Bank AL Habib Limited (BAHL) posted its full year CY17 financial results yesterday, posting a decent growth in bottom line, accompanies with a final cash dividend of Rs3/share. The top line growth remained modest, as widely expected, but BAHL did a great job to continue consolidating its balance sheet, as the asset base grew 22 percent over December 2016.

In times of thin spreads and low interest rates, keeping a top line in green is not short of an achievement. Detailed accounts were not available at the time of writing this, but a cursory look at the broad numbers suggests that the increase in earning assets has played a big role in keeping the top line up. BAHL has of late seen its loan book grow by leaps and bounds.

BAHL has really upped the game on the advances front, as once a reluctant lender; it now has an ADR touching 50 percent. The advances portfolio soared by a massive 30 percent over December 2016 to Rs339.8 billion. The bank has remarkably turned around the quality of its loan book and now possesses one of the cleanest books in the industry. The non-performing to gross advances ratio is as low as 1.52 percent from 2.1 percent in December 2016. And whatever little NPLs there are, are more than adequately provided for with a coverage ratio of 144.3 percent. Provisioning expenses have been in check, as a result.

Another feather in the cap was the contribution from non-mark-up income, which helped the bottom line grow. Gain on sale of securities, which has been the chief reason for most banks’ limited profit growth this season, was the key behind BAHL’s impressive bottom line growth. The regular contributions from fee and commission income also contributed heavily towards non-core income, improving the cost to income ratio.

The investment portfolio also continued to grow in double digits, despite a higher surge in advances. Investment in government securities still offer decent risk free returns for banks to part some of the excess liquidity.

The investments portfolio surged by 17.6 percent over December 2016, taking the IDR to 68 percent.
The growth on the liability side also remained strong, with a 15 percent growth in deposits over December 2016. BAHL’s CASA ratio has seen improvement over the quarts, but there is still room for further improvement towards adding low cost deposits.