Karachi: Habib Bank Limited (HBL) disclosed a modest year-over-year profit increase of 3% for the first nine months of 2024, totaling PkR 44.1 billion, driven by gains in both Net Interest Income and Non-Interest Income. The performance was tempered by higher provisioning and operational costs. The Board of Directors also declared an interim dividend of PkR 4.0 per share, bringing the total payout for the period to PkR 12 per share.
According to AKD Securities Limited, HBL's return on equity stood at 16.6% with a book value of PkR 281, contributing to an increase in both Tier-1 Capital Adequacy Ratio to 12.6% and the total Capital Adequacy Ratio to 16.4%. Despite a downturn in local business profitability, the bank's international operations soared, with Profit Before Tax (PBT) from overseas rising by 77% year-over-year to US$ 30.9 million. The domestic business faced challenges, largely due to heightened provisioning related to the adoption of IFRS-9 and the absence of a one-off gain recorded the previous year.
The bank reported a 5% increase in Net Interest Income to PkR 158.1 billion, attributed to volumetric growth despite narrowing net interest margins by 66 basis points as the rate cycle turned. Non-Financial Income also surged by 64% year-over-year, reaching PkR 60.7 billion, bolstered by significant growth in fee income from the bank's flagship Cards business and increased remittances and Banca fees.
Administrative expenses rose by 19% over the previous year to PkR 104.6 billion, driven by transaction-related costs and staff expenses. The cost-to-income ratio increased to 56.5%, with the bank targeting a reduction to around 50% moving forward.
The bank also noted an increase in provisions by PkR 10.7 billion due to industry-wide issues in sectors such as Steel, Oil and Gas, and Real Estate. Deposits grew by 16.1%, reaching PkR 4.8 trillion, primarily fueled by growth in current accounts. Advances showed recovery but were still below December 2023 levels, though international advances increased significantly.
The bank's non-performing loans ratio worsened slightly to 6.0%, with a coverage ratio of 90.0%. Management is focused on achieving an Advance to Deposit Ratio (ADR) of 50.0% by year-end by enhancing low-cost deposit acquisition.
HBL's investment portfolio exceeded PkR 3.2 trillion, reflecting a 24% increase, predominantly allocated to 12-month Treasury Bills and fixed and floater Pakistan Investment Bonds.