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Saturday, February 17, 2024

HBL doubles its pretax profits and increases its international footprint

Habib Bank Ltd, Pakistan's largest private bank has in the first quarter of 2021 doubled its pretax profits, expanded its international footprint by a second branch in Beijing, boosted its Islamic Banking operations and has doubled its mobile and internet banking - according to HBL's press release on 20th April.

HBL, in first quarter 21 doubles its pre-tax profit 

HBL, on 20th April, declared a consolidated profit before tax of Rs14.5 billion for the quarter ended March 31, 2021. This is more than double that for the same period last year. Profit after tax recorded a growth of 108% over Q1 2020 to Rs8.6 billion. The Bank’s earnings per share increased from Rs2.79 to Rs5.68 in Q1 2021. Along with the results, the Bank declared a dividend of Rs1.75 per share (17.5%).

Helped by this strong profitability, the Bank’s Tier 1 Capital Adequacy Ratio (CAR) rose to 13.9%, with