Rupee fall to continue till IMF fund realization: Pakistan’s top bank

Rupee fall to continue till IMF fund realization: Pakistan’s top bank

KARACHI: Pakistani Rupee likely to continue its falling spree until the country receives funds from the International Monetary Fund (IMF), according to an analyst briefing by the Habib Bank of Pakistan (HBL), the top bank of the country.

“The bank management believes that the rupee would continue to depreciate until Pakistan receives $1.2 billion from IMF,” according to the Topline Securities quoting the bank.

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The HBL conducted its second quarter of 2022 analyst briefing on July 29, 2022 where the management discussed financial results of the bank and its future outlook.

The asset repricing of the loan book is likely to re-price by 3Q2022 and 4Q2022. As a result, Net Interest Income (NII) and Net Interest Margins (NIMs) of the bank are likely to remain strong in 2H2022 as per the management. The management expects further hike in policy rate in the upcoming monetary policy meeting.

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On loan growth the management indicates that HBL will continue to grow and remain in double digit. Deposits are also expected to grow in an ongoing year where HBL is targeting to maintain its market share of 14 per cent.

Foreign exchange income jumped to Rs7.8 billion in the first half of 2022 vs Rs1.4 billion 1H2021 primarily due to (1) Rs1.3 billion from the revaluation of overseas banking due to rupee devaluation, (2) Rs3.2 billion generated from the long derivative FX position, and (3) Rs1.9 billion treasury activities.

The bank offered Voluntary Separation Scheme (VSS) to its employees amounting to Rs2.6 billion in 1Q2022 and Rs0.6 billion in 2Q2022.

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Out of the total PIB portfolio, around 55 per cent of PIBs are floater rates with average yield of around 11 per cent and T-bill yields of 10.75 per cent. Fixed PIB worth of Rs50 billion is maturing in July however no other PIBs are maturing in 2H2022.

HBL continues to focus on improving its customer experience in the digital space which is also evident from its improving numbers. Total mobile app monthly active users reached 1.8 million in 1H2022 vs. 1.3 million in 1H2021.

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The management highlighted that in the current economic scenario, stress is seen in Autos, Cement, Steel and few other customers but with current provisions HBL is at a comfortable levels. Total coverage of the bank now stands at 101 per cent in June 2022 vs. 100 per cent in March 2022.

Bank’s cost to income ratio in 1H2022 stood at 52.1 per cent vs. 51.3 per cent in 1H2021. Management targets to maintain the current cost to income ratio where the growth in operating expenses are in line with the inflation.

HBL posted strong financial results, but due to higher taxation which hits bottom-line resulting into ROE of 9.2 per cent and ROA of 0.5 per cent.

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