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  • Sri Lankan default impact on Pakistani banks

    Sri Lankan default impact on Pakistani banks

    KARACHI: Pakistani banks operating in Sri Lanka will have adverse effect on their books due to declaration of Sri Lanka for failure to repay its foreign debt.

    In a recent development, Sri Lanka announced that it would be defaulting on its external obligations due to dwindling foreign exchange reserves.

    Sri Lanka’s total external debt currently stands at $51 billion, i.e. 60 per cent of GDP.

    As per foreign news agency, Sri-Lanka has to make a foreign repayment of $4 billion, including $1 billion sovereign bond maturing in July 2022.

    Insight Securities said that its banking universe including UBL, MCB, HBL, and BAHL holds Sri Lanka sovereign instruments in their investment book (both USD denominated & Local currency), may result in revaluation loss or provision charge.

    Sri-Lanka’s central bank governor said that this suspension of payment would be placed until the country reaches an agreement with creditors and alongside with the International Monetary Fund (IMF).

    The analysts believed that this declaration of default will only affect USD denominated bonds while the CBSL (Central bank of Sri Lanka) will continue to honor domestic bonds i.e. T-bills. However, disclosure of local and USD-denominated sovereign bonds is not available in respective banks financials.

    It is worth mentioning that these above abstracts are based on the CY21 financial statement, and there is a possibility that these banks have already reduced their exposure before the default announcement.

    Analysts at Arif Habib Limited said that the economic crisis in Sri Lanka seems to be worsening with the authorities announcing temporarily default on its foreign debts.

    With more than $50 billion in external debt and foreign exchange reserves hovering around $1.9 billion (last month), the country is currently struggling to make payments on its international sovereign bonds.

    Media sources suggest, this week $36 million interest payment is due on a Sri-Lanka’s 2023 dollar bond as well as $42.2 million on 2028 note.

    Moreover, a $1 billion sovereign bond is maturing on July 25th, 2022.

    The extraordinary measure taken by the Sri-Lankan authorities to halt payments on foreign debt is to preserve its dwindling reserves for the purpose of importation of essentials such as food, fuel and medicine.

    Going forward, the analysts believe, the options available to the Sri-Lankan government include: negotiation of a settlement in which bondholders are given new bonds that are worth less but help provide some partial compensation, or restructuring of the current one with the support of IMF which media sources claim to be likely Sri Lanka’s strategy.

    It is pertinent to note here that some of the Pakistani banks are exposed to the Sri-Lankan economy either through branch banking or investments in the government debt securities.

    Amongst our AHL coverage banks, MCB has eight branches in the Lankan territory while HBL operates with three branches in the country.

  • Habib Bank posts Rs35.51 billion annual profit

    Habib Bank posts Rs35.51 billion annual profit

    Habib Bank Limited (HBL) held its conference call on Friday to discuss financial performance and provide its future outlook onwards. HBL posted a profit after tax of Rs 35.51 billion (EPS: Rs 23.9) in 2021 as opposed to Rs 30.91 billion (EPS: Rs 21.1) in the same period last year, up by 15 per centYoY. It was the best ever result in the history of HBL.

    Along with the result, the bank announced a final cash dividend of Rs 2.25 per share taking the full payout to Rs 7.5 per share.

    Analysts at KASB Research have an outperform rating on HBL based on Justified P/B with a target price of Rs 175 per share. The stock offers a dividend yield of 7.4 per cent and is currently trading at a one year forward P/Bv of 0.57x.

    READ MORE: Habib Bank declares Rs26.44 billion 9-month profit

    As per the management, three key pillars of mid to long term strategy include accelerating Pakistan’s growth and development, shaping financial industry and improving agriculture sector’s productivity. The bank also aims to step up SMEs, branchless banking and CPEC based infrastructure growth in country.

    The bank’s digital footprint is increasing day by day, the highest in the industry. Konnect accounts are up by 1.3x 7.1 million.

