October 16, 2020 (MLN): Habib Bank Limited (HBL) has witnessed a 2.86x (186.38%) increase in its net profits after tax during 9MCY20 to Rs. 25.27 billion as opposed to the profits of Rs 8.82 billion earned in the corresponding period of last year.
This reflected in HBL’s earnings per share which exhibited a whopping increase of 191.5% from Rs 5.89 per share to Rs 17.17 per share.
This extraordinary performance can be attributed to higher than expected Net Interest Income (NII), normalization of operating expenditure post winding-up of New York operations and the continuing strong performance from the core domestic franchise.
In addition to this, 15% YoY rise in dividend income from associates, income from derivatives (Rs 622.74 million) and gain on sales of securities (Rs 7.36 billion) further strengthened bank’s profitability. As in the same period last year, the bank booked a loss of Rs 657.5 million from derivatives and Rs 2.4 billion on sales of securities.
During the period, bank’s total income increased by a 36.7% YoY to Rs. 122.85 billion led by 33.39% (Rs 24.72 billion) YoY growth in net interest income to Rs 98.78 billion. The increase in net interest income was mainly due to negligible growth in interest expense by 0.5% YoY compared to a 13.85% YoY increase in interest earned.
Moreover, the increase in bank’s non-interest income by 52.5% to Rs 24 billion further supported bank’s earnings.
The provisioning expenses for the bank clocked in at Rs 8.5 billion during 9MCY20 which is 4.7x higher compared to last year. To recall the management has stated that it finds it appropriate to record upto 1% general provision on the domestic portfolio excluding govt. guaranteed exposure, consumer/staff lending and cash secured exposure, a report by Arif Habib Limited cited.
Following NY costs elimination, the bank’s operating expenses witnessed a decline of 1.9% YoY to Rs 70.28 billion.
This has caused bank’s cost to income ratio to decline to 58% from 78% during 9MCY19.
On the tax front, the bank has witnessed 86% YoY surge in tax related expenses. The effective rate during the period stood at 41% compared to 52% last year.
Moreover, as per SBP directives for capital conservation, the bank did not announce any cash dividend.
|
Consolidated Profit and Loss Account for the Nine months ended September 30, 2020 (Rupees '000) |
|||
|---|---|---|---|
|
|
Sep-20 |
Sep-19 |
% Change |
|
Mark-up/return/profit/interest earned |
207,931,102 |
182,631,441 |
13.85% |
|
Mark-up/return/profit/interest expensed |
109,146,648 |
108,573,082 |
0.53% |
|
Net mark-up/return/profit/interest income |
98,784,454 |
74,058,359 |
33.39% |
|
Non mark-up/interest income |
|
|
|
|
Fee, commission and brokerage income |
13,383,475 |
15,456,596 |
-13.41% |
|
Dividend income |
287,643 |
367,646 |
-21.76% |
|
Share of profits of associates and joint venture |
2,546,333 |
2,212,652 |
15.08% |
|
Foreign Exchange Income/(loss) |
(333,426) |
302,575 |
|
|
Income/(loss) from derivatives |
622,743 |
(657,532) |
– |
|
Gain/ (loss) on sale of securities – net |
7,362,042 |
(2,411,531) |
– |
|
Other income |
198,466 |
506,627 |
-60.83% |
|
Total non-mark-up /interest income |
24,067,276 |
15,777,033 |
52.55% |
|
Total income |
122,851,730 |
89,835,392 |
36.75% |
|
Non mark-up/interest expenses |
|
|
|
|
Operating expenses |
70,284,509 |
68,969,691 |
1.91% |
|
Workers' Welfare Fund |
856,682 |
393,094 |
117.93% |
|
Other charges |
292,448 |
404,057 |
-27.62% |
|
Total non-mark-up/interest expenses |
71,433,639 |
69,766,842 |
2.39% |
|
Profit before provisions and taxation |
51,418,091 |
20,068,550 |
156.21% |
|
Provisions and write offs-net |
8,514,690 |
1,783,344 |
377.46% |
|
Profit before taxation |
42,903,401 |
18,285,206 |
134.63% |
|
Taxation |
17,631,334 |
9,460,517 |
86.37% |
|
Profit after taxation |
25,272,067 |
8,824,689 |
186.38% |
|
Earnings per share – basic and diluted (Rupees) |
17.17 |
5.89 |
191.51% |
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