Habib Bank Limited (HBL) expects returns on its investment portfolio to gradually improve as floating-rate securities undergo repricing, according to the bank’s management during an analyst briefing on its third-quarter 2026 financial results. The bank highlighted the composition of its investment holdings, stronger deposit mobilisation, expansion in Islamic banking and digital transaction activity, alongside stable asset quality. Management said the portfolio’s exposure to floating-rate instruments would allow investment yields to adjust over time as securities are repriced in line with prevailing market conditions.
During the briefing session attended by KTrade, HBL disclosed that floating-rate securities represented approximately 60% of its investment portfolio as of September 2026. Medium-term bonds accounted for around 15%, while fixed-rate securities made up the remaining 25%. The bank reported a duration of 3.2 years for its fixed-rate portfolio, whereas the overall investment portfolio had a shorter duration of approximately 1.12 years. This composition reflects the bank’s exposure to different interest-rate structures and the potential effect of repricing on its investment income. HBL also increased its holdings of Pakistan Investment Bonds (PIBs) by approximately Rs450 billion between the second and third quarters of 2026, indicating a substantial expansion in its government securities portfolio during the period.
The bank reported earnings of Rs19.6 billion, equivalent to Rs13.33 per share, for the third quarter of calendar year 2026. This represented an increase of 6.5% compared with the preceding quarter and was broadly in line with market expectations. HBL also announced an interim cash dividend of Rs6 per share. The quarterly performance came alongside improvements in several business areas, including deposit growth, foreign exchange income and fee-based revenue. Management’s comments on investment yields indicate that the bank expects the repricing of its floating-rate holdings to support portfolio returns gradually, while its broader financial performance continues to depend on lending activity, deposit mobilisation and income from services.
Deposit growth remained an important part of HBL’s performance during the first nine months of 2026. Current account deposits increased by 15%, or Rs273 billion, during the period ended September 2026. Their share of the bank’s total deposits rose to 40%, compared with 38% at the end of December 2025. A larger current account deposit base can support a bank’s funding structure by providing a greater proportion of non-term deposits. HBL’s deposit performance also reflects its extensive branch network and digital banking channels, which allow customers to access accounts and conduct transactions through different service options.
Islamic banking continued to expand within the bank’s operations, with Islamic deposits reaching Rs1.3 trillion in September 2026. Approximately 36% of HBL’s branch network was dedicated to Islamic banking services, comprising around 658 Islamic branches and 500 Islamic windows. The figures show the scale of the bank’s Shariah-compliant banking operations within its wider business. HBL operates more than 2,000 branches across its network and added approximately 84 branches during the first nine months of the year. Its continued expansion in Islamic banking is taking place alongside broader investment in branch infrastructure and technology systems.
The bank is also progressing with its core banking migration to Temenos, with approximately 800 branches already migrated to the platform. Further milestones are expected during 2027. The migration is part of the bank’s wider technology development, as core banking systems support account management, transaction processing and the delivery of services across physical and digital channels. Completing the transition across the remaining network is expected to be an important operational milestone, although the bank has indicated that the process will continue in stages.
HBL reported growth in domestic advances across corporate and commercial lending segments, while its international lending business also expanded. Consumer financing remained a significant area of activity, with the portfolio crossing Rs200 billion, which the bank described as the largest in the market. Credit card receivables reached Rs66 billion, while Islamic financing represented approximately 20% of HBL’s overall loan portfolio. These figures reflect the bank’s presence across business lending, consumer credit and Shariah-compliant financing. The expansion of lending activity also requires continued attention to credit quality and the management of potential defaults.
Asset quality remained stable, with HBL reporting an infection ratio of 4.5% and specific coverage of 85%. The bank said general provisions provided an additional layer of coverage. These indicators offer insight into the level of non-performing financing and the provisions maintained against identified credit risks. Maintaining adequate coverage is important as banks expand their lending portfolios, particularly across consumer, commercial and corporate segments. HBL’s reported figures suggest that asset quality remained resilient during the period despite growth in domestic and international advances.
The bank also recorded a 76% year-on-year increase in foreign exchange income, supported by growth in fee income. Digital banking activity continued to gain momentum, with throughput through HBL’s mobile application increasing by 36%. Digital over-the-counter transactions accounted for 94.6% of total transactions, while physical branches handled the remaining 5.4%. The figures indicate that most of the bank’s transactions were being processed through digital channels or digitally supported services rather than conventional branch-based activity. The expansion of mobile banking and digital transaction processing is also changing how customers access routine banking services.
On regulatory requirements, HBL’s management said the bank was already compliant with the State Bank of Pakistan’s phased requirement to reclassify its banking-book other comprehensive income portfolio into the trading book. Management expects the completion of the reclassification to result in no additional capital requirement and no impact on the bank’s Common Equity Tier 1 ratio. The capital position remains an important consideration for banks as they adjust investment classifications and comply with regulatory changes. HBL’s comments indicate that management does not anticipate the reclassification to create additional pressure on its reported capital adequacy.
Separately, the bank provided an update on an ongoing civil liability case in New York. Management said it expected a favourable outcome and clarified that the proceedings were separate from previously discussed penalty-related matters. The case is progressing according to schedule, and the bank anticipates a relatively early conclusion, although management acknowledged that legal proceedings in the United States can take time. No final outcome was reported during the briefing.
HBL’s third-quarter update therefore covered several areas of its business, from the expected repricing benefits of its investment portfolio to deposit mobilisation, Islamic banking, lending and digital services. The increase of approximately Rs450 billion in PIB holdings between the second and third quarters was a notable development in its investment strategy, while floating-rate securities remained the largest component of its portfolio. Stronger current account deposits, expanding consumer financing and increased mobile application activity also highlighted the scale of the bank’s operations. Management expects investment yields to improve gradually as floating-rate instruments reprice, while the bank continues to advance its technology migration and manage regulatory and legal matters.
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