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Offline Farzooq

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Re: Banking Sector
« Reply #959 on: January 30, 2018, 12:11:00 PM »
Pak Banks earnings for 2018F revised up by 1-3%
With an earlier than anticipated 25bps hike in the Policy Rate by the State Bank of
Pakistan (SBP), we revise-up our earnings outlook of JS Banking Universe by 1-
3% for 2018F, though valuation impact remains relatively muted. We now expect
another 25bps hike in May-2018 (50bps previously), followed by a 25bps in Nov2018
to 6.75%. We build-in status quo thereafter. We highlight that the magnitude
of the impact of monetary tightening on Pak Banks is higher on banks with (1)
higher asset allocation in Advances and MTBs, (2) lower asset financing by interest
bearing deposits and Repo Borrowings and (3) higher Net Interest Income (NII)
contribution in Total Income.

JS Banking Universe Snapshot
(Rs) Rating Dec-2018 TP 2018F P/B EPS 2018F Change from prev
base case
HBL Buy 249 1.46 24.57 0.6%
NBP Buy 52 0.81 6.94 1.8%
UBL Buy 287 1.41 23.66 0.3%
MCB Buy 252 1.70 21.85 0.5%
ABL Buy 119 1.06 12.39 1.3%
BAFL Hold 53 1.03 5.51 2.0%
BAHL Hold 72 1.52 6.98 1.6%
MEBL Hold 80 1.86 7.91 1.3%
AKBL Buy 25 0.78 2.95 1.1%
HMB Buy 50 0.98 6.13 0.9%
FABL Hold 24 0.78 2.93 2.7%
Source: JS Research
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Re: Banking Sector
« Reply #959 on: January 30, 2018, 12:11:00 PM »

Offline MZ

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Re: Banking Sector
« Reply #960 on: February 12, 2018, 10:29:41 PM »
Elixir Insight

Pakistan Banking Sector
2017 to End with Flat Earnings for the Sector

·         We expect 4Q2017 earnings decline of 4.1%YoY for our Banking Sector Coverage as revenue growth fails to offset the rise in operating expenses. On a full year basis we expect earnings to remain flat with just 1.0%YoY decline in earnings (Ex of HBL fine) due to the benefit of provisioning reversals in 2017 at ABL, BAFL, BAHL and FABL.

·         We expect significant earnings growth of 55%YoY and 122%YoY during 4Q at ABL and FABL respectively, led primarily by one offs and provisioning reversals expected during the quarter.

·         We see earnings decline of 30%YoY at BAHL, 50%YoY at HMB and 36%YoY at NBP in 4Q2017. The decline at BAHL is due to a one off, while the decline at HMB and NBP is of a more permanent nature.

4Q2017 Earnings Expected to Decline 4.1%YoY; Full Year Earnings to Remain Flat: We expect earnings for our Banking Sector (BS) Coverage to decline by 4.1%YoY in 4Q2017 due to flat topline which is offset by growth in operating expenses. Our coverage includes Allied Bank Limited (ABL), Bank Al-Falah Limited (BAFL), Bank Al-Habib Limited (BAHL), Faysal Bank Limited (FABL), Habib Bank Limited (HBL), Habib Metropolitan Bank (HMB), MCB Bank (MCB), National Bank of Pakistan (NBP) and United Bank Limited (UBL).

Net Interest Income is expected to rise 6.5%YoY in 4Q2017 despite a decline in Pakistan Investment Bond (PIB) yields. The 3Y outstanding PIB stock yield has declined from 8.08% in 4Q2016 to 6.79% in 4Q2017. IDRs have increased during this period from 65.7% to 71.5%, while the PIB/Deposits ratio has declined from 30.4% to 26.5%. 99.1% of new investments generated between 4Q2016 and 3Q2017 have been in Market Treasury Bills (MTB) and this trend is expected to continue for the near future.

Despite the dilutive impact of lower PIB yields and higher concentration of short term MTBs in the portfolio mix, net interest income is expected to increase due to 19.7%YoY asset growth in 4Q2017. This growth was partly propelled by 14.8%YoY deposit growth and partly by higher repo borrowing to benefit from securities carry income.

Non–Interest Income is expected to decline by 4.9%YoY in 4Q2017 due to a 51.4% decline in capital gains, a trend we expect to continue into 2018. However we expect N0n–Interest Income to get some support from fee income which is expected to rise 14.9%YoY in 4Q2017 compared to 4.6%YoY growth in 4Q2016. 9M2017 fee income shows a similar trend with 13.7%YoY growth compared with a meagre 8.0%YoY growth in 9M2016. Overall total revenues are expected to increase 3.0%YoY in the quarter.

We expect provisions for the sector to be minimal at PKR542mn primarily due to expected reversals at ABL, BAFL, BAHL and FABL. Although this is a sharp jump from PKR286mn sector wide reversal recorded in 4Q2016, the majority of that reversal was booked by NBP.

Operating expenses are expected to maintain their normalized single digit growth at 9.7%YoY in 4Q2017, leading to an after tax earnings decline of 4.1%YoY. 

2017 Earnings to Decline by 1.0%YoY (Ex of HBL Fine): On a full year basis, the earnings decline is less pronounced at 1.0%YoY. The overall trends are similar with a moderate 1.3%YoY increase in revenues and 9.9%YoY increase in operating costs. However earnings in 2017 have benefited largely from provisioning reversals, which are expected to close the year at PKR1.96bn, compared to PKR3.6bn provisioning expense in 2016. Had provisions been maintained at the same level as last year, the decline in earnings would have been 4.8%YoY. We see this sharp positive shift in provisions as transitory; a net provisioning expense is likely in 2018.

Bank Wise Earnings Will Have Diverging Trends in 4Q2017: We see earnings decline of 30.2%YoY at BAHL, 50.1%YoY at HMB and 35.7%YoY at NBP in 4Q2017. The decline at BAHL is primarily due to 39.5%YoY growth in operating expenses due to a one-off reversal. The bank recorded a PKR710mn (PKR0.6/share before tax) WWF reversal in 4Q2016 setting a high base for 4Q2017.

HMB’s earnings are expected to fall 50.1%YoY primarily due to a 45.4%YoY drop in Non–Interest Income due to lower capital gains. In addition we expect the bank to report a provisioning expense of PKR255mn in 4Q2017 compared to a PKR202mn provisioning reversal reported in 4Q2016.

