Equity Analysis /

Islami Bank: ISLAMI BANK: Q1 18 – Slow start to year reinforces bearish stance. Sell

    Waseem Khan
    Waseem Khan

    Equity Research Analyst, Financials, Consumer and Pharmaceuticals (Bangladesh)

    Tellimer Research
    17 May 2018
    Published byTellimer Research
    Islami Bank reported Q1 18 EPS of BDT0.36. Major variances to our forecast came from non-interest income (miss), impairment charges (miss) and effective tax rate (miss). The bank trades at 18x 2018f P/E and 0.7x P/B, and our unchanged target price of BDT18/0 suggests an ETR of -21%. Our bearish stance stems from the recent changes in its board, which we consider a governance red flag, in addition to capitalisation challenges (10.9% CAR against 10% regulatory minimum), asset quality concerns (under-reporting of problem loans) and low profitability (4.1% 2018f ROE).