Intermarket Pulse: UBL: Earnings estimates maintained; Neutral
We maintain our Dec’17 TP for UBL at PkR265/sh, which offers a total return of 13% (Neutral). In light of management’s latest guidance, we have kept our CY17 EPS estimate of PkR24.02/sh unchanged, where lower Fee Income is now offset by higher capital gains assumption.
UBL posted consolidated NPAT of PkR7.52bn (EPS: PkR6.14) in 1QCY17, flat YoY, but up 20%QoQ. Lower loan provisions and flat admin expenses were enough to mute the impact of lower Fee Income and Capital Gains. Loan growth clocked in at 10%YoY, with potential to surpass current level as the ongoing expansion cycle gathers pace.
UBL currently trades at a CY17F P/B of 1.74x and P/E of 10.24x, where the market has majorly priced in the positives. We would turn more bullish if higher-than-expected loan growth is achieved in the upcoming quarters.
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.
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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