Bank of Punjab’s asset quality expected to improve remarkably

The Bank of Punjab (BOP), backed by the government of Punjab and listed at the Pakistan Stock Exchange (PSX), has re-emerged as an attractive bank for depositors and borrowers and provides investment opportunities for shareholders as well, says a research report.

The bank has recovered from the painful era of one of the biggest financial frauds in the history of Pakistan.

It has made a comeback on the banking horizon after settling bad loans on its balance sheet. It has regained the required Capital Adequacy Ratio (CAR) and met the Minimum Capital Requirement (MCR) for continuing its operations after the Punjab government injected fresh equity and the bank raised additional funds by issuing right shares to the existing shareholders.

With this, the new bank management is having ample quality assets in hand that can be offered to new borrowers. The current environment in which the benchmark interest rate is going up also supports the bank to make fresh lending with the prospect of higher interest income.

At the PSX, a barometer of the economic and listed corporate sector’s performance, BOP has attracted new investors and has emerged as the volume leader as well.

In this backdrop, Taurus Securities – a subsidiary of the National Bank of Pakistan – has found BOP shares attractive for investment at a time when the stock market was passing through a rough patch.

In its research report, the brokerage house anticipated a potential upside of 28% in BOP’s share price to Rs14 per share by December 2019 from Rs10.9 in mid-October.