Habib Bank Limited (HBL), one of the largest banks in Pakistan, reported a strong financial performance for the first quarter ending March 31, 2023.
The bank announced a 56 percent increase in profit after tax, amounting to PKR 13.2 billion, as compared to PKR 8.48 billion in the same period last year.
This significant jump in earnings was mainly attributed to higher net interest income, according to analysts at Arif Habib Limited.
The bank’s net interest income settled at PKR 55.8 billion during the first quarter, reflecting a 54 percent year-on-year increase and a 13 percent quarter-on-quarter increase. Interest income remained high, recording a 72 percent year-on-year increase, while interest expense was up 84 percent year-on-year, depicting asset-repricing impact in the out-going quarter. Additionally, fee and commission income posted a 27 percent year-on-year increase, clocking in at PKR 9.3 billion during the same period.
However, the bank also reported a decrease of 17 percent year-on-year and 23 percent quarter-on-quarter in non-interest income, primarily due to a significant loss on domestic foreign exchange income. The bank also booked a loss of PKR 6.2 billion on derivatives and a PKR 1.1 billion loss on its securities portfolio during the same period.
HBL announced an earnings per share of Rs9 for the first quarter under review, compared to Rs5.78 in the same quarter last year. The bank also declared a dividend per share of PKR 1.5 for the quarter.
Provisioning for the bank jumped significantly year-on-year, up 156 percent while posting a decline of 35 percent quarter-on-quarter to PKR 3.2 billion during the first quarter. The bank’s operating expenses increased by 29 percent year-on-year and 16 percent quarter-on-quarter, clocking in at PKR 39.7 billion.
Despite the increase in operating expenses, the bank managed to improve its cost-to-income ratio to 61.7 percent in the first quarter of 2023, compared to 66 percent in the same period last year. The effective tax rate was set at 38.3 percent during the first quarter, compared to 40.9 percent in the same period last year.
HBL’s strong financial performance for the first quarter of 2023 reflects the bank’s commitment to maintaining its leadership position in the banking industry in Pakistan.