The decline in NBP’s earnings is due to similar reasons as HMB with an 8.5%YoY decline expected in Non–Interest Income on account of lower capital gains and a net provisioning expense of PKR364mn in 4Q2017 compared to a provisioning reversal of PKR2.7bn in 4Q2016. In regards to NBP’s potential PKR47.7bn pension liability, we have assumed in our estimates that the bank does not have any pension related expense in 4Q2017. Therefore any one-off pension liability is a risk to our earnings estimate for NBP.

On the flip side we expect significant earnings growth of 54.8%YoY and 122.2%YoY at ABL and FABL respectively. The earnings growth at ABL is due to a 6.3%YoY increase in total revenues led by asset growth of 10.2%YoY and an 8.4%YoY decline in operating expenses due to a high base set in 4Q2016 (earnings in that quarter grew by 18.5%YoY).

Similarly at FABL we expect 122.2%YoY earnings growth due to a 16.1%YoY increase in total revenues. This is due to 13.5%YoY net interest income growth and 23.2%YoY non interest income growth (which was abnormally low in 4Q2016 due to a one off capital loss). We expect provisioning reversals to contribute to earnings growth as well with a PKR132mn expected reversal in 4Q2017 compared to PKR279mn provisioning expense in 4Q2016.

Lastly we expect HBL to skip its dividend during the quarter similar to the previous one due to the one off penalty of PKR23,625mn imposed during the year, which will hit capital buffers.

Offline Farzooq

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Re: Banking Sector
« Reply #961 on: February 14, 2018, 10:07:32 PM »
Pakistan Banks: Four areas to watch post SC’s decision on pension cost

With pension cost issue for privatized banks approaching its eventual conclusion, we believe four areas are likely to dominate investors focus in near-term (i) emerging macro trend, particularly on interest rate, (ii) upcoming results, (iii) any residual action by FED on Pakistan banks, and (iv) capital raising exercise.
Though the final judgment is yet to be made public on pension cost issue, overall drag on earnings from pension cost appears quite nominal in the context of penalty on similar issues on National Bank of Pakistan. The judgment has however opened up possibility of a favorable decision for NBP on this issue.
Policy rate hikes remains a major source of earnings upside for banks (upto 75bps hikes seen, MCB to benefit the most among big banks), while we expect CY17 to end on a strong note for most banks under our coverage.
Meanwhile, growing focus on anti-money laundering remains a major concern. On the other hand, capital raising exercise may focus on non-dilutive capital and as such is not our major concern.
UBL continues to be our top pick among big banks followed by MCB. We also have Buy rating on HBL. Among mid-sized banks we prefer BAFL and FABL.

SC’s decision to work out in favor of banks/ Dust on pension issue to settle: With the Supreme Court reportedly announcing its final verdict on the Pension Cost issue for privatized banks on 13th Feb (see detailed here), one of the major noise factors for banks seems to be approaching its conclusion. The decision appears to be more favorable for banks. Based on available details, our estimates suggest the impact on earnings for banks could be negligible (<1% impact on earnings) in case of prospective application or nominal (2-4.5% bottom-line impact) in case of retrospective application of the SC’s decision. Banks’ management expects the decision to be implemented on prospective basis. Reportedly banks are required to pay minimum pension of PKR8,000/mth for retired employees falling in the pension scheme. Furthermore, a 5% increment p.a. will also be applicable.

What next for banks-watch progress on four areas: We believe four areas are likely to dominate investors focus in near-term;

I-Emerging macro trend: We believe a surprised policy rate reversal by the central is likely to be followed by two more hikes (of at least 75bps) before June’18.  Another bout/round of devaluation, expected before Mar’17, may strengthen the argument for rate hike.  Rate hike will likely allow banks to improve NIMs. MCB is likely to benefit the most among big banks given its domestic focus and deposit franchise. We don’t expect rate hike to lead to major impact on revaluation gains on investment portfolio (revaluation gains accounted for 13-19% of Tier II Capital for UBL, & HBL in 3Q17) or major uptick in infection ratio (already assumed to go up).

II- Upcoming results: We expect most banks under our coverage to end CY17 on a strong note.  Sequentially, banks may deliver 12-15% earnings growth due to seasonality. Capital gains and FX income remains major surprise areas for banks.

III-Any residual action by FED on Pakistan banks: Growing focus on anti-money laundering issue remains a major concern. Possibility of further action by the US regulator against international branch operations of Pakistan’s banks in New York cannot be ruled out. We understand Pakistan banks are moving in the right direction in terms on initiative on compliance.

IV-Capital Raising: As highlighted in our report dated January 05, 2018 title “A clear re-raging candidate”, we expect capital raising to remain a major theme for banks in CY18 for reasons ranging from capital erosion (US to penalty, pension cost) to growth constraint. However, focus of banks is clearly going to be on non-dilutive capital (additional Tier I Capital in the form of redeemable capital) and as such may not result in significant earnings dilution of banks. Currently, at least three banks are considering or in process of raising additional Tier I capital as per our channel checks. 

Undemanding valuation despite strong performance: Banking stocks have led the recovery in KSE-100 index from its bottom in Dec’17 with 18% performance (3% out-performance for a sector which carries 24.4% weight in the index). Valuations of banks are not demanding however despite strong price performance, in our view, with average P/BV of 1.1x (avg ROE of 13%. UBL continues to be our top pick among big banks followed by MCB Banks. We also have Buy rating on HBL. Among mid-sized banks we prefer BAFL and FABL.

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Offline ABNEIQBAL

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Re: Banking Sector
« Reply #962 on: March 01, 2018, 06:52:35 PM »
Outlook on Pakistan banks stable: Moody’s


Moody’s Investors Service says that its outlook for banks in Pakistan (B3 stable) is stable over the next 12-18 months, but the economy is susceptible to political instability.

The outlook is driven by an accelerating economy and stable funding, while also taking into account the banks’ large holdings of low-rated government bonds, modest capital levels and high asset risks.

“Pakistan’s economic growth — boosted by domestic demand and China-funded infrastructure projects — will stimulate lending and support a slight improvement in asset quality over the next 12-18 months,” says Constantinos Kypreos, a Moody’s Senior Vice President, on Wednesday.

“And, despite margin pressure, the banks’ profitability should remain flat,” adds Kypreos. “Stable funding from customer deposits and high liquidity levels represent further strengths.”

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“However, the biggest challenge facing the banks is their large holdings of low-rated Pakistan government bonds,” says Corina Moustra, a Moody’s Associate Analyst.

“Modest capital levels and high asset risks pose additional risks,” adds Moustra.

