Habib Bank Limited (HBL), incorporated in Pakistan, is engaged in commercial banking, modaraba management and related services in the country and overseas. Its registered office and principal offices are situated at Habib Bank Plaza, one of the tallest buildings in the country and a landmark in Karachi.
On December 31, 2005, HBL operated 1425 branches (2004: 1,424) inside Pakistan and 45 branches abroad (2004: 47).
HBL is the holding company of the following entities, of which the first is 90% owned while the rest are wholly-owned: (i) Habib Allied International Bank Plc., UK; (ii) Habib Finance International Limited, Hong Kong; (iii) Habib Finance (Australia) Limited, Australia; (iv) Habib Bank Financial Services (Private) Limited, Pakistan; (v) Habib Currency Exchange (Private) Limited, Pakistan; and (vi) Habib Asset Management Limited, Pakistan.
First Habib Bank Modaraba, Pakistan is also a subsidiary. The consolidated financial statements of the Group for the six months ended June 30, 2006 comprise of HBL and its subsidiaries (together referred to as the Group) and the Group's interest in its associated and jointly controlled entities. The Overview hereunder is of the consolidated, condensed, interim and un-audited financial statements.
Management control of HBL was transferred to Aga Khan Fund for Economic Development, S.A., Switzerland after signing of agreement with the Privatisation Commission, Government of Pakistan on February 26, 2004. As at June 30, 2006, the AKFED holds 51% shares of HBL. JCR-VIS has assigned entity rating in the medium and long term at "AA" (Double A) and "A-1+" for the short term.
Total assets of HBL Group saw 4% increase to Rs 553 billion as on June 30, 2006 compared to Rs 529 billion on December 31, 2005. On June 30, 2006, the Investments declined by 2% to Rs 105 billion as on June 30, 2006 (19% of Total Assets) compared to Rs 107 billion (20% of TA) as on December 31, 2005. Of the total, HBL has 81% investments in Available for Sale Securities (2005: 80%).
HBL's Net Advances as on June 30, 2006 were at Rs 315 billion (57 % of TA) compared to Rs 317 billion (60% of TA) as on December 31, 2005, registering 1% decrease. On June 30, 2006, of the gross advances, 86% were within Pakistan whereas advances abroad were 14%. As on June 30, 2006, gross NPLs were Rs 43.545 billion (December 31, 2005: Rs 41.360 billion). In percentage terms gross NPLs on June 30, 2006 were 12.4% of gross Advances (2005: 11.8% of GA). On Net basis, NPLs were 3% of Advances as on June 30, 2006 (2005: 2% of Advances). Of the gross NPLs 68% pertain to local advances whereas 32% pertain to advances abroad. In other words, the incidence of NPLs is higher on the advances abroad and the management might look into it.
It may be noted that HBL has made full provision against NPLs according to the SBP criteria. However, as some doubtful loans have the tendency to stay under cover for sometime due to different reasons, a prudent policy for HBL would be that the management remains extra vigilant in the appraisal and monitoring of all loans.
Total revenues of HBL for the first six months of 2006 increased by 52% to Rs 20 billion compared to Rs 13 billion for the corresponding six months of the previous year. Net interest income (after provisions) for the six months period under review experienced 25% increase to Rs 12.2 billion (2005: Rs 9.8 billion). Total mark up-interest expense represented 31 % of total mark up income for six months ended June 30, 2006, compared to 23% for the corresponding six months of 2005. The payout to the Depositors is still very low although the return on period-end remunerative deposits for the six months under review works out on an average to 1.79% (2005: 0.93%).
Non-mark up income of the bank for the six months ending June 30, 2006 was lower at Rs 3.128 billion as against Rs 3.758 billion for the corresponding six months of 2005. The six months under review were closed with After-tax Profit attributable to HBL shareholders at Rs 3.943 billion (2005: Rs 3.351 billion), registering an increase of 17%. ROE for the six months is at 8.8% (six months of 2005: 8.2%). No cash dividend has been proposed to be paid to the shareholders (2005: 10%). Performance statistics are given below.
