HBL in clover

Buoyed by increase in operating revenues, Habib Bank Ltd (HBL) recorded an outstanding growth in its bottom line in CY11 compared to the previous year. In keeping with expansion in an asset base, the Banks top-line registered growth. The Banks asset base stood at Rs.1,064 billion as on 31st December 2011 nearly 20 percent higher compared to the same period of last year. Given that advances fell by 4 percent to Rs.416 billion as on 31st December 2011 relative to the same period of last year, the Banks asset base benefited from expansion in an investments portfolio. The Banks investment base grew by 63 percent to around Rs.400 billion as on 31st December 2011 when the industrys (all scheduled banks) investment base grew by 41 percent. This lifted Investment to Deposit Ratio (IDR) to 46 percent at the end of CY11, nearly 12 percentage points higher compared to the same period a year earlier. Hence, revenues from investments accounted for 40 percent of the top line in CY11, as opposed to 29 percent in CY10. The Bank outdid the industry on a deposit growth front, given that its deposit base increased by 21 percent during the year to Rs.875 billion as on 31st December 2011 when the industrys deposit base grew by 15 percent. However, the Banks CASA ratio inched down by around 2 percentage points to 70 at the end of December 2011 relative to the same period a year earlier. The Banks net mark-up income accrued a gain of 20 percent; while the Banks gross spread ratio inched down by 48bps to around 57 percent in CY11 compared to the previous year. Supported by growth in income from dealing in foreign currencies, and slight improvement in income from other non-mark-up income avenues, HBLs total non-mark-up income was 9 percent higher in CY11 compared to the previous year. In the face of growth in non-mark-up expenses, the Bank managed to improve its total operating revenues to expense ratio to 2.42 in CY11 from 2.38 in CY10. As NPLs grew by 10 percent during the year to Rs.51 billion at the end of December 2011 along with decline in gross advances, the Banks infection ratio inched up by around 1 percentage points to 11.2 at the end of December 2011 relative to the same period of last year.