HMB & NBP_CY20 Result Previews, (AKD Daily, Feb 22, 2021)
AKD Daily
HMB & NBP_CY20 Result Previews,
HMB CY20 earnings expected at PkR10.6/sh, 4QCY20 DPS: PkR2/sh: Habib Metropolitan Bank Limited (HMB) is scheduled to announce its CY20 results today, where we expect the bank to post NPAT of PkR11.4bn (EPS: PkR10.6) compared to PkR7.0bn (EPS: PkR6.34) in the same period last year. For 4QCY20, earnings are likely to be recorded at PkR2.6/sh, +71.6%YoY but down 32.0%QoQ. The downtick in earnings on sequential basis is attributable to normalization in asset yield particularly that of investments as indicated by unrealized gains on Govt. securities diminishing to PkR7.1bn as of Sep’20 vs. PkR13.4bn as of Jun’20. As a result, NIMs are expected to decline to 3.3% in 4QCY20, down 1.1ppt QoQ, pulling down net interest income to 18.7%QoQ. Non-Interest income is expected to pull up 7.0%QoQ on possible recovery in fee income as trade begins to normalize. Moreover, we do not rule out the bank realizing gains on bonds (PkR7.1bn as of Sep’20) which should carry NFI north of our expectation. We have incorporated higher provisioning expense for the 4QCY20 where we expect HMB to build general provisions for possible credit risks. Together with the results, the bank is expected to announce a dividend of PkR2/sh, taking cumulative payout to PkR4/sh.
NBP 4QCY20 earnings expected at PkR2.3/sh potentially dragged by provision against HR related contingency: National Bank of Pakistan (NBP) is scheduled to announce its CY20 results on Feb 24th 2021 where earnings for full year are likely to be recorded at PkR31.1bn (EPS: PkR14.6) compared to PkR16.6bn (EPS: PkR7.8) in the same period last year. For 4QCY20, NPAT is expected at PkR4.9bn (EPS: PkR2.3), down 55.1%QoQ owing to lagged impact of interest rates on asset yields (Unrealized gains on TBILLs/PIBs stood at PkR3.2bn/PkR5bn as of Sep’20 vs. PkR12.0bn/PkR15.4bn as of Jun’20 in AFS category). Consequently, NIMs are expected to decline to 4.73% compared to 5.30% in the previous quarter. Non-funded income is likely to be +58.6%QoQ to PkR15.5bn owing to seasonal factors pulling up fee income (+48.0%QoQ) and possible capital gains (+48.6%QoQ) to counter the impact from impact of potential provision against certain HR related case. To highlight, the bank in 4QCY19 recorded a provision against HR related contingency to the tune of ~PkR8-10bn however, recent judgment which came against the bank puts total contingency related expense to PkR16bn (one-time cost). We expect the bank to record the remaining provision in 4QCY20, taking benefit of strong CY20 profitability, which would along with other seasonal factors could pull administrative cost +65.0%QoQ.
AKD Research
National Bank of Pakistan (the Bank) is a Pakistan-based commercial bank. The Bank provides commercial banking services, including commercial loans, investment advisory, asset management, global remittances, agency services, forex, leasing, modarba, underwriting, brokerage, and other banking and financial services. The Bank offers retail products, which include saving deposits, current deposits, housing finance, personal loans and agricultural loans; transaction banking services, which include cash management, trade finance and services, and remittance management; Corporate Finance services, which include deposits, structured corporate finance, capital advisory, investment advisory and trade finance; Treasury services, which include forex and financial derivatives, and government to person (G2P) services, which include pension payments, tax and fee collection, and other payments. The Bank serves its customers in over 20 countries.
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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