AKD Quotidian about — NBP: 1HCY13 Result Preview

Karachi, August 12, 2013 (PPI-OT): National Bank of Pakistan (NBP) is scheduled to announce its 1 HCYI 3 result on Aug 2213.

According to AKD Securities on a consolidated basis, AKD Securities expected the bank to post NPAT of PIcR8.l9bn (fully diluted EPS: PkR3.85) in 1HCYI3 vs. NPAT of PkR9.29bn (EPS: PkR4.37) in 1HCYI2, translating into a 12%YoY decline. That said, 2QCY1 3F NPAT of PkR4.36bn (fully diluted EPS: PkR2.05) is expected to be up by 14%QoQ on higher Nil (volume driven), lower provisions and higher `other income.’ Key highlights of

1HCYI3 results are expected to be:

14%YoY decline in Nil due to tighter NIMs

30%YoY reduction in total provisions

1 9%YoY increase in non-interest income with across-the-board growth

11%YoY increase in non-interest expenses

NBP has gained 33%CYTD to trade at a CY13F P/B of O.7x, P/E of 6.9x and DIV of 10.9%. With the interest rate cycle expected to reverse soon, AKD Securities expects banks particularly the larger ones, to be key beneficiaries with CY14F earnings poised to post a marked rebound. In this regard, AKD Securities awaits NBP’s 1 HCY13 result and the next MPS to formally revisit AKD Securities investments case.

HBL: 1HCY13 Result Preview
On a consolidated basis, AKD Securities expects Habib Bank Ltd (HBL) to post NPAT of PkR10.27bn (fully diluted EPS: PRR7.70) in IHCY13 against NPAT of PkR11.73bn (EPS: PkRS.8O) in 1HCYI2, translating into a decline of 1 2%YoY. Alongside the result, AKD Securities expects the BoD to approve an interim dividend of PkR4!share (payout ratio: 52%). On a sequential basis, 2QCYI3 NPAT of PkR5.24bn (EPS: PkR3.93) should be up 4%QoQ driven by lower provisions and an expected lower effective tax rate. Key highlights of upcoming 1HCYIZ results are expected to be:

9%YoY decline in Nil will HBL aggressively favouring GoP securities over loans

Contained 5%YoY increase in total provisions

Flattish non-interest income with higher fees countered by lower fx income

Just 4%YoY increase in non-interest expenses

Effective tax rate of 33.9% in 1HCY13 vs. 381% in 1HCY12

HBL has gained a stellar 54%CYTD to trade at a CY13F P/B of 1 .5x, PIE of 8.8x and DIV of 4.8%. In this regard, while HBL will also be a key beneficiary of any increase in interest rates, AKD Securities believes the stock price run-up already largely incorporates the positives where HBLs peers such as ABL, UBL and BAFL appear to offer better value for money. As such, while AKD Securities will look to formally revisit AKD Securities investments case post 1HCY13 results, AKD Securities targets price of PkR130/share implies 21% downside.

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