Karachi, April 14, 2022 (PPI-OT): BAHL, ABL, and UBL: Result Previews

BAHL earnings expected at PkR3.76/sh in 1QCY22: Bank Al Habib is set to announce its 1QCY22 results on April 19th, 2022 where we expect the bank to post earnings of PkR4.2bn (EPS: PkR3.76) compared to PkR4.6bn (EPS: PkR4.17) in the same period last year. On a sequential basis, earnings are likely to be down 12.5%QoQ primarily on account of higher visibility of repricing effect in the foregoing quarter and bank’s misplaced asset mix. As such, net interest income is to decline 3.8%QoQ with NIMs standing at 3.1% in 1QCY22 vs. 3.6% in the previous quarter. Non-interest income is to decline marginally due to one-offs present in the previous quarter (BAHL recognized exchange gain on the closure of overseas branch in 4QCY21 of PkR293mn). Provision expense is likely to remain muted as is seen in the previous quarters. We have a buy stance on the stock with Dec’22TP standing at PkR93.0/sh – an upside of 29.1% from last close where we see impact of higher interest rates becoming visible from 2HCY22.

UBL’s 1QCY22 earnings to stand at PkR6.5/sh: United Bank Limited (UBL) is scheduled to report its 1QCY22 results on April 20th, 2022. In this regard, we expect the bank to announce earnings of PkR8.0bn (EPS: PkR6.5) for the foregoing quarter vs. PKR7.6bn (EPS: PkR6.2) reported in the same period last year. Together with the result, the bank is expected to announce a dividend of PkR5.0/sh. On a sequential basis, earnings is likely to be down 8.8%QoQ attributable to absence of one-off income from discontinued operations. It overshadowed growth in core income (+10.0%QoQ) on account of improvement in NIMs to 3.6% in 1QCY22 vs. 3.3% in the previous quarter due to higher asset tilt towards Govt. securities that registered widened yield spread. Non-interest income is expected to be down 7.7%QoQ due to normalization effect in fee income base of the bank (down 10.6%QoQ). Yet, cost to income ratio of the bank is likely to stand at 51.8% compared to 53.0% in the previous quarter. We have a buy stance on the stock with Dec’22TP standing at PkR156.1/sh – an upside of 10.2%, and an attractive dividend yield of 14.1%.

ABL to record EPS of PkR3.7 in 1QCY22: Allied Bank Limited (ABL) is scheduled to hold in BoD meeting on April 20th, 2022 to announce 1QCY22 results. In this regard, we expect the bank to post earnings of PkR3.70/sh, flat when compared to last year and also to previous quarter. Sequential performance is expected to be led by core income growth of the bank that clocked in at 15.1%QoQ given higher asset tilt to investments and continuous accumulation of CA in the deposit mix (4QCY21: 38.4% vs. 36.1% at the start of CY21). However, it is likely to be offset by potential normalization in capital gains contribution in non-interest income which is expected to overall decline by 8.7%QoQ. Effective tax rate is expected at 40.0% in 1QCY22 vs. 33.7% in the previous quarter. Together with the result, we expect ABL to announce a dividend payout at PkR2.0/sh while any upside cannot be ruled out.