HBL’s profit rises 25pc to Rs15.5bn

KARACHI: The Board of Directors of Habib Bank Ltd met on Wednesday to review the bank’s performance and announce its financial statements for the year ended December 31, 2019.

According to the financials, the bank reported a profit after tax increased to Rs15.5 billion for the year ending December 31, 2019, as compared to Rs12.44 billion for the corresponding period last year, showing a growth of 25pc.

The bank declared a final cash dividend of Rs1.25 per share, or 12.5pc. This is in addition to the interim dividend already paid at Rs3.75 per share, or 37.5pc. This brings the cumulative divided to Rs5 per share, or 50pc.

The bank’s earnings per share (EPS) clocked in at Rs10.45, which is a small increase from Rs8.22 during the same period last year.

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The bank’s profit before tax stood at Rs 28.9 billion for the year ended December 31, or a growth of 34pc over 2018. Its profit before provisions increased 21.1pc to Rs32.2 billion.

The bank’s net interest income stood at Rs101.3 billion, or an increase of 21.1 percent. According to HBL, this marks the first time that any bank’s net interest income has crossed the Rs100 billion mark.

The fee income rose by 13pc over 2018 to Rs 20.4 billion, while the total non-fund income grew by 21pc to Rs24.2 billion. The asset quality of the bank improved to 6.6pc, while the coverage ratio further improved to 93.2pc.

The bank’s consolidated Capital Adequacy Ratio (CAR) as of December 31, 2019, stood at 15.4pc, while the Bank’s Tier 1 CAR improved to 12.5pc. According to HBL, both those ratios remain ahead of regulatory requirements.


There has been a mixed reaction among analysts regarding the earnings results.

According to Faizan Kamran, an analyst at brokerage firm Arif Habib Ltd, the earnings were ‘above’ expectation.

“The healthy jump in net interest income, alongside a significant gain on FX operations helped the bank post an impressive surge in yearly earnings,” he said.

He also noted that the drastic improvement in earnings on a quarterly basis, which showed a growth of 36pc, was due to a surprising decline in OPEX, which witnessed a decline of 4pc on a quarterly basis.

According to AKD Securities report, the results were ‘in line’ with expectation.

The report noted that the quarterly growth in earnings was  due to the 3.5pc increase in net interest income, non-funded income jumping 7.2pc, and non-markup costs being relatively contained (down 4pc QoQ).

However, Taurus Securities took a less optimistic view, and said the bank’s earnings were ‘slightly below’ expectation.

It did, however, note that the non-mark-up income registered a growth of 21pc on a yearly basis, mostly due to the 13pc growth in fee income and surge in income from foreign exchange, which was offset by heavy capital losses. 


In addition to releasing the financial statements to the Pakistan Stock Exchange, HBL also released a statement, in which it claimed that the bank’s core business was on a strong growth trajectory.

The bank said it continued to support the real economy through extending credit for its growth, with domestic loans growing by 3.5pc ahead of market growth to Rs 945 billion.

The total advances of the bank grew by 8pc, to Rs 1.2 trillion, mostly due to the increase in the bank’s international business.

HBL remains the largest player in the deposits market, with a share of nearly 14pc. The bank’s domestic deposits reached Rs2.1 trillion while total deposits crossed Rs2.4 trillion, with the CASA ratio improving to 82.6pc in December 2019.

HBL also said in its statement that 2019 has been a year of accelerated transformation, claiming it enjoyed market-leading positions in most of its business segments.

The bank hopes to become a“Technology company with a Banking License,” and is focussed on developing the Agriculture and SME sectors. HBL already enjoys a 25pc and 15pc market share in agriculture and SME segments respectively. The bank now serves over 50,000 farmers, through more than 600 designated rural banking branches.

The bank also highlighted its efforts in increasing the financial inclusion of women, noting that HBL Konnect enabled close to 7 million new-to-bank customers, of which approximately 60pc are women. The bank has also partnered with the largest G2P programme – Ehsaas Kafalat.

HBL said that its HBL Mobile achieved the milestone of crossing 1 million app users during 2019, which signals a shift in the way millennials and the bank’s customers prefer doing business. In total, the bank processed a staggering 340 million digital transactions in 2019, a 35% increase over 2018.

As the largest executor of CPEC related financing in Pakistan, China is going to be a very important country for HBL going forward. In November 2019, the HBL Urumqi Branch formally commenced the RMB business by becoming the first and only bank from Pakistan and one of the three banks from the South Asia and MENA region to offer end-to-end RMB intermediation. In December 2019, HBL became the first Pakistani bank to be awarded the much-coveted branch license to offer financial services to clients in Beijing, which is expected to go operational in Q3 2020.

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Meiryum Ali
The author is a member of the staff and can be reached at [email protected]
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