Moody’s conclusions are contained in its just-released banking system outlook for Pakistan and is authored by Kypreos and Moustra.

The stable outlook is based on Moody’s assessment of five drivers: operating environment (stable), asset risk and capital (stable), profitability and efficiency (stable), funding and liquidity (stable), and government support (stable).

On the operating environment, Moody’s says that real GDP growth will accelerate to 5.5 per cent and 5.6pc in the fiscal years ending June 2018 and June 2019. Infrastructure investment and solid domestic demand will prove the main drivers of economic growth and will fuel lending growth of 12pc-15pc for 2018. The economy, however, remains susceptible to political instability and a deterioration in domestic security.

With regard to asset risk, Moody’s expects asset quality to improve in the current supportive macroeconomic environment, helped by the banks’ diversified loan portfolios and low corporate debt. Moody’s points out that non-performing loans measured 9.2pc of gross loans as of Sept 30, 2017.

Asset risk remains high, however, due to weaknesses in the legal framework, inefficient foreclosure processes and scant information for assessing borrower creditworthiness. In addition, the banks’ high exposure to low-rated government securities (44pc of assets) continues to pose a key risk.

As for capital, the banks’ capital ratios — with Tier 1 at 12.7pc as of Sept 30, 2017 — have declined, but will recover gradually once higher regulatory requirements kick in this year and the next. Capital will be boosted by higher profit retention, capital increases and capital optimisation measures.

However, based on Moody’s adjusted Tier 1 ratio — which measured 6.5pc on Sept 30, 2017 — the banks’ capital buffers are modest.

On the issue of profitability, Moody’s says that the banks’ profitability will remain flat, despite margin pressure. Moody’s explains that profits will be supported by strong lending growth, a focus on low-cost current accounts and moderate provisioning needs, despite interest margin compression. Interest margins should level off towards the end of 2018, once pressure from the reinvesting of legacy high-yielding Pakistan investment bonds reduces, as the remaining of these mature.

Offline MZ

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Re: Banking Sector
« Reply #963 on: March 31, 2018, 10:15:02 PM »
Elixir Insight

Pakistan Banking Sector
Estimating Bank Wise PIB Maturities

·         We expect PKR964bn of PIB maturities in 2018, mainly concentrated in the 3Y and 5Y category carrying yields of 7.14% and 12.4%. These mature in 1Q2018 and 3Q2018 respectively.

·         We have used a 7 step process for estimating bank wise PIB maturities, with varying degrees of success depending on the number of bank disclosures.

·         Majority of the banks have a shorter duration tilt in their PIB books, which favoraubly places the sector as a whole to benefit from interest rate increases.

·         We believe further decreases in the yield on investments for the sector is unlikely in 2018 as the yields are already low due to a high concentration of MTBs due to previous maturities, most notably in 3Q2016.

·         Of the 9 banks we have looked at, as a % of their PIB book, ABL, BAFL, BAHL, HBL and MCB have roughly 30-40% of their PIB portfolios maturing in 2018, and are thus best positioned to capitalize on interest rate hikes.

PKR964bn of PIB will mature in 2018: Based on the State Bank of Pakistan’s (SBP) auction data we expect roughly PKR964bn of Pakistan Investment Bonds (PIB) maturities in 2018. Of these maturities, half or nearly PKR514bn are 3Y PIBs maturing in 1Q2018, PKR416bn are 5Y PIBs maturing in 3Q2018 and the remaining PKR32bn are 10Y PIBs also maturing in 3Q2018. These PIBs carry a yield of 7.14%, 12.4% and 13.3% respectively.

Our Process For Estimating PIB Maturities: With respect to maturity profiles, banks disclose maturities by year for the total investments book. This includes clubbed maturities for market treasury bills (MTB), PIBs, Term Finance Certificates (TFC), Sukuks and other securities. Since PIBs usually carry the highest yields and form a significant portion of the investments book, it is crucial to estimate the PIB maturity profile of different books to judge which ones will have the liquidity to go into new PIBs once interest rates rise even further (we expect another 100bps interest rate hike in 2018).

We have estimated PIB maturities using a 7 step process:

1.       Interest Rate Sensitivity Disclosures: We have started with the Interest Rate Sensitivity disclosure in bank’s financial statements. While the disclosure on “Contractual maturities of assets and liabilities” may be more accurate, this disclosure includes non-interest bearing investments which makes the process more difficult. The former disclosure excludes these securities as they are not interest rate sensitive.

2.       Exclusion of Market Treasury Bills: After collating the interest rate sensitivity disclosure for the investments book, we have excluded the bank’s total market treasury bills position from the less than 12 month category (as that is the maximum maturity for an MTB).

3.       Excluding Other Securities: Next we have collected data on the respective bank’s investment in particular sukuks, TFCs, sovereign bonds, Ijarah sukuks etc. Disclosures vary by bank in this category. If a bank discloses maturities for every single non – PIB security, it is relatively easy to get an accurate PIB maturity profile.

However this is not the case due to insufficient disclosures. We have tried to get as close of an estimate as possible in each case.

4.       Investment Maturities Excluding MTBs and Other Securities: This is arrived at by 1 minus 2 minus 3.

5.       Estimated PIB Maturities: We have finally arrived at the estimated PIB maturity by applying the same distribution (in terms of maturity) as calculated for number 4. For example if number 4 is equally distributed across several years, it is reasonable to expect that so are the PIBs.

6.       Estimated PIB Maturity in %: For added clarity we have added in a column on the distribution of PIB maturities by year by bank.

7.       Estimation Error: The estimation error depends on bank disclosures. The better the disclosures, the easier it is to reverse engineer PIB maturities with a higher degree of confidence.

ABL has one of the shortest duration of PIB portfolios: Allied Bank Limited’s (ABL) total investments book is mainly concentrated in MTBs and PIBs which makes the process relatively simple. Other securities held by ABL include some sukuks issued by Liberty Power which mature in 2021, PKR2.6bn of sukuks issued by Neelum Jhelum Hydropower maturing in 2026 and a PKR4.9bn foreign currency bond maturing in 2025.

Excluding these securities we expect roughly PKR139bn of PIB maturities for ABL in 2018 which constitutes roughly 58.6% of its PIB portfolio, with another 26.3% maturity in 2019. ABL has one of the shortest duration PIB portfolios in our coverage, which will provide ample liquidity to enter new PIBs in 2018-19 when interest rates rise further.

