Research Analyst
July 26 - Aug 1, 2010

HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Key areas of operations encompass product offerings and services in retail and consumer banking. HBL has the largest corporate banking portfolio in the country with an active investment banking arm. SME and agriculture lending programs and banking services are offered in urban and rural centers.

With a domestic market share of over 40 percent, HBL was nationalised in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55 percent) and loans to small industries, traders, and farmers. International operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands.

On December 29, 2003 Privatization Commission announced that the government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51 percent of the shareholding in HBL, against an investment of PKR 22.409 billion ($389 million).

HBL is the largest private sector bank in Pakistan, having a market share of 13.4 percent in the overall banking sector's domestic deposits at year-end 2009.


HBL is currently rated AA (Long term) and A-1+ (Short term) and has a balance sheet size of over $11 billion. It is the first Pakistani bank to raise Tier II Capital from external sources.


The profit after tax of Habib Bank Limited has increased to Rs3.602 billion in the quarter ended March 31, 2010 as compared to Rs3.481 billion earned in the corresponding quarter in 2009. The earning per share was Rs3.96 in the period against Rs3.82 in the same period a year back.


INDICATORS MARCH 31, 2010 DEC 31, 2009
Investments 203,676,729 209,421,147
Advances 412,890,415 432,283,588
Lending 22,433,637 5,352,873
Borrowings 41,807,569 48,121,649
Deposits 647,166,613 653,452,460
. MARCH 31, 2010 MARCH 31, 2009
Profit After Tax 3,602,602 3,481,427
EPS 3.96 3.82

The banks mark-up/return/interest earnings increased to Rs19.156 billion against Rs18.237 billion while non-mark-up/interest income surged to Rs2.653 billion against Rs1.949 billion.

The bank's mark-up/return/interest expenses increased to Rs8.551 billion against Rs7.817 billion. The provisions and write-offs increased to Rs1.388 billion against Rs1.271 billion while operating expenditure increased to Rs5.907 billion against Rs5.640 billion. The before tax profit of HBL surged to Rs5.964 billion in the first quarter of 2010 as compared to Rs5.457 billion in the same quarter in 2009.

During 2009 the manufacturing and finance and insurance sectors, which grew by 7.6 percent and 12.9 percent in 2008, recorded a negative growth of 3.3 percent and 1.2 percent respectively.

In this challenging environment, HBL continues to manage its portfolio prudently while aggressively serving the productive sectors of the economy, which promote sustainable growth.

HBL focuses on developing new products and strives to improve service quality so that it is better able to serve its customers. The bank is committed to maintaining its superior market positioning as it continues to improve its extensive branch network through technology upgrades as well as product innovation; HBL's asset base has increased by 7.2 percent and its net worth has increased by 16.7 percent.

HBL has a 6.28 percent stake in PHB Bank Nigeria. The bank has witnessed deterioration in asset quality as a result of the market conditions in Nigeria. This will lead to the dilution of HBL's investment value in this holding.


During the period under review, banking sector has shown signals of improvement and growth. The total asset base of the sector has increased from Rs5,627 billion in CY08 to Rs6,529 billion by the end of quarter December 2009. The net investments of the sector have also shown improvement. They stood at Rs1,753 billion on the quarter ended December 09, from levels of Rs1,080 billion. Even the deposit base of the sector has shown improvement. They have increased from levels of Rs4,217 billion in CY08 to Rs4,787 billion in CY09.

Another major change that has been identified in the overall banking sector of Pakistan is change in the asset structure of the system. There has been a decline in the proportion of advances by the sector but a slight increase in the investments over the years. The private sector's low demand for bank credit has been reinforced by bank's risk aversion due to heightened credit risk. In this scenario, the public sector has emerged as a major consumer of bank credit.

The global economy is still trying to recover from the crisis of the past year; Pakistan has been deeply impacted by this crisis. In addition, the country continues to battle internally with concerns relating to security. A combination of these factors has resulted in a major strain on economic growth and the GDP growth has been limited to two percent during 2009.


Challenges faced by the economy in general and banking sector in particular include restrained liquidity, slowdown of economic activity, and high inflation. Despite these issues, HBL has been able to maintain its profitability and only concern is of the higher NPL's growth, which has to be checked as it has surpassed to alarming levels. The bank is equipped to face challenges with its dynamic management and trained workforce.