NBP: Adverse case ruling is a risk; Bank is hopeful for +ve outcome
- National Bank of Pakistan (NBP) held an analyst briefing yesterday to discuss (i) recent financial performance (CY16 EPS: PkR10.83; up 15%YoY), (ii) initiatives being taken on the Commercial & Retail banking fronts that are pushing fees higher, and (iii) the pension fund case that is currently under appeal in the Supreme Court (PkR48bn immediate impact in case of adverse ruling).
- As per management, there is a good chance that the case will be decided in the bank’s favor particularly as in a similar case involving the SBP, the SC ruled in favor of the central bank. Accordingly, no provision has been made. That said, we flag that a ruling against NBP may potentially lead to similar issues for the other large banks that were nationalized in 1974.
- Our base-case TP for NBP is PkR92/sh. However, our scenario analysis indicates TP could drop to c. PkR70/sh where other than the one-off PkR48bn impact, the bank will see recurring expense of PkR2-3bn. In addition, we believe this will likely lead to lower than base-case loan growth, payout ratio dropping to less than 50% vs. 70% at present and possibly a Tier-II capital issuance over the medium-term.
National Bank of Pakistan (the Bank) is a Pakistan-based commercial bank. The Bank provides commercial banking services, including commercial loans, investment advisory, asset management, global remittances, agency services, forex, leasing, modarba, underwriting, brokerage, and other banking and financial services. The Bank offers retail products, which include saving deposits, current deposits, housing finance, personal loans and agricultural loans; transaction banking services, which include cash management, trade finance and services, and remittance management; Corporate Finance services, which include deposits, structured corporate finance, capital advisory, investment advisory and trade finance; Treasury services, which include forex and financial derivatives, and government to person (G2P) services, which include pension payments, tax and fee collection, and other payments. The Bank serves its customers in over 20 countries.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.