Assuming the PKR140bn maturity is two thirds 3Y PIBs and one third 5Y PIBs, the maturity will carry a weighted average yield of 8.9%. ABL’s current investment yield is 6.96% and we estimate a 8.1% yield on their PIBs portfolio. If ABL were to channel this liquidity into 5Y PIBs, we would not expect any reduction in the yield on investments for this bank.

49% of BAFL’s PIB Book is estimated to mature in 2018: Bank Al-Falah (BAFL)’s PIB portfolio also tilted towards the shorter maturities like ABL. We estimate that BAFL has a PKR70.8bn PIB maturity in 2018 which constitutes 49.4% of its PIB portfolio followed by smaller PKR20-30bn maturities every year. This is a positive for the bank as it allows it to benefit from the increase in interest rates. BAFL has also a PKR20.5bn Ijarah Sukuk 16 maturity in 2018, which gives it additional liquidity to invest in new papers. We believe BAFL has a ~8% PIB yield as well and as such should not face any material decrease in the yield on investments in 2018.

BAHL has a well distributed PIB Maturity Profile: Bank Al-Habib (BAHL)’s PIB portfolio is well distributed with PKR45bn of maturities in 2018, followed by a PKR14.5bn maturity in 2019 and a PKR43bn maturity in 2020. The bank’s maturities are tilted towards the shorter end and it has one of the lowest PIB / Deposits ratio at ~17% and as such the investments yield should remain flat in 2018 despite maturities, and rise going forward.

BAHL’s 2017 investments yield was 7.4% and we expect this to remain more or less flat in 2018.

FABL – PIB Profile is less relevant: Due to a high proportion of investments held as sukuks, which are undisclosed, we have the least accuracy in our estimates for Faysal Bank (FABL). We expect roughly PKR8.4bn or 37.3% of FABL’s PIB portfolio to mature in 2018. However since FABL only has a 6.1% PIB / Deposits ratio, PIB maturities are more or less irrelevant in estimating the bank’s future investments yield, which will be mainly driven by MTBs and Sukuks, which yield around the same level as KIBOR. FABL’s investments yield in 2017 was 6.7%.

HBL likely to witness PIB maturities of PKR268bn in 2018 : HBL has one of the highest expected PIB maturities of PKR268bn in 2018 which constitutes 43.3% of their PIB portfolio. The bank highlighted in its analyst call that the maturity in 3Q2018 alone is PKR100bn; this would be a 5Y PIB maturity. The majority of the bank’s PIB books is expected to mature within two years.

HMB has one of the Longest Duration of PIB’s: Habib Metropolitan Bank’s PIB portfolio is estimated to have a 56.5% maturity in 2021-22 based on available disclosures. The bank’s PIB portfolio has a longer maturity profile than average with just 8.9% of PIBs maturing in 2018. This is slightly unfortunate as the bank has a significant PIB position at 30% PIB / Deposits. If rates rise faster than expected in the medium term, HMB will be relatively poorly placed to benefit compared to some other banks.

MCB also Well Positioned to Capitalize on Rising Interest Rates: MCB Bank (MCB) has one of the highest PIB maturities at 46.2% of their overall portfolio in 2018 with PKR103bn of PIB maturities. 93.6% of the bank’s investments book is mainly MTBs and PIBs and therefore the bank does not have sufficient disclosures with regards to maturities of the remaining 7.4% other securities.

NBP will have a more Neutral Position with respect to PIB’s : National Bank of Pakistan (NBP) has a relatively equally distributed PIB portfolio with a small PKR32bn maturity in 2018 followed by PKR60-70bn maturing every year thereafter. Therefore the bank has a neutral liquidity position with respect to PIBs.

UBL not too Well Positioned on PIB’s: United Bank Limited (UBL) has a PKR132bn PIB maturity in 2018 followed by a similar maturity in 2019. Similar to NBP, the bank has an equally distributed PIB portfolio and will not particularly benefit (compared to other banks) in relation to its PIB portfolio.

Looking at PIB Portfolios, Its Safe To Say Margin Compression Is Mostly Over: Majority of the banks we have looked at have a shorter duration PIB portfolio, while some have a more equal distribution. In the previous years, PIB maturities such as the one in 3Q2016 was a major cause of concern as investment yields were expected to fall and indeed they did. The investments yield for these 9 banks fell from 8.04% in 2016 to 7.09% in 2017.

Going forward however we expect the yield to remain more or less flat in 2018 followed by an increase in 2019. As such we highlight that ABL, BAFL, BAHL and MCB have a relatively shorter duration portfolio and benefit greatly if interest rates rise faster and these banks choose to build up their PIB portfolios.

Offline Farzooq

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Re: Banking Sector
« Reply #964 on: April 16, 2018, 11:44:27 AM »
Pakistan Banks: Soft earnings likely in 1Q18; UBL & MCB remain the best play

QTD trend in major banking indicators point towards muted quarterly earnings for most banks under our coverage in 1Q18.  Overall, growth in advances remained solid (21% YoY in 2M18), while deposit generation has normalized (11% in 2M18).
Absence of big capital gains and weakness in NIM (8-10bps) may offset the impact of volume growth and drag earnings of our banking universe by 16% YoY. Low-base of earnings for select banks means the sequential drop in earnings is likely to be more moderated at 4% QoQ.
NBP/BAFL are likely to see relatively strongest/weakest YoY trend in earnings with 5%/25% decline. On sequential basis, BAFL and MCB are likely to be the strongest performers (75/81% earnings jump seen) due to heavy one-offs.
Banking earnings trend is likely to pick-up pace in 2Q18 given policy rate hike and expected pick-up in economic activity, in our view.
UBL & MCB remain our top two picks in banking universe though we also have a Buy rating on HBL. We find more value in big banks relative to small banks where valuation discount has already narrowed from 55% to 30%.
Soft quarterly earnings projected in 1Q18: QTD trend in major banking indicators point towards muted quarterly earnings for most banks under our coverage in 1Q18. A key drag to YoY earnings trend stems from likely absence of big capital gains and expected softness in Net Interest Margin (NIM). Most banks have already booked capital gains on bond portfolio in CY17 ahead of expected reversal in policy rate. Equity market performance may however open up possibility for modest CG. The weakness in NIM is likely to be driven by both the re-pricing of legacy high-yielding bonds and expected softness in loans spreads (15bps in first two months). Balance sheet growth is however encouraging with strong momentum in advance growth extending in 1Q (+21% in 2M18) and deposit growth of 11%. The pricing and lack of capital gains are however likely to offset the impact of volume growth, leading to an expected drop of 16% in earnings on YoY basis. Sequentially, earnings may see a modest drop of 4% due to low base effect (big capital loss, restricting cost booked for select banks).

