Deposit base grew by 3.8% QoQ in 1Q14. Despite lower deposit rates,
customer deposits continued to flow where it grew by 3.8% QoQ to
LKR311.8 bn. Further bank also managed to improve its CASA mix to c.
35.0% (cf. 33.7% in 4Q13) which helped to bring down the funding costs.
Further given the subdued loan growth SAMP remains well liquid with a
liquid asset ratio of 29.1% (regulatory limit 20%).
Forecast 2014E net profit up 32.5% to LKR4,818.0 mn. Given the current
gold prices of USD1,290/Oz we do not expect any major impairment in the
pawning portfolio in 2014E and also expect the bank to clear c. 80.0% of its
pawning bad loan portfolio by 3Q14. Further given the low interest rate
environment we believe credit demand would pick up from 2H2014 onwards
and SAMP would be able to grow its loan book by c.15.0% YoY in the
medium term. Further we project bank’s NIMs to be intact around 4.0%,
improving cost to income, improving CASA mix and wider coverage would
further strengthen the core business. Hence SAMP’S outlook is positive.
Therefore we project 2014E net earnings to grow by 32.5% YoY to
LKR4,818.0 mn and 2015E net profits to increase by 17.5% YoY to
Share offers good value on 6.7X forecast 2014E net profit. The voting
share offers good value trading on 6.7X forecast 2014E net profit and 5.7X
forecast 2015E net profit whilst trading on 0.9X PBV. Maintain BUY.
Softlogic Stockbrokers (Pvt) Ltd