EUR 4.27 For Business Accounts Only

Askari Bank (AKBL): 1Q2019 EPS of Rs1.45, +33% YoY (126% QoQ) (Better than expectations)

• Askari Bank Limited (AKBL) reported earnings of Rs1.45/share in 1Q2019, +33% YoY, better than our expectations primarily due to impressive growth in Net Interest Income (NII) and provisioning reversal.
• NII of AKBL in 1Q2019 grew by 35% YoY (+19% QoQ). This is likely be due to hike in policy rate and better asset reprising strategy. 
• Non‐markup income during the outgoing quarter up 12% YoY mainly due to increase in fee & commission income despite the absence of income from SMS.
• AKBL booked foreign exchange income of Rs397mn, up 22% YoY, in line with the trend seen in other banks so far.
• Non‐markup expense on the other hand up 12% YoY mainly on the back of higher operating expenses.
• During the outgoing year bank has recorded net reversal in provision of Rs348mn vs. reversal of Rs559 during same period last year. 
• While pretax earnings of AKBL were increased by 48% YoY in 1Q2019, net earnings growth was restricted to 33% on account of higher effective tax rate, +7ppts YoY to 42%.
• To note, the govt. in its last economic reforms package imposed super tax on banks for the year 2017 to 2020, due to which banks are now recording additional super tax (2017 annual earnings) in their 1Q2019 accounts.
• Key risks for AKBL include: 1) lower than anticipated hike in policy rate 2) Significant Impact of IFRS-9, 3) Slow down in Advances growth, and 4) deterioration of Pakistan macros.