FIRST ASIA SECURITIES
PakistanSri LankaPREV
EquitiesFixed Income
DATA AS OF 20 JUN 2026 · EOD

HNB

Hatton National Bank
BANKS

LAST · LKR

402.12
+2.65 ▲ +0.66%
P/E 4.9× · YIELD 3.7% · ROE 16.6%

52W RANGE

319.03455.75
61% OF RANGE · YTD −15.8%
01 / HNB — 1 YearAS OF 20 JUN 2026 · EOD
PERIOD 1Y · 250 SESSIONS▼
The Call
BUY+19%
480.00LKR · 12-MO
5.9× FY26E

Credit growth revives; ROE recovers.

Risks to our view
02 /

FAS DESK · FIRST ASIA SECURITIES RESEARCH · 23 JUN 2026 · EOD

Cheapest bank on the board, returns recovering

  1. 01

    Buy, LKR 480 target: HNB is the cheapest bank at 4.9× with a recovering 17% ROE — deep value in a healing banking system.

  2. 02

    A large branch and SME franchise gives leverage to the credit-growth recovery as rates fall.

  3. 03

    Resolved sovereign exposure and improving asset quality de-risk the earnings base.

  4. 04

    A re-rate to ~5.9× FY26E gets to LKR 480; the discount to peers is too wide for the returns.

Where we differ from the street
Street viewOur viewWe change our mind if
A lower-quality franchise deserves the discount.Some discount is fair, but 4.9× on a recovering 17% ROE overstates it.ROE failing to climb back toward peers.
SME books are first to crack in a downturn.SME is also first to benefit as rates fall and demand returns; quality is improving.A rise in SME delinquencies.
Spreads compress with the cycle.Credit growth and lower provisioning offset much of it.Sharp NIM compression with no volume offset.

— FIRST ASIA SECURITIES RESEARCH · NOT INVESTMENT ADVICE