    The bank crossed Rs 100.0 billion in consumer loans. Consumer financing grew by 31 per cent reaching Rs 102.8 billion driven by growth in auto and personal loans.

    READ MORE: Habib Bank, Meezan Bank directed to pay fraud victims

    Home remittances for the bank also increased by 29 per cent YoY in 2021 to USD 2.74 billion and the market share clocked in at 8.8 per cent. The bank aims to take the market share to double digits in 2022.

    Domestic deposits noted a growth of 19 per cent over December 2021 and the banks’ market share improved to 14.4 per cent. Meanwhile, international deposits increased by 16 per cent to USD 1.9 billion. CA crossed Rs 1.0 trillion.

    Domestic advances expanded by 20 per cent over December 2020 to Rs 1.2 trillion and international loans increased by 24 per cent.

    READ MORE: Habib Bank pays penalty of Rs42.2 million to SBP

    Infection ratio clocked in at 5.1 per cent as opposed to 6.3 per cent in December 2020 and the bank’s coverage stood at 104 per cent.

    ROE came at 14.4 per cent and ROA stayed at 0.9 per cent in December 2021.

    The bank intends to expand Islamic banking by adding 30/40 new branches in different new cities taking the tally to 250-260 by December 2022.

  • Habib Bank declares Rs26.44 billion 9-month profit

    Habib Bank declares Rs26.44 billion 9-month profit

    KARACHI: Habib Bank Limited (HBL) on Friday announced Rs26.44 billion as profit after tax for nine month period ended September 30, 2021.

    The profit after tax of the bank was Rs24.98 billion in the same period of the last year.

    The earning per share of the bank was at Rs18.03 for the nine months period ended September 30, 2021 as compared with Rs17.03 EPS.

    Total income of the bank during January – September 2021 fell to Rs112 billion as compared with Rs113 billion n the same period of the last year.

    Net markup income of the bank fell to Rs90.01 billion during the period under review as compared with Rs92.96 billion in the same period of the last year. Non markup income increased to Rs22.02 billion as compared with Rs20 billion.

    Operating expenses were at Rs62.04 billion as compared with Rs62.77 billion.

    Provisioning and write-offs fell to Rs3.9 billion during January – September 2021 as compared with Rs7.28 billion in the same period of the last year.

    On a quarterly basis the bank declared a decline of 11.11 per cent in profit after tax (PAT) for the quarter ended September 30, 2021.

    According to financial statement, the bank recorded Rs8.96 billion as net profit for the quarter July – September 2021 as compared with Rs10.08 billion in the same quarter of the last fiscal year.

    Total income of HBL recorded 6.33 per cent decline to Rs40.40 billion for the quarter under review as compared with Rs43.13 billion in the same quarter of the last year.

    Net Markup Income of the bank posted a decline of 9.6 per cent to Rs32.28 billion for the quarter ended September 30, 2021 as compared with Rs35.71 in the same quarter of the last year.

    However, non-markup income registered a growth of 9.29 per cent to Rs8.11 billion as compared with Rs7.42 billion.

    Operating expenses of the bank grew to Rs23.161 billion for the quarter ended September 30, 2021 as compared with Rs22.612 billion in the same quarter of the last year.

    Similarly, the provisioning and write-offs fell to Rs1.75 billion for the quarter ended September 30, 2021 as compared with Rs3.04 billion in the same quarter of the last year.

    The earning per share for the quarter fell to Rs6.17 as compared with Rs6.85.

    HBL declares 108 percent growth in quarterly profit
  • SBP approves Rs82.6 million interest free student loan

    SBP approves Rs82.6 million interest free student loan

    KARACHI: The State Bank of Pakistan (SBP) has approved an amount of Rs82.6 million as interest free loan for deserving students.

