HBL Profits Fall in FY2016-17 After the New York Branch Scandal

HBL, on Monday, declared a consolidated profit after tax of Rs 7.82 billion for the year 2017, which is down by a massive 77.05% as compared to last year’s profit of Rs 34.07 billion.

The earnings were down as HBL paid a hefty sum of $225 million (Rs 24 billion) to settle the New York State Department of Financial Service’ penalty during the Q32017.

Along with the results, the bank surprisingly declared a final dividend of Rs 1.00 per share (10 percent), bringing the total dividend for the year to Rs 8 per share.


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Earnings per share of the bank decreased to Rs 5.34 from Rs 23.23 in the previous year.

The results were below the market expectations. It is hard to talk about anything else when the extraordinary penalty has singlehandedly delivered such a telling blow.

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Interest expense recorded a 10% YoY increase and settled at Rs 64.94 billion during CY17 as compared to Rs 59.13 billion. The Markup income showed an uptick (5% incline YoY) to support Net Interest Income (1% increase YoY) which remained flattish compared to same period last year. On a yearly basis, Net Interest Income remained flat as the cost of funds ballooned.

On a quarterly basis, the Bank’s top-line remained flat with fund cost soaring most likely owing to increasing composition of remunerative deposits and higher leverage.

Non-markup income shed by 26 percent YoY to Rs 6.6 billion in Q42017 which mainly led to lower profits during the quarter. This was on the back of a lower fee, commission & brokerage income and share of loss from associated companies.

The net interest income was up by 7% YoY to Rs 21 billion.

A staggering reversal was recorded in Q4CY17, clocking in at Rs 1.2 billion with regard to the reversal of Rs 404 million. cumulatively, as the bank booked a reversal of Rs 115 million during CY17 compared to a provisioning expense of Rs 718 million.

Capital Gains during the quarter stood at Rs 2.8 billion, up 52% YoY.

The share price has appreciated 3.24 percent in the last 6 months and has gained 27 percent in 3 months.

At the end of the day, HBL’s share price saw a decline of -1.36 %, or -Rs 2.75, to close at Rs 199.03 with a volume of 0.66 million shares traded at the bourse on Monday.


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