NBP: Analyst Briefing Key Takeaways
NBP held its inaugural analyst briefing on March 8th, chaired by Chairman & CEO Mr. Ali Raza. Points of discussion included a review of CY09 performance and outlook for both the banking sector in general, and for NBP in particular. In this regard, NBP management believes that while the ongoing year will likely be challenging (in that the absolute quantum of systemic provisions may remain flat YoY) the overall macroeconomic environment is set to be more upbeat over the next 2-3 years. While we concur that the worst is certainly behind us, we believe existing economic challenges still merit a relatively cautious stance. Regarding NBP, we believe that the positives have largely been captured by the recent runup in stock price (up 25%CYTD) with risks more likely to come to the forefront in CY10F. At current levels, NBP trades at a CY10F Total Equity P/B of 0.76x and offers an upside of 8.9% to our target price of PkR101.3/share.
AKD Research
March 9 2010
NBP: NIT & tax credit drive earning growth
Saroor Investment takes over AHBL management
Saroor Investment has taken over the management of Arif Habib Bank Limited (AHBL) and has changed the board of directors. The new AHBL directors are Nasser Abdullah Hussain Lootah Chairman and director, Hussain Lawai President and CEO with other directors namely Nasim Beg, Asadullah Khawaja, Mohammed Ahmad Mousa Ismail, Khrida Nasser Abdullah Hussain Lootah and Md. Jaglul Karim.The new board of directors of Arif Habib Bank Limited (AHBL) have decided to inject additional capital of Rs 2.5 billion into the equity of the bank.
Karachi, March 5, 2010
NBP CY09 result review
National Bank of Pakistan (NBP) has announced its full-year CY09 result. On a consolidated basis, NBP has posted a Net Profit After Tax (NPAT) of PkR18.01bn (EPS: PkR16.82) in CY09 against NPAT of PkR15.7bn (EPS: PkR14.57) in CY08, growth of 15%YoY. This was inline with our forecasted NPAT of PkR18.0bn (EPS: PkR16.73). Alongside the result, NBP announced a cash dividend of PkR7.5/share and a stock dividend of 25%, both much above consensus expectations.
Net Profit Before Tax (NPBT) in CY09 is lower by 5%YoY where bottomline growth has been driven by lower effective tax rate (18% following significant capital gains). Considering 4QCY09 performance alone, salient features include 1) 29%QoQ decline in loan provisions indicating some FSV reversals may have been availed, 2) healthy 27%QoQ increase in fee income and 3) a very high 32%QoQ increase in admin expenses.
NBP trades at a CY10F Tier-I P/B multiple of 0.94x (Total Equity P/B: 0.72x). While we have an Accumulate stance based on our target price of PkR101.3/share we will revisit our investment case post release of detailed CY09 accounts.
AKD Research
March 4, 2010
Banks — blanket exposure to the economy
NBP posted upbeat bottom-line growth of 18% YoY in 2009 to PRs16.92/sh with cash dividend of PRs7.5/sh and stock dividend of 25%.
Earnings were primarily driven by gain from NIT (PRs4.0bn) and tax credit of prior years. Adjusting for these two, core net profit declined ~19% YoY to ~11.6/sh.
Pre-prov op profit (PPOP) was down 1% YoY, despite NIT gain, mainly due to decline in net interest margin (NIM) and higher operating expenses (up 24% YoY).
While divergence in op. performance between NBP and peers is evident, the stock has rallied +24% in 2010 vs +1.1% for sector. Trading at 36% discount on P/B as compared to historical discount of 30% we maintain underperform on NBP.
KASB Securities and Economics Research
March 5, 2010
