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Karachi: Allied Bank Ltd (ABL) is scheduled to announce its full-year CY11 result on Tuesday, Feb 14’12.
According to AKD Securities, on a consolidated basis, AKD Securities expects ABL to post NPAT of PKR10.17bn (EPS: PKR11.82) in CY11 against NPAT of PKR8.28bn (EPS: PKR10.59) in CY10, translating into robust growth of 23%YoY. However, 4QCY11 NPAT is expected to dip by 13%QoQ to PKR2.38bn on a slight sequential contraction in Nil and a spike in loan provisions. Alongside the result, AKD Securities expects ABL to announce a final cash dividend of PKR2/share (bringing full-year CY11 payout to PKR4.5/share) as well as a 10% bonus in order to meet CY12 MCR requirement of PKR9bn. Key highlights for CY11 are expected to be 1) 9%YoY Nil growth, 2) a 30%YoY decline in loan provisions, 3) 14%YoY increase in non interest income on higher dividend and fx income and 4) high admin expense growth of 21%YoY. Having gained 16.75%CYTD, ABL trades at a CY12F P/B of 1.1x and PER of 5.1x where AKD Securities’ target price of PKR75.5/share offers upside of 21%. In this regard, AKD Securities believes ABL will continue to enjoy superior valuations, primarily owing to one of the highest ROE among Pakistan Banks, superior asset quality and a strong franchise (9MCY11 estimated. NIMs at 6.2% remain strong). Upside to earnings estimates exists on potential tapping of sizeable capital gains backlog.
| Profit and Loss Accounts | ||||||
| (In PKRmn) | CY11F | CY10 | YoY | 4QCY11E | 3QCY11 | QoQ |
| Interest Income | 49,622 | 45,011 | 10% | 12,372 | 12,665 | -2% |
| Interest Expense | 25,039 | 22,466 | 11% | 6,423 | 6,427 | 0% |
| Net Interest Income | 24,583 | 22,545 | 9% | 5,949 | 6,237 | -5% |
| Loan Provisions | 2,155 | 3,074 | -30% | 800 | 315 | 154% |
| Total Provisions | 2,104 | 4,083 | -48% | 800 | 312 | 156% |
| Post Provision Nil | 22,479 | 18,462 | 22% | 5,149 | 5,925 | -13% |
| Fee Income | 2,917 | 2,646 | 10% | 755 | 576 | 31% |
| Capital Gains | 1,231 | 1,435 | -14% | 500 | 338 | 48% |
| Non Interest Income | 6,677 | 5,867 | 14% | 1,965 | 1,582 | 24% |
| Non Interest Exp | 14,163 | 11,914 | 19% | 3,839 | 3,437 | 13% |
| Profit before tax | 14,987 | 12,415 | 21% | 3,275 | 4,100 | -20% |
| Profit after tax | 10,172 | 8,284 | 23% | 2,379 | 2,722 | -13% |
| EPS (PKR) | 11.82 | 9.63 | 23% | 2.76 | 3.16 | -13% |
Investment Perspective: ABL has gained 16.75%CYTD to trade at a CY12F P/B of 1.1x and PER of 5.1x. Despite these gains, ABL’s valuations remain highly attractive where AKD Securities believes the bank deserves to trade at a premium relative to peers. The latter is justified in AKD Securities ‘view given ABL’s robust ROE (CY12F: 23%, one of the highest among Pakistani banks), strong asset quality dynamics (contained NPL slippage, coverage >80%) and sizeable capital gains backlog (PKR3.6bn on Sep 30’11). AKD Securities projects 5yr NPAT CAGR of 10 % going forward while strong capital strength (Tier- I CAR projected to stay above 20%) implies potential for a ramp-up in payouts going forward.