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HBL_Analyst_Briefing_Takeaways, (AKD Off the Analyst's Desk Mar 02, 2023)

AKD, Off the Analyst's Desk

HBL: Analyst: Briefing: Takeaways

Habib Bank Limited (HBL) held its analyst briefing earlier today, wherein the bank’s management discussed the following:

 

• HBL posted NPAT of PkR10.8bn (EPS: PkR7.3/sh) for the final quarter of the year, lower by 6.5%QoQ while higher by 20.4% on a YoY basis. The earnings during the quarter were driven by better net interest income, increasing by 18%QoQ, in turn driven by expanding NIMs. To note, the NIMs for the quarter clocked in at ~5.4%, compared to ~4% in 3QCY22.
• The bank’s deposits grew by 2.6%YoY/2.9%MoM to PkR3.5tr at the end of the quarter. The bank’s Current Account share in total deposits improved to 40.3%, compared to 38.5% in the earlier quarter and 34.6% in the same period last year. At the end of CY22, the bank’s CASA stood at 81.5%.
• The bank closed the year with a consolidated Advance-to-Deposit ratio of 51.4%, compared to 50.9% in 3QCY22. This was driven by a 3.9%QoQ increase in the bank’s Advances, clocking in at PkR1.78tr. The infection ratio stood at 4.8%—a historical low for the bank. HBL’s coverage at the end of the year stood at 100.8%.
• The bank’s cost-to-income ratio stood at 58.8% during FY22, compared to 57.1% in the same period last year.
• Provisioning during the period was largely attributable to those related to the Eurobonds issued by the GoP, driven by the downgrades in the country’s ratings by agencies. For the Sri Lankan bond, the bank management apprised that it is sufficiently covered against those. Furthermore, the recent downgrades  would lead to a charge in 1QCY23, however it is too soon to assess the quantum of the same.
• In terms of the future outlook, the bank guided towards a 12%-13% growth in its deposits in CY23. Furthermore, the bank is looking to increase the financial inclusion in the country, noting that currency in circulation stands at ~PkR8tr and needs to be brought into the banking channel.
• Regarding the investment portfolio, the bank apprised that it has 58% of  fixed-income portfolio in Floaters, whereas 25% are in fixed rates, while 16%-17% is in the form of T-Bills. The return on investment currently stands at ~15.5%. The bank is comfortable with the current composition of the bank’s investment portfolio.
• As for the policy rate, the bank is of the view that the SBP is targeting the core inflation, and would peak at ~20%-21%.
• Regarding the bank’s capital position, the management apprised that it had raised additional tier-1 capital of PkR6.5bn during the year. Furthermore, the drag that was previously coming from the international business, has been minimized and the state of the bank’s capital position is likely to be better going forward.

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