Author Topic: ABL -- Allied Bank Limited  (Read 84319 times)

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Offline Farzooq

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Re: ABL -- Allied Bank Limited
« Reply #379 on: October 24, 2017, 12:50:27 PM »
ABL: 9M2017 EPS stood at Rs8.50, down 20% YoY
 
 October 24, 2017 (JS Research)
 
Allied Bank Ltd (ABL) announced its 9M2017 result today posting a PAT of Rs9.73bn (EPS: Rs8.50), down 20% YoY. The company also announced third interim cash dividend of Rs1.75 per share, taking 9M2017 payout to Rs5.25 per share. Earnings came in-line with our expectations.
 
ABL's 3Q2017 earnings clocked in 10% YoY lower at Rs3.26bn (EPS: Rs2.85). Where NII during 3Q2017 declined by 12% YoY; operating expenses declined by 4% YoY on reversals booked against other assets and off-balance sheet obligations. Reversals under provisioning expenses also continued during 3Q2017. On a sequential basis, earnings improved by 14% YoY on 2Q Super Tax charge.
 
We keep our 'Buy' rating intact with Dec-2018 Target Price at Rs124. At current levels ABL is trading at 201E P/B of 0.97x.
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Re: ABL -- Allied Bank Limited
« Reply #379 on: October 24, 2017, 12:50:27 PM »

Offline MZ

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Re: ABL -- Allied Bank Limited
« Reply #380 on: October 24, 2017, 09:35:05 PM »
Flash Note


Allied Bank Limited

Provisioning Reversals Contain 3Q2017 EPS Decline to 10.1%
·        Allied Bank Limited (ABL) declared 3Q2017 standalone earnings of PKR2.85/share, and an interim dividend of PKR1.75/share; above our EPS expectation of PKR2.62/share on account of provisioning reversals. 

·        9M2017 earnings are down by a massive 20.4%YoY as capital gains came in at PKR410mn vs. PKR2,691mn in SPLY. Resultantly 9M2017 dividends of PKR5.25/share were down 4.5%YoY.

·        3Q2017 dividend of PKR1.75/share was down 12.5%YoY but in line with estimates. 

·        Net Interest Income (NII) in 3Q2017 was 5.6% below our estimates owing to higher mark-up expenses. We attribute this to high repo borrowing during the quarter. NII was down 11.6%YoY in 3Q2017 due to PIB maturities in the quarter.

·        Non-Interest Income was up 2.7%YoY with fee income growing by 9.9%.

·        Major surprise during the quarter was the booking of provisioning reversals which led to higher than expected earnings. The bank reported PKR980mn of reversals out of which PKR532mn were non-performing loan reversals. This translates into a PKR0.55/share after tax benefit.

·        Administrative expenses grew by 5.3%YoY in 3Q2017 compared to 9.0%YoY growth in 3Q2016. Due to classification of PKR448mn of off-balance sheet and other reversals within the operating expenses category, these expenses fell by 4.3%YoY.

·        While we see consistent NPL reversals as a positive, we await management guidance in regards to the nature of the remaining PKR448mn reversals, which will most likely be one-offs. Excluding these reversals earnings would have declined by 17.9%YoY.

·        Therefore while NPL reversals are a positive, so far they have not offset NIM decline. The situation is unlikely to improve in 2018 with an estimated 30.0% of their PIB portfolio maturing in the year.

Offline Farzooq

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Re: ABL -- Allied Bank Limited
« Reply #381 on: November 15, 2017, 11:23:36 PM »
Allied Bank Ltd : Growing its way out of yield recession; “Overweight”
We have fined tune estimates for Allied Bank Ltd in light of recent management discussion and 3Q17 results. As a result, we cut our earnings estimates for CY17/18/19 by 10/7/2%.
We favorably view bank’s strategy to expand branch network and accumulation of low cost deposit as a means to counter low asset yield and the impact of bond re- pricing.
Similarly, bank’s initiatives (non-fund income, Islamic banking, Int’l footprint, etc) may lead to a much needed diversification of earnings base, away from plain vanilla corporate banking that ABL has been accustomed to.
ABL’s spreads are clearly on course to bottom out over the next three quarters in our view.
Meanwhile valuation has opened up post 5.3% underperformance (in 1-mth) with the stock trading at sub 1x book value and 8.6% D/Y.  We accordingly lift our rating on the stock to “Overweight”.

