abib Bank Limited (HBL) has announced its 9MCY09 result. On a consolidated basis, HBL has posted NPAT of PkR10.4bn (EPS: PkR11.47) in 9MCY09 against NPAT of PkR11.1bn (EPS: PkR12.16) in 9MCY08, a decline of 6%YoY. This was against our forecasted NPAT of PkR9.5bn (EPS: PkR10.40) where deviation from our forecasts is largely to significantly lower total provisions. HBL has posted NPAT of PkR3.88bn (EPS: PkR4.26) in 3QCY09, up 22%QoQ. Sequential increase in earnings is largely due to a 56%QoQ drop in total provisions.
HBL has a 6.28% stake in Platinum Habib Bank (PHB) in Nigeria and accounts for the investment under the equity method (share of profit). As per HBL detailed accounts (note 6.2), PHB may have to increase its provisioning, where HBL’s share is PkR4bn. Recall that in 4QCY08, HBL booked a dilution gain of PkR4bn on investment in PHB.
HBL is currently trading at a CY10F Tier-I P/B multiple of 1.38x. At current levels, we have a Reduce stance on HBL based on our target price of PkR115/share. However, we will be looking to update our investment case soon