Karachi, February 26, 2014 (PPI-OT): Habib Metropolitan Bank – good option for dividend lovers | HMB profitability remained stable for CY13 | BUY maintained
Habib Metropolitan Bank (HMB) reported PAT of Rs 3.5bn (EPS Rs 3.37) for CY13 showing slightly growth of 3.5% YoY against last year’s PAT of Rs 3.25bn (EPS Rs 3.25).
According to Standard Capital, bank maintained its constant payout policy and announced Rs. 2/sh as cash dividend for CY13. The results are as per Standard Capital’s projection vide Standard Capital’s previous call on Nov 11’ 2013.
HMB interest income was decreased by 13.7% YoY to Rs 24.6bn in CY13 against Rs 28.6bn in CY12; moreover interest expense was also decreased by 20.8% which escort positive side growth in net interest income by 1.9% to Rs 9.05bn in CY13 against Rs 8.9bn in last year. Non-interest income was also slightly dropped by 1.7% YoY to Rs 4.8bn in CY13 against 4.9bn in last year.
Lower provision expense in middle tier banks
Lower provisioning against NPLs in CY13 had been beneficial for middle tier banks. HMB being a middle tier bank also expensed 21.7% YoY lower provision cost for CY13 and posted Rs 2.1bn in CY13 against 2.7bn expensed in CY12.
Valuation – GOOD OPTION
HMB is attractive middle tier bank based on
Best dividend yield of 8.1% for CY14
49% ADR ratio-higher among other peer banks
Book value of Rs 25.
Standard Capital recommends HMB which yield lower CY14 PE of 7.6x among other peers. BUY
Key Ratios based on 9MCY13
Bank HMB BAHL BAFL ABL
Advances to Deposit Ratio 49.9 41.9 47.9 42.7
Cash to Deposit Ratio 9.2 9.0 12.7 8.5
Book Value 25.4 23.5 22.6 57.4
PBV 1.0 1.8 1.2 1.6
Dividend Yield 8.1 7.2 7.2 7.3
Exp. P/E 7.6 8.6 8.5 8.4
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