Reinstate with Overweight stance; earnings growth recession set to continue: We have trimmed our earnings estimates for ABL by 10/7/2% for CY17/18/19 post 3Q17 results and management call. The revision in estimates is based on slightly below-expected trend in NIMs, incorporation of Super Tax for CY17 and revised outlook of dividend income on bank’s equity portfolio. ABL’s equity portfolio accounts for 2% of bank’s PPP and have major concentration in energy and banks names. Dividend income from select names within IPPs and bank is likely to remain below par in CY17 & CY18. Overall, we believe ABL’s earnings are likely to drop 7% in CY18 due to lower yield on bond portfolio.

Two encouraging trends seen 9M17/3Q17: ABL appears to be emerging as a catch up play on at least two positive trends seen over the years in its peers;

The bank’s growth in low cost deposit in 9M is impressive and stands at 25% with overall deposit growth of 9% (vs industry deposit growth of 17%). This should allow ABL to improve the deposit mix (CA up to 36% in 9M17, up 200bp YoY) and provide a much-needed support to bank’s spreads and earnings. Trend in CA in 3Q defies the broader trends with peer banks, whereby CA have generally come off. ABL is expected to carry the momentum on CA in 4Q17 though at a slower pace. Branch expansion is likely remain a major driver for accumulation of low-cost deposit
Advances growth has picked up pace in 9M17 with 12% jump in total advances vs industry growth of 20%. Importantly, a major portion of growth has come from corporate segment which remain ABL’s forte. ABL is set to stick to low-risk, high quality assets at the cost of spreads. ABL’s asset quality is also high with NPL ratio of 5.75% - one of the lowest in the industry.
NIMs set to bottom out: The bottom for credit spreads for ABL seems on the cards with the pick-up in credit demand from both private and public sector. Spreads appears to have stabilized in the past two quarters at 35-40bps despite lean period in 3Q17. Overall, NIM are likely to bottom out at 3.3-3.4% (adjusted with OMO borrowing and investment) over the next two quarters as the impact of re-pricing of bonds wears out and cost of funding remains under control, thanks to addition in CA.

Focus on non-fund income is growing: Faced with competition in core areas, ABL is stepping away from its plain-vanilla business model. Of late, we see ABL’s growing focus on building Islamic banking franchise, going for international diversification of business, testing the water in consumer banking space and growing fee & commission income (remittance business, ADC, bancassurance). Contribution from new initiatives is likely to support bank’s non-fund income growth in coming years. ABL’s fee & commission as %age of total income stood at 9% in 2016, which is one of the lowest among its peers.

High CAR and asset quality: ABL’s capital adequacy at 20.84% (Highest Tier II, Tier I is second only to MCB among big banks) is impressive and shows room for balance sheet growth (leverage of 10x). High CAR and low leverage should allow ABL to maintain its cash payout policy.

Investment thesis-Upgraded to Overweight: Our twin concerns on ABL i.e. asset re-pricing and low credit spreads- seemed to have played out in ABL stock price with the stock underperforming the broader index by over 5% in 1-mth Furthermore we note encouraging progress on bank’s liability mix and advances growth in 9MCY17. We have lifted rating on the stock to Outperform from Neutral with revised TP of PKR93/sh. Recent price correction has opened up valuations with the stock trading at sub 1x book value (CY18E P/BV of 0.80) and providing D/Y of 8.6%, one of the highest among its peers.

Key risks to our call are; (I) imposition of Super Tax in CY18 (banks were required to pay additional 4% tax in CY17), (II) dividend income and stock prices of equity portfolio, (III) delay in interest rate reversal.

bma
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Offline MZ

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Re: ABL -- Allied Bank Limited
« Reply #382 on: November 28, 2017, 09:24:22 PM »
Allied Bank Limited (ABL): Lower core income dents earning

Tuesday, 28 November 2017

By: WE Financial Services Limited
In our today's morning briefing we would discuss the performance of Allied Bank Limited (ABL) in 9MCY17.
Primarily owing to lower interest and non-interest income, the cumulative profit after taxation (PAT) of ABL fell by 20% YoY in 9MCY17 to Rs 9,735 million (EPS: Rs 8.50) versus a PAT of Rs 12,228 million (EPS: Rs 10.68) in 9MCY16.
This is due to lower net interest income on account of matured PIBs and drop in non-interest income's contribution. However, bank posted growth of 14% QoQ to Rs 3,261 million (EPS: Rs 2.85) from a PAT of Rs 2,872 million (EPS: Rs 2.51) in 2QCY17 owing to normalize effective taxation.
The corporate results were accompanied with a third interim cash dividend of Rs 1.75/share taking the total cash dividend announced in 9MCY17 to Rs 5.25/share

