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Bank of Punjab (BOP): 1Q2019 EPS of Rs0.74, +1.4% YoY (In line with expectations)

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(May 30, 2019)

 

• Bank of Punjab (BOP) reported earnings of Rs0.74/share in 1Q2019, +1.4% YoY, in line with our expectations. NII of BOP in 1Q2019 depicted outstanding growth of 64%YoY (+12% QoQ) amid hike in policy rate and better asset reprising strategy, We believe.
• Non‐markup income during the 1Q2019 declined by 11% YoY mainly due to loss recorded on account of foreign exchange loss of Rs2.7mn compared to gain of Rs67.8mn same period last year. This is contrary with the trend seen in other banks so far.
• Non‐markup expense on the other hand up 28% YoY mainly on the back of higher operating expenses.
• During the outgoing year bank has recorded net provision of Rs246mn vs. reversal of Rs157mn during same period last year. 
• Pre tax earnings of BOP were increased by 19% YoY in 1Q2019 while net earnings growth was restricted to 1.4% mainly on account of higher effective tax rate, +10ppts YoY to 45%. 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 BOP 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.