FLASHNEWS:

AKD Securities Limited – AKD Daily (March 27, 2023)

Karachi, March 27, 2023 (PPI-OT): FABL: The New Kid on the Shariah block

FABL demonstrated strong growth in its bottom line during CY22 with earnings of PkR11.23bn (EPS: PkR7.4), which is a 38%YoY increase, along with an impressive ~95% earnings payout during the period.

The bank’s total revenues increased by 43%YoY, driven by a 55% growth in NII income to PkR40.0bn, primarily due to a robust growth in its earnings assets (+24% YoY) and an improvement in overall spreads (4.32% vs. 3.27% in CY21).

Our projected NIMs are expected to be at 6.31%/6.39% for CY23/24, particularly due to FABL’s improving CASA mix during the outgoing year (79% vs. 76%/71% during CY21/20).

We anticipate that cash payouts to continue in the future since the bank currently stands at comfortable capital levels with a total CAR of 15.51%.

With the bank expanding its presence in the Islamic banking space, we anticipate increased demand from Shariah-based investors, which could potentially result in a significant re-rating of the stock in the near future.

As a result, we have a ‘Buy’ stance on the stock, with a Dec’23 TP of PkR40/sh, which offers a potential upside of 86% from the last close.