HBL Profits Rise by 54% to Rs. 13.3 Billion in Q1

HBL has declared a consolidated profit after tax (PAT) of Rs. 13.3 billion for the first quarter ended March 31, 2023, up 54 percent as compared to Rs. 8.61 billion recorded in the same period last year.

This was driven by excellent results across all domestic businesses and sustainable operating profit from the international franchise. Earnings per share (EPS) improved from Rs. 5.78 in 1QCY22 to Rs. 9.00 in 1QCY23.

Along with the result, the Bank declared a dividend of Rs 1.50 per share (15 percent).

The Bank’s balance sheet grew by 7 percent to Rs. 4.96 trillion with deposits increasing to Rs. 3.6 trillion. Growth of Rs. 260 billion in average low-cost domestic deposits enabled HBL to contain the rise in deposit costs. The record policy rate of 21 percent has resulted in muted credit demand with a net reversal in private-sector credit growth. However, total advances were maintained at December 2022 levels of Rs. 1.8 trillion.

In the rapidly rising rate environment, a combination of significantly higher net interest margins and a 13 percent growth in the average domestic balance sheet drove a 53 percent growth in net interest income. This was well supported by a 46 percent higher interest income from international business. Consequently, HBL’s total net interest income increased to Rs. 55.8 billion.

HBL continues to lead the market in fees, with another robust growth of 27 percent to Rs. 9.3 billion. The flagship Cards business continued to deliver stellar results, accounting for two-thirds of the fee increase. Trade cash management and consumer finance made solid contributions, delivering high double-digit fee growth. The Bank’s total revenue for Q1 2023 thus increased by 38 percent over Q1 2022 to Rs. 64.4 billion.

HBL continues to invest in its people and its digital infrastructure while ensuring it gives back to the communities in which it operates. In Q1 2023, unprecedented inflation levels and Rupee devaluation further impacted administrative expenses which increased to Rs. 39.2 billion. However, with the strong revenue growth, the cost/income ratio improved from 65.1 percent in Q1 2022 to 60.8 percent in Q1 2023. With the slowdown in loan growth, the infection ratio has increased to 5.4 percent but remains below industry levels; prudent provisioning ensured that the Bank’s total coverage was maintained at above 100 percent.

Commenting on the Bank’s performance, Muhammad Aurangzeb, President & CEO of HBL said,

We have remained steadfast in the course we have set for ourselves i.e. setting new benchmarks in challenging times. Given this was achieved while Pakistan faces perhaps the most challenging economic conditions in its history, speaks for the continued patronage of our clients, the robustness of our business model, and the dedication of the entire HBL team. As we navigate the current environment, we remain live to risks; we will pursue a course that ensures the highest possible standards of client experience whilst ensuring that business controls are robust across the franchise.

Business Development

The Bank is in good health with solid business fundamentals, enjoying leadership positions across most areas of our operations.

HBL’s investments in technology over many years are coming to fruition. During Q1 2023, HBL’s Mobile and Internet Banking user base increased by 25 percent to 3.4 million users; transactions grew by 46 percent YoY, channeling a total value of over Rs. 940 billion.

HBL is driving Pakistan’s e-commerce payments landscape, with its recently launched HBL Digital Invoicing. HBL’s Billing Aggregator continues to make online bill payments accessible to millions of Pakistanis across the world. During Q12023, the channel processed around Rs. 400 billion, a 60 percent YoY rise, and recorded another industry-first by enabling clients of other banks to use their own app to pay education fees for HBL-registered institutions.

Konnect provides services to over 8.9 million clients, of which 23 percent are women. Konnect has been instrumental in implementing the government’s welfare programs; in Q1 2023, HBL disbursed Rs. 102 billion to over 6.3 million BISP beneficiaries, to support underprivileged women. HBL also collaborated with BISP on the Waseela-e-Taleem Program to promote education and literacy, disbursing Rs. 9.4 billion to 4.8 million beneficiaries in Q1 2023.

HBL’s cards remain the first choice of clients as usage of both debit and credit cards grew by 54 percent over the same period last year with spending reaching nearly Rs. 94 billion in Q1 2023.

HBL is growing the SME business in a significant and sustainable way; the business registered a 20 percent YoY. New cashflow-based lending products witnessed good momentum, growing the portfolio to over 3,000 clients by the end of Q1 2023. Supply chain financing has also recorded the highest ever growth by any bank in the country.

HBL made significant growth in Agriculture financing, with a new business acquisition of Rs. 3.7 billion during Q1 2023. HBL maintains a dominant role in Agriculture financing with a market share of 35 percent and the largest portfolio amongst commercial banks. As the champion bank for Balochistan, HBL continues to lead the industry with the highest agriculture disbursements in the province. After the hugely successful agriculture pilot interventions in Punjab, which saw farmer incomes double, HBL is expanding this to KPK.

HBL maintained its dominance in the Investment Banking space by closing 8 deals worth over Rs. 300 billion. Despite a plethora of headwinds, the Bank secured 8 mandates covering the entire Investment Banking spectrum and valuing over USD 1 billion. Transaction & Employee Banking has maintained its leadership position with cash management throughput up by 40% to Rs 3.6 trillion in Q1 2023; 70 percent of this was through digital transactions. HBL’s market-leading employee banking proposition, [email protected], provided payroll services to 3.2 million employees, and tablet-based real-time account opening and activation were commercially launched to facilitate implementation.

HBLPSL 8 was successfully held in Q1’23. This year for the first time ever, the month-long, 34-match tournament was played across 4 cities in the country. HBLPSL has put Pakistan back on the map of world cricket and brought untold joy to tens of millions of Pakistanis.

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