HBL, Pakistan’s largest bank, was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network to over 1,700 branches and +2,100 ATMs globally, serving 14 million customers and clients.

HBL 1HCY19 Conference Call Takeaways

HBL conducted an investors’ conference call to discuss the financial performance of the bank during 1HCY19.

The bank announced its 2Q/1H CY19 results yesterday posting a lesser than expected earnings with a consolidated PAT for equity holders of the bank of PKR652mn (EPS PKR0.44), registering a decline of 81% YoY and 79% QoQ.

Key deterrents to the earnings were 1) revaluation loss on open FX position, and 2) capital losses.

The revaluation loss on FX open position amounted to PKR6bn during 1HCY19, eliminating which FX Income would have arrived at PKR4.4bn during 1HCY19.

Capital loss during 1HCY19 loss on listed equities of PKR2.2bn, which include includes PKR1.8bn realized loss on sale of already impaired listed equities.

During 1HCY19, the reported PBT of the bank stood at PKR9.9bn reflecting a decline of 30% YoY.

Normalizing the PBT with the FX and equity losses, it has grown by 3% YoY.

While total NII increased by 20% YoY, domestic NII improved by 18% and international NII improved by 14% YoY (in USD terms).

The growth in international NII came from improvements in Bahrain, UK, and UAE.

Domestic NIMs improved by 59bps where earning assets yield improved by 309bps to 10.5% due to full re-pricing impact of interest rate hikes in 2018 and maturing investments being rolled over at higher rates.

Cost of funds increased by 250bps to 5.5% due continued increase in current accounts.

Normalized administrative expenses increased by 10% YoY during 1HCY19 compared to the headline growth of 24%.

The factors for higher expenses are higher costs in New York, and PKR devaluation impact on overseas expenses.

Domestic deposits increased by 7% over Dec’18 crossing 2tn mark with current accounts growing at 9% over Dec’18.

High quality consumer lending up 7% with a loss rate of less than 0.2%.

Trade volume up 9% YoY with market share of over 9%.

Domestic business transformation cost concluded, which are now being rolled out to international franchise spreading over 13-15 countries but the overall cost would be significantly lower

The management has designed a clear plan in reducing open position in FX which is in the execution phase.

The bank sees advances growth for CY19 in high single digit.

Source: http://www.hbl.com and Next Advantage Forum

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