The State Bank of Pakistan (SBP) has granted its approval to Habib Bank Limited (HBL) for the incorporation of ‘HBL Zarai Services Limited’ – which aims to promote Pakistan’s agriculture sector – as a wholly-owned subsidiary of the bank.

The development was shared by HBL in its notice to the Pakistan Stock Exchange (PSX) on Friday.

“The approval is subject to compliance with all applicable laws/regulations,” read the notice.

Earlier this year, the board of HBL approved the incorporation of ‘HBL Zarai Services Limited’ as a wholly-owned subsidiary to promote Pakistan’s agriculture sector.

“To promote the agriculture sector of Pakistan, the Board of Directors of the bank has approved the incorporation of ‘HBL Zarai Services Limited’ as a wholly owned subsidiary of the bank, subject to receipt of all regulatory approvals,” read the notice from July.

Agriculture forms the backbone of Pakistan’s economy as it provides livelihoods to millions and is a major generator of export earnings. However, after three consecutive years of commendable performance, the growth in agriculture sector decelerated to 1.6% during FY23, the SBP said in its annual State of Pakistan’s Economy report.

As per HBL’s latest financial results, the bank posted a consolidated profit before tax (PBT) of Rs83.5 billion for the nine months of 2023, which was 50% higher than the PBT for 9M’22.

Despite continued excessive taxation on the banking sector, the HBL’s profit after tax (PAT) for 9M’23 grew by 82% to Rs43.0 billion over the same period last year. Meanwhile, earnings per share for the first nine months were Rs29.20 compared to Rs15.95 for 9M’22.