Karachi: Habib Bank Limited (HBL) announced its third-quarter results for 2024 today, posting a profit of PkR14.5 billion, marking a 13% decrease year-over-year but a slight increase of 1% from the previous quarter. The bank also declared an interim dividend of PkR4.0 per share, bringing the total dividend for the first nine months of the year to PkR12.0 per share, significantly higher than the PkR5.8 per share in the same period last year.

According to AKD Securities Limited, the bank’s profitability faced challenges this quarter primarily due to increased provisioning for credit losses and rising operating expenses, despite stable net interest income (NII) and improved non-interest income. The credit allowance provisioning saw a significant increase, totaling PkR8.9 billion in the quarter, up both year-over-year and sequentially.

Net interest income remained stable at PkR63.7 billion, with no year-over-year growth but a 4% increase from the second quarter. The bank’s net interest margin (NIM) fell to 5.0% in the quarter, down from 6.0% in the same quarter last year, attributed to declining investment yields against stagnant borrowing costs.

Non-interest income was a bright spot, rising to PkR21.2 billion, bolstered by higher fee income, gains from the sale of securities, and improved dividend income. Fee income grew by 16.3% year-over-year to PkR12.4 billion, and gains on the sale of securities rebounded impressively to PkR4.9 billion after a loss in the previous year.

Operating expenses also increased to PkR47.9 billion, up 8% from last year, though the bank’s cost-to-income ratio showed improvement due to higher revenue from NII and non-interest sources. The ratio stood at 56.5% for the quarter, improving from previous periods.

HBL has maintained its ‘Buy’ recommendation with a target price of PkR160 per share by June 2025, anticipating a dividend yield of 12%.