HBL is in pretty good shape. Pakistan’s largest commercial bank announced its first half CY17 financial results yesterday, which were well within expectations. It was not necessarily an eventful period in terms of profitability, but that, in fact is an achievement of sorts, to keep the profits intact, in such times of low interest rates.

What is heartening from the shareholders’ point of view is that the dividend stream is fast becoming constant and the yield is also increasing. HBL declared an interim dividend of Rs3.5/share, which took the year-to-date dividend to Rs7/share. All this while, the balance sheet has continued to grow slowly but surely, and more importantly, in the right direction.

Low spreads and low interest rates were always going to result in a modest top line growth, despite a surge in earning assets. The asset mix saw no drastic change, as investments continued to outweigh advances. The IDR now stands over 71 percent, whereas the ADR barely is a shade over 41 percent. That said, the period did witness a double digit growth in advances after a long time.

HBL will surely be in the thick of things, should credit demand from the private sector pick up. The bank has done considerably well to increase its advances portfolio. But HBL would surely do it prudently and would not be trapped into going on a lending spree, just for the sake of an inflated ADR. And it makes all business sense too, as the profits still seem sizeable, primarily coming from government treasuries and non-funded income.

HBL’s balance sheet has both grown and improved of late and now exceeds Rs2.5 trillion. The deposit base had extended in double digits last year. And the growth momentum has continued. Deposits have grown by 6 percent over December 2016, which is huge, given the massive base that HBL sits on. HBL has become the only bank to now boast of a deposit base of over Rs2 trillion. And it will take some catching up to do for any other bank.

Importantly, HBL’s cost of deposit has also been on the mend, as the CASA ratio keeps improving, every quarter. The non-core income continues to ably support the bottom-line, as a sizeable growth was witnessed in gain on sale of securities and income on dealing in foreign currencies. These are good signs for any bank, especially in times of squeezed earning spreads.

HBL’s infection ratio is now comfortably in single digits and very well provided for. The financial soundness indicators speak volumes of ever improving asset quality and prudence. The bank is expanding its footprint very wisely and should be well poised to pounce on any wave of increased credit demand, whenever it arrives. That said HBL is doing more than fine without it anyways.