Flash Note: Habib Bank (HBL): 1H2018 Conference Call Notes
- HBL reported consolidated PBT of Rs14.1bn in 1H2018 vs. Rs27.7bn in 1H2017 primarily due to impact of 1) pension charge of Rs1.9bn, 2) business transformation and compliance transformation project cost of Rs1.4bn, 3) impact of rupee devaluation of Rs2.5bn against foreign currency borrowing and 4) additional cost incurred on its New York operation.
- International business incurred a loss of Rs4.9bn in 1H2018 vs. profit of Rs0.5bn in 1H2017 due to significant decline in revenue as a result of Balance Sheet shrinkage post de-risking and higher consultancy cost related to New York operations.
- Net Interest Income (NII) of the bank was down 3% to Rs40bn in 1H2018, whereas domestic NII was slightly up +1% driven by balance sheet growth.
- Non-interest income of the bank clocked in at Rs10.7bn, down 35% YoY primarily due to lower fee, commission income, capital gains and exchange losses.
- Admin Expense of the bank was up 28% YoY to Rs36bn amid pension charge, business transformation cost and cost on its New York operation. The ongoing business transformation cost and consultancy/legal cost related to New York Operation is anticipated to continue till 1H2019.
- Gross NPLs of the bank has improved to 8.2% in Jun 2018 vs. 7.6% in Dec 2017.
- CAR ratio of the bank has improved to 17% as of Jun 2018 vs. 16% in Dec 17 as the bank has been optimizing its Risk Weighted Assets (RWA) that has augmented CAR improvement.
- Deposit insurance cost is anticipated to be close to Rs500mn in a quarter going forward.
Habib Bank Limited is engaged in commercial banking and asset management related services in Pakistan and overseas. The Bank's segments include Branch Banking, which consists of loans, deposits and other banking services to agriculture, consumer, small and medium-sized enterprise (SME), and commercial customers; Corporate Banking, which consists of lending for project finance, trade finance and working capital to corporate customers and it also provides investment banking services, including services provided in connection with mergers and acquisitions; Treasury, which consists of trading, fixed income, equity, derivatives and foreign exchange businesses, and it also includes credit, lending and funding activities with professional market counterparties; International Banking, which is engaged in monitoring and reporting purposes and consists of its operations outside of Pakistan, and Head Office/Others. It operates in Pakistan; Europe, Middle East and America, and Asia and Africa.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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