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Karachi, During its latest analyst briefing, Habib Bank Ltd (HBL) shared insights into its robust performance and strategic directions for the upcoming year. The bank’s management delved into various aspects of its operations, highlighting significant growth in profits, advancements in technology, and proactive measures for maintaining asset quality.
According to AKD Securities Limited, HBL’s international business reported a profit before tax (PBT) of US$21.4 million, contributing to the group’s consolidated PBT of PKR 113.6 billion for the calendar year 2023, marking a 47% year-on-year increase. A notable surge in fee income by 35%, led predominantly by a 50% growth in the card segment, underscored the bank’s thriving service sectors.
The briefing revealed that domestic expenses ascended by 31%, partially due to the currency devaluation affecting technology solution costs from international vendors, as well as forex transactions with Visa/Mastercard. Provisions increased by PKR 5.7 billion during CY23, primarily because of a single problematic borrower; however, management expressed confidence in the bank’s asset quality and foresaw no major non-performing loans (NPLs) ahead.
Management anticipates the return on equity (ROE) to stabilize between 16-18% in the future, attributing this to HBL’s status as a Domestic Systemically Important Bank (D-SIB), which necessitates holding additional capital. Furthermore, HBL has launched HBL Zarai, a subsidiary dedicated to the agricultural sector, promising an investment of PKR 7.5 billion over five years to support small farm owners with various farming needs.
For CY24, the bank projects an 18-19% year-on-year growth in deposits and a 12-13% increase in advances. On the monetary front, cautious optimism was expressed about potential rate cuts by the central bank, with a forecasted policy rate of 17% by year-end, pending favorable consumer price index (CPI) numbers.
Islamic banking continues to be a focal growth area, with plans to convert more branches into Islamic Banking branches. In terms of investments, HBL holds securities worth PKR 1.95 trillion, with a significant portion in floating-rate Pakistan Investment Bonds (PIBs), and an average yield of 19.6% on its banking book.
The impending application of IFRS-9 is expected to impact general provisioning, with management preparing for a PKR 19 billion effect due to the Expected Credit Loss (ECL) requirement, phased over five years. Legal expenses of PKR 10 billion were acknowledged, attributed to services from legal counsel.
Regarding Open Market Operations (OMO) transactions, a cautious approach was affirmed, with aims to keep OMO borrowings below 10% of the deposit base. Lastly, HBL intends to continue its current dividend distribution policy, barring significant macroeconomic disturbances.
The post HBL Reports Strong Performance and Strategic Initiatives in CY23 Analyst Briefing appeared first on Pakistan Business News.