Bank Al-Habib Announces Robust Cash Payout Amid Mixed Profit Results

Karachi: Bank Al-Habib Limited (BAHL) reported its financial results for the fourth quarter of 2024, revealing a profit of PkR6.8 billion, or PkR6.1 per share, reflecting a 13% year-over-year decrease and a 43% quarter-over-quarter increase. Despite the mixed profit figures, the bank surprised investors with an unexpected cash payout of PkR6.5 per share for the quarter, taking the total payout for the year to PkR17 per share.

According to a statement by AKD Securities Limited, BAHL’s net interest income rose to PkR39.7 billion, marking a 3% year-over-year increase but a 7% quarter-over-quarter decrease. This growth was attributed to a rise in mark-up earned from the bank’s expanding asset base. However, the bank’s non-interest income fell to PkR5.9 billion, down from PkR6.3 billion the previous year, primarily due to a significant drop in foreign exchange income.

Provisioning expenses decreased significantly to PkR3.0 billion compared to PkR5.2 billion in the same quarter last year. Non-markup expenses also saw a slight increase, reaching PkR21.8 billion, amidst inflationary pressures and higher staffing costs due to branch expansion.

The effective tax rate for the quarter remained high at 67.2%, partly due to a recent increase in tax rates for banks by 5% this year. Notably, the Government of Pakistan has implemented further tax rate increases for the banking sector for the coming years, while abolishing the Advances to Deposit Ratio based tax starting in 2025.

Despite the challenges, BAHL managed to enhance its cash payout, achieving a payout ratio of 107% for the final quarter. Analysts maintain a ‘BUY’ stance on BAHL, forecasting a target price of PkR173 per share by December 2025, with a dividend yield of 10%.

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