⚡ Flash Summary

First Habib Modaraba (FHM) reported satisfactory performance for the quarter ended September 30, 2025. Disbursements increased to Rs.5.230 billion compared to Rs.3.895 billion in the same quarter last year. The balance sheet also saw growth, reaching Rs.36.081 billion compared to Rs.28.195 billion. Despite a reduction in policy rates, the Modaraba managed to sustain profitability through enhanced business volumes and a focused business strategy. The report acknowledges challenges in the economic environment, including potential pressures on profitability due to declining policy rates, but expresses confidence in maintaining growth momentum through prudent financial management.

📌 Key Takeaways

• 👍 Disbursements increased to Rs.5.230 billion, up from Rs.3.895 billion in the same quarter last year.
• 📈 Balance sheet footing reached Rs.36.081 billion, a significant increase from Rs.28.195 billion year-over-year.
• 💰 Maintained profitability despite a reduction in policy rates, indicating efficient management.
• 🎯 Focused business strategy and dedicated efforts are cited as key drivers for volume enhancement.
• ⚠️ Economic outlook for Pakistan is mixed, with challenges from floods, low industrial growth, and inflation.
• 📉 World Bank revised Pakistan’s GDP growth rate projection downward to 2.60% for fiscal year 2025-26.
• 🏦 State Bank of Pakistan kept the policy rate unchanged at 11% in September 2025.
• 🌍 External account faces renewed pressure due to a widened current account deficit.
• 🛡️ Maintained long-term credit rating at AA+ and short-term credit rating at A1+ by PACRA.
• 📊 FHM recognized as market leader with a diversified portfolio of Shariah-compliant products.
• ⏳ Challenging economic environment foreseen, potentially disturbing business activities and investor confidence.
• 📉 Anticipate pressure on profitability of FHM in FY2025-26 due to decline in policy rate.
• 🙏 Expressed gratitude to regulators, customers, and employees for their support and dedication.
• 🤝 Acknowledged smooth operations and satisfactory results achieved in a difficult business environment.
• 🏢 Geographical presence includes branches in Karachi, Lahore, Islamabad and Multan

🎯 Investment Thesis

HOLD recommendation for First Habib Modaraba (FHM) due to mixed performance. While disbursements and balance sheet size have increased, profit after tax decreased slightly and the economic outlook for Pakistan is uncertain. The company’s strong credit ratings and market position provide stability, but potential pressures on profitability warrant a cautious approach. Price target is maintained at current levels due to balanced growth and risk factors.