Karachi, July 26, 2023 – Habib Bank Limited (HBL) has surpassed expectations by announcing a remarkable profit for the Second Quarter of Calendar Year 2023 (2QCY23).
The bank reported a profit after tax of PKR 13.1 billion, with an Earnings Per Share (EPS) of PKR 8.9, marking an astonishing 3.7x Year-on-Year (YoY) increase.
READ MORE: State Bank of Pakistan Issues New Instructions on Import of Cash US Dollars
Analysts at KTrade Research have attributed this impressive growth to the low base effect, as the bank had recorded a higher Effective Tax Rate (ETR) of 83% in the second quarter of the previous year (2QCY22).
On a Profit Before Tax (PBT) basis, HBL witnessed a substantial 50% YoY and 40% Quarter-on-Quarter (QoQ) growth, driven by strong Net Interest Income (NII) and Non-Funded Income (NFI). The bank’s result has exceeded analyst estimates, primarily due to higher than expected NFI.
The bank has also announced a cash dividend of PKR 1.5 per share as an interim payout, taking the half-year payout to PKR 3.5 per share. Notably, this is slightly lower than the PKR 3.8 per share dividend paid out in the same period last year.
READ MORE: Private Sector Loans Nose-Dive 87% in FY23 Due to High Interest Rates and Slowdown
Key Highlights of HBL’s 2QCY23 Performance:
Net Interest Income (NII): HBL achieved a robust NII of PKR 58.1 billion in 2QCY23, exhibiting a substantial 54% YoY and 4% QoQ growth. The significant impact of asset repricing, amounting to 400 basis points (bps) in the previous quarter, was fully reflected in the results for this quarter. Additionally, an additional 200 bps hike in the current quarter is yet to be factored into the results.
Non-Funded Income (NFI): The bank witnessed an impressive 16% YoY and a remarkable 81% QoQ rise in NFI during the quarter. The notable support came from a 12% YoY and 35% QoQ increase in fee income. Moreover, HBL recorded a gain on derivatives worth PKR 1.0 billion.
READ MORE: SBP Commits Not to Launch New Refinancing Schemes, IMF Country Report States
Provisioning Expense: HBL recorded a provisioning expense of PKR 2.8 billion in 2QCY23, showing an 81% YoY increase. However, the expense declined by 11% QoQ, indicating a slight improvement in macroeconomic conditions.
Operational Expenses (OPEX): OPEX increased by 39% YoY and 3% QoQ, mainly driven by higher administrative expenses due to inflation. Nevertheless, the Cost-to-Income (C/I) ratio improved to 55% compared to 62% in the previous quarter.
READ MORE: IMF Warns of Exceptionally High Economic Risks in Pakistan
Effective Tax Rate (ETR): During the quarter, the ETR stood at 56%, mainly due to higher tax on account of super tax. This rate is lower than the ETR recorded in the same period the previous year.
HBL’s strong financial performance in 2QCY23 showcases the bank’s resilience and efficient management amidst challenging economic conditions. With robust NII and NFI driving the growth, the bank remains optimistic about its future prospects.
