Karachi: Habib Bank Limited (HBL) unveiled its financial performance for the first quarter of the calendar year 2025, showcasing a noteworthy profit increase driven by higher net interest income (NII). The bank reported a profit of PKR 16.6 billion, translating to earnings per share (EPS) of PKR 11.3. This represents a 9% increase compared to the same period last year and a 10% rise from the previous quarter.

The bank attributed the favorable results to a lower-than-expected taxation expense. Alongside the earnings announcement, HBL declared an interim cash dividend of PKR 4.5 per share.

For the first quarter, HBL’s NII was recorded at PKR 68.8 billion, marking a 12% year-on-year growth and a 14% increase from the last quarter. The increase in NII was primarily due to a more pronounced decline in mark-up expenses compared to the drop in mark-up earned, which fell by 21% year-on-year and 17% quarter-on-quarter to PKR 157 billion. This decline was attributed to significant decreases in yields on investments and advances. The bank’s net interest margins (NIMs) showed a slight improvement, rising to 5.5% from 5.4% in the same period last year.

HBL’s non-interest income for the quarter stood at PKR 21.6 billion, reflecting a 7% year-on-year growth but a 40% decline quarter-on-quarter. The increase was driven by gains on the sale of securities amounting to PKR 4.2 billion, a reversal from a loss on securities sales in the same period last year. However, foreign exchange income and income from derivatives showed declines.

The bank recorded a provision expense of PKR 2.7 billion, lower than the provisions made in both the first and last quarters of 2024. Operating expenses for the period amounted to PKR 51.0 billion, resulting in a cost-to-income ratio of 56%, an improvement from previous comparisons.

HBL’s effective tax rate for the quarter was 54.6%, influenced by increased tax rates for banks. Despite this, the tax expense was lower than anticipated, likely due to the absence of a windfall tax on foreign exchange gains.

Furthermore, HBL increased its cash dividend payout for the first quarter, maintaining a positive outlook on its financial performance. AKD Securities Limited, which provided the report, maintains a ‘BUY’ stance on HBL, with a target price of PKR 258 per share by December 2025 and a dividend yield of 10.8% for the same period.