==============================================================
Performance Statistics (Un-audited) (Rs, million)
==============================================================
Balance Sheet As June 30, As Dec. 31,
==============================================================
2006 2005
==============================================================
Total Assets: 552,648 528,894
Cash, balances with banks: 70,593 64,865
Lending to financial institutions: 32,236 12,272
Investments-Net: 105,432 107,384
Advances-Net: 315,068 316,882
Borrowing from fin. Institutions: 39,975 34,905
Deposits, other accounts: 442,589 432,545
Total Liabilities: 507,420 487,716
Net Assets: 45,228 41,178
Share Capital: 6,900 6,900
Reserves & Un-app. Profit: 30,134 25,821
Sub total-Equity: 37,034 32,721
Minority Interest: 885 847
Surplus on Revalue, Assets: 7,309 7,610
Equity incl. Revalue Surplus: 45,228 41,178
Subordinated Loan: 0 0
Equity & Sub. Loans: 45,228 41,178
Advances- Gross: 350,332 350,425
Gross NPLs: 43,545 41,360
Total Provision: 35,264 33,543
Conting. & Commitments: 289,488 239,411
--------------------------------------------------------------
Ratios:
--------------------------------------------------------------
Cash & bank/Total Assets: 13% 12%
Investments/Total Assets: 19% 20%
Advance-Net/Total Assets: 57% 60%
Gross NPLs/Advances-Gross: 12.4% 11.8%
Gross NPLs/Total Equity: 96% 100%
Net NPLs/Advances-Net: 3% 2%
NPLs Prov./Advances-Gross: 10.1% 9.6%
Deposits/Total Assets: 80% 82%
Total Liabilities/Total Assets: 92% 92%
Total Equity/Total Assets: 8.2% 7.8%
Equity & S. Loans/T. Assets: 8.2% 7.8%
Deposits/Equity-Times: 9.8 10.5
Advances/Deposits: 71% 73%
Investments/Deposits: 24% 25%
Contin.& Comm./Equity-Times: 6.40 5.81
Book Value Per Share: 65.55 59.68
--------------------------------------------------------------
Income Statement (six months) 2006 2005
--------------------------------------------------------------
Markup-interest earned: 20,319 13,359
Markup-interest expensed: 6,238 3,017
Net Markup- interest income: 14,081 10,342
Provisions and write offs: 1,826 501
Net mark up income (aft. Prov.): 12,255 9,841
Total non-markup income: 3,128 3,758
Income bef. Admn. Exp.: 15,383 13,599
Admin Expenses, etc: 7,629 7,184
Profit before Taxation: 6,035 4,915
Current & deferred tax: 2,067 1,522
Profit after taxation: 3,968 3,393
--------------------------------------------------------------
Ratios: (6-Month Basis)
--------------------------------------------------------------
Markup earned/Total Assets: 3.7% 2.5%
Net Markup Income/TA: 2.5% 2.0%
Net markup (aft. Prov.)/TA: 2.2% 1.9%
Non-Markup Income/TA: 0.6% 0.7%
Income before AE/TA: 2.8% 2.6%
Admin Expenses/TA: 1.4% 1.4%
Profit before Taxation/TA: 1.1% 0.9%
Profit after taxation/TA: 0.7% 0.6%
Profit after tax/Total Equity: 8.8% 8.2%
EPS- (Annualized) - Rs: 11.43 9.71
Cash Dividend: 0% 10%
Bonus Shares: 0% 0%
--------------------------------------------------------------
Cash flow Summary (6 months) 2006 2005
--------------------------------------------------------------
Net Cash flow, Operations: 4,873 -640
Net Cash flow, Investing: 511 333
Net Cash flow, financing: 344 -720
Change in Net Liquidity: 5,728 -1,027
Net Liquidity at beginning: 64,865 65,389
Net Liquidity at end: 70,593 64,362
==============================================================