Research Analyst
May 23 - 29, 2011

Habib Bank Limited (HBL) is engaged in commercial banking, modaraba management and asset management related services in Pakistan and overseas. The segments of the bank include retail banking which consists of retail lending, deposits generation, and banking services.


Admin Expenses 24,252,960
PBT 27,040,030
PAT 17,034,380
EPS (Rs) 16.78

HBL Corporate banking group comprises a seasoned team of regional managers (RMs) to meet the demanding service standards of the large corporations. A long history of financing and nurturing relationships in Pakistan has given HBL a unique insight, enabling bank to provide timely and effective financial solutions for their customers to meet the growing challenges of the global economy.

If a corporate customer has a turnover of at least Rs300 million, the bank has a range of solutions designed to meet his/her a range of banking needs. The bankís RMs have expertise to create tailored financial solutions catering to the specific requirements of the customerís business.

HBLís commercial banking group targets medium sized companies with a turnover of at least Rs50 million. The bank has the ability and the resources to meet the needs of customerís business with their pro-active, responsive, and experienced RMs who are committed to understanding customerís business.

HBL offers full-service investment banking capabilities to its clientele.

This year alone, HBL has closed over thirty transactions with a cumulative worth of over USD2 billion. The investment-banking group operates in three specialist business areas: project finance, debt capital markets and syndications, and equity capital markets and advisory.

Now the HBL has launched the phone banking to their customerís facilitation. Customers can now call HBL PhoneBanking and save a trip to the branch. Customerís query resolves in a single telephone call from anywhere and at anytime.

The geographical segments of the bank include Pakistan, Asia Pacific, Europe, North America, Middle East and others. The bank financial results for the year 2010 show a strong growth in all areas. Deposit growth for the year has been 9.5 per cent and the net asset growth of the bank has been 14 per cent over 2009. HBLís consolidated pre-tax profit for 2010 is Rs27 billion and the profit after tax is Rs17 billion, which translates into an earning per share of Rs16.78.

On the occasion of the annual World Bank and IMF meetings 2010 in Washington, D.C., Global Finance presented banking awards to the top global banks at a ceremony attended by senior bank officials. HBL was presented with two awards: Best Bank Pakistan and Best Trade Finance Provider Pakistan. During the year ended December 31, 2010, the bank operated 1,459 branches locally and 42 overseas branches.


In Pakistan, the banking system registered growth in profits over the corresponding quarter of Sep-09 owing to improved net interest income and lower loan-loss provisioning charges. The profitability in terms of volume improved across all the banking groups. Disaggregated analysis shows that the performance of top five banks remains the key support to the overall profitability of the banking system.

The earning from loans and advances and investments improved net interest /mark-up income during the quarter. Investment declined towards the end of quarter. However, higher investment volumes (mainly in government papers) built over last couple of years along with rising return increased their shares in mark-up income. Due to stagnant growth in advances and increased NPLs, share of income from loans and advances decreased. On the expense side, deposits remained the key source of interest/mark-up expense (81.6 per cent).

After some letup in the last quarter, provision charges increased again during Sep-10. This increase mainly occurred in sub-standard category, requiring partial provisioning, and loss category as non-performing loans (NPLs) in doubtful category loans downgraded to loss category.

Non-interest income declined 5.4 per cent on year on year basis. Consequently, share of non-interest income in gross income squeezed further by one percentage point to 24.4 per cent. Persistent increase in administrative and other business related expenses due to inflationary pressures affected the cost to income ratio, which inched up by one percentage points. Volume of net advances and deposits contracted during the quarter under review and the share of top five banks in net advances and deposits decreased further to 51.9 per cent and 52.7 per cent respectively. Since these banks due to their wider outreach and brand recognition enjoy lowest cost of deposits, the spread between return on advances and deposit declined by 8bps, as there was relatively higher decrease in return on advances compared to return paid on deposits.

Return on assets of the system decreased over the quarter underscoring the slowdown in advances, increase in NPLs and decline in non-interest income.


Economic environment is likely to remain tough during 2011 owing to persistently high inflation, soaring fiscal deficit coupled with structural issues like energy crisis in the country. This will lead to continuing pressure on private sector credit demand and borrowers repayment capacity. Under these circumstances, Habib bank limited would continue its pursuit of steady growth. Key focus for the bank during 2011 would be on quality of assets, effective liability management through enhancing the proportion of core deposits, controlling costs, improving efficiencies while making efforts to attain higher standards of service quality and building good relationship with the customers in future.