HBL’s non-interest income remained flat, clocking in at Rs8 billion, a meagre 3% growth over the corresponding half of last year. PHOTO: FILE
Keeping up with the banking sector, Habib Bank (HBL) reported a fall in earnings which were 11.3% lower at Rs10.52 billion in the first half of 2013 as non-conducive interest rate environment for banks and imposition of floor at 6% on saving and term deposits on monthly average balances hurt earnings growth.
According to the notice sent by the bank to the Karachi Stock Exchange, the bank’s core operations suffered, falling 10% to Rs26.24 billion, compared to Rs29.11 billion in the corresponding half of 2012 as net interest margins for the whole sector contracted during the period due to the SBP’s expansionary monetary policy. The bank also announced interim cash payout of Rs4 per share for the semi-annual period.
In the period, the bank recorded 45% fall in total provisioning expense at Rs1.2 billion, where provisioning for bad loans registered a decline to Rs1.2 billion from Rs2.78 billion in the corresponding period of last year. Reversals against off-balance sheet obligations helped the bank contain provisioning expenses. Thus, HBL was able to pocket Rs25 billion from core operations.
According to the published accounts, HBL’s non-interest income remained flat, clocking in at Rs8 billion, a meagre 3% growth over the corresponding half of last year. Even though the bank managed to boost its income from fees and advisory services, and capital gains on equities, all the growth was offset by a massive decline in income from dealing in foreign currencies.
Expenses of the bank also kept the bottom-line under pressure as it increased 10% to Rs17.2 billion in during the period, where admin expenses climbed to Rs17 billion, and analysts believe that this was due to aggressive expansion strategy that the bank is pursuing.
Moreover, HBL paid taxes on a lower rate (36.5%) in the first half of 2013, which is 420 basis points lower than 38.8% rate on which the bank paid its taxes in the corresponding semi-annual period of 2012.
Furthermore according to a press statement issued by the bank post-result, the bank registered a modest 3.6% growth in deposits to Rs1.26 trillion in the period.
Published in The Express Tribune, August 23rd 2013.
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