HBL Deposits Surge 22% in First Half as Current Accounts Drive Growth

Habib Bank Limited reports Rs5.19tr deposits in June 2025, with improved current account ratio and stronger capital adequacy.

Habib Bank Limited (HBL) reported a 22 percent surge in deposits to Rs5.19 trillion by June 2025, with a stronger share of current accounts and improved capital strength, according to management takeaways shared by Topline Research after a meeting with senior executives.HBL Earnings Up 9% in 1Q2025

The country’s largest bank by assets said deposits rose from Rs4.37 trillion in December 2024 to Rs5.19 trillion six months later, supported by an improvement in the non-remunerative current account ratio to 40.5 percent from 37.3 percent over the same period. The expansion in deposits helped fuel a sharp rise in the bank’s investment book, which grew from Rs2.53 trillion in December 2024 to Rs4.30 trillion by June 2025. HBL management noted that most of this liquidity was deployed in Pakistan Investment Bonds (PIBs) floaters, currently providing a spread of 90–100 basis points.

CFO Irfan Meer, Head of Financial Institutions Faisal Noorali Lalani, and Head of Investor Relations and Strategic Programs Arif Saifie briefed analysts on the bank’s performance and outlook. They emphasized that while market share gains remain a key priority, HBL is pursuing a conservative approach on provisions. The bank continues to hold Rs12 billion in general provisions, which under State Bank of Pakistan guidelines may be retained until December 2026.

The capital adequacy ratio (CAR) strengthened to 17.9 percent in June 2025, well above regulatory requirements, while asset quality also improved. The infection ratio eased to about 5 percent in June from 5.3 percent in March, with a coverage ratio of 90 percent. Management stressed that its loan book remains resilient despite evolving risks from recent flooding, noting that losses from the catastrophic 2022 floods had been minimal.

On the cost side, HBL’s administrative expenses rose just 6 percent year-on-year in the first half of 2025, significantly lower than the industry average. This supported an improvement in the domestic cost-to-income ratio, which declined from 52.4 percent to 49.2 percent. Executives said the trend reflects structural cost initiatives, including branch solarization, and is expected to continue through the full year.

While advances are expected to broadly hold market share, the bank said it will continue to focus lending on areas where demand persists, alongside efforts to deepen deposit mobilization. Management also highlighted treasury strategy as a key lever for stabilizing returns, pointing to an aggressive stance in balancing corporate lending and investment portfolios.

The meeting also underscored HBL’s broader strategic focus on sustaining network performance, strengthening its position in both deposits and lending, and maintaining its leading market share in the banking sector. Analysts at Topline Research reiterated a buy stance on HBL stock, citing attractive valuations with a 2025 forward price-to-earnings ratio of 6.9 times, a price-to-book ratio of 0.9 times, and a dividend yield of 7 percent.

The developments mark another milestone in HBL’s growth trajectory, which has historically leaned on its extensive branch network and corporate relationships. In recent years, the bank has faced challenges from rising inflation, tighter regulations, and climate-related risks. However, management’s strategy of balancing cost efficiency with aggressive deposit growth is seen as a buffer against sectoral headwinds.

With deposits at record highs and profitability metrics improving, HBL appears positioned to sustain its dominance in Pakistan’s financial sector. The bank’s emphasis on current account mobilization—considered a cheaper and more stable source of funding—reflects a broader trend among domestic lenders to strengthen liquidity in a high interest rate environment. Analysts suggest that maintaining this momentum while managing risks from macroeconomic and environmental shocks will be critical in the coming quarters.

Habib Bank’s performance in the first half of 2025 underscores the resilience of Pakistan’s banking industry at a time of heightened challenges, with its focus on cost management, capital strength, and stable funding providing confidence to investors and regulators alike.