Offline MZ

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Re: ABL -- Allied Bank Limited
« Reply #383 on: December 13, 2017, 08:00:09 PM »
Allied Bank Limited (ABL): Overcoming the Hurdles

Wednesday, 13 December 2017

By: Arif Habib Limited
Upwards Revision in Valuation

After incorporating the latest accounts, we revise our target price upwards by 7% to PKR 110.0/share (earlier: PKR 102.8/share), providing an upside of 39% based on current prices. Our earnings estimates for CY17 clock in at PKR 10.65/share which is a downwards revision of 2% (earlier: PKR 10.90/share). The downwards revision in CY17 earnings comes on account of i) higher interest expense, and ii) suppression in NFI (Non-Funded Income) continued on the back of lower dividend income and slower growth in fee income. However, our target price has been revised upwards on the back of i) strength of recovery pipeline, and ii) impressive growth in low cost deposits.
Low Cost Deposits Continue Upwards Trajectory

The bank’s increasing focus on low cost deposits is providing significant support to the bottomline. During 9MCY17, the bank registered an impressive growth of 25% YoY in its nonremunerative current accounts. The proportion of current accounts to total deposits of the bank currently stands at a mighty level of 48.5% compared to 44.4% in SPLY. The average current accounts proportion for the top 5 banks currently stands at ~41%. Through focus on low cost deposits, the bank has been able to control its cost of deposits remarkably well, bringing it down to ~2.8% from an average of 4.3% during CY12-CY16 period. We project nonremunerative current deposits to clock in at PKR 309bn (24% higher YoY) and savings deposits to settle at PKR 247bn (16% higher YoY).
Recoveries Continue to Flow

The bank’s credit offtake has shown an impressive trend off late. During 9MCY17, the bank portrayed YTD growth of 14% with advances locking-in at PKR 374bn. The growth in advances has outperformed industry growth, which showed an uptick of 10% during the same period. We expect advances to clock in at PKR 385bn by the end of CY17, registering a growth of 17% YoY. With the growth in the advances portfolio, focus on quality lending has constantly been maintained. Infection of the bank in 9MCY17 currently stands at 4.8%, improving from 5.9% in SPLY. Going forward, we expect infection to settle at 4.4% by the end of CY17, given the management’s confidence in its recovery pipeline. The bank has booked a massive reversal of PKR 1,236mn in 9MCY17 compared to a reversal of PKR 229mn in 9MCY16. NPLs during 9MCY17 clocked in at PKR 18.8bn, decreasing by 9% YoY (9MCY16: PKR 20.7bn).

Offline Farzooq

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Re: ABL -- Allied Bank Limited
« Reply #384 on: January 12, 2018, 11:11:59 AM »
ABL: Earnings growth to outperform peers in 4Q2017, 'Buy' with TP of Rs118
January 12, 2018 (JS Research)

We expect Allied Bank Ltd (ABL) earnings to clock-in 13% YoY lower at Rs12.55bn (EPS: Rs10.96), owing to 75% YoY drop in Gain on Sale of Securities.
The bank's Net Interest Income (NII) decline is likely to clock-in at 4% YoY in 2017, where an impressive 14% YoY growth is anticipated in 4Q2017 (9M2017: -9% YoY) on the back of 20% YoY higher Advance during the year.
Hence in 4Q2017, we expect earnings to clock in at Rs2.82bn (EPS: Rs2.46), up 28% YoY, outperforming expected peers' growth of -8% YoY.
Alongside result, we expect the bank to announce a final cash dividend of Rs1.75/share, taking cumulative payout in 2017 to Rs7.0/share.
We reiterate our 'Buy' rating on ABL, with a potential upside of 28% on offer from our Target Price of Rs118, alongside an attractive D/Y of 7%.
The bank trades at a discount of 22% to sector's 2018F P/B of 1.3x, where its NIMs (3%) and potential Tier I ROE of 18% (5-year forward average), are both at par with the sector's average.
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Offline Koolfire

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Re: ABL -- Allied Bank Limited
« Reply #385 on: February 21, 2018, 08:06:21 PM »
Failure Is Only a Temporary Change in Direction To Set You Straight For Your Next Success...Only Those Who Dare To Fail Greatly Can Ever Achieve Greatly...