NBP set to outperform peers: NBP/BAFL are likely to see relatively strongest/weakest YoY trend in earnings with 5/25% YoY drop. On sequential basis, BAFL and MCB are likely to be the strongest performers (75/81% earnings jump seen) due to heavy one-offs in the form of capital losses and restructuring cost (only for BAFL) charged in the previous quarter. We note following consideration on expected quarterly earnings trends in our covered stocks;

#1 United Bank Ltd (UBL): Our EPS expectation of PKR4.96 (down 20% YoY) does not incorporate the impact of employee pension cost. Given the review petition, we believe UBL can afford to delay the impact in later periods. A key surprise for UBL may stem from above-expected provisioning on international portfolio (significant new addition in 4Q17, dragging overall coverage to 76% in Dec’17 from 83% in Dec’16). Expected cash payout of PKR3/sh may not bring any surprise for the market.

#2 MCB Bank (MCB): Whilst the bank’s NII and Non-fund income may continue to show the impact of acquisition of NIB, the impact on bottom line will likely be watered down by re-pricing of bonds and higher admin cost.

#3 Habib Bank Ltd (HBL):  For HBL, the key consideration is recovery in non-fund income post a disappointing period in 4Q. Further support to non-fund income may come from absence of capital losses. We see modest cash payout for HBL and expect complete normalization in 2H18.

#4 National Bank Ltd (NBP): Pending review petition on the pension issue, we believe NBP may continue to skip provisioning for pension liability (PKR46bn). NBP is unlikely to pay any cash dividend due to ongoing case on the same issues.

#5 Bank Alfalah Ltd (BAFL): 1Q18 is likely to show the first glimpse to what we believe normalization of earnings post restructuring exercise. A key element to watch out in 1Q18 is recovery in bank’s Current Account franchise which has been under pressure since 2Q17 (CA drop from 46% in 2Q17 to 41% in 4Q17). Consolidation done in the past two years coupled with issuance of Add Tier I capital has allowed the bank to resume cash dividend in 4Q17. We believe the bank is likely to exercise restraint on payout given increased capital cushion requirement in CY18/19 and may decide to delay complete normalization of payout to its pre-2014 levels.

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Offline MZ

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Re: Banking Sector
« Reply #965 on: April 16, 2018, 07:43:39 PM »
AKD Daily
 
Pakistan Banks: 1QCY18 Result Previews
 
Commencing this week, the AKD Banking Universe is scheduled to declare its 1QCY18F results; first up being UBL (Apr 18'18). We expect the B-6 banks to post combined NPAT of PkR21.2bn, down 12%YoY. Significant decline in NFI is likely to be a key factor leading to earnings decline where lower capital gains utilization during the quarter (expected to go down by 67%YoY) is the key culprit. Asset quality pressures (particularly for MCB and UBL) further inhibited growth with provisions during the quarter rising to PkR3.0bn vs. reversal of PkR832mn in 1QCY17. On the positive side however, we see expenses to come down by 2%YoY/3%QoQ, coming off from high base. That said, earnings deviation could come through should the banks choose to book the revised pension related obligation this quarter. With 1QCY18F earnings expectations remaining unexciting, we feel May’18 MPS will be an important checkpoint for the sector, determining the course of future rate hikes.
 
1QCY18F Earnings Preview: As a group, we expect the Big-6 banks to post combined NPAT of PkR21.2bn in 1QCY18F as compared to PkR24.1bn in 1QCY17- earnings deceleration of 12%YoY. Significant decline in NFI is likely to be a key factor leading to earnings decline where lower capital gains utilization (expected to go down by 67%YoY) is to be a key factor. Asset quality deterioration (higher provisioning charge) is to further restrict growth despite NII expected to end 9%YoY higher (see table-I).
 
Investment Perspective: The AKD Banking Universe has gained 14.1% CYTD. Overlooking the pension case judgment, we feel investors are now focusing towards further rate hikes in CY18. 1QCY18F results provide attractive entry points where removal of super tax in budget FY19 (proposal submitted by PBC) along with rate hike expectations in May’18 MPS can further bullish sentiments.

Offline Farzooq

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Re: Banking Sector
« Reply #966 on: May 17, 2018, 11:55:10 AM »
Pakistan Banking Sector

Finance Bill Amendments Offer Respite for Banks

 

·         As per Media Reports, the amendments to Finance Bill 2018-19 include a major relaxation on Super Tax for the Banking Sector.

·         Accordingly, our understanding suggests that the “effective” Super Tax on Banking Sector would now be at 4% in 2018 (on estimated PBT of 2018), to be booked in Jun-18 – compared to original language of the Bill which implied the same at ~7% (4% on PBT of 2017 + 3% on PBT of 2018).

·         Note that Banks account for their earnings on Calendar Year basis, hence original imposition of 4% Super Tax in 2018 “Tax” Year meant that the sector would have been required to pay 4% Super Tax on 2017 PBT. In addition, the announcement of Super Tax on prospective basis implied that Banks would have been required to book the tax on recurring basis as well. In case the measure would not have been amended, then it would have translated into “effective” Super Tax of ~7% in 2018, followed by 2% in 2019 and 0% in 2020 – which would have been contrary to the intent of the government.

·         Post this rationalization, the actual effective tax rate on the sector (on calendar year basis) should come to 4% in 2018, 3% in 2019, 2% in 2020 and Nil thereafter (on the same year’s estimated earnings; we understand that this would be adjustable in forthcoming years, respectively).


·         The Amendments to Finance Bill so far do not hint of such relief being extended to non-banking calendar year companies – which means they may have to book “effective” Super Tax of 5% in 2018, followed by a mere 1% in 2019, as per our understanding.

·         For Fiscal Year based companies, there remains no confusion (as their financial year ties with the tax year) – implying an effective super tax of 3%/2%/1%/0% in FY18/FY19/FY20/FY21.

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Offline aharoon

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Re: Banking Sector
« Reply #967 on: May 21, 2018, 12:35:53 AM »
Lagta hai Stock Pandits nay for upcoming 5 Year trading plan k liay Banking Sector aur Oil n Gas ko choose kara hai...
Itni tabahi mandi jis mai 5000 points less hojain Banking Sector k stocks apnay aap ko maintain rakhay huay hain

Offline rashid.Maria

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Re: Banking Sector
« Reply #968 on: May 21, 2018, 12:57:09 AM »
Lagta hai Stock Pandits nay for upcoming 5 Year trading plan k liay Banking Sector aur Oil n Gas ko choose kara hai...
Itni tabahi mandi jis mai 5000 points less hojain Banking Sector k stocks apnay aap ko maintain rakhay huay hain



Ahroon bhai clover  ki buying kis rate par hai ap ki



Offline aharoon

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Re: Banking Sector
« Reply #969 on: May 21, 2018, 04:14:36 AM »
Aik baar 62rs me average se buy karke 137+rs pe sell kardia tha.. Then again 142+rs k rates par again buy kara hai..

