HBL Reports 15% Decline in Third-Quarter Profit

KARACHI: Habib Bank Limited (HBL) has recently announced a significant decline in its third-quarter net profit, reporting a decrease of 15 percent. This downturn is primarily attributed to an increase in interest expenses. According to the bank's statement to the Pakistan Stock Exchange (PSX), HBL's net profit for the quarter ending September 30 stood at Rs14.197 billion, a drop from Rs16.631 billion during the same period last year.

In addition to the profit report, HBL declared an interim cash dividend of Rs4 per share. This is in addition to the interim cash dividend of Rs8 per share that was already paid. The earnings per share (EPS) for this quarter were recorded at Rs9.85, compared to Rs11.34 a share last year, indicating a notable decline.

Despite the drop in profit, HBL reported an increase in interest earned income, which rose to Rs217.89 billion from Rs190.77 billion a year earlier. However, the bank's interest expenses also increased, reaching Rs154.17 billion, up from Rs125.78 billion a year ago. This rise in expenses has contributed to a decrease in the overall profit margin.

For the nine months ending September 30, HBL's net profit was Rs43.254 billion, slightly up from Rs42.971 billion during the same period last year. The EPS for this nine-month period was recorded at Rs30.03, compared to Rs29.20 a share last year.

HBL's balance sheet has shown growth, with total assets increasing by 12 percent since December 2023, reaching Rs6.2 trillion. This growth is largely due to a Rs660 billion increase in deposits, which now total Rs4.8 trillion. Domestic deposits alone have surged by 18 percent to Rs4.1 trillion, while the bank's advances increased by 3.9 percent during the quarter, totaling Rs1.8 trillion.

Commenting on the bank's performance, HBL's President & CEO, Muhammad Nassir Salim, stated, "HBL’s 9M’24 results were driven by leadership position across all business segments, and a focus on serving our clients better." He emphasized the bank's commitment to enhancing its digital services, noting that a majority of transactions are now conducted through digital platforms. HBL is also dedicated to strategic priorities such as agriculture, small and medium enterprises (SMEs), and sustainability.

HBL's digital banking services have seen impressive growth, with a year-on-year increase of 34 percent in financial transactions and 26 percent in service requests, processing over Rs2 trillion in the third quarter alone. The bank's Konnect platform processed Rs586 billion, reflecting a 16 percent growth compared to last year.

Furthermore, HBL's support for the agriculture sector remains robust, with total lending exceeding Rs57 billion. The bank's focus on growing its SME business has resulted in a year-on-year increase of 19 percent in advances, reaching Rs91 billion.

While HBL has faced challenges in its third-quarter profits, the bank continues to demonstrate resilience through its strategic initiatives and digital transformation. The growth in deposits and advances, along with a strong commitment to serving various sectors, positions HBL for potential recovery and future success. As the financial landscape evolves, HBL's ability to adapt and innovate will be crucial in maintaining its leadership in the banking sector.