Offline MZ

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Re: ABL -- Allied Bank Limited
« Reply #386 on: February 21, 2018, 11:21:03 PM »
Flash Note


Allied Bank Limited

Earnings Rise 43%YoY in 4Q2017 on Provisioning Reversals
·        Allied Bank Limited (ABL) declared 4Q2017 standalone earnings of PKR2.62/share (up 43%YoY), and a final dividend of 1.75/share; earnings were slightly below expectations while the dividend was in line. Full year earnings came in at PKR11.12/share (down 11%YoY) with PKR7.0/share in dividends.

·        Both Net Interest Income (NII) and total revenues were in line with expectations in 4Q2017. NII grew by 10.9%YoY due to asset growth, despite reduced yields on Pakistan Investment Bonds (PIBs). Non – Interest Income (NFI) grew by 7.5%YoY in 4Q2017. Within NFI, FX income grew by 81%YoY while fee income decreased by 13.8%YoY. The increase in NFI was led by FX income growth and higher capital gains.

·        The bank also recorded a provisioning reversal of PKR467mn in 4Q2017, which was in line with expectations.

·        Operating expenses remained more or less flat in 4Q2017 with growth of 2.9%YoY. However this comes from a high base of 4Q2016 when operating expenses had swelled by 19%. Earnings slightly underperformed expectations primarily on this account (we expected operating expenses to drop 8%YoY).

·        The bank declared PKR1.75/share in dividends, taking full year dividends to PKR7.0/share, in line with expectations.

·        As of last close, ABL trades at 1.1x on a PBV basis. We have a Hold rating on the stock with a Dec-18 PT of PKR90/share, representing 1.5% total potential upside (including 7.3% leading dividend yield).

Offline Farzooq

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Re: ABL -- Allied Bank Limited
« Reply #387 on: April 16, 2018, 11:50:11 AM »
Allied Bank Limited: Allied Bank Limited’s (ABL) earnings are expected to decline 9.3%YoY in 1Q2018 to PKR 2.85/share. NII is expected to remain flat with a 0.7%YoY decline. Flattish growth in NII is due to muted asset growth at just 9%YoY (adjusted for the impact of higher borrowings to benefit from securities carry income). NFI is expected to rise 35.5%YoY in 1Q2018 primarily due to the seasonal effect of higher dividends from the bank’s equity portfolio. Resultantly total revenues are expected to rise 6.7%YoY. Earnings on the whole however are expected to fall despite higher revenues due to 16.2%YoY expected growth in operating expenses. The high growth in operating expenses is due to the low base effect of unusually low operating expense growth in 2017 at just 5%YoY.

We also expect ABL to declare a PKR1.75/share dividend, in line with the bank’s historical dividend policy.
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Offline Farzooq

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Re: ABL -- Allied Bank Limited
« Reply #388 on: April 26, 2018, 04:22:55 PM »
ABL: Key takeaways from 1Q2018 result conference call
April 26, 2018 (JS Research Beep)

The company witnessed 5% YoY growth in profitability, clocking in at Rs3.29 per share. For 1Q2018, ABL also announced dividend of Rs2 per share.
Earnings include one-time pension cost of Rs265mn, which was lower than peer average on account of lower number of pensioners being affected by the pension case.
Asset base growth limited to 3% YoY, as borrowings declined by 59% YoY. On the other hand, Deposit base increased by 12% YoY.
Deposit mix further improved as 28% YoY higher zero-cost deposits took CASA up to 81% (+54bps YoY).
On the asset front, deposit mobilization was seen in the Lending to Financial Institutions and Advances head. On the other hand, Investment declined during 1Q2018 on lower shorter tenor and longer tenor papers. ADR/IDR for ABL stands at 43%/50%, respectively.
The bank reiterated its strategy of increasing loan-book with keeping asset quality at priority. During 1Q2018, ABL's NPL stock sharply fell to Rs16.7bn, taking coverage ratio up to 97% and infection ratio down to 4%.
We keep our 'Buy' rating intact on ABL with a Target Price of Rs122. We expect the bank's sustainable Tier I ROE at 17%, where our base case incorporates decline in NIMs. We highlight a high Tier II CAR of 22.65% keeps ABL at an advantage over peers with respect to loan book expansion.
Key risks to our investment case are (1) delay in interest rate increase and (2) subdued asset growth.

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