Report
Jaap Meijer

BLOM Bank: Further clarity on BdL deal – strong capital offers opportunities


  • BdL gains came in at USD 433m for FY 16A (368m after tax), o/w USD 173m was used to bolster IFRS 9 provisions (1.3% of RWAs), USD 85m to completely write off operations in Syria, and USD 110m in deferred liabilities (0.8% of RWAs). None of the gains sit in CAR.
  • BLOM plans to increase DPS in line with EPS in FY 16 (suggesting a DPS of LBP 1,456/share and providing a yield of 8.4%). Furthermore it plans to redeem preferred dividends (1.5% of RWAs in T1), which should increase earnings by USD 14m or 3.2% on FY 17e earnings.
  • The government is in discussions to increase taxes in FY 17e, with BLOM’s expected tax rate jumping from 15-17% to 21% (we have pencilled in 22%), still the least affected among peers.
  • We increase our TP from USD 14.4 to USD 16.6 (including over provisioning of USD 283m), and offering 44.6% upside, at an implied P/E18e 5.3x and P/tNAV17e of 0.8x.


Provider
Arqaam Capital
Arqaam Capital

Established in 2007, Arqaam Capital is a specialist emerging markets investment bank, bringing regional and international product offerings to the emerging markets. Arqaam Capital combines international best practice with expertise in the markets in which we operate. Our primary role is to provide financial intermediation and create investment opportunities for frontier and emerging markets investors looking to invest in their own markets and abroad, as well as international investors seeking opportunities in target frontier and emerging markets. Arqaam Capital is headquartered in the Dubai International Financial Centre (DIFC), with additional offices in Libya, Lebanon, Egypt, and South Africa. 

Arqaam Capital's research platform provides the largest coverage footprint of MENA equities and one of the largest on the African continent with a total of 300 stocks under coverage. Arqaam Capital is ranked as one of the leading research providers in the region - a reflection of its broad coverage universe, its in-depth and high quality research, as well the compelling investment ideas that the team generates. The analysts closely analyze their sectors and issue in-depth company and sector research while the strategy team connects the micro with the macro, focusing on index analysis, macroeconomics and strategy research. 

Analysts
Jaap Meijer

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