HBL’s half-year profit declines 59pc to Rs3.927bln

KARACHI: The Habib Bank Limited (HBL) profit declined 59 percent to Rs3.927 billion for the half year ended June 30, 2019, translating into earnings per share (EPS) of Rs2.53, a bourse filing said on Wednesday.

HBL earned Rs8.128 billion with EPS of Rs5.42 in the corresponding period last year, a notice to the Pakistan Stock Exchange (PSX) said.

The bank announced interim cash dividend for the second quarter ended June 30, 2019 at Rs1.25/share which is 12.5 percent.

Net interest income (NII) of the bank increased 20 percent YoY to settle at Rs47.7 billion for the first half of calendar year 2019, as 78 percent higher interest expense was offset by the 47 percent rise in mark-up income. NII registered an uptick of 4.0 percent QoQ as well despite rate hikes during Q2 (50bps in April and 150 bps in May) owing to net interest margins expansion from lagged impact of loans re-pricing.

NFI of the bank nosedived 28 percent YoY/80 percent QoQ primarily owing to a massive 241 percent YoY higher loss on foreign exchange operations, which was attributable to rupee depreciation (adverse impact on open forex position in lieu of foreign borrowing for NY settlement payment).

Adverse market conditions have impacted the bank’s results. These include a further 15 percent depreciation in the value of rupee and a 9.0 percent fall in the continuously declining PSX, which have resulted in a combined Rs7.9 billion reduction in profit, the bank said in a statement.

The bank continued to book losses on sale of securities – 4.5x higher QoQ (Rs1.7 billion during Q2). However, it booked a 16 percent YoY jump in its fee income.

Provisioning expenses returned for the bank (316 percent YoY higher) as expected with Rs594 million expense booked during Q2 (Rs83 million net reversal last quarter) which owes to an impairment charge on the equity book.

Higher OPEX (up 23 percent YoY / 9 percent QoQ) owing to NY remediation/business transformation costs continued for the bank.

In the first half of 2019, HBL held the market-leading position in most of its business segments. “In the strategically vital CPEC (China-Pakistan Economic Corridor) initiative, HBL is the largest executor of CPEC related financing in Pakistan,” the statement said.

HBL’s recent partnerships in the development of Rashakai Special Economic Zone (SEZs) and PV Solar projects, depict strong leadership position in investment banking and China inbound transactions.

The bank remains the largest private sector lender in farmer financing and the largest SME bank in the country. “Recently, Visa has acknowledged that HBL Credit Card is Pakistan’s no 1 Visa Credit Card portfolio in terms of payment volume; HBL continues to be the market leader in acquiring business with a 17 percent increase from 2018,” the bank’s statement said.