Offline Farzooq

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Re: Banking Sector
« Reply #970 on: June 14, 2018, 11:47:44 AM »
Pakistan Banks: There is another side to the interest rate uptick story…

We sense market seems to be focused on one-sided view on interest rate cycle and impact of the same on banks’ earnings. Potential pick-up in non-performing loans (NPL) cycle remains important along with interest rate cycle and not-so-favorable changes in growth environment.
We reckon recent policy rate hikes of cumulative 75bps CYTD may not prove to be a tipping point for infection ratio. However, possibility of future rate hikes and expected macro stabilization measures may throw important implications for build-up of infected loans.
Key question to us is what %age build-up in infection is required to nullify the positive impact of rate hike on earnings. Current stock of advances suggests a mere 0.5% change in infection ratio may dilute most of the gains from 100bps hike in policy rate.
Interestingly, current infection ratio of 7.0% for almost all banks under our sample sits at the lowest level since 2012 (average at 10.3% for top eight banks). We expect infection ratio to first further trend down in 2Q/3Q before start creeping up.
MCB, NBP, BAHL and ABL appears to be well-positioned both in terms of asset/liability positioning and the impact of increase in infection ratio on earnings. We reiterate our liking for domestically focused banks with low-duration investment book and low-cost deposits. For the same reason, we now make MCB our top pick in our banking universe replacing UBL.
Market cheers the uptick in cycle; a key emerging risk ignored: We sense market seems to be focused on one-sided view on interest rate cycle and impact of the same on banks’ earnings. Banking stocks were the key outperformer last week (up 4.1% WoW). Similarly, our discussion with fund managers also highlight heavy positioning in banks in anticipation of earnings upgrade on the back of hike in interest rate cycle. While we agree to consensus view to some extent, however we strongly believe potential pick-up in NPL cycle remains important alongwith interest rate cycle and not-so-favorable changes in growth environment. The possible upturn in NPL cycle and its implications for earnings are however relatively ignored.

Rate hike so far is not threatening: We reckon recent policy rate hikes of cumulative 75bps since Mar’18 may not prove to be a tipping point for infection ratio to start picking up, for now. We highlight three reasons:

Momentum of advances growth is still strong with latest data for 5MCY18 suggesting a significant 19% growth in advances. Higher stock of advances tend to reduce the NPL ratio and may obscure fresh NPL accumulation.   
The overall change in policy rate is still small from historical perspective. In the last cycle,  policy rate jumped from 9% to 15% over a course of 18 months.
Current policy rate of 6.5% is still low from historic perspective and set at 3-year low.
That said, we have recently highlighted possibility of further rate hikes (we expect 25bps increase in Jul’18, though highlighted risk of 50bps) and expected the government to adopt more macro stabilization measures (both fiscal and monetary) in order to achieve its objectives of containing aggregate demand and ward off pressure from external account (for details please see our report titled Pakistan Strategy: Latest deval round heightens risk for further policy actions. With stabilization measures and changing environment for growth, possibility of build-up of infection ratio is set to increase.   

Strong correlation between NPL and interest rate cycle: A historical perspective offers interesting observation on NPL/rate cycle and economic growth. NPL ratio in 2007 for a sample of eight largest banks clocked in at 4.9% which was at multi years’ low. The economic growth in 2007 was at a multi-decade high of 9% while policy rate was at 9.5%. Infection ratio started creeping up from 2008 and jumped to 10.3% by 2012 (sample size: eight largest banks). Interestingly, current infection ratio of 7.0% for almost all banks under our sample sits at the lowest level since 2012.

Looking ahead, we expect infection ratio to first further trend down in 2Q/3Q before starting to creep up. Given low NPL ratio and expected rate hike cycle, key question to us is what %age build-up in infection ratio is required to nullify the positive impact of rate hike on earnings. Looking at the current stock of advances and NPL, our calculations suggest a mere 0.5% change in infection ratio may dilute most of the gains from 100bps hike in policy rate. We believe 50bps increase in infection ratio over CY19-20 may not prove to be surprising (see side bar for bank-wise impact).

What to play? From our sample of eight banks, we highlight MCB, NBP, BAHL and ABL, which appears to be well-positioned both in terms of asset (duration & quality of investment book), quality of loan book/ funding mix and the impact of increase in infection ratio on earnings. We reiterate our liking for domestically focused banks with low-duration investment book and low-cost deposits. For the same reason, we now make MCB our top pick in our Banking universe replacing UBL.

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Offline Farzooq

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Re: Banking Sector
« Reply #971 on: June 19, 2018, 01:37:48 PM »
Pakistan Banks: Payout constraints increase on new capital requirement

Details unveiled in the central bank’s latest press release on Domestic Systemically Important Banks (DSIB) are not entirely unexpected. The central bank has designated three banks-HBL, UBL and NBP- as DSIBs and has put requirement for additional capital in the form of CET-I (2% for HBL, 1.5% for UBL, NBP).
Looking at the capital details in 2017 and earnings outlook for CY18, we reckon all three banks do not face any near-term requirement for raising capital to remain in compliance with new requirement, which are due to come in effect from Mar’19.
However, we believe the new requirement may restrain cash payout by HBL while room for optimization of RWA may allow UBL to maintain payouts. On the other hand, NBP remains unaffected.
Post notification of DSIB framework, all eyes are on notification of Deposit Protection Fund (deposit insurance), which may also entail earnings risk for almost all banks (Pakistan Banks: Deposit Protection Fund- New risk to earnings emerge).
We reiterate our liking for domestically focused banks with low-duration investment book and low-cost deposits. MCB remains our top pick among big banks while we also have a Buy call on UBL & HBL.

