HBL Profits Decline Due to PSL Expenses

Banking industry has seen a shortfall in its consistent growth recently. In the first fiscal quarter of the year 2016, profits were down for various banks  as Habib Bank Limited saw a decline of 9 percent in its first quarter of 2016, and MCB Bank saw a 22 percent decline in its profitability.

Reasons for the shortfall in profitability include the heavy expense incurred for sponsoring Pakistan Super League in Dubai, declined income from interest and different sources.

According to financial results disclosed to shareholders, HBL made a profit of Rs 9.034 billion in the first quarter of 2016 which is less than 9 million from the corresponding period of last calendar year. Last year the profit stood at Rs 9.934 billion for the same period.

The bank witnessed negative growth in its interest income which was presumed to go down since the interest rate stayed at 6 percent since September 2015 in the country. It earned Rs 35. 7 billion as interest income whereas its mark-up expenses stand at Rs15.5 billion. This totaled a net income of Rs 20.18 billion for the bank.

The bank showed a decline of 15 percent to stand at Rs 6.532 billion by end of March 2016 as against of Rs 7.75 billion recorded by end of March 2015. Under this head, the bank lost its margins through foreign exchanging earning and share from associate companies and joint-ventures.

The administrative expense of HBL saw an increase of Rs 1.62 billion or 15 percent from the previous year. They increased to Rs 12.105 billion from Rs 10.48 billion in administrative expenses recorded in the similar period of 2015.

Habib Bank also opened up its branch in China as well.

The next quarter of 2016 is also set to be tough for banks. This is because the majority of commercial banks, having posted a handsome growth in capital gains the outgoing year of 2015, may see variant drop in unrealized capital gains subsequently after significant maturity of long-term Pakistan Investment Bonds (PIBs) in 2016.

HBL overall revenue earning stands at Rs 26.24 billion in the first quarter of 2016 as against of Rs 26.291 billion in corresponding period of 2015.

The bank announced an interim cash dividend of Rs 3.50 per share to its shareholder.