HBL has declared a consolidated profit after tax (PAT) of Rs. 26.33 billion for the half year ended June 30, 2023, up 117.5 percent YoY as compared to Rs. 12.1 billion recorded in the same period last year.
According to Arif Habib Limited (AHL), this is HBL’s highest-ever half-yearly PAT, largely driven by higher net interest income.
HBL achieves record half-yearly profit in 1HCY23
In 1HCY23, HBL posted its highest-ever half-yearly profit (PAT) of PKR 26bn, largely driven by higher net interest income.@HBLPak @Pakstockexgltd #KSE100 #PSX #HBL #Equities #Pakistan pic.twitter.com/dl40QKg9Lt
— Arif Habib Limited (@ArifHabibLtd) July 26, 2023
Along with the result, the Bank declared an interim cash dividend of Rs 2 per share (20 percent) for the April-June quarter, taking the total payout for H1’23 to Rs. 3.50 per share.
Earnings per share for the half year were Rs. 17.86 compared to Rs. 8.10 for H1’22.
HBL’s balance sheet grew by 7 percent over December 2022 to Rs. 4.9 trillion, driven by a Rs. 224 billion growth in deposits. Domestic deposits crossed the Rs. 3 trillion mark, with low-cost deposits increasing by Rs. 162 billion. Average domestic deposits increased by more than Rs. 300 billion; 90 percent of this growth was from cheaper deposits enabling the Bank to keep its funding cost at manageable levels.
Advances declined as private sector demand reduced in light of the record-high borrowing costs. Most of this decline was in lending to corporates; agriculture and consumer lending held steady even in the face of macroeconomic headwinds while microfinance loans increased by 7 percent.
In the rising interest rate environment, net interest margins widened by 192 bps and, combined with an Rs. 460 billion growth in the average domestic balance sheet, resulted in a 53 percent increase in net interest income. With a strong contribution now coming from international markets as well, HBL’s total interest income rose to Rs. 114 billion.
During the quarter, inflation continued to rise, with a weaker rupee further impacting the cost base. Despite these headwinds, proactive cost management efforts contained expense growth to only 2.5 percent over the previous quarter, improving the cost/income ratio from 60.8 percent in Q1’23 to 54.5 percent in Q2’23. The net infection ratio of 0.8 percent remains below industry levels and prudent provisioning has ensured that coverage remains in excess of 100 percent.
Commenting on the Bank’s performance, Muhammad Aurangzeb, President & CEO of HBL said,
HBL’s H1’23 results, underpinned by client centricity, were driven by strong organic growth. Exceptional performance across all business segments further cemented the Bank’s leadership position. We will continue to invest in our digital capabilities and are committed to providing the best possible banking experience. The recognition by Asiamoney as the ‘Best Bank for Digital Solutions Pakistan’ is a tribute to millions of clients’ continued trust and confidence in HBL. The Bank continues to help its customers navigate challenging periods, emphasizing sustainability and giving back to the community.
Business Development
In H1’23, HBL won Pakistan’s Best Digital Bank for clients thus validating its progress towards becoming a ‘technology company with a banking license’. The Bank’s digital channels played a significant role in shaping the financial landscape and enabled clients to process more than 115 million digital financial transactions for a staggering volume of Rs. 2.75 trillion. This growth has resulted in processing about 85 percent of all HBL’s transactions through digital channels, compared to conventional branches.
HBL Mobile introduced an Urdu language option and witnessed a growth in user base by 26 percent to more than 3.6 million users. Financial transactions and service requests through the app grew by 50 percent to over 430 million and channeled a remarkable total value of over Rs. 2.02 trillion.
HBL has taken the lead in becoming the first Bank to offer aggregator services to other financial institutions across the country through 1link. In H1’23, Rs. 825 million worth of digital payments were processed through this channel. HBL also introduced Digital Invoicing – a new digital payments solution for the e-commerce sector.
HBL’s flagship cards business remained the first choice of clients as usage grew by 50 percent over the same period last year. HBL Personal Loan reached a milestone of Rs. 20 billion in disbursements, digitally, to its 100,000 plus clients.
HBL made significant growth in Agriculture financing, with a new business acquisition of Rs. 8.5 billion in H1’23. The outstanding gross loans are now close to Rs. 50 billion, a 12 percent growth over H1’22.
HBL’s ambition to grow SME business has led to delivering accelerated growth with average advances for H1’23 rising by 13 percent over the corresponding period last year, while the number of borrowers registered a growth of 24 percent YOY.
Under the HBL Islamic initiative, the Bank successfully established its flagship Prestige branch at Dolmen Mall Clifton, Karachi. Furthermore, HBL Islamic CarFinance achieved a milestone of Rs. 3 billion in disbursements in H1’23.
HBL sets a new industry record by surpassing Rs. 3 billion mark in Roshan Apni Car loans for Non-Resident Pakistanis (NRPs). In H1’23, HBL also facilitated approximately USD 139.7 million in transactions and opened over 12,000 new Roshan Digital Accounts (RDA).
During H1’23, HBL’s Investment Banking arm closed multiple deals across the energy, oil & gas, real estate, insurance, and road infrastructure sectors. These deals included syndications and debt capital market/Sukuk issuances worth over Rs. 325 billion.
The HBL Transaction & Employee Banking maintained its leadership position in cash management and employee banking with market shares above 30 percent. The throughput in cash management increased from Rs. 5.9 trillion in 2022 to Rs. 7.1 trillion in 2023, showing a 20 percent volume growth.
The international franchise witnessed substantial improvement in operating profit for H1’23, mainly supported by a 45 percent higher interest income compared to H1’22. This year marks the 10th anniversary since CPEC was kicked off. During this time, HBL has been a key financial partner to major Chinese Entities as well as Government Ministries & Departments.