Details on DSIB unveiled: In an expected move, the central bank has come up with details on Domestic Systemically Important Banks (DSIB) based on draft framework introduced in Apr’18. The details unveiled in the central bank’s press release are not entirely unexpected where the central bank has designated three banks-HBL, UBL and NBP- as DSIBs and has put requirement for additional capital in the form of CET-I (2% for HBL, 1.5% for UBL, NBP). The banks are required to increase CET-I capital by Mar’19. The criteria for the selection of banks as DSIB is in two parts:

Banks are included in the sample for DSIB in case total exposure of a bank is higher than 3% of Pakistan’s GDP at market price. Total exposure as defined by the central bank is different from Risk Weighted Asset (RWA)and incorporates/disallow addition/subtraction for both on-balance sheet/off-balance sheet items (collateral, netting of deposit with advances, derivative, repo etc).
The sample banks are then subject to composite systemic approach based on four key categories (size, interconnectedness, substitutability and complexity) and decision on designation of any bank as DSIB is taken on the basis of central bank’s assessment.
Based on above, the designated banks are put in four buckets (A to D) with bucket A having minimum additional CET-I requirement of 1%. HBL has been placed in bucket B while both NBP and UBL are placed in bucket C. Bucket D has been kept empty. The designation as DSIB is a dynamic process whereby the central bank will annually notify the banks regarding the status on DSIB by end-May. Banks included in the sample DSIB list are subject to enhanced supervisory requirement to be notified by the central bank regardless of their designation as DSIB.

Payout constraint increases for select banks: Looking at the capital details in 2017 and earnings outlook for CY18, we reckon all three banks do not face any near-term requirement for raising capital to remain in compliance with new requirement which is due to come in effect in Mar’19. However, we believe the new requirement may impact cash payouts besides eroding buffer that banks maintain over and above mandated CAR. Likely strategy of each designated bank is discussed below;

HBL- With Dec’17 CET-I of 12.1% and CAR of 15.8%, HBL clearly have room to absorb higher capital requirement. The new regulation restrict HBL’s flexibility in terms of RWA and cash payout. The bank has done big optimization of its RWA exposure in 2017 with off-balance sheet exposure scaling back in 2017. We believe the bank’s conservative cash payout policy may well stretch into 2H18 in order to create room for further pick-up in CET-I ratio.

UBL-Focus on optimization of RWA exposure may intensify along with consolidation of international operation. UBL may need to trim its payout in CY18 due to combination of Super Tax and higher CET-I requirement.

NBP-The bank already faces legacy pension cost of PKR46bn pending due to ongoing legal cases in the Supreme Court. The bank is expected to withhold cash payout in CY18 to create buffer for absorption of pension cost in case of adverse decision.

All eyes on new regulation on Deposit Protection Fund: Post notification of DSIB framework, all eyes are now on notification of Deposit Protection Fund, an Insurance scheme for deposits. In the latest development, the central bank has incorporated the subsidiary which will undertake insurance function. The formalities in terms of annual premium (0.1% or 0.2% of eligible deposits) and the base of deposit (definition of eligible deposits) are being worked out. The premium on deposit may entail earnings risk for all banks with banks having higher retail funding facing higher effect. All in all, we estimate earnings impact of 4-5% p.a. for our covered banks.

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Offline Farzooq

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Re: Banking Sector
« Reply #972 on: June 26, 2018, 11:54:26 AM »
Pakistan Banks: Deposit insurance rolled out; 3-5% earnings drag

The central bank has finally unveiled mechanism for deposit insurance. Details suggest the cost of insurance is likely to range between 3-6% of banks’ earnings in CY18.

Insurance premium for protected deposit is largely inlinewith our expectation (@0.16%); however the definition of protected deposits is broader than anticipated (Deposit Protection Fund- New risk to earnings emerge). The insurance premium will be recurring in nature and non-recoverable in deposit return.

All in all, the deposit insurance aids to robustness of banking system and brings risk management framework inlinewith other regimes. Furthermore, it also fulfills an important consideration set forth in the last IMF program.

BAHL, MCB, UBL maintain relatively higher portion of deposit from eligible sources (mainly retail) and as such may see the earnings drag by 4.5%/3%/4% respectively.

While deposit protection opens up a new source of earnings drag for our covered banks, the impact on stock prices is likely to be muted given current valuations where big banks trade at CY18E P/BV of1.2-1.5x. We reiterate our Buy rating on MCB, UBL and HBL.

Details on deposit protection scheme reveal downside risk: The central bank has made a long-awaited notification on mechanism for deposit insurance. The insurance policy is applicable on scheduled banks and as such aims to provide protection to eligible depositors in case of bank’s failure. All in all, the deposit insurance aids to robustness of banking system in Pakistan and brings risk management framework inline with other regimes. Furthermore, it also fulfills an important consideration set forth in the last IMF program. There are not many differences in terms of the structure of the scheme discussed in our report(Deposit Protection Fund- New risk to earnings emerge). However, details on select issues have been decided in the banks’ favor and may reduce the overall cost of new regulation for banks.

Key highlights of the scheme: Following points are worth highlighting;

Overall insurance premium has been set at 0.16%, payable on quarterly basis. The deposit base is reported as period end December of preceding year (Dec’17 base for insurance cost in CY18) will be used as basis for calculation of insurance premium. The scheme will come into effect from Jul’18. Earlier, we had highlighted potential insurance premium of 0.15-.2%. Banks are required to pay insurance premium to Deposit Protection Corporation, a subsidiary of the central bank. Our estimates, based on deposit profile of top eleven banks (90% of total deposits), suggest the corporation may collect PKR8-10bn annually in the name of deposit protection contribution. 
The central bank has specifically instructed banks not to recover deposit insurance cost from the depositors. We believe commercial banks are likely to respond by cutting freebies banksoffer to depositors in order to dilute the impact.
The scheme is only applicable on domestic deposits. This is against our expectation of uniform applicability of the scheme on both domestic and international deposits. This is positive for HBL and UBL, which have significant portion of int’l deposits (11/19% respectively).
The eligibility criteria of protected deposits excludes certain sources of domestic deposits (Govt, corporates, Financial Institutions, directors). This implies effectively retail deposits (all types of deposits) are covered in the scheme.
In the event of default, compensation for depositors upto PKR250,000 will be available. In case of multiple accounts in a bank, the compensation will remain limited to maximum of PKR250,000 (per bank, per depositor) while if multiple accounts are maintained at different banks, maximum bank-wise maximum limit will apply.
 A separate Shariah-compliant scheme for Islamic deposits will be notified.
Impact on banks: BAHL, MCB, HBL, UBL,& BAFL carry relatively higher portion of deposit from eligible sources (mainly retail) which is calculated at 70/62/61/54/50% in CY17 (excluding int’l deposits). On average, retail deposits contributes 50% to total deposit base of banks. HMB maintains a unique deposit profile whereby only 5% of deposits are contributed by retail depositors. In terms of impact, we estimate insurance premium may chip off banks’ earnings by 4.5/3/4/3/4% for BAHL, MCB, HBL, UBL, BAFL respectively. For our calculations, we have assumed deposit protection cost for Islamic deposit equivalent to conventional deposits and used annualized earnings for BAHL.

