Staff Reporter
Karachi
HBL announced earnings on Wednesday for 1HCY19 at PKR 3.7bn (EPS: PKR 2.53/share), depicting a YoY decline of 53% and QoQ hammering of 79%. The heavy OPEX and FX losses once again contributed to the depressed earnings of the bank. A dividend of PKR 1.25/share was also announced for the quarter. NII of the bank settled at PKR 47.7bn for 1HCY19, rising 20% YoY as 78% higher interest expense was offset by the 47% rise in mark-up income. NII registered an uptick of 4% QoQ as well despite rate hikes during the 2Q (50 bps in April and 150 bps in May) owing to NIMs expansion from lagged impact of loans repricing comes through. NFI of the bank nosedived 28% YoY/80% QoQ primarily owing to a massive 241% YoY higher loss on FX operations which is attributable to PKR depreciation (adverse impact on open FX position in lieu of foreign borrowing for NY settlement payment). The bank continued to book losses on sale of securities – 4.5x higher QoQ (PKR 1.7bn during 2Q). The bank however booked a 16% YoY jump in its fee income. Provisioning expenses returned for the bank (316% YoY higher) as expected with a PKR 594mn expense booked during 2Q (PKR 83mn net reversal last quarter) which we view is owing to an impairment charge on the equity book. Higher OPEX (+23% YoY / 9% QoQ) owing to NY remediation/business transformation costs continued for the bank. Effective tax rate was set at 60% for 1HCY19 vis-à-vis 43% SPLY.
