HBL Reports Strong Earnings Growth in 2Q2025
Staff Report
Habib Bank Limited (HBL) announced its financial results for the second quarter of 2025, posting a consolidated profit of Rs17.8 billion (EPS: Rs12.1), marking a 24% year-on-year and 10% quarter-on-quarter increase. This performance took H1CY25 earnings to Rs34.4 billion (EPS: Rs23.4), reflecting a 16% YoY growth.
The results exceeded industry expectations, primarily driven by robust Net Interest Income (NII) and improved cost efficiencies. Deposits saw a significant 17% QoQ increase, reaching Rs5.2 trillion by June 2025. Despite a 100 basis points cut in the policy rate during the quarter, NII remained stable. Analysts attribute this to a shift towards low-cost deposits, helping sustain Net Interest Margins (NIMs).HBL Earnings Up 9% in 1Q2025
Non-interest income also recorded an upward trend—rising 5% QoQ and 17% YoY—largely due to Rs5.3 billion in capital gains from securities. Additionally, the bank’s share of profit from associates grew to Rs2 billion, up 30% YoY and 48% QoQ.
Cost control remained a key highlight. The cost-to-income ratio declined by 210 basis points to 55.7% in 2Q2025 compared to 57.7% in the same period last year. Operating expenses remained flat QoQ, showing only a modest 9% YoY increase.
The effective tax rate stood at 54% for the quarter, slightly lower than 1Q2025 but notably higher than the 49.5% rate seen in 2Q2024. For the first half, the average tax rate clocked in at 54.3%.
Provisioning costs significantly declined, with HBL recording Rs1.9 billion in provision expenses for the quarter—down 71% YoY and 31% QoQ. Total provisioning for the half-year period dropped 54% YoY to Rs4.6 billion.
Alongside the earnings, HBL announced an interim cash dividend of Rs4.5 per share, taking the total payout to Rs9.0/share for 1HCY25.
With the stock trading at an attractive 2025E/2026E PE ratio of 6.0x/5.7x and offering a dividend yield of 8%+, analysts maintain a BUY rating on HBL.
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