Bank Al Habib: From strength to strength

Bank Al Habib Limited (BAHL) continued 2021 where it left 2020. The bank continues to amass sizeable profit growth despite challenges thrown by Covid-19. Financial results released last week show BAHL recorded 61 percent year-on-year growth in after-tax profits, stemming from strong core and non-core income, and provisioning reversals booked during the period.

BAHL recorded volumetric expansion in balance sheet, which was instrumental in driving the markup income, especially in times of substantially reduced interest rates from the same period last year. BAHL’s asset base expanded by 6.5 percent over December 2020 to reach Rs1.61 trillion. Much in line with the industry trend, bulk of the growth was driven by investments in government securities, as the portfolio jumped to Rs844 billion, showing an increase of 10.4 percent over December 2020.

The advances portfolio saw muted growth, yet the growth was better than some of the bigger banks which reported negative advances trend during the quarter. Net advances grew by 4.5 percent over December 2020 at Rs533 billion. BAHL’s gross ADR stood at a healthy 46.8 percent – significantly higher than the mid to low 30s ADR reported by the bigger banks this earning season.

BAHL’s loan book continues to be clean as the NPLs went down to Rs6.7 billion, returning an NPL ratio of just 1.24 percent. General and specific provisions have been adequately made, and the prudent policy adopted by the management is well and truly reflected in the coverage ratio in excess of 180 percent.

On the liabilities front, deposit base expanded by 6.2 percent over December 2020, much higher than the industry average deposit growth in the same period. Bulk of the deposit growth was witnessed in non-remunerative deposits, with current deposits having a share of 37 percent. BAHL has continued to improve the deposit mix, with an improved CASA ratio of over 66 percent, which still offers more room for improvement, given the deposit mix of the larger banks.

The non-funded income grew phenomenally, driven mainly by 38 percent rise in fee, commission income, despite challenges thrown by the pandemic. The administrative expenses grew in the double digits, explained well by continued branch expansion and technology investment.