Housing & Development Bank (HDB) issued a brief release stating that its standalone 3Q16 net income stood at EGP160mn, up 153% Y-o-Y (-9% Q-o-Q), with 3Q15 being a low base due to an exceptionally high tax-related provisioning charge of EGP175mn. The actual standalone earnings in 3Q16 missed our forecast of EGP192mn by 17%. Pre-tax income came in 5% below our forecast, up 185% Y-o-Y and flat Q-o-Q, suggesting that tax charges were likely an area of negative surprise this quarter. Net interest income was very strong, up 75% Y-o-Y and 52% Q-o-Q, exceeding our forecast by 30%. However, gross loan growth was subdued, up just 1% Q-o-Q (21% Y-o-Y), compared to 6% Q-o-Q in 2Q16. We believe strong net interest income growth was driven largely by free funds from down-payments linked to land allocations on behalf of NUCA (for which HDB is the sole agent). This has been a key driver of net interest income growth for the bank, as these down-payments do not have a cost for the bank and can be invested in short liquidity instruments (T-Bills, ST deposits at the CBE).   HDB’s standalone financial statements include the commercial bank and real estate development on lands owned directly by HDB, but exclude HDB’s associate Hyde Park and other associates and subsidiaries of the bank, which operate in the real estate and financial services sector. Consolidated numbers tend to be published much later than standalone financial statements. (Company disclosure, Elena Sanchez-Cabezudo, Rajae Aadel)   Housing & Dev. Bank: EGP20.81 as of 15 November 2016, Rating: Buy, FV: EGP23.38 per share, MCap: USD173mn, HDBK EY / HDBK.CA