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NIB – 1QCY10 result review

On an unconsolidated basis, NIB has posted NPAT of PkR23mn (EPS: PkR0.01) in 1QCY10 against NPAT of PkR400mn (EPS: PkR0.10) in 1QCY09. This was significantly lower than our expected 1QCY10 NPAT of PkR491mn (EPS: PkR0.12). On a consolidated basis, NIB has posted NPAT of PkR127mn (EPS: PkR0.03) in 1QCY10, down 84%YoY.

As expected, Net Interest Income has contracted, by 12%YoY. Loan provisions of PkR277mn have been booked in 1QCY10 against net reversals of PkR472mn in 1QCY09. On a positive note, non-interest income is up a healthy 87%YoY, driven by 15%YoY growth in fee income and 3x higher capital gains (largely NAFA divestment). Contrary to expectations however, total non-interest expenses have spiked by 20%YoY in 1QCY10, led by a 14%YoY increase in admin expenses.
 Not surprisingly, NIB stock price is down 3% post result announcement. NIB trades at a CY10F Total Equity P/B of 0.95x and PER of 9.42x. Our target price of PkR4.95/share implies 5% upside.
AKD Research
28 April 2010

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