HBL Reports Strong Second Quarter with Increased Earnings and Interim Cash Payout

Karachi: Habib Bank Limited (HBL) has reported robust financial results for the second quarter of the calendar year 2025, posting a net profit after tax of PKR 17.8 billion, which translates to earnings per share of PKR 12.12. This marks a 24% year-on-year and 7% quarter-on-quarter increase, surpassing market expectations due to significant gains on securities and other income. An interim cash payout of PKR 4.5 per share was also announced, aligning with predictions and raising the half-year cash payout to PKR 9.0 per share.

The bank’s net interest income (NII) was recorded at PKR 68.9 billion, reflecting a 14% year-on-year rise, although it remained largely unchanged from the previous quarter. This was primarily attributed to a significant increase in the investment book, which grew by 35% year-on-year and 52% quarter-on-quarter.

Mark-up earned saw a decline of 20% year-on-year but increased by 6% quarter-on-quarter, totaling PKR 166.9 billion. Meanwhile, mark-up expenses dropped by 34% year-on-year, rising 11% from the previous quarter to PKR 98.0 billion. The bank’s net interest margins (NIMs) fell to an estimated 4.8% in the second quarter, down from 5.5% the previous quarter.

Non-interest income showed a robust increase, climbing to PKR 22.7 billion, up 17% year-on-year and 5% quarter-on-quarter. This was driven by a substantial rise in other income and gains from the sale of securities. However, fee income decreased to PKR 10.7 billion, marking a 12% year-on-year and 7% quarter-on-quarter decline.

Operating expenses were stable quarter-on-quarter at PKR 51.0 billion, reflecting a 12% increase year-on-year. The cost-to-income ratio improved slightly to 55% from 56% in the same quarter last year and the first quarter of this year.

Credit allowances and provisioning dropped significantly to PKR 1.9 billion, compared to PKR 6.5 billion and PKR 2.7 billion in the second quarter of last year and the first quarter of this year, respectively. The effective tax rate for the quarter stood at 54%, compared to 50% in the same period last year and 55% in the previous quarter.

AKD Securities Limited maintains a ‘BUY’ rating on HBL with a target price of PKR 258 per share by December 2025, citing the bank’s expansion of its low-cost deposit base, focus on agriculture, technology-driven transaction improvements, and enhanced asset quality as key factors.