    The apex committee for Student Loan Scheme having representation from State Bank of Pakistan, Finance Division (Government of Pakistan) and five major banks (NBP, HBL, UBL, ABL and MCB Bank) has approved Rs 82.6 million as interest-free loans to deserving students for their studies within Pakistan.

    The amount, approved by apex committee, will be disbursed to 518 deserving students of public sector universities across the country, studying in different disciplines of under-graduation, graduation and PhD studies for the Session 2017-18, 2018-19 & 2019-2020.

    The objective of the Student Loan Scheme is to provide financial assistance to the meritorious students having insufficient means. The loans are granted for a maximum tenor of 10 years from the date of the disbursement of first installment and repayable in monthly installments after six months from the date of first employment or one year from the date of completion of studies, whichever is earlier.

    National Bank of Pakistan, being the administrator of the Scheme, performs all the functions like receiving and scrutinizing the loan applications, disbursement of loans and their recovery.

  • PMRC, HBL Islamic Banking raise Rs1bn Sukuk

    PMRC, HBL Islamic Banking raise Rs1bn Sukuk

    KARACHI: Pakistan Mortgage Refinance Company (PMRC) announced the closing of another Sukuk with HBL Islamic Banking.

    A statement issued on Wednesday said that the sukuk will serve to make Shariah Compliant Housing Finance more accessible to the public.

    On the occasion Mudassir CEO/MD PMRC said: “PMRC is delighted to partner with HBL Islamic Banking for this Sukuk.

    “The funds raised under this Sukuk are important for the promotion of the Islamic housing finance market.

    “I am confident this will be beneficial in the growth of fixed-rate, low-cost housing for the end consumers.”

    Muhammad Afaq Head HBL Islamic Banking said: “HBL Islamic Banking is pleased to be collaborating with PMRC in the placement of the Rs1 billion Sukuk.

    “The funds will be used to promote financing in the housing sector of Pakistan with a special focus on low-cost housing initiatives.

    “This will enable us to play our part in the economic development of the country.”

  • Habib Bank pays penalty of Rs42.2 million to SBP

    Habib Bank pays penalty of Rs42.2 million to SBP

    KARACHI: Habib Bank Limited (HBL) has paid monetary penalty of Rs42.2 million to State Bank of Pakistan (SBP) for violation of various regulatory provisions.

    According to HBL it paid Rs42.2 million during first quarter (January – March) of 2021 against penalties imposed by the SBP. The bank had paid around Rs231.6 million as monetary penalties to SBP in the same quarter of the last year.

    A total amount of Rs42.23 million was paid by the bank as penalties, including those imposed by other regulatory bodies. The bank had paid around 232.19 million as total penalty for the same quarter of the last year.

    The bank had paid an amount of Rs320.79 million as penalty for various regulatory violations during the year ended December 31, 2020.

    For the year ended December 31, 2020, the bank paid the amount of Rs320.79 million as penalties for violation of various regulations.

    However, the payment of penal amount reduced by 33 percent when compared with Rs480.56 million paid in the preceding year.

    The bank paid an amount of Rs296 million against fine imposed by the SBP for the year ended December 31, 2020. The latest amount of monetary penalty has been reduced when compared with Rs476 million that was imposed by the SBP on the bank during the preceding year.

  • HBL declares 108 percent growth in quarterly profit

    HBL declares 108 percent growth in quarterly profit

    KARACHI: Habib Bank Limited (HBL) on Tuesday announced 108 percent increase in profit for the quarter ended March 31, 2021. The profit after tax of the bank increased to Rs8.56 billion during the first quarter (January – March) 2021 from Rs4.11 billion in the same quarter of the last year.

    Analysts at Insight Research said that the results of the bank were above expectation.

    “The result is above our expectation of Rs4.3/share as net interest income and non-markup income came in higher from our expectations. The result is also accompanied by a cash dividend of Rs1.75/share,” they said.

    Net interest income (NII) increased by 16 percent/4 percent YoY/QoQ to clocked-in Rs32.4 billion, possibly due to lagged impact of repricing and balance sheet expansion. However, we await detailed account for further clarity in this regard.

