Pakistan Bank_Deposits drop at the end of CY22, (AKD Daily, Jan 18, 2023)
AKD Daily
Pakistan Bank: Deposits drop at the end of CY22
- Total deposits of scheduled banks dropped by 1.2%MoM to PkR22.5tr at the end of Dec’22. This marks the first time in about 20 years that deposits have concluded the calendar year with a MoM drop.
- The drop in deposits witnessed this time around can be attributed to banks aiming to end the year with a higher Advances to Deposits ratio (ADR), in a bid to shield themselves from heightened taxation introduced in the FY23 budget.
- Industry ADRs jumped from 48.8% in Nov’22 and 48.6% at the end of 3QCY22 to a whopping 53.0% in Dec’22.
- Investments held by banks dropped by ~3.1%MoM to PkR17.9tr as of Dec22. Over the past quarter, scheduled banks’ investments have increased by 2.4%QoQ or PkR417.8bn.
- With interest rates in the country likely to increase in 1HCY23 (200bps, taking the policy rate to 18% by Jun’23), we expect NIMs to expand during CY23. As a result, the average NIMs of our Banking Universe are expected to increase from 4.9% in CY22 to 5.4% in CY23.
- Our top picks are MEBL (TP: PkR152/sh) and MCB (TP: PkR160/sh) due to the former’s healthy deposit growth and the latter’s dividend yield of ~24%.
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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