HBL, the country’s biggest commercial bank, announced its 2021 financial results posting a 17 percent year-on-year in pre-tax profits. The result was accompanied with a dividend of Rs2.25/share, taking the full year dividend to Rs7.5/share. Despite reduced interest rates as compared to last year, HBL managed to post growth in profits, at the back of strong and sustained organic balance sheet growth.

HBL in 2021 became the first bank to boast of a balance sheet in excess of Rs4 trillion, with December end asset size at Rs4.3 trillion, up from Rs3.8 trillion a year ago. The bank registered an impressive growth on the deposits front, up 19 percent from December 2020. HBL also became the only Pakistani bank with a deposit base in excess of Rs3 trillion, closing the year with Rs3.38 trillion.

Domestic current deposits alone crossed the trillion-rupee mark, improving the CASA ratio further. In contrast to yesteryears, on the earning assets front, investment portfolio remained largely unchanged from December end 2020 at Rs1.94 trillion. PIBs continued to remain the paper of choice for HBL, much in line with 2020. The investment to deposit ratio came town from over 68 percent as at December end 2020 to a little under 58 percent by end of 2021.

Lending made a comeback in 2021 as HBL’s advances portfolio reached Rs1.5 trillion up from Rs1.2 trillion in 2020 – up 23 percent. HBL further consolidated its leader status in consumer lending, crossing Rs100 billion. The ADR improved to a little over 44 percent, whereas the loan quality remained healthy. The infection ratio slid to 51 percent, which is an all-time low for the bank. The NPLs continue to be adequately provided for, with coverage ratio exceeding 90 percent.

The non-funded income growing by 19 percent year-on-year continued to lend a big hand to total income. The fee and commission income constituted the biggest chunk to non-funded income, growing by 35 percent year-on-year, as the economic activities picked up, compared to the lows seen during the peak pandemic times of 2020. HBL managed to keep a tight lid on administrative expenses, curtailing the growth to just 2 percent year-on-year, improving the cost to income ratio from 61 percent last year to 57 percent in 2021.

With the interest rate scenario destined to alter in 2022, HBL appears well-poised to leverage its ever-growing strong balance sheet to cash on the opportunities on offer.