PACRA maintains entity ratings of Habib Metropolitan Bank

KARACHI: Habib Metropolitan Bank is differentiated on the basis of its superb ability to serve trade-related needs of its customers, and therefore enjoys a leading position in the industry.

The ratings of Habib Metropolitan Bank (HabibMetro) are vested in the brand strength of the bank, flanked by a family of astute bankers. The bank is also associated with a diversified and financially strong international bank-Habib Bank AG Zurich (HBZ). This association helps in assimilating the parent’s best practices into HabibMetro, while fostering control environment with enhanced level of oversight.

Additionally, it is a part of House of Habib, which has a strong array of business in Pakistan mainly large industrial and corporate units. The benefits continue to accrue in terms of non-markup income. The bank has a strong forte in the business hub of Pakistan in terms of its presence and contribution of deposits and advances.

The Bank grew its customer deposit base by 10.6 percent, wherein it enhanced its current account deposits by 21.5 percent. The bank continues to remain focused on improving its deposit mix. The bank’s emphasis in terms of its loan portfolio is evident by the growth of 28.9 percent in performing advances, led by its presence in textile.

Overall infection ratio improved to 4.0 percent (CY20: 5.8pc) owing to decline in absolute NPLs. Due to the low monetary policy rate for major period of CY21, as well as improved current account deposits, HMBL’s cost of funds declined, resulting in a reduced markup expensed. This resulted in inched up net mark up income of the bank. This progress, along with growth in non-markup income, resulted in the growth in profitability.

As at December 31, 2021 the bank’s CAR declined to 14.10 percent (CY20:16.79pc). Pakistan’s economy has gone through several varied phases in last two years due to the Covid-19 pandemic. Banking sector continued to flourish with high profitability.

Going forward, the macro-economic environment is beset with myriad challenges due to heightened interest rate, tightening of demand, rupee depreciation and higher infection. This has repercussions for the entire system including banking. The ratings are dependent on the management’s ability to augment its position generally in the banking industry and particularly in its market niche-trade finance in the wake of rising competition. Any weakening in asset quality will in turn put pressure on the bank’s profitability and risk absorption capacity.

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               Entity
Rating Type   Current        Previous
            (25-Jun-22)   (25-Jun-21)
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Action        Maintain       Maintain
Long Term        AA+              AA+
Short Term       A1+              A1+
Outlook       Stable           Stable
Rating Watch         -              -
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Copyright Business Recorder, 2022