Habib Bank Limited (HBL) - April 2023

Habib Bank Limited (HBL) – April 2023

Research Team

Table of Contents

Corporate Briefing Notes

Habib Bank Limited (HBL) conducted its corporate briefing session today to discuss the financial results for 1QCY23 and to highlight its future roadmap.

Key Highlights

● To recall, HBL recorded PAT of PKR13.25bn (EPS: PKR9/sh) in 1QCY23, depicting an upside of 56%YoY compared to PKR8.6bn (EPS: 5.78/sh) in SPLY. The increase during the quarter was mainly attributed by higher net interest income.
● The bank also announced DPS of PKR 1.5 for the quarter.
● Deposits clocked in at PKR3.6Tn with the current accounts mix improving to 40.8%. Domestic deposits were recorded at PKR3.1Tn. Overall, average domestic deposits of the Bank were up 11%YoY to PKR2.9Tn, respectively.
● Total advances during the 1QCY23 remained flat to PKR1.8Tn, compared to previous quarter. Whereas, domestic advances declined by 3.3%QoQ to PKR1.45Tn, mainly due to economic slowdown.
● HBL has added 1.3 million customers in the first quarter. Out of them, more than half are coming through our Konnect channel.
● With respect to the investment portfolio; around 55% in floaters, 30% in fixed PIB, and remaining 15% is held in T-Bills. However, around PKR70bn of fixed PIBs are expected to mature this year. Furthermore, 2/3 of the fixed instrument portfolio is expected to mature in next 2-2.5 years.
● The bank recorded impairment loss rather a general provision charge, on Pakistan Eurobonds, mainly on the back of downgrading of country’s rating by the International Credit Rating agencies.
● NIM improved to 6.8% in 1QCY23 compared to 6.2% in 4QCY22, on the back of earlier rate hikes flow through to asset repricing.
● The bank’s cost-to-income ratio stood at 51.6% during 1QCY23, compared to 51.1% in FY22.
● The total CAR decreased to 13.5% in Mar’23 from 14.8% in Dec’22. This decline is led by unprecedented PKR devaluation along with MTM losses during the said quarter.
● Banks’ ADR was declined at 49.3% in 1QCY23 due to slow down in credit demand. Infection ratio increased to 5.4%, backed by decline in lending.

● The infection ratio during the quarter stood at 5.4%, backed by decline in lending. HBL’s coverage at the end of 1QCY23 clocked in at 103%.

Future Outlook

● Going-forward, the bank is of the view that higher NIMs could be witnessed in the upcoming quarters, reflected by recent 400bps increase in interest rates. Moreover, despite uncertainty on economic front, the management does not see any major stress on loan portfolio.

Important Disclosures


This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.

Analyst certification:

The research analyst for this report certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and 2.no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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