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Karachi: Habib Bank Limited (HBL) convened an analyst briefing to discuss its financial performance for CY24, revealing flat profits amidst a challenging economic environment. The bank reported a profit of PkR57.8 billion, with earnings per share at PkR39.9. The core domestic profit before tax declined by 5% year-on-year to PkR119 billion, while international operations surged by 74% to US$37 million.
According to a statement by AKD Securities Limited, the Board of Directors announced a final dividend of PkR4.5 per share, bringing the total payout for CY24 to PkR16.25 per share. The growth in net interest income remained modest at 1% year-on-year, influenced by declining interest rates and the downward repricing of yielding assets.
Deposits increased by 5.5% year-on-year to PkR4.4 trillion, and the advances portfolio grew by 31% to PkR2.4 trillion. However, the investment book remained largely unchanged at PkR2.5 trillion. Looking ahead, management expects a deposit growth of 17-18% in CY25, alongside a 12-13% expansion in the advances portfolio.
Non-funded income saw a significant increase of 68% during the fourth quarter of CY24, largely due to a PkR14.3 billion gain from operations in Mauritius and branch closures in Oman. Digital transactions, including mobile and internet banking, rose by 27% year-on-year to PkR7.9 trillion, while fee income grew by 17%, driven by card transactions.
The bank’s infection ratio improved to 4.3%, and specific coverage remained stable at 90%. The fourth quarter also saw an increase in general provisioning by approximately PkR11 billion, reflecting a conservative approach in response to economic uncertainties.
HBL’s cost-to-income ratio stood at 56.3%, a slight improvement from the previous year. The Tier-1 and total capital adequacy ratios improved to 14.3% and 17.7%, respectively. The bank handled US$5.3 billion and US$4.29 billion in imports and exports, securing market shares of 10% and 13%.
One-third of HBL’s branch network is Islamic, with plans for further conversion under guidance from the State Bank of Pakistan. The closure of 23 domestic branches in CY24 was part of a strategy to focus on high-ticket customers, with smaller transactions being directed to digital channels.
Concerns in the auto, steel, and construction sectors have receded due to declining interest rates and prudent deleveraging. Recent taxation reforms on agricultural income are anticipated to enhance documentation within the sector. The bank expects a cautious approach to policy rate cuts, with the central bank likely maintaining real interest rates at 200-250 basis points.
HBL’s investment strategy includes a potential increase in the fixed component of its investment book, contingent on the yield curve’s normalization. AKD Securities Limited reiterated a ‘BUY’ recommendation for HBL, with a target price of PkR258 per share by December 2025, and a dividend yield of 10% from the last close.
The post Habib Bank Limited Reports Stable Profits Despite Economic Challenges appeared first on Pakistan Business News.