Driven by higher operating revenues, Habib Bank Limited (HBL), the countrys second largest commercial bank by deposit size; recorded a 28 percent, year-on-year growth in its bottom line during the first nine months of CY11. HBL, the first of the countrys major banks to report third-quarter earnings, is expected to be an indicator for the performance of the rest of the banking industry. HBL rewarded investors with earnings per share of Rs.4.67 in 3QCY11; bringing the total EPS to Rs.13.10 in the first nine months of CY11 versus Rs.10.25 in the corresponding period last year. The bank announced first interim dividend of Rs.3 per share. Aided by higher investment income, the banks top line shifted into high gear. The banks investment base continued its inexorable growth, edging up by 50 percent during the first nine months to Rs.368 billion as of September 30, 2011. As a result, the proportion of investments-to-deposits (IDR) increased by around 12 percentage points in the nine months under review to 46 percent. The expansion in HBLs investment portfolio came at the cost of lending, given that the net advances for the bank fell by 6 percent in the period under consideration. With 11 percent growth in the deposit base during the first nine months to Rs.802 billion, the bank outdid the banking industry, given that deposit base for all commercial banks grew by 6 percent in the period under consideration. The bank strengthened its market leadership in attracting deposits, as its market share increased by 72 bps in the first nine months to 14.8 percent by the end of September. However, the massive growth in fixed deposits base hauled down the banks CASA ratio by 2 percentage points to 70 percent as of September 30, 2011. The bank has been able to marginally improve gross spread ratio, which increased by 17 bps, year on year, to 57 percent in 9MCY11. In consideration of higher investment banking fees and significant improvement in income from dealing in foreign currencies, the non markup income accrued a gain of 18 percent. Whereas, the banks administrative expenses increased by 14 percent for all the three quarters combined. Even though NPLs grew by 10 percent in the first nine months of the calendar year, higher provisioning expense slightly improved the banks coverage ratio to 82.9 percent as of September 30, 2011, from 82.3 percent as of December 31, 2010. The banks infection ratio was also up 159 bps to 11.4 percent in the same period. The monetary easing undertaken by SBP in the past two monetary policies will have an adverse bearing on the banking industrys margins down the line. However, this in turn, would tilt the banking industrys interest towards advances in search of higher returns.
==================================================== Habib Bank Limited ==================================================== (Rs mn) 9MCY11 9MCY10 chg ==================================================== Markup Earned 70,134 59,016 18.8% Markup Expensed (30,088) (25,420) 18.4% Net Markup Income 40,046 33,596 19.2% Provisioning (6,343) (5,075) 25.0% Net Markup income after provisions 33,703 28,521 18.2% Other income 9,307 7,904 17.8% Operating revenues 49,353 41,500 18.9% Other expenses (20,666) (18,260) 13.2% Profit before taxation 22,345 18,165 23.0% Profit after taxation 14,435 11,293 27.8% EPS 13.10 10.25 ====================================================
Source: Company Accounts
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