Prime Bank PLC. (PRIMEBANK) is one of the leading 2nd generation private commercial banks that is serving its customers through its 146 branches and 82 agent banking outlets spread across Bangladesh, including 5 full-fledged Islamic Banking branches. The bank also provides offshore banking services through its 3 Off-shore Banking Units (OBU).
A director at Prime Bank PLC bought 525,000 shares at 0.000BDT and the significance rating of the trade was 58/100. Is that information sufficient for you to make an investment decision? This report gives details of those trades and adds context and analysis to them such that you can judge whether these trading decisions are ones worth following. Included in the report is a detailed share price chart which plots discretionary trades by all the company's directors over the last two years clearl...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
The imposed rate cap has lowered banks' profitability. Bangladesh Bank imposed a rate cap from March 1 2020. Hence, Q2 2020 was the first quarter with this rate cap. Our coverage NPAT has decreased by 30% YoY in this quarter driven by a 34% fall in net interest income (excluding government securities interest income). Among our coverages, Prime Bank reported an 88% YoY fall in NPAT followed by BRAC (75% YoY fall) and CITY (71% YoY fall) in Q2 2020. DUTCH NPAT fall was lowest (2% YoY) followed...
To maintain liquidity for executing the stimulus package declared by the government and to strengthen the capital base, Bangladesh Bank (BB - the central bank of Bangladesh) has introduced some conditions for disbursing dividend of the year 2019 by scheduled banks. Table 1: Summary of the regulation CAR (inclusive of Conservation Buffer)Deferral FacilityMaximum DividendCAR ≥ 12.5% Not Availed 15% Cash (BDT 1.5); 30% Total 11.25%≤ CAR
Interest cap and Covid-19 create a challenging business environment.Bangladesh Bank (BB), the central bank of Bangladesh, finally implemented the interest rate cap from 1 April, intending to promote industrialization and spur private sector credit growth. However, this rate cap will lower the banks' profitability. On the other hand, the outbreak of Covid-19 has impacted business significantly due to the lockdown in both local and foreign business activities. Almost all types of domestic busin...
Liquidity condition improves. Higher deposit growth (6.3% YTD June) compared to credit growth (5.4% YTD June) has improved banking sector liquidity. Deposit growth accelerated in Q2 (5.2% QoQ) compared to Q1 (1.1% QoQ). As a result, interest rate has started to decline. However, we are yet to see a noticeable decline in the interest rate due to the substantial increase in government borrowings. We expect the continuation of this money flow in the banking system followed by reform in NSC investme...
On the back of the recent increase in non-performing loans outstanding, the sector’s systematic risk remains high. Relaxation in NPL classification and higher rescheduling activity coupled with existing low provisions coverage have increased the systematic risk further. However, low valuations (sector median 0.7x PB) suggest that this systematic risk is mostly priced in. We expect banks with better corporate governance practices and capital/funding advantages will gain higher market share and ...
We are cautious on the sector. On the back of the recent increase in non-performing loans outstanding, the sector’s systematic risk remains high. However, lower valuation (sector median 0.8x PB) suggests that this systematic risk is mostly priced in. Fundamentally, we expect moderate top-line growth and improved profitability for our coverage names. We use a dividend discount model to derive our target prices.
Getting better, but much further to go. With every bank other than City (beat) and BRAC (in-line) falling short of our Q3 EPS targets, Bangladesh banks’ headline EPS numbers look uninspiring. However, these misses were mostly driven by non-recurring items such as weak investment income (a by-product of DSEX weakness) and high effective tax rates (low loan write-offs), while core business drivers such as margins and loan growth rebounded, particularly for our Buy-rated banks. We expect this rec...
Major variances to our forecast came from net interest income (NII; miss), risk cost (beat) and effective tax rate (miss). With a new senior management team and board level conflicts finally settled, we had expected the bank to be more aggressive in its loan deployment in 2018, but that has thus far not materialised.
We expect the liquidity challenges of H1 to taper off, slowing down the margin squeeze and enabling better volume growth. However, given H1 18 risk cost was unusually low (at c0.8% of loans), we expect some uptick in risk costs for Q3 (and H2 overall). Q3 ROE is expected at c12% for our coverage, with most names posting yoy declines but qoq improvements.
Earnings rebounded from Q2 17 lows as Prime Bank re-allocated treasury bonds into loans, leading to 70% yoy net interest income growth. The beat came from a lower than forecast effective tax rate due to higher tax-deductible write-offs and lower financial asset impairments, while operating metrics were largely in line.
Macro challenges take their toll on the operating environment. We expect the impact of difficult liquidity conditions to linger as loan growth remains slow and re-pricing is made more challenging due to regulatory steps. We forecast a 25% yoy decline in bottom line, as higher risk costs, margin shrinkage and lower investment gains take their toll. Price correction opens up valuation opportunities, with our Bangladesh banks coverage currently trading at 1.0x P/B and 9.8x P/E on 2018f. BRAC (BUY...
Newsflow tide looks to have turned. Newsflow in the Bangladesh banks sector has become more positive in recent weeks, in our view reflecting a recognition from regulators and politicians of the sector’s immediate liquidity need. Given the c16% decline in sector share prices YTD, this change in tone could drive a short-term relief rally. However, we maintain our cautious long-term view. In this context, we prefer BRAC Bank given its superior funding profile, high loan quality and retail/SME foc...
Concessionary adjustments give more breathing space: Two circulars published recently have (1) extended by six months the implementation timeline for a harsher Advance-to-Deposit (ADR) ceiling, and (2) lowered the general provisions requirement on home loans to 1%, from 2% previously. Within our coverage, we think UCB will benefit the most from the ADR timeline change, while BRAC benefits the most from the lower general provisions requirement, potentially lifting its 2018f EPS by c4%. BRAC Bank ...
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