AKD Quotidian about — ABL: 1HCY12 Result Preview

Karachi, August 09, 2012 (PPI-OT): The BoD of Allied Bank Limited (ABL) is scheduled to finalize the bank’s 1HCY12 result on Aug 16’12.

According to AKD Securities, on a consolidated basis, AKD Securities expects ABL to post NPAT of PKR 6.06 billion (EPS: PKR 6.40) in 1HCY12 vs. NPAT of PKR 5.07 billion (EPS: PKR 5.36) in 1HCY11, translating into strong 19%YoY growth. Alongside the result, AKD Securities expects ABL to announce a cash dividend of PKR 1/share to bring 1HCY12 payout to PKR 3/share. Key highlights of 1HCY12 results are expected to be 1) 15%YoY decline in NII due to tighter NIMs, 2) impressive 39%YoY decline in provisions as ABL should continue to depict superior asset quality dynamics, 3) robust 74%YoY growth in non-interest income on higher dividends and capital gains and 4) flattish expenses. On a sequential basis, AKD Securities expects ABL to post NPAT of PKR 2.97 billion (EPS: PKR 3.14) in 2QCY12, up 17%YoY but down 4%QoQ. The sequential decline is likely to emanate from the non-interest income side although AKD Securities notes the potential for positive earnings surprises given ABL carries sizeable unrealized capital gains on its balance sheet. Having gained 47%CYTD (outperforming the KSE-100 Index by 17.5% in the process), ABL trades at a CY12F P/B of 1.36x and P/E of 6.2x. While AKD Securities’ target price of PKR 69/share implies a Neutral stance, AKD Securities will look to revisit AKD Securities’ investment case post release of detailed 1HCY12 accounts.

MEBL: 1HCY12 Result Preview

Meezan Bank Limited (MEBL) is scheduled to announce its 1HCY12 result on Aug 12’12. On a consolidated basis, AKD Securities expects MEBL to post NPAT of PKR 2.1 billion (EPS: PKR 2.35) in 1HCY12 vs. NPAT of PKR 1.51 billion (EPS: PKR 1.67) in 1HCY11, translating into a growth of 41%YoY. Alongside the result, AKD Securities expects MEBL to announce interim cash dividend of PKR 0.50/share (MEBL announce a 10% cash dividend in the same period last year but did not maintain payout trajectory in subsequent quarters). Key highlights of upcoming 1HCY12 results are expected to be 1) 13%YoY growth in net mark-up income, 2) impressive 42%YoY decline in provisions as NPL stock has largely stabilized, 3) modest 5%YoY non-mark-up income growth with higher fees and capital gains diluted by lower dividends and fx income and 4) steep 20%YoY increase in non-interest expenses due to larger branch network. Share of profit of associates (asset management) is expected to climb by 4x YoY to PKR 811 million. On a sequential basis, MEBL should post NPAT of PKR 994 million (EPS: PKR 1.10) in 2QCY12, up 14%YoY but down 12%QoQ. The sequential dip in profits should arise on the back of lower net mark-up income on tighter margins, lower capital gains and likely lower and annualized (on 1QCY12) P/E of 5.9x. At present, AKD Securities’ stance on MEBL is under review but AKD Securities will shortly look to refresh AKD Securities’ investment case on the scrip.