HBL expects 18% deposit growth in 2025

Deposits rise 6% to Rs4.37trn in 2024; management sees room for rate cuts

Habib Bank Ltd (HBL) projected robust deposit growth for 2025, with management expecting a 17–18% increase following a 6% year-on-year rise to Rs4.37 trillion in 2024.

The outlook was shared during the bank’s corporate briefing held on Thursday, where executives also discussed lending expansion, provisioning, and market expectations for monetary easing.

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HBL’s advances surged 31% during 2024 to Rs2.44 trillion, lifting the gross advances-to-deposits ratio (ADR) to 59%. The bank anticipates loan growth to moderate to around 12–13% in 2025 as the credit cycle normalizes. Management noted that the State Bank of Pakistan (SBP) still has “room to cut” the policy rate to 10.5–11% from the current 12%, signaling potential relief for borrowers amid easing inflationary pressures.

Non-interest income grew in the fourth quarter of 2024 on the back of divestments from its Mauritius and Oman operations, generating a gain of Rs14.2 billion for the year. HBL’s investment book stood at Rs2.5 trillion by December 2024, with roughly one-third (Rs870 billion) in floating-rate Pakistan Investment Bonds (PIBs), Rs498 billion in fixed PIBs, Rs447 billion in T-bills, and Rs714 billion in other securities.

The bank set aside Rs22.1 billion in provisions during 2024, more than double the Rs9.5 billion recorded a year earlier, as industry-wide credit risks persisted in construction, energy, and steel sectors. The infection ratio edged up to 6.3% by end-2024 from 6.0% in September and 5.2% a year earlier, while the coverage ratio eased slightly to 88.9%.

HBL reported consolidated earnings of Rs9.83 per share for the fourth quarter, down 3% year-on-year, keeping full-year 2024 EPS flat at Rs39.85. The bank declared a final cash dividend of Rs4.5 per share, taking total payouts for the year to Rs16.25 per share.

Analysts at Topline Securities maintained a Buy stance on HBL, noting the stock’s attractive valuations — trading at a 2025E price-to-earnings ratio of 4.7x, price-to-book of 0.5x, and a dividend yield of 10%. According to the State Bank’s October 2024 Monetary Policy Statement, the banking sector continues to benefit from strong liquidity and improved capital adequacy, positioning major players like HBL to capitalize on expected monetary easing and stable credit demand in 2025.