Karachi, January 31, 2022 (PPI-OT): Pakistan Banks: BAFL, MEBL, BAHL Result Previews

BAFL’s 4QCY21 earnings to stand at PkR2.0/sh: Bank Alfalah Limited (BAFL) is scheduled to hold its BoD meeting of Feb 2’22 to announce its annual result. We expect the bank to post earnings of PkR14.3bn (EPS: PkR8.1) in CY21 compared to PkR10.8bn (EPS: PkR6.1) in the same period last year. For 4QCY21, we expect BAFL’s earnings to clock in at PkR2.0/sh, +66.2%YoY but down 2.8%QoQ where on a sequential basis, the downtick is attributable to the repricing effect coming into play following an aggressive rate hike of 250bps in the current quarter. Consequently, NIMs of the bank is expected to be compressed to 3.2% in 4QCY21 compared to 3.4% in the previous quarter resulting in a decline in core income of 5.8%QoQ. However, the decline is partially offset by potential reversal in provisioning costs, and realization of capital gains (PkR3.7bn unrealized gains on investment portfolio). Together with the result, we expect the bank to announce a dividend of PkR2/sh, taking cumulative payout for CY21 to PkR4.0/sh.

MEBL to report 4QCY21 earnings of PkR4.7/sh: Meezan Bank Limited (MEBL) is expected to report an NPAT of PkR27.6bn (EPS: PkR16.9) in CY21 vs. PkR22.6bn (EPS: PkR13.8) in the same period last year. On a quarterly basis, earnings are expected to clock in at PkR4.7/sh, +8.8%QoQ/82.5%YoY where we see the bank to be least effected from repricing mismatch due to profit sharing business model. Hence, we see NIMs sustaining in the current quarter at 4.7% while the volumetric growth at the back of aggressive branch expansion is likely to push up net interest income by 6.2%QoQ. Administrative expenses of the bank is likely to grow 11.0%QoQ on account of branch expansion which usually speeds up in order to meet year-end targets. Together with the result, we expect the bank to announce a dividend of PkR2.0/sh – taking cumulative dividend cash payout to PkR6.5/sh.

BAHL to witness sequential decline in earnings – 4QCY21 EPS at PkR3.9/sh: Bank AlHabib Limited (BAHL) is set to close another year of strong profitability with an NPAT of PkR18.2bn (EPS: PkR16.5) in CY21, flat when compared to last year. The earnings announcement is likely to be accompanied by a dividend payout of PkR4.5/sh. For 4QCY21, earnings are expected to be recorded at PkR4.3bn (EPS: PkR3.9) vs. PkR/sh 4.4/4.2 in the previous quarter/4QCY20. The downtick in sequential earnings is attributable to, i) historically higher administrative expense in the final quarter of the year, and ii) the large repricing lag coming into play for the bank with NIMs possibly diminishing to 3.3% in 4QCY21 vs. 3.5% in the previous quarter but countered by balance sheet volumetric growth, keeping net interest income decline to 2.0%QoQ. We have a buy stance on BAHL with Dec’22TP at PkR93/sh.