HBL posts 15% higher profits owing to suppressed provisioning

By MG News | February 24, 2022 at 04:53 PM GMT+05:00

0:00

February 24, 2022 (MLN): Habib Bank Limited (HBL) announced its CY21 results today where the bank reported net profits of Rs35.5bn (EPS: Rs23.9) compared to Rs30.9bn (EPS: Rs21.06) in the same period last year, showing an upsurge of 15% YoY.

Along with the result, the bank announced a final cash dividend of Rs2.25 per share, taking the full-year cash payout to Rs7.5 per share.

The YoY growth in earnings was primarily due to reduced provisioning charges as last year saw elevated expenses as part of building general coverage along with improved non-interest income, earning report by Arif Habib Limited cited.

Net interest income of the bank settled at Rs131.4bn for CY21, marginally up by 1% YoY. The flattish YoY rise in the spread is mainly due to 7% YoY increase in interest expense.

On the other hand, non-interest income of the bank surged by 19% YoY during CY21 to Rs36.3bn, led by a marked improvement in fee income (35% YoY) due to resumption in economic activity and improved trade volumes, while FX income clocked in at Rs5.3bn compared to a loss of Rs161mn SPLY.

Meanwhile, capital gains clocked in 85.5% YoY lower during CY21 to Rs1bn.

On the expense side, provisions saw a 34% YoY reduction during the period under review as last year aggressive charges were booked to enhance coverage.

In addition, operating expenses remained flattish in CY21, posting a meagre 2% YoY increase. Moreover, the effective tax rate was stood at 43% for CY21 compared to 42% in CY20.

Consolidated Profit and Loss Account for the year ended December 31, 2021 (Rupees '000)
	Dec-21	Dec-20	% Change
Mark-up/return/profit/interest earned	262,253,962	271,237,258	-3.31%
Mark-up/return/profit/interest expensed	130,834,913	141,132,940	-7.30%
Net mark-up/return/profit/interest income	131,419,049	130,104,318	1.01%
Non-mark-up/interest income
Fee, commission income	25,433,355	18,795,739	35.31%
Dividend income	913,769	489,303	86.75%
Share of profits of associates and joint venture	2,585,595	2,963,090	-12.74%
Foreign Exchange Income/(loss)	5,380,594	(161,688)	-
(Loss)/ Income from derivatives	(182,098)	1,077,945	-
Gain on sale of securities - net	1,024,384	7,054,874	-85.48%
Other income	1,155,761	375,597	207.71%
Total non-mark-up /interest income	36,311,360	30,594,860	18.68%
Total income	167,730,409	160,699,178	4.38%
Non-mark-up/interest expenses
Operating expenses	95,784,969	94,018,405	1.88%
Workers' Welfare Fund	1,273,226	1,109,730	14.73%
Other charges	557,198	320,793	73.69%
Total non-mark-up/interest expenses	97,615,393	95,448,928	2.27%
Profit before provisions and taxation	70,115,016	65,250,250	7.46%
Provisions/ (reversals) and write offs-net	8,087,105	12,219,614	-33.82%
Profit before taxation	62,027,911	53,030,636	16.97%
Taxation	26,521,038	22,117,287	19.91%
Profit after taxation	35,506,873	30,913,349	14.86%
Earnings per share - basic and diluted (Rupees)	23.88	21.06	13.39%

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