Habib Bank Limiteds (HBL) 1HCY11 profits rose 25 percent from the same period a year earlier, close to the top five banks cumulative growth of 24 percent, but lower compared with industry peers such as UBL, MCB and ABL. Net mark-up income remained the biggest contributor to the healthy bottom-line, since the banks gross spread ratio jumped to 58 percent in the 1HCY11, up from 56 percent in 1HCY10. Expansion in the investment portfolio, combined with a higher average Kibor fuelled revenue growth. The revenue contribution from the investments reached 36 percent of the total mark-up income in 1HCY11, up from 29 percent in 1HCY10. The banks investment portfolio increased by 34 percent to Rs327 billion during the period. The bank has experienced the strongest investment growth in the big-five group. The advances inched down by around one percent to Rs431.5 billion at the end of 1HCY11. Therefore, the banks investment to deposit ratio (IDR) surged to 40 percent at the end of 1HCY11, up from 34 percent by the end of CY10. Deposit growth also remained strong. The size of deposits increased by around 14 percent to Rs821 billion at the end of the first-half, with fixed deposits rising by 21 percent. In the same breath, the cumulative deposit in the current and savings account improved by around 12 percent to Rs584 billion, but growth in fixed deposits inched down the banks CASA ratio by 1 percentage point to 71 percent at the end of 1HCY11(or in the first-six months). The aggregate deposit base for the group of top five banks increased by eight percent to Rs3,147 billion at the end of 1HCY11. HBL accounted for a quarter of the groups total deposit base at the end of 1HCY11. In fact HBLs deposits are only about Rs10 billion shy of those of National Bank of Pakistan. Given the formers growth trajectory it may well become the largest bank in terms of deposits by the end of the current year. The jump in provision expenses echoes fresh accretion and ageing of non-performing loans. The total bad-loans increased by around nine percent to Rs51 billion in the first-six months of CY11. This helped the bank improve its coverage ratio by half a percentage point to around 83 percent, higher than the groups (top five banks) average coverage ratio of around 72 percent. The banks infection ratio inched up one percentage points to 10.8 percent. The bank has also performed better on the investment banking front. Non-markup income improved on the back of higher income from dealing in foreign currencies. In the face of higher inflationary pressure which averaged around 14 percent, HBL managed to fetter its operating expenses which grew by nine percent, year-on-year, while the groups (top five banks) non mark-up expenses increased by 15 percent. The banking sectors performance has been hampered by a decline in asset quality amid feeble economic growth. However, bad loans may start declining in the next year as the banks have become conservative in lending and have increased their exposure to risk-free investments.
============================================================= HABIB BANK LIMITED ============================================================= Rs(mn) 1HCY11 1HCY10 chg ============================================================= Markup Earned 45,246 39,036 16% Markup Expensed (19,007) (17,017) 12% Net Markup Income 26,240 22,019 19% Provisioning (4,786) (3,102) 54% Net Markup income after provisions 21,454 18,917 13% Other income 6,529 5,544 18% Operating revenues 32,769 27,562 19% Other expenses (13,471) (12,348) 9% Profit before taxation 14,512 12,113 20% Profit after taxation 9,288 7,423 25% EPS 8.43 6.74 ------------------------------------------------------------- Source: Company accounts =============================================================
Comments
Comments are closed for this article.