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KARACHI, August 24, 2026: Insight Securities has maintained its ‘BUY’ recommendation on Habib Bank Limited (HBL) and set a June 2027 target price of Rs404 per share, offering around 27% potential capital upside from the current price of Rs317.
According to the brokerage’s latest research report, HBL’s strong deposit base, improving cost efficiency and growth in SME, consumer and agriculture financing could support earnings growth in the coming years.
HBL has a deposit base of around Rs5.9 trillion and an advances portfolio of approximately Rs2.1 trillion, making it one of Pakistan’s largest banks.
The report said HBL has significant potential to increase low-cost deposits, particularly current accounts. Current deposits increased by more than Rs400 billion during the first half of 2026, raising their share to around 41%, compared with 36% in December 2025 and 39% in June 2025.
The brokerage expects the higher share of zero-cost deposits to support HBL’s margins, particularly in a declining interest-rate environment. It also sees further room for improvement, as some competing banks have current-account ratios above 50%.
Insight Securities identified small and medium enterprises, consumer financing and agriculture lending as key drivers of future advances growth. These segments could increase lending income while expanding HBL’s reach among underserved customers and creating additional opportunities for fee and commission income.
HBL’s net interest margin came under pressure in the second quarter of 2026 due to a lag in asset repricing. However, the brokerage expects margins to stabilize as asset yields gradually adjust, potentially supporting modest improvement in the coming quarters.
The bank has also made significant progress in controlling operating costs. Its consolidated cost-to-income ratio declined from around 74% in 2019 to approximately 56% currently.
Despite opening more than 50 branches in the first half of 2026, HBL’s operating expenses increased by only around 6% during the period. Insight Securities expects continued cost discipline and earlier investments in technology and infrastructure to support further efficiency gains.
HBL’s large customer base is also supporting growth in fee income. Non-funded income has continued to expand, while fee income increased by around 2.5 times over the past five years and grew by 16% year-on-year during the first half of 2026.
Credit card-related fees account for around 30% of fee income, followed by merchant discounts at approximately 12%. With more than 40 million customers, an extensive branch network and a growing digital ecosystem, HBL has strong potential to generate recurring fee-based revenue.
HBL is also expanding its Islamic banking operations. The share of Islamic branches in its total network increased from around 24% in December 2024 to 36% in June 2026.
Islamic deposits reached Rs982 billion in June 2026, compared with Rs831 billion in December 2025 and Rs495 billion in December 2024. The current-account share within the Islamic banking segment stood at around 55%, which could provide further support to margins.
Insight Securities believes rising demand for Shariah-compliant financial products, combined with HBL’s established customer base and extensive branch network, will support further growth in its Islamic banking business.
The brokerage forecasts HBL’s profit after tax at Rs76 billion for 2026, with earnings per share of Rs50.9 and dividend per share of Rs24. For 2027, it expects profit after tax to reach Rs82 billion, with EPS of Rs55.4 and DPS of Rs28.
The key risks to the investment outlook include slower-than-expected deposit growth, an increase in non-performing loans, higher operating costs and sudden changes in the regulatory environment
