Karachi: Habib Bank Ltd (HBL) is scheduled to announce its 1HCY11 result on Friday, Aug 19’11.
According to AKD Securities, on a consolidated basis, AKD Securities expects HBL to post NPAT of PkR9.81bn (EPS: PkR8.90) in 1HCY11 against NPAT of PkR7.87bn (EPS: PkR7.14) in 1HCY10, translating into stellar 25%YoY growth. On a sequential basis, AKD Securities expects 2QCY11 NPAT to register at PkR4.81bn (EPS: PkR4.36), down 4%QoQ primarily due to likely higher effective tax rate (one-off 15% surcharge). Going by past precedence, AKD Securities does not expect HBL to announce any interim payout. Key highlights of upcoming 1HCY11 results are expected to be 1) strong 19%YoY NIl growth, 2) 55%YoY increase in provisions largely due to bad loan ageing, 3) 14%YoY growth in non-interest income propelled by FX income and 4) contained 5%YoY increase in admin expenses. At current levels, HBL trades at a CYIIF P/B of 1.12x, PER of 6.45x and dividend yield of 5.8% where the scrip offers an upside of 10.9% to AKD Securities’ target price of PkR130/share. Accumulate!
Summarized Consolidated P and L
| PkRmn | 1HCY11 | 1HCY10 | YoY | 2QCY11 | 1QCY11 | QoQ |
| Interest Earned | 45,385 | 39,675 | 14% | 22,864 | 22,520 | 2% |
| Net interest income | 18,650 | 17,136 | 9% | 9,389 | 2,261 | 1% |
| Net interest Income | 26,735 | 22,539 | 19% | 13,475 | 13,259 | 2% |
| Total Provisions | 4,867 | 3,141 | 55% | 2,500 | 2,367 | 6% |
| Post Provision NIl | 21,867 | 19,399 | 13% | 10,975 | 10,892 | 1% |
| Fee Income | 2,696 | 2,730 | -1% | 1,450 | 1,246 | 16% |
| Dividend and Share of Profits | 545 | 534 | 2% | 275 | 270 | 2% |
| FX Income | 2,168 | 1,350 | 61% | 1,050 | 1,118 | -6% |
| Non Int income | 7,162 | 6,306 | 14% | 3,685 | 3,477 | 6% |
| Total Income | 29,030 | 25,705 | 13% | 14,660 | 14,369 | 2% |
| Non Int Expenses | 13,553 | 12,940 | 5% | 6,875 | 6,678 | 3% |
| NPBT | 15,477 | 12,764 | 21% | 7,785 | 7,691 | 1% |
| NPAT | 9,810 | 7,865 | 25% | 4,809 | 5,000 | -4% |
| EPS (PkR) | 8.90 | 7.14 | 25% | 4.36 | 4.54 | -4% |
Investment Perspective: HBL has gained 5.7%CYTD (12%outperformance vs. the KSE-100 Index) to trade at a CY11F P/B of 1.12x, PER of 6.45x and dividend yield of 5.8%. At current levels, our target price of PkR13O/share offers upside of 10.9% and implies an Accumulate stance. AKD Securities’ positive stance on HBL is based upon 1) high NIMs (est. 6.9% in 1QCY11), 2) shill towards T-bills over the last two years and 3) diversification afforded by investments across banks in various developed economies. AKD Securities believes these should enable HBL to post a CY10-CY15F NPAT CAGR of 12%. Going forward, even if interest rates trend lower AKD Securities believes HBL will be able to maintain its growth momentum with likely lower credit costs to compensate for margin compression (dynamics similar to CY09/CY10 should play out where the bank posted growth of 23% YoY and 27%YoY). At the same time, lower interest rates would likely imply positive multiples rerating.