HBL incurs Rs14.12bln in losses in first quarter

KARACHI: Habib Bank Limited (HBL) incurred Rs14.12 billion in losses during the third quarter ended September 30, as $225 million settlement payment to a US financial regulator affected the bank’s profitability. 

HBL recorded a loss per share (LPS) of Rs9.7 in the July-September quarter as compared to earnings per share (EPS) of Rs6.61 with profit of Rs9.78 billion, a notice to Pakistan Stock Exchange said on Friday.  

Analyst Mustafa Mustansir at Taurus Securities Ltd. said quarterly earnings registered a spell-binding growth without the settlement payment.  The bank also skipped dividend payout during the quarter to support capital adequacy ratio (CAR) of the bank. It already paid interim cash dividends of Rs7 per share for the first two quarters of 2017.

“As a result of the settlement payment, the consolidated Tier 1 CAR as at September 30, 2017 reduced to 10.6 percent with the total CAR at 13.6 percent,” HBL said in a statement. “While HBL’s capital ratios still remain above regulatory requirements, the bank will be taking all measures necessary to restore its capital ratios to their previous levels as early as practically possible.” 

HBL’s net interest income slightly fell to Rs20.57 billion in July-September from Rs20.8 billion a year earlier. Non mark-up income, however, rose 24 percent year-on-year to Rs9.86 billion during the quarter under review.   

The bank’s non-interest expense increased 14 percent to Rs16 billion in 3Q2017. Analyst Umair Naseer at Topline Securities said a delay in hike in interest rate and lower-than-expected advance growth pose risks. 

HBL’s profit amounted to Rs18.76 billion for the nine months ended September 30, translating into EPS of Re0.87. The bank registered a net income of Rs43.49 billion with EPS of Rs17.47 for the same period a year ago.   “Excluding the impact of the settlement payment, HBL’s consolidated profit after tax for the first nine months of 2017 is Rs25.3 billion, and pre-tax profit is Rs42.5 billion, both two percent lower than the same period in 2016,” the bank said in the statement. 

Net interest income for the nine months reduced marginally to Rs62 billion due to the spread compression caused by falling investment yields and competitive loan pricing.  Non mark-up income of R 26.3 billion for the period was 18 percent higher than the same period a year ago. Fees and commissions rose 13 percent to Rs15.5 billion. 

The main contributors to the fee growth were home remittances, card related and consumer financing fees and asset management.  Treasury related income increased 43 percent; although capital gains contributed the majority of this growth. The asset quality ratio improved to 8.2 percent as at September 30 and the coverage ratio was 91.4 percent.

HBL’s deposits continued to grow, reaching Rs2.03 trillion, while its market share increased to 14.4 percent. Domestic current and saving accounts ratio improved to 87.4 percent in September from 85.5 percent in December 2016. Domestic current accounts crossed Rs600 billion, and the current account ratio was 35 percent by as at September-end compared with 34.8 percent in December 2016. 

Fauji Fertilizer’s quarterly profit down 13.7pc 

Net income of Fauji Fertilizer Company (FFC) fell 13.7 percent year-on-year to Rs3.22 billion for the quarter ended September 30, translating into earnings per share (EPS) of Rs2.53, a bourse filing said on Friday. 

FFC’s profit amounted to Rs3.736 billion with EPS of Rs2.94 in the corresponding period a year earlier, a notice to Pakistan Stock Exchange said.

The fertiliser maker announced an interim dividend of Rs1.5/share, which is in addition to Rs2.5/share already paid to the shareholders. Fauji Fertilizer’s sales revenue surged 54.5 percent year-on-year to Rs28.75 billion for the July-September over the same period a year ago. But, cost of sales sharply decreased to Rs22.797 billion during the quarter as compared to Rs13.893 billion a year earlier.  

“The growth in sales revenue was mainly due to higher diammonium phosphate off-take on the back of replacement of cash subsidy with reduced general sales tax fixed at Rs100/bag,” Momena Mumtaz, an analyst at Taurus Securities Limited said. “Urea sales, however, remain depressed for September due to reduction in cash subsidy from Rs156/bag.”

Analyst Adnan Sami at Topline Securities said subsidy cut also caused a 44 percent year-on-year decline in other income to Rs1.4 billion during the quarter under review.  “Key risks include decline in international urea prices, slower than expected urea sales, and weaker than expected local urea prices,” Sami added.  Finance cost, however, went up eight percent year-on-year to Rs908 million in July-September.  FFC’s profit slid seven percent to Rs6.8 billion for the nine-month period ended September 30, translating into EPS of Rs5.35.