Morning Briefing for November 06, 2012 – Standard Capital

Karachi, November 06, 2012 (PPI-OT): Soneri Bank delineates cheapest PBV multiple of 0.58x SNBL reported flamboyant earnings growth of 44% in 9MCY12 over the corresponding period last year reporting PAT of Rs.1.08 billion (EPS:Rs1.20/share) as against PAT of Rs.750 million (EPS:Rs0.83/share) in the same period last year.

According to Standard Capital, increased Interest income contributed in bottom line with 11% y-oy growth in Interest Income reporting Rs.10 billion in 9MCY12 as against 9.55 billion in 9MCY11, thus reflecting growth in branches. Growth in branches also spelt growth in advances from Rs.65 billion in 9MCY11 to Rs.68 billion in 9MCY12 observing 6% growth.

SNBL (Rs’000)

9MCY12

9MCY11

Chg.

Int. Earned

10,595,668

9,555,730

11%

Int. Expensed

6,984,086

6,653,100

5%

Net Int Inc.

3,611,582

2,902,100

24%

Provisions

121,509

828,726

-85%

Net. Int. After Provision

3,490,073

2,073,374

68%

Non Int. Inc

1,361,439

1,478,014

-8%

Non-Int Exp

3,216,184

2,494,247

29%

PBT

1,635,328

1,057,141

55%

Tax

552,960

306,977

80%

PAT

1,082,368

750,164

44%

EPS

1.20

0.83

44%

The risk management policies are reflected in noticeable decrease in 85% in overall provisions from Rs.828 million in 9MCY11 to Rs.121 million in 9MCY12. The main contribution was decline in provisions against NPL’s from Rs.848 million to Rs.107.5 million. However, non-core income declined by 8% wherein non-core brokerage and commission income rose by 9% from Rs.337 million to Rs.368 million.

The company also invested heavy amount of Rs.12 billion in securities in the period 9MCY11 and also invested cash Rs.1.5 billion in 9MCY12 which makes cumulative investment of Rs.47.86 billion as at 9MCY12 compared with Rs.45.77 billion in 9MCY11 realizing 5% growth in overall investments. Besides, the company has successfully repaid Rs.299 million of cash in terms of sub-ordinate loans which has allowed SNBL to left with Rs.595 million (33% decline) in the relevant head in the books.

Balance Sheet Extracts 9MCY12 9MCY11 Chg.
Assets      
Advances

68,996,102

65,339,947

6%

Investments

47,869,512

45,775,969

5%

Liabilities

Deposits

112,221,668

99,733,970

13%

Sub-Ordinated Loans

598,560

897,840

-33%

Valuation

SNBL is currently yielding CY12PE of 3.9x – 4x (CY12E EPS:Rs. 1.6 – Rs. 1.8) which is much lower than industry i.e. 5.6x which makes SNBL quite attractive proposition. Moreover, SNBL reflects one of the cheapest PBV multiple of 0.58x (Book value Rs 13/share).

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