Equity Analysis /
Sri Lanka

Sampath Bank: SAMPATH BANK: Q1 18: Net interest income grows but asset quality deteriorates; Hold

    Rohit Kumar
    Rohit Kumar

    Global Financials/Thematics

    Tellimer Research
    8 May 2018
    Published byTellimer Research
    We retain our Hold rating on SAMP with an unchanged target price of LKR315 (ETR +6%). We adjust for completion of the recent rights issue (23% rise in share count) and distribution of the 5% scrip dividend, but also: i) eliminate the 15% discount applied to our target price because of expected rights issue dilution; and ii) roll forward our model. The bank has witnessed strong loan growth in recent years, which has supported profits, but we are concerned that this will result in asset quality deterioration.