Karachi: Habib Bank Limited (HBL) released its fourth-quarter results for 2025, showing a year-over-year increase in earnings per share but falling short of industry expectations. The bank reported consolidated earnings of Rs15.4 billion, with an earnings per share (EPS) of Rs10.5, marking a 7 percent rise from the previous year but a 9 percent decline from the third quarter. For the full year, HBL's earnings reached Rs66.7 billion, with an EPS of Rs45.5, which represents a 14 percent year-over-year increase.
According to JS Global, the lower-than-expected quarterly results were primarily due to a significant decline in Non-Interest Income and a higher effective tax rate. The bank's Non-Interest Income dropped 50 percent year-over-year and 22 percent quarter-over-quarter, largely driven by a capital loss on securities amounting to Rs425 million in the fourth quarter of 2025, compared to capital gains of Rs3.9 billion in the same quarter the previous year and Rs4.6 billion in the third quarter of 2025. Meanwhile, Net Interest Income (NII) rose by 13 percent year-over-year to Rs68 billion due to higher volumetric growth but declined 2 percent from the third quarter, possibly due to asset repricing.
HBL reported a 27 percent year-over-year and 9 percent quarter-over-quarter growth in bank deposits, reaching Rs5.5 trillion by the end of the fourth quarter of 2025. The cost-to-income ratio was maintained at 56.8 percent in the fourth quarter, a slight increase from 56.3 percent in the same period of the previous year and a decrease from 57.0 percent in the third quarter. Non-interest expenses were reduced by 9 percent year-over-year and 7 percent quarter-over-quarter, resulting in a cost-to-income ratio of 56.5 percent for 2025, compared to 57.1 percent in 2024.
The bank's effective tax rate was recorded at 57.2 percent for the quarter, slightly lower than 57.8 percent in the same quarter of the previous year but higher than 54.0 percent in the third quarter of 2025. For the full year, the tax rate was 54.9 percent, up from 52.0 percent in 2024. Provision expenses saw a significant reduction, falling 83 percent year-over-year and 59 percent quarter-over-quarter in the fourth quarter. For 2025, provisions decreased by 66 percent year-over-year to Rs9.1 billion.
In addition to the earnings report, HBL announced a dividend of Rs6.0 per share, exceeding expectations of Rs5.0 per share. This brings the total dividend for 2025 to Rs20.0 per share. JS Global maintains a buy stance on HBL, with the stock trading at a 2026 estimated price-to-earnings ratio of 6.5x and a price-to-book value of 0.9x, offering a dividend yield of 7 percent.
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