HNB posted a PATMI of LKR 7.2bn in 1Q 2024 (+2% YoY) which translated to an EPS of LKR 12.61. NII fell by 27% YoY to LKR 25.3bn owing to the drop-in market interest rates. Impairment provisions fell 86% YoY to LKR 1.6bn in 1Q 2024 (1Q 2023 impairments LKR 11.7bn of which LKR 4.7bn was for foreign government securities). We believe HNB is poised for recovery in loan book and asset quality, in correlation to positive macro developments, aiding normalized recurring earnings going forward. We believe HNB has made sufficient provisions on ISBs, and a lesser impact would see impairment reversals on HNB books. Hence, we remain bullish on HNB, assigning a forward fair value of LKR 290.75 and LKR 235.25 on voting and non-voting respectively, recommending BUY.