    Non-Markup income increased by 42 percent/26 percent YoY/QoQ to clocked-in at Rs8.2 billion. This is primarily led by a higher fee income which increased by 25 percent YoY, while recovery of income in FX operations and derivatives further fueled non-markup income.

    Bank has booked provision of Rs1.9 billion against a provision of Rs0.62 billion booked in SPLY. To note, HBL has booked hefty provisioning in both general and specific categories during CY20 (Rs12.2 billion).

    Operating expenses witnessed a contraction of 7 percent YoY, to clocked-in at Rs24.2 billion, attributable to a reduction in business transformation cost.

    Effective taxation remained at 41 percent during the quarter as compared to 42 percent in SPLY.  

  • HBL to acquire consumer portfolio of SilkBank

    HBL to acquire consumer portfolio of SilkBank

    KARACHI: Habib Bank Limited (HBL) has shown interest to acquire consumer portfolio of SilkBank Limited, according to a statement issued on Thursday.

    An information shared by the SilkBank to the Pakistan Stock Exchange (PSX) revealed that HBL had requested SilkBank Limited to provide its concurrence to HBL to apply to State Bank of Pakistan (SBP) to proceed with the due diligence of the Consumer Portfolio of SilkBank Limited comprising of credit cards, running finance and personal installment loans in order to explore the possibility of HBL’s potential interest in the same.

    The Board of Directors of the SilkBank Limited, in its meeting held on April 07, 2021 has accorded in principle approval, for the same.

    The SilkBank further informed that M/s. Fauji foundation will not be proceeding with the due diligence process of SilkBank Limited, in pursuance of its application in this regard.

  • HBL approves Rs4bn investment in First MicroFinanceBank

    HBL approves Rs4bn investment in First MicroFinanceBank

    KARACHI: The Habib Bank Limited (HBL) to invest Rs4 billion in the First MicroFinanceBank Ltd. (FMFB) over the next three years, according to a statement issued on Monday.

    The board of directors (BOD) of HBL approved at the Annual General Meeting (AGM) authorized investment in the FMFB of up to Rs4 billion over the next three years to help FMFB to maintain a stronger capital base and provide sufficient headroom in its capital adequacy ratio (CAR) for ongoing business expansion and growth plans. However, to the investment is subject to the approval of the State Bank of Pakistan (SBP).

    The AGM also approved payment of final cash dividend of Rs3 per share i.e. 30 percent for the year ended December 31.2020, as recommended by the BOD to shareholders as at close of business on March 19, 2021, which is in addition to the 12.5 percent interim cash dividend i.e. Rs1.25 per share already paid.

  • HBL announces 287 percent surge in half year profit

    HBL announces 287 percent surge in half year profit

    KARACHI: Habib Bank Limited (HBL) on Friday declared massive increase of 287 percent in half-year profit tax for the period ended June 30, 2020.

    The bank, one of the largest bank in Pakistan, declared Rs15.188 billion profit after tax for the period January 01 to June 30, 2020 as compared with Rs3.927 billion in the same period of the last fiscal year.

    The bank also declared earning per share of Rs10.32 for the period under review as compared with EPS Rs2.53 declared in the same period of the last year.

    The net mark-up income/interest income of the bank surged by 32 percent to Rs63.075 billion during first half for the period ended June 30, 2020. The bank declared Rs47.7 net interest income in the same period of the last year.

    The bank also paid income tax amounting Rs10.64 billion during January – June 2020 as compared with Rs5.96 billion in the corresponding period of the last fiscal year.

    The HBL declared Rs11.08 billion net profit for the quarter April – June 2020 as compared with Rs749 million declared in the same quarter of the last year.

    Net interest income of the bank increased to massive Rs10.86 billion during the quarter under review as compared with Rs1.3 billion in the corresponding period of the last year.