Banking Sector earnings up 39% in 9MCY14

[ Morning Report ]
Monday, November 10, 2014
Market Overview
Karachi Stock Exchange (KSE) surged to record high level on Friday on expectation of
discount rate cut in upcoming monetary policy. The benchmark KSE-100 index was up
by 266.26 point to close at 30,930.04 points.
Banking Sector earnings up 39% in 9MCY14
Earning of Pakistan's banking sector has remained strong during the nine month of 2014 as
it profitability increased by 39%. Our sample includes 22 commercial listed banks which
have announced their results representing 97% of market capitalization.
Robust growth in earnings seen
Banking sector earning growth continues and registered significant growth of 39.2% in
9MCY14, exhibiting bottom-line of Rs 109.54 billion as against Rs 78.69 billion in 9MCY13.
The main features for growth in earning remained 1) 20.2% rise in net interest income, 2)
68% decrease in provisions due to lower growth in fresh NPLs and reversals and 3) 16% rise
in non interest income. However, profitability decline by 2% QoQ to Rs 38.40 billion in
3QCY14 against Rs 39.19 billion in 2QCY14 due to decline in non funded income by 8.3%
QoQ owing to limited capital gains.
P&L of 22 Banks
Rs in million
Interest Income
Interest Expenses
Net Interest Income (NII)
Provisions
Non Interest Income
Non Interest Expenses
Profit before Taxation
Taxation
Profit after Taxation
Source: AZEE Research
9MCY14
622,965
353,539
269,426
7,960
111,190
206,053
166,604
57,056
109,548
9MCY13
535,254
311,082
224,172
24,801
95,708
177,814
117,265
38,570
78,695
YoY
16.4
13.6
20.2
(67.9)
16.2
15.9
42.1
47.9
39.2
3QCY14
216,769
121,594
95,174
2,679
36,180
70,441
58,235
19,831
38,404
2QCY14
213,152
118,697
94,456
2,930
39,449
70,527
60,448
21,249
39,199
QoQ
1.7
2.4
0.8
(8.6)
(8.3)
(0.1)
(3.7)
(6.7)
(2.0)
Major boost by higher net interest income
Banking sector net interest income surge by 20.2% to Rs 269.42 billion against Rs 224.17
billion in 9MCY13 mainly due to change in deposit mix and rise in earning assets.
Interest income increased by 16.4% to Rs 622.96 billion versus Rs 535.25 billion in
9MCY13 mainly due to investments in PIBs. Interest expense too hike by 13.6% to Rs
353.53 billion in 9MCY14 compared to Rs 311.08 billion in 9MCY13 due to increase in
minimum benchmark rate.
Top five banks earning rise by 31% YoY
The cumulative earning of big five banks which include HBL, MCB, NBP, UBL and ABL totaled
Rs 78.09 billion in 9MCY14 against Rs 59.78 billion in 9MCY13, depicting rise by 31% YoY.
However profitability market share of big 5 decrease from 76% to 71.3% in 9MCY14 due to
higher profitability growth in medium size bank. The highest growth among top five banks
was of NBP whose earning rise by 107% YoY in 9MCY14 followed by ABL and HBL as their
earning went up by 38.5% YoY and 32.3% YoY during the period under review.
News Update
Prime Minister Nawaz Sharif has reached Beijing
on a three day visit to attend annual meeting of
Asia-Pacific Economic Coo-peration leaders
being held there Friday. Federal Ministers Ahsan
Iqbal, Khawaja Muhammad Asif, Shahid Khaqan
Abbasi and Special Assistant on Foreign Affairs
Tariq Fatemi are accompanying him. Earlier in a
statement, before his departure to China, Prime
Minister said Pakistan-China Economic Corridor
project will have far reaching impacts on the
national economy.
The Finance Ministry has decided to defer the
sale of 10 per cent government shares of
OGDCL. The decision to defer the sale was made
by the privatization committee as the target of
$800 million was not expected to be met. This
was due to the decrease in the price of crude oil
in the international market.
Finance Minister, Ishaq Dar said on Saturday the
International Monetary Fund (IMF) had
expressed satisfaction with Pakistan's economic
performance. During a press conference held
with IMF officials, Dar said despite sit-ins, international payments were made on time. "We
have been making all payments on time without
any delay despite the protests and sit-ins."
Outlook
We have market weight stance on banking sector as spread to remain stable but higher PIBs
yield would drive net interest income. On top of that higher capital gain, dividend income
and lower provision to further boost earnings. We uphold our liking on ABL, MCB, NBP &
UBL with June'15 target price of Rs 132/share, Rs 311/share, Rs 67.70/share & Rs 211/share
respectively.
