LAHORE - The board of directors of HBL will meet on Friday to announce it full year 2008 results. Financial market experts believe that HBL to post earnings of Rs10.9bn (EPS of Rs14.3) in 2008 versus earnings of Rs8.0bn (diluted EPS of Rs10.6) last year - a substantial growth of 35%YoY. The sharp increase in earnings is mainly led by a sharp reduction in provisions for non performing loans (NPLs). HBL has been one of the most affected banks from removal of State Bank's forced sale value (FSV) regime as it booked massive provisions of Rs8.2b in 2007, Rs5.7b of which were the direct consequences of change in FSV regulation. During 2008 we expect HBL to recognize provisions for NPLs of Rs5.8bn, which is 29% lower than that recognized in 2007. In addition to sharp fall in provisions, growth in HBL's bottom would also be supported by strong growth in net interest income. On the back of higher spreads and strong growth in advances, we expect HBL's net interest income to rise to Rs34.7bn up 14% YoY. Moreover, increase levels of trade and forex activity would help non interest to rise to Rs9.5bn up 19%YoY. Along with its full year results the bank is expected to announce a final cash dividend of Rs4 per share and a bonus payout of 15-20%. Analysts from BMA Capital pointed out that the HBL like many other companies has also been affected by recent crash in stock market. It has equity investment portfolio classified as Available for Sale (AFS) and accounted for under IAS 39 which has been affected by the stock market crash. With relaxation by SECP on recognition of impairment losses for AFS investments, HBL could defer recognition of impairment loss. According to calculations, total impairment loss based on Dec 31, 2008 prices would have ranged between Rs900mn-Rs1bn, the recognition of which would reduce reported earnings by Rs0.7-0.9 per share.