HBL: Upbeat on loan growth outlook; maintain TP
​We maintain Dec’17 TP for HBL at PkR290/sh (Neutral), because of no material changes in our earnings estimates. We expect HBL to post an EPS of PkR25.34/28.35 in CY17/18F, with higher loan growth assumption (15%/16% in CY17/18F) offsetting the potential delays in interest rate liftoff.
On a consolidated basis, HBL posted NPAT of PkR34.01bn (EPS: PkR23.23) in CY16, down 3%YoY. For 4QCY16, earnings of PkR5.76/sh (down 10%YoY) came in lower-than-expected on account of 26%YoY surge in admin expenses. NII posted a 5%YoY growth in CY16, despite reinvestment of high yielding PIBs at lower rate.
HBL is currently trading at a CY17F P/B of 1.8x and P/E of 10.6x, where the market has majorly priced in the positives. Materialization of MSCI upgrade and surprise on loan growth front seem to be the only short term triggers, which can result in valuation expansion. Our TP of PkR290/sh offers a total return of 14%.
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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