AKD Securities Limited - Off the Analyst's Desk (February 24, 2023)

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AKD Securities Limited – Off the Analyst’s Desk (February 24, 2023)

February 24, 2023

Karachi, February 24, 2023 (PPI-OT): HBL – CY22 Result Review

Habib Bank Limited (HBL) has reported its earnings earlier today, wherein the bank posted 4QCY22 NPAT of PkR10.8bn (EPS: PkR7.3), lower by 7%QoQ – in line with our expectations. This takes the full-year earnings to PkR34.4bn (EPS: PkR23.2), 3% lower than the earlier year.

Net interest income for the final quarter clocked in at PkR48bn, higher by 14%QoQ and 40%YoY. The increase can be attributed to an expansion in the bank’s NIMs to 5.1% in 4QCY22 compared to ~4.2% in 3QCY22.

Non-interest income for the final quarter was reported at PkR11.1bn, which was higher than expected, as a drop in FX income was offset by higher fee income. To note, the FX income declined from a positive contribution of PkR4.8bn in 3QCY22 to a negative contribution of PkR772mn in 4QCY22, whereas fee income increased by 13%QoQ to PkR8.7bn in 4QCY22.

Provisions for the quarter were recorded at PkR4.9bn, higher by 5.2x compared to the earlier quarter. The higher provisioning was on account of PkR1.9bn provisioning against GoP US$ bonds and PkR1.4bn provisioning against foreign currency government bonds.

The Operating Expenses for the bank clocked in at PkR34.3bn, higher by 6% compared to the earlier quarter. Hence, the cost-to-income ratio for the final quarter clocked in at 56.6%, compared to 59.7% in the earlier quarter.

The bank was able to improve its deposit mix in favour of the current accounts – making up 40.3% of total deposits at the end of CY22, compared to 38.5% in the earlier quarter.

The bank’s ADR at the end of the quarter stood at 51.4% at the end of the year, compared to 50.9% in 3QCY22. The infection ratio stood at 4.8% as of Dec’22, compared to 5.1% in 3QCY22, while the coverage as at Dec’22 stood at 101%.

The consolidated Total CAR of the bank has dropped to 14.8% at the end of the year, compared to 15.3% at the end of 3QCY22 (regulatory limit: 13.0%).

Alongside the earnings, the bank announced a cash dividend of PkR1.5/sh for the quarter, taking the full year payout to PkR6.75/sh.