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ABL: analyst briefing

ABL: analyst briefing key takeaways & reassessment of our investment case

ABL held its analyst briefing yesterday to discuss its CY09 results and its medium term strategy & outlook. In a macroeconomic environment where the growth slump has become the “new normal”, ABL’s strategy is to continue on the path of balance sheet consolidation, especially deposit restructuring, while targeting top-tier blue chip companies with good credit histories and conservatively gaining market share in the high-yielding SME segment. We posit that the bank can maintain “quality” earning growth (EPS CAGR of 10% over FY10-FY13) over the medium term if it manages to build on the successes it has achieved in a tough operating environment where the bank in CY09:

1   raised its Net Interest Margin by 85bpsYoY compared to average NIM expansion of 33bpsYoY for peers

2   achieved bottom-line growth of 71%YoY and an RoE (Tier-I) of 31% in contrast to average profitability growth of 13%YoY and RoE (Tier-I) of 21% by peers

3    limited loan infection to 6.5% of loan book and maintained coverage of 77% as compared to 10.8% infection ratio and 75% coverage for peers
AKD Research
31 March 2010

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