AKBL: Quarterly decline in operating expense along with continued reversals, help elevate quarterly earnings
Askari Bank Limited (AKBL) reported unconsolidated earnings for the 1QCY17 of PKR 1.23bn (or PKR 0.98/share) up by +19%QoQ (or +1%YoY).
During the quarter, bank interest income declined by 4%QoQ along with lower realization of capital gains (PKR 517mn in 1QCY17), that led to overall decline in banks total revenue (down by 5%QoQ to PKR 5.1bn).
However, 8%QoQ decline in bank’s operating expense along with reversals booked against non-performing loans (AKBL has booked reversals against non-performing loans for the consecutive 5 quarters), helped expands bank’s bottom-line.
With a forward P/B of 0.7x and dividend yield of 7%, we recommend “BUY” on AKBL call with our Dec-17 target price of PKR 26/share, scrip offers +37% upside from its last closing of PKR 19/share. The scrip is cheapest in terms of CY17F P/E multiple of 5.3x, amongst our coverage banks.