MMSPL RESEARCH

BANK AL HABIB: GOOD TIMES AHEAD

MIR ZAIN UL HASSAN We recommend the BUY for BANK AL HABIB, with a good potential growth in earnings in
Zainulhassan@mmsecurities.com.pk
Cont:021-35317703-04 the upcoming quarters. BAHL is trading at PBV of 1.86x where the average PBV for the top
banks stands at 2 xs. Bank Al Habib in 1QCY14 posted a PAT of 1.35 billion (EPS 1.22) a growth
of 17% as compared to the same periods last year. Net Interest Income and Non Markup
50 35000 income increased by 16% and 23% YOY. This growth is consistent with the growth in deposits
45 (14.5% YOY) and subsequent increase in advances and investments of 6.4% and 18% YOY.
30000
40 Provisions against NPLS have declined substantially by 57% YOY, which helped increase the
35 25000
NII after provisions by 9% YOY. BAHL is trading at CY14E PE 6.4Xs we recommend the upside
30 20000
25 potential of 23% at this level.
20 15000 BAHL
15 10000 KSE 100 Deposits and Advances
10
5000 Deposits of the banks increased to PKR 396.5 billion as compared to the deposits of PKR
5
0 0 386.2 billion at year end 2013.Advances to deposit ratio (ADR %) stood at 42.30% at the end
of 1QCY14 as compared to 43.40% at the yearend 2013, due to the lower spreads.
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INVESTMENTS
Investment to deposit ratio (IDR %) have increased to 69 % in 1QCY14 which stood at 62% at
Year end 2013. Further analysis of Balance sheet reveals that the bank increased its holdings
KEY STATISTICS
of PIBs by PKR 59 billion. PIBs currently consist of 26% of total investments as compared to
Current Price 41.79 the 13% of total investments at Year end 2013. In recent PIBs auction the Government raised
Outstanding shares (mn) 111 Rs 423.48 billion worth of bonds against the target of Rs 100 billion. We expect further rise in
P/E(Trailing) 6.4 investments in PIBs investment and its positive impact will be seen in the upcoming quarters.
DY (Trailing) 5%
1QCY14 EPS DPS BVS P/B ADR% Investment/deposit%
52 weeks High 43.76
BAHL 1.22 0 22.5 1.86 42.30% 69%
52 weeks Low 26.09
HMB 0.95 0 26.8 1.15 44.30% 84.80%
FABL 0.41 0 21.25 0.78 68% 35.20%
AKBL 0.81 0 14.8 1.27 55.25% 50%
MCB 4.95 3 99 2.86 39.30% 73.60%
HBL 4.11 2 98 1.89 42% 71%
ABL 2.83 1.25 57.81 2.19 43.50% 55.60%
UBL 4.26 2.5 82.43 2.08 44.50% 57%
NBP 1.41 0 73.46 0.80 55.90% 44.40%

M.M. Securities (Pvt.) Ltd

M. M. Tower, 3 C,
Khayaban-e-Ittehad,
Phase II, Extension,
Defence Housing Authority,
P.O. Box 12414,
Karachi 75500, Pakistan.

Disclaimer: This report has been prepared by MMSPL. The information and opinions contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been inde-
pendently verified and no guaranty, representation or warranty, express or implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only.
Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as, an offer, or solicitation of an offer, to buy or sell any securities or other financial instruments.
MMSPL may, to the extent permissible by applicable law or regulation, use the above material, conclusions, research or analysis before such material is disseminated to its customers. Not all customers will receive the material at the same time. MMSPL, their
respective directors, officers, representatives, employees, related persons may have a long or short position in any of the securities or other financial instruments mentioned or issuers described herein at any time and may make a purchase and/or sale, or offer to
make a purchase and/or sale of any such securities or other financial instruments from time to time in the open market or otherwise, either as principal or agent. MMSPL may make markets in securities or other financial instruments described in this publication, in
securities of issuers described herein or in securities underlying or related to such securities. This document may not be reproduced, distributed or published for any purposes.
 MMSPL RESEARCH
BANK AL HABIB: GOOD TIMES AHEAD

Outlook
The lower returns in T-Bills attracted more investment in PIBs and bank increased its invest-
PKR MN 1QCY13 1QCY14 YOY ment in PIBs by 138% at the end of 1QCY14 as compared to the Year end 2013. We expect
NII(After provisions) 3366 3989 19% the effect of increased investments in the upcoming quarters. Moreover we expect Cur-
Non Interest Income 801 989 23% rently the script is trading at PBV of 1.86xs; we recommend investment in BAHL with a TP of
Total Revenue 4330 5067 17% RS 51.50 at DEC 14.
Total Provisions 208 89 -57%
PAT 1156 1354 17%
EPS 1.04 1.22 17% Discount Rate is expected to remain unchanged
The recent data on CPI records an increase of 9.2%, averaging 8.85% (March-April). The in-
crease in inflation curbs real interest rate, still keeps it above 1%. In current circumstances,
we expect no change in Discount rate in the upcoming monetary policy announcement by
the Central Bank.

M.M. Securities (Pvt.) Ltd

M. M. Tower, 3 C,
Khayaban-e-Ittehad,
Phase II, Extension,
Defence Housing Authority,
P.O. Box 12414,
Karachi 75500, Pakistan.

Disclaimer: This report has been prepared by MMSPL. The information and opinions contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been inde-
pendently verified and no guaranty, representation or warranty, express or implied is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. This document is for information purposes only.
Descriptions of any company or companies or their securities mentioned herein are not intended to be complete and this document is not, and should not be construed as, an offer, or solicitation of an offer, to buy or sell any securities or other financial instruments.
MMSPL may, to the extent permissible by applicable law or regulation, use the above material, conclusions, research or analysis before such material is disseminated to its customers. Not all customers will receive the material at the same time. MMSPL, their
respective directors, officers, representatives, employees, related persons may have a long or short position in any of the securities or other financial instruments mentioned or issuers described herein at any time and may make a purchase and/or sale, or offer to
make a purchase and/or sale of any such securities or other financial instruments from time to time in the open market or otherwise, either as principal or agent. MMSPL may make markets in securities or other financial instruments described in this publication, in
securities of issuers described herein or in securities underlying or related to such securities. This document may not be reproduced, distributed or published for any purposes.