Report
EUR 8.14 For Business Accounts Only

United Bank Limited : Int’l credit cost masks an exciting domestic result; Buy!

  • United Bank Ltd (UBL) appears to have an impressive momentum on domestic operations in 1Q18. However, a not-so-surprising heavy provisioning on int’l operations and above-expected pension cost has eclipsed otherwise a strong result.
  • We particularly highlight growth in CA (+19% YoY), advances growth (+25% YoY), domestic recoveries and fee & commission (+21% YoY) in domestic operations. We see limited impact of 3% from drop in stock of PIBs on CY18/19E earnings.
  • Banks’ CAR remains comfortable at 15.4% in 1Q18. Concerns on additional CET-I requirement under soon-to-be implemented framework of Systematically Important Banks are unwarranted.
  • Our liking remains unaltered on the stock. We reiterate our Buy rating with revised TP (based on justified P/V) of PKR259 (implied CY18E P/BV of 1.8x, CY19E ROE of 15.6%).  
  • We have adjusted down our earnings estimate for UBL by -8/-3% in CY18/19E. Overall, we expect UBL to deliver 3-yr earnings CAGR of 6% over CY17A-20E.
Underlying
United Bank Limited

United Bank is engaged in commercial banking and related services. Co. operates five business segments: Corporate Finance, Trading and Sales, Retail Banking, Commercial Banking and Asset Management. As of Dec 31 2016, Co. operates 1,341 branches inside Pakistan including 47 Islamic Banking branches and 2 branches in Export Processing Zones, and 18 branches outside Pakistan.

Provider
BMA Capital Management Limited
BMA Capital Management Limited

​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.

Analysts
Fawad Khan

Other Reports on these Companies
Other Reports from BMA Capital Management Limited

ResearchPool Subscriptions

Get the most out of your insights

Get in touch