HBL – 1QCY23 result review

Habib Bank Limited (HBL) posted its 1QCY23 earnings earlier today, where the bank announced NPAT of PkR13.3bn (EPS: PkR9.0)-in line with our estimates. The earnings showed growth of 23%QoQ and 54%YoY.

* Net interest income at HBL clocked in at PkR55.8bn, showing an increase of 13%QoQ and 54%YoY, in line with our estimates. The bank’s NIMS improved from 5.5% in 4QCY22 vs. 5.1% in 1QCY23, owing to the increasing interest rates in the country.

* The bank’s profitability during the three-month period was also buoyed by lower provisioning, clocking in at PkR3.2bn in 1QCY23, lower by 35%QoQ and higher by 1.6x on a YoY basis.

* The dampener to earnings during the period was the lower-than-anticipated non-interest income, which clocked in at PkR8.6bn, lower by 23% as compared to the earlier quarter. This sequential decline can be attributed to a loss of ~PkR6bn reported against the bank’s derivatives book. Some respite to the non-interest income at HBL came in the form of a 7%QoQ increase in Fee income, clocking in at PkR9.3bn.

* Operating expenses during the quarter were recorded at PkR39.7bn, higher by 16%QoQ and 29%YoY. This corresponds to a cost-to-income ratio of 62% during the period, compared to 57% in the earlier quarter.

* Lower taxation during the period lent a helping hand to HBL’s bottomline during the Mar’23 quarter, with the ETR clocking in at 38% in 1QCY23 as compared to 50% in 4QCY22.

* Alongside the earnings, the bank also announced a cash dividend of PkR1.5/sh, in line with our estimates, corresponding to a payout ratio of 17% for the quarter, as the bank continues to struggle with its capital position.

Courtesy – AKD Research

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