Risks priced in: While deposit protection opens up a new source of earnings drags for our covered banks, the impact on stock prices is likely to be muted given current valuations and big underperformance of select banks (14.2/23.2/11% for UBL, HBL, MCB in 3-mth). Valuating for big banks trade at CY18E P/BV of 1.3with CY19E ROE of 16%, we reiterate our Buy rating on MCB, UBL and HBL.

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Offline MZ

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Re: Banking Sector
« Reply #973 on: July 16, 2018, 10:04:19 PM »
AKD Daily

Pakistan Banks: Adjusting for higher rates

SBP has increased interest rates by a 100bps in Jul’18 MPS resulting in a cumulative bump of 175bps in CY18 so far, citing the following reasons: 1) NFNE core inflation at 7.0%YoY in Jun’18, 2) rising fiscal deficit (FY18E: 6.8% vs. GoP’s target of 5.5%), and 3) escalating external imbalance as key determinants. The swift pace of increments has come as a surprise, where we have accordingly revised upwards our average DR assumption to 7.50 % in CY18F (previously at 7.0%).This remains particularly positive for banks, with net interest margins likely improving on the back of higher asset yields. Accordingly, our earnings estimates for the Big-6 banks have increased by an avg. 3.5-7.0% for CY18F. While banks will continue to struggle in CY18F (earnings to decelerate on the back of one-off exogenous charges during the year), recovery thereon should be swift (CY19F earnings growth of average 24%) making a strong long-term investment case. In addition to, the attractive forward valuation set at hand (CY19F PB/PER at 1.1/7.4x) post a sharp reduction in prices (AKD Banking Universe lost 7% CYTD) furthers our investment thesis. We advise building position in We advice building position in undervalued names like HBL, UBL, MCB and BAFL.               . 

 

Policy rate up by 100bps: In a preemptive move, SBP raised benchmark rate by 100bps with TR/DR ending at 7.5%/8.0%. This marks the third round of interest rate hike in CY18 (cumulative 175bps) in order to curb buildup of inflationary pressures (core inflation NFNE standing at 7.0%YoY in Jun'18 vs. 5.5%YoY in Jun'17). Additional catalyst for the hawkish stance included rising fiscal deficit (FY18E: 6.8% vs. GoP’s target of 5.5%), rupee devaluation and escalating external imbalance. Going forward, inflation is expected to continue to mount in light of currency depreciation and rising oil prices along with sustained external imbalance, subsequently leading to continued upward trajectory of interest rate profile. In this regard, we expect cumulative 75bps hike in interest rate during the ongoing year with TR/DR ending at 8.25%/8.75% by Dec'18.          .

 

Upward adjustment in DR: In light of the recent uptick in interest rates, we have upward revised our macro assumptions for DR where we now see a cumulative 250bps hike in CY18F (vs. 125bps earlier). Adjusting for the same, our earnings estimates go up by 3.5-7% in CY18F for our banking universe. That said, earnings rebound will become more noticeable from CY19F (earnings growth of an average 24%) particularly in the absence of one-off charges while improvement in NIMs in the backdrop of higher asset yields should further aid recovery.

 

Investment Perspective: In the backdrop of an increasing interest rate scenario, we believe banks having: 1) a higher proportion of low cost C/A deposits, 2) prudent asset quality credentials, 3) lower PIB/investment ratio and 4) an adequate CAR buffer should be preferred. We advise building position in undervalued names like HBL, UBL, MCB and BAFL.

Offline Farzooq

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Re: Banking Sector
« Reply #974 on: October 04, 2018, 12:55:34 PM »
Pakistan Banks: Soft earnings patch seen for banks in 3QCY18
 
The trends seen in major indicators for banking sector hint towards deeper than usual seasonal slowdown in core earnings momentum for banks in 3Q18.

The latest data suggests the deposits have shrunk 3% QoQ while investment yield is expected to come down due to retirement of PIBs (~PKR480bn). Spreads are however stable (4.88%,+4bps QTD) despite lag in loan re-pricing post policy rate hike in Jul’18.

The credit demand was, however, shielded from general slowdown seen in the production data of many industries with stable stock of private and public sector credit (+20/42% YoY respectively). We attribute YoY growth to rising commodity prices and increased margin on trade.

Non-fund income is, however, expected to remain strong in 3Q18 with major support from currency gains, remittances and trade.

All in all, profitability of banks is likely to drop by 3-4% QoQ (after taking into account absence of additional Super Tax and provisioning for deposit insurance cost). Among our coverage universe, UBL’s earnings are likely to see highest positive momentum while BAFL is expected to see most negative momentum in 3Q18. MCB and HBL are our top two picks.

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Offline MZ

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Re: Banking Sector
« Reply #975 on: October 09, 2018, 08:12:05 PM »
COMMERCIAL BANK: IN A STATE OF AMBIVALENCE; A YEAR OF POSITIVES AND NEGATIVES AT PLAY

Tuesday, 09 October 2018

BY: TAURUS SECURITIES LIMITED

After 20 months of status quo i.e. 5.75bps, the State Bank of Pakistan’s Monetary Policy Committee finally commenced revising the benchmark interest rate north, citing soaring aggregate demand pressures, worsening inflation, twin deficits and external factors.
YTDCY18, the SBP’s MPC has effected rate hikes accumulating to 275bps—the most aggressive since CY08, bringing the benchmark policy rate to 8.5% - a key earnings driver for the Banking sector.
However, despite the surge in policy rate, industry spread on lending has failed to pick-up, succumbing to systemic re-pricing lag between assets and liabilities. Industry spread on outstanding loans has hovered around 4.80bps for the entire year, which is 14bps less than the average for CY17—the year of status quo.
Nevertheless, rate hike sensitivity of the industry continues to improve which we believe will bode positively for sector earnings in CY19, where we expect double digit growth next year.

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Re: Banking Sector
« Reply #976 on: October 14, 2018, 05:58:01 PM »
Sell sell sell !!
Nikal jaoo banking stocks se bcoz more than 100 billions unknown money found in accounts which should transfer to SBP
Banks deposits par acha khasa negative impact dekhnay ko milay Ga
.