Pakistan Banks_4QCY18_Interest rate hikes to reflect on NIMs
AKD banking universe is set to announce their full year CY18 results where we expect the sector to post an NPAT of PkR86.4bn for CY18E vs. PkR124.3bn in CY17 (excluding HBL penalty). 4QCY18 NPAT is likely to record at PkR14.3bn (down 22.1/54.6% QoQ/YoY), with attrition in earnings attributable to super tax.
On a PBT basis, we expect earnings to register a growth of 18.1%QoQ driven through NIMs improvement 4QCY18E NIMs: 3.54% vs. 3.27/3.45% in 3QCY18E/4QCY17) pulling-up NII growth by 10.3%QoQ vs. –ve 3.5%QoQ in 3QCY18.
4QCY18 provisions are likely to creep up by 38.7%QoQ/3.5xYoY to PkR8.1bn likely driven by HBL, UBL and NBP. Apart from provisioning costs, administrative costs are likely to remain elevated due to continuation of one-off cost for HBL and seasonally higher administrative expense at year-end for HBL, ABL and MCB.
Our preference is tilted towards banks that can keep their provisioning costs at a manageable level in a fragile macro-economic environment and resultantly we have our liking for MCB with a Dec’19 TP of PkR238.3/sh.
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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