HBL posts PKR 16.9 billion Q3 profit, strengthens digital and deposit base

Habib Bank's investment portfolio stood at PKR 4.0 trillion as of Sept. 30, reflecting a prudent tilt toward floating-rate instruments to manage interest rate risk.

In a corporate briefing, the bank said that about 65-66% of the portfolio is invested in floater Pakistan Investment Bonds (PIBs), 25% in fixed PIBs, and 10% in treasury bills, maintaining a short duration profile with a weighted average maturity of 1.05 years.

The average yield on the fixed-income book stood at 12.25%, while management noted that spreads on 10-year floater PIBs—currently around T+90 basis points—remain below HBL’s portfolio average, providing comfort despite mild repricing pressure in the market.

Habib Bank reported a consolidated profit of PKR 16.9 billion for the third quarter of 2025, up 16% year-over-year, as the bank continued to post solid growth in deposits, lending, and digital transactions.

Earnings per share stood at PKR 11.53, according to details shared at the bank’s corporate briefing session.

HBL also announced an interim cash dividend of PKR 5 per share, bringing the total payout for the first nine months of 2025 to PKR 14 per share.

The bank’s management said it expects stable interest rates and a gradual movement in the currency in the near term, with a continued focus on low-cost deposit mobilization and digital expansion to sustain profitability.

For the first nine months of 2025, net interest income (NII) grew 11% year-over-year to PKR 207 billion, supported by balance sheet expansion and an improved deposit mix. Non-fund income (NFI) also rose 11% to PKR 68 billion, driven by card fees, banking services, and treasury gains.

The bank’s cost discipline remained strong, with the group cost-to-income ratio improving to 55.3% from 56.3% a year ago.

At the domestic level, it stood at 49.7%, compared with 49.8% in 2024, underscoring HBL’s focus on digitization and operational efficiency.

Deposits and advances

HBL’s total deposits rose by PKR 713 billion during the first nine months of 2025 to reach PKR 5.1 trillion, the highest in the industry.

Growth was led by current account deposits, which increased PKR 371 billion to PKR 1.9 trillion, taking the current account share to 40% of the total deposit mix.

Domestic deposits rose 22% year-over-year, while international deposits increased $41 million over December 2024. Management expects total deposits to grow between 14-16% in 2026, maintaining a focus on low-cost current accounts.

On the lending side, net advances stood at PKR 2.0 trillion as of September, keeping HBL as the largest lender in Pakistan. The loan book remains well diversified—33% corporate, 23% commercial, and 11% consumer.

Domestic advances stood at PKR 1.43 trillion, while the international loan portfolio increased 12% year-over-year to $1.6 billion, led by growth in the UAE and UK markets.

Consumer lending grew 15% year-over-year to PKR 164 billion, driven by strong demand for credit cards and auto financing.

Asset quality improved, with the infection ratio declining to 4.9% and specific coverage rising to 90.6%.

Digital expansion

Digital transactions surged 34% year-over-year to PKR 25.7 trillion in the first nine months of 2025.

Mobile and internet banking volumes jumped 47% to PKR 8.2 trillion (239 million transactions), while transaction banking grew 35% to PKR 10.3 trillion and branchless banking increased 24% to PKR 724 billion.

The digital-to-over-the-counter ratio improved to 92:8, reflecting HBL’s continued leadership in digital penetration and customer engagement.

Capital strength and outlook

HBL’s Capital Adequacy Ratio (CAR) stood at 18.3% as of September, well above regulatory requirements.

The management said the bank is well-positioned to navigate a stable interest rate environment and plans to expand its customer base through digital channels and low-cost deposit growth.

“We expect deposit growth to remain strong into 2026, supported by a continued shift toward current accounts and enhanced customer value propositions,” the management said in the briefing.

Analysts said HBL’s strong fundamentals and digital leadership support a positive outlook. “With the bank trading at a forward P/E of around 6.5x and a dividend yield of roughly 6%, HBL remains attractively valued,” said a Karachi-based banking analyst.