LAHORE - Habib Bank Limited (HBL) has reported unconsolidated 2012 earnings of Rs21.6 billion, an increase of 4 per cent YoY. Along with the result, the bank announced a final cash dividend of Rs4.0 per share, taking the cumulative dividend for the year to Rs7.5 per share. A bonus issue of 10pc was also declared by the board of directors.

As expected, growth drivers in the bottom line were 1) lower provisions of Rs5.2b (down 28pcYoY) and 2) better Net Interest Income (NII) of Rs56.1b (up 2pcYoY). Growth in NII is likely to be driven by growth in earnings assets. Surprisingly, non interest income came better than our expectation and registered a growth of 2pcYoY to Rs12.4b.  Compared to last year provisioning of Rs7.2b, bank recorded provisioning of Rs5.2b. 28pc decline in provisioning is on account of restrictive lending and decline in interest rates. Consecutive discount rate cuts affected bank’s performance where its interest earnings failed to rise at the same pace as its interest expense.