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Banks were supposed to have it rough in the second quarter owing to the pandemic. Most banks have shown immense resilience and inherent strength of the systems and prudence, in smoothly sailing through the Covid-19. Habib Metropolitan Bank (HMB) is the latest to join the list – having reported 30 percent year-on-year growth in after-tax profits.

All good things start from the top, and the topline growth was strong enough to carry the momentum down to the bottomline. The growth in net markup income was driven by volumetric expansion in average earning assets, as well as possible reprofiling of investment portfolio, in line with the changing ground situation, as regards the interest rate scenario.

Most banks have reprofiled the investment portfolio from short-term to long-term government securities, and HMB in all likelihood is expected to have followed the trend. The investments grew by 10 percent to Rs493 billion over December 2019. The advances portfolio also grew handsomely by 11 percent over December 2019 to Rs292 billion. The ADR stood at 49 percent, slightly higher from December 2019.

On the liabilities front, the growth at 9 percent over December 2019 to Rs598 billion kept pace with the industrywide deposit growth. The deposit growth has importantly been in the right direction, as current account deposits constitute 35 percent of the total deposits. The growth in current deposits at 18 percent to Rs207 billion, comfortably outpaced the growth in remunerative deposits, improving the CASA ratio further, and bringing the cost of deposits down.

The non-funded income soared by a massive 43 percent year-on-year, mainly on account of increase in foreign exchange income. Another reason for such high growth is a massive reversal in sale of securities, which had reported substantial losses in the same period last year. HMB has done a phenomenal job in keeping the fee and commission income largely intact, in the face of the pandemic. The cost to income ratio improved drastically to 46 percent, from 53 percent in the same period last year.