ABL: One-offs yielded above expected results
Allied Bank Limited (ABL) announced its financial results for CY19, posting a profit after tax (PAT) of PKR 14.49bn, 11% up on YoY basis, above our expectation. Major deviation emanated from WWF reversal worth PKR 1.12bn recorded during 4QCY19 compared to total charge of PKR 345mn in 9MCY19.
The result was accompanied with a dividend of PKR 2/sh for 4QCY19, taking cumulative dividend to PKR 8/sh for CY19 compared to PKR 8/sh in CY18.
Net Interest Income (NII) increased by 27% on QoQ basis taking cumulative increase to 29% for CY19. This increase was largely attributed to ABL’s exposure in high yielding bonds.
Non-interest income posted a growth of 25% on QoQ basis. The bank also recorded gain on securities worth PKR 853mn taking cumulative gain for CY19 to PKR 1.764bn.
Operating cost posted an increase of 10% on QoQ taking cumulative increase to 16% during CY19. However, sharp uptick in NII and portfolio gains lowered cost/income ratio to 54% compared to 56% in CY18.
Going forward, we expect expansion in NII to remain the central theme for the ongoing year. We maintain our BUY stance on the stock. Given its lower ADR, sufficient CAR and exposure in high yielding instruments, the stock is currently trading at an attractive P/BV of 0.96x.
Allied Bank Ltd. Allied Bank Limited is engaged in providing commercial banking and related services. The Bank's segments include Corporate & investment banking, Trading and sales (Treasury), Commercial & retail banking and Others. The Corporate & investment banking segment offers a range of financial services to medium and large sized public and private sector entities, and also covers overseas operation of the Bank. These services include providing and arranging tenured financing, corporate advisory, underwriting, cash management, corporate finance products and customer services. The Trading and sales (Treasury) segment undertakes the Bank's treasury and money market activities. The Commercial & retail banking segment provides services to commercial and retail customers, including agriculture sector. The Commercial & retail banking segment offers loans, deposits and other transactions to commercial and retail customers. Its other services include phone banking and utility bill payments.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
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