQ/35.0%YoY where sequential decline is at the back of lagged re-pricing of PIB floaters which was partially offset by recovery in fee income and potential gain of bonds. To this end, the bank has an unrealized gain of PkR7.4bn as of Sep’20. Administrative expenses are likely to increase in 4QCY20, +3.2%QoQ as the bank possibly resumes expanding branch network. Together with the result, the bank is expected to announce a dividend of PkR2/s
• ABL to resume dividend payouts; earnings to clock in at PkR13.8/sh for CY20: Allied Bank Limited (ABL) is expected to post CY20 earnings of PkR15.8bn (EPS: PkR13.8) vs. PkR14.5bn (EPS: PkR12.65) in the same period last year. On a sequential basis, 4QCY20 earnings are likely to stand at PkR2.8/sh, recording a decline of 23.2%QoQ/34.3%YoY - primarily a result of certain year-end adjustments as seen historically which result in administrative costs surging by 24.5%QoQ. Net interest income is likely to remain stable (witnessing a marginal downtick of 5.0%QoQ) primarily on account of lower re-pricing factor coming into play in 3QCY20. Non-funded income is likely to increase by  27.4%QoQ potentially driven by capital gains on Power stocks as indicated by commercial banks selling US$11.2mn in Power sector. Along with the result, ABL is likely to resume dividends, announcing a payout of PkR6/
• MEBL likely to post 4QCY20 earnings of PkR4.1/sh: We expect Meezan Bank Limited (MEBL) to announce an NPAT of PkR24.2bn (EPS: PkR17.0) in CY20 as against PkR15.7bn (EPS: PkR11.0) in the same period last year. For 4QCY20, we expect earnings of PkR5.8bn (EPS: PkR4.1), down 15.8%QoQ but up 18.4%YoY where our basis for sequential basis is formed by Gross interest income undergoing re-pricing adjustment though limited (down 9.8%QoQ), benefitting from Jun’20 issuance of power sukuk II (which are likely to be re-priced in 1QCY21). Hence, Net interest margin is likely to stand at 5.3%, one percentage point lower on QoQ basis. Non funded income is likely to increase by 16.4%QoQ with components capitalizing on resumption of economic activities while continued waiver on internet transaction fee remains a drag. MEBL should continue with the payout in the 4QCY20, announcing a dividend a PkR4/sh.

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