Karachi, July 28, 2021 (PPI-OT): HBL, UBL and BAHL: 2QCY21 Result Previews

HBL to post earnings of PkR5.5/sh in 2QCY21: Habib Bank Limited (HBL) is due to announce its 1HCY21 result tomorrow where we expect the bank to post NPAT of PkR16.7bn (EPS: PkR11.1) compared to PkR15.2bn (EPS: PkR10.3) in the same period last year. For 2QCY21, we foresee earning of PkR5.5/sh, down 5.0%QoQ/26.6%YoY on the back of possible increase in provisioning costs (cost of provisioning assumed at 0.2%), seasonal uptick in administrative costs (+10.5%QoQ), and normalization in net FX income. Net Interest Income (NII) is expected to register a growth of 5.6%QoQ driven largely by balance sheet’s volumetric growth. Together with the result, we expect the bank to announce a dividend payout of PkR1.25/sh, given management focusing on building appropriate capital buffers (cumulative payout for CY21TD to PkR2.5/sh). HBL’s performance has remained largely flat, underperforming market by 9.7ppts. We have a buy stance with TP of PkR174.6/sh where our liking emanates from, i) HBL being the largest play in banking space offering exposure to Pakistan’s macro story, ii) aggressive adoption of technology potentially yielding first-mover advantage, and iii) adequate buildup of loss reserves.

UBL earnings to stand at PkR4.82/sh in 2QCY21: United Bank Limited (UBL) has announced its BOD meeting for 1HCY21 result on Aug 6th, 2021 where we expect it to post earning of PkR13.4bn (EPS: PkR11.0) compared to PkR10.7bn (EPS: PkR8.9) in the same period last year. Together with the result, we expect a dividend of PkR3.5/sh, taking cumulative payout to PkR7.5/sh for 1HCY21. For 2QCY21, earnings are likely to clock in at PkR4.82/sh, down 22.8%QoQ/flat YoY where sequential decline is attributable to normalization in capital gains (PkR1.8bn recorded in 1QCY21 mostly related to power holdings), and absence of impairment reversals (PkR222mn in 1QCY21) pulling up cumulative provisioning possibly to PkR753mn compared to PkR115mn in 1QCY21. We have a Buy stance on the stock with TP of PkR142.5/sh whereas dividend yield stands at 9.5%.

BAHL to record EPS of PkR3.84 in 2QCY21: Bank Al Habib Limited (BAHL) is due to announce its 1HCY21 result on Aug 4th 2021. In this regard we expect bank to record earnings of PkR8.9bn (EPS: PkR8.0) compared to PkR7.2bn (EPS: PkR6.5) in the same period last year. For 2QCY21, earnings are likely to clock in at PkR3.84/sh, down 7.9/3.1% QoQ/YoY with sequential downtick coming through from potential normalization in provisioning costs (PkR396mn assumed in 2QCY21 vs. -ve 245mn in the previous quarter). Net Interest Income (NII) is expected to jump 5.8%QoQ given balance sheet’s volumetric growth amid stable NIMs whereas non-funded income is likely to grow 7.7%QoQ with impetus coming from bank’s robust trade franchise. We have a buy stance on the stock with TP of PkR91.5/sh with BAHL likely reaping benefits of aggressive branch expansion of yesteryears.