Corporate results: HBL posts a healthy result

After-tax profit increases 38.6% over comparable period last year.

Kazim Alam July 22, 2014

KARACHI: After-tax profit of Habib Bank (HBL) for the six-month period ending June 30 increased by 38.6% over the comparable period of the last year, according to the consolidated financial results released by the country’s largest commercial bank in terms of assets.

Pre-tax and after-tax profits of HBL clocked up at Rs22.1 billion and Rs14.6 billion, respectively, for the six-month period. Last year, pre-tax and after-tax profits were Rs15.9 billion and Rs10.5 billion, respectively, for the comparable period.

The rise of 38.6% in after-tax profit resulted in the earnings per share (EPS) of Rs9.88 for the six-month period ending on June 30 as opposed to the EPS of Rs7.07 recorded last year.

The board of directors of HBL also declared a second interim cash dividend of Rs2.25 per share for the current year ending on December 31.

The group’s deposits increased 3.5% to Rs1.45 trillion on June 30 as opposed to Rs1.40 trillion recorded at the end of 2013. The bank delivered an improvement in the deposit mix, with current accounts showing growth of 22.5% to Rs504 billion, thus improving the CASA ratio to 76.7% on June 30. In contrast, the CASA ratio stood at 73% on December 31, 2013.

Overall deposit growth remained strong despite a well-managed reduction of high-cost deposits, according to a statement by HBL. Overall, the balance sheet size grew by 1.5% to Rs1.741 trillion.

Operating income in all areas has shown growth. For example, net mark-up income increased by 21.8% to Rs31.9 billion from Rs26.2 billion last year. The improvement in the net mark-up income can be attributed to a change in the deposit mix, resulting in a lower cost of deposits and higher earnings on its investment.

Non mark-up income increased 41% to Rs11.3 billion for the six-month period ending on June 30. It was contributed by an increase in all areas, including fee and commission, capital gains, income from dealing in foreign currencies and investment income.

Provisioning expenses reduced from Rs1.1 billion to Rs0.2 billion in the Jan-Jun period. Non-performing loans (NPLs) declined by 7.5% to Rs51.3 billion on June 30.

“The fundamentals of the group remain very strong with growth in balance sheet size, improving core CASA deposits, healthy contribution from both mark-up and non-mark-up income, effective risk management and strong capitalisation,” the statement said.

Published in The Express Tribune, July 23rd, 2014.

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