HBL: TP raised on impressive 3Q earnings; Neutral stance maintained
- ​​We maintain our stance on HBL to Neutral with revised Dec’17 TP of PkR240/sh (from previous PkR223/sh), which offers a total return of 14.6%. Our revised CY16/17F EPS estimates of PkR23.58/25.34 reflects the recent support to earnings from lower loan provisions, improved cost efficiencies, and robust fee income growth.
- HBL posted consolidated NPAT of PkR9.70bn (EPS: PkR6.61) in 3QCY16, down 3%YoY, despite significantly higher capital gains during same period last year. This was a function was (i) surprising 8%YoY rise in NII with cushion from recovery of accrued markup, and (ii) loan provisioning reversal of PkR326mn.
- HBL currently trades at a CY17F P/B of 1.56x and P/E of 9.03x where with (i) negatives already priced in, (ii) interest rates expected to rise from next year, (iii) loan growth to pick up further, and (iv) potential MSCI rerating yet to fully materialize, the stock still carries potential, in our view.
Habib Bank Limited is engaged in commercial banking and asset management related services in Pakistan and overseas. The Bank's segments include Branch Banking, which consists of loans, deposits and other banking services to agriculture, consumer, small and medium-sized enterprise (SME), and commercial customers; Corporate Banking, which consists of lending for project finance, trade finance and working capital to corporate customers and it also provides investment banking services, including services provided in connection with mergers and acquisitions; Treasury, which consists of trading, fixed income, equity, derivatives and foreign exchange businesses, and it also includes credit, lending and funding activities with professional market counterparties; International Banking, which is engaged in monitoring and reporting purposes and consists of its operations outside of Pakistan, and Head Office/Others. It operates in Pakistan; Europe, Middle East and America, and Asia and Africa.
Intermarket Securities Limited (IMS) is a full service corporate brokerage firm based in Karachi, Pakistan. We service both domestic and international clients. IMS was ranked #2 Best Local Brokerage and #3 Best for Overall Country Research for 2016 by AsiaMoney.
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