Solid 2021 for Bank AL Habib

Bank AL Habib Limited (BAHL) marked another year of steady progress on all fronts. The Bank’s after-tax profits went up by 5 percent year-on-year, as gains were made on non-markup income and provisioning fronts, in addition to continued expansion of the balance sheet. The year end financial result was accompanied with 70 percent final cash dividend – the highest in the bank’s history.

The markup earned went down year-on-year, primarily due to significant reduction in average yields on earning assets. Volumetric growth was evident as the asset base expanded by 21 percent to Rs1.85 trillion over December 2020. Unlike the industry trend, BAHL’s asset base expansion is not entirely built on investment portfolio. The investment portfolio grew by 8 percent over December 2020 to Rs827 billion.

BAHL made big strides in 2021 on account of growth in advances portfolio. The earning asset growth was built largely around growth in advances, which grew to over Rs733 billion, registering an increase of 44 percent over December 2020. BAHL has a reputable name in trade financing, and from the looks of it, the bank cashed in on the trade growth spurt during 2021. The gross advances to deposit ratio improved from 46 percent last year to over 57 percent.

The loan quality continues to remain exemplary, as the NPL ratio fell further to 1.04 percent, with a high coverage ratio of 169 percent, indicating the prudent approach adopted by the Bank. On the liabilities front, the growth was higher than the industry average at 19 percent over December 2020 at Rs1.31 trillion.

Non-funded income provided an able hand to the income growth, headlined by a sizeable growth in fee and commission income, as business activities picked up considerably during the year versus 2020. There were gains to be had on foreign exchange income as well, taking the overall non-funded income growth to 37 percent year-on-year. The administrative expense growth was slightly on the higher side, leading to higher cost-to-income ratio for 2021. The biggest difference to the bottomline was made by considerable reversal in provision expenses, which accounted for an impact of more than Rs4.5 billion.