NCCPL (U.S $ in million)
FIPI (07-Nov-2014)
Local Companies (07-Nov-2014)
Banks / DFI (07-Nov-2014)
Mutual Funds (07-Nov-2014)
NBFC (07-Nov-2014)
Local Investors (07-Nov-2014)
Other Organization (07-Nov-2014)
Portfolio Investment U.S $ in million)
-3.22
-0.46
4.27
-0.61
2.88
-3.29
0.43
Yearly(Jul, 2014 up to 05-Nov-2014)
121.47
Monthly(Nov, 2014 up to 05-Nov-2014)
-8.03
Daily (05-Nov-2014)
-8.03
Total Portfolio Investment (24-Oct-2014) 5768
1
KSE Statistics
Indices
All Share Index
KSE-30TM Index
KSE-100TM Index
Turnover
All Share Index
KSE-30TM Index
KSE-100TM Index
November 7, 2014
22,694.15
20,328.32
30,930.04
274,550,560
69,107,200
158,275,810
[ Morning Report ]
Monday, November 10, 2014
Pivot Analysis
Board Meetings
Company
CR
RSI
Buy 1
Buy 2
Sell 1
Sell 2
Pivot
KSE 100 INDEX
30930.04
70.82
30,729 30,529
31,065
31,200
30,865
Attock Cement
174.75
52.04
173.85 172.90
175.35
175.90
174.40
Adamjee Insurance
47.18
56.48
46.00
44.85
47.95
48.75
46.80
Askari Bank
23.14
67.81
22.95
22.80
23.25
23.40
23.10
Azgard Nine
5.90
75.11
5.45
4.95
6.20
6.45
5.70
Attock Petroleum
565.12
61.48
560.40 555.70
567.90
570.70
563.20
Attock Refinery
195.29
38.72
193.50 191.70
197.10
198.90
195.30
Bank Al-Falah
31.31
76.49
31.10
30.90
31.65
31.95
31.40
BankIslami Pak
10.78
67.51
10.50
10.20
11.00
11.25
10.75
Bank.Of.Punjab
8.97
65.40
8.90
8.85
9.00
9.05
8.95
Faysal Bank
18.24
49.11
18.15
18.05
18.35
18.45
18.25
Fauji Cement
22.33
66.71
22.10
21.90
22.60
22.90
22.40
Fauji Fert Bin
41.20
54.34
40.70
40.15
41.85
42.50
41.35
Fauji Fertilizer
116.58
58.40
116.35 116.05
117.00
117.45
116.75
Habib Bank Ltd
214.49
56.97
213.60 212.75
215.80
217.15
214.95
Hub Power
68.34
63.27
67.10
69.25
70.15
68.65
ICI Pakistan
597.56
72.74
582.70 567.85
608.20
618.85
593.35
Lucky Cement
451.48
73.24
444.85 438.25
460.05
468.65
453.45
MCB Bank Ltd
280.46
43.93
275.60 270.80
283.65
286.85
278.80
Maple Leaf Cement
31.62
77.46
31.20
30.80
32.15
32.65
31.70
National Bank
61.04
59.15
60.60
60.15
61.65
62.20
61.15
Nishat Mills
119.49
54.15
115.80 112.10
121.35
123.20
117.65
Pak Petroleum
206.31
40.10
202.55 198.75
208.65
210.95
204.85
20.84
30.22
20.95
21.10
20.85
P.T.C.L.A
67.70
20.70
20.60
CR = Yesterday's Closing Rate; RSI = 14 day RSI.
RSI Indication: Less than 30 Indicate oversold position & Greater than 70
Indicate overbought position.
Risk Disclosure
This report has been prepared by AZEE Securities (Pvt) Limited and the information contained in the Product is
intended solely for the recipient or attached skilled individuals of the firm. The Firm accepts no liability whatsoever
for the actions of individual, collateral or third parties in all over Pakistan and abroad as well. This report is provided solely for the information of professional advisers who are expected to make their own investment decisions
without undue reliance on this report and AZEE Securities (Pvt) Limited accepts no responsibility whatsoever for any
direct or indirect consequential loss arising from any use of this report contents. All rights reserved. The material
contained in this report is based on data obtained from sources we deem to be reliable and without prior written
permission this information is provided on an "as is" basis.
2
Company
DATE TIME
Universal Insurance Co. Ltd
08-11-2014 11:30
Olympia Spng & Weaving Mills Ltd08-11-2014 10:00
Al-Abbas Sugar Mills Ltd
10-11-2014 4:00
Honda Atlas Cars (Pak)
17-11-2014 11:00
Key Data
Money Market
T-Bills (3 Mths)
T-Bills (6 Mths)
T-Bills (12 Mths)
Discount Rate
Kibor (1 Mth)
Kibor (3 Mths)
Kibor (6 Mths)
Kibor (9 Mths)
Kibor (1 Yr)
P.I.B (3 Yrs)
P.I.B (5 Yrs)
P.I.B (10 Yrs)
P.I.B (15 Yrs)
P.I.B (20 Yrs)
P.I.B (30 Yrs)
29-Oct-2014
29-Oct-2014
29-Oct-2014
20-Sep-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
07-Nov-2014
9.96%
9.98%
9.99%
10.00%
10.23%
10.10%
10.12%
10.39%
10.43%
10.95%
11.25%
12.00%
12.55%
12.75%
12.85%
Commodities
Crude Oil (brent)$/bbl
Crude Oil (WTI)$/bbl
Cotton $/lb
Gold $/ozs
Silver $/ozs
Malaysian Palm $
GOLD (PMEX) PKR
KHI Cotton 40Kg PKR
83.58
78.99
62.97
1,158.85
15.61
656
38,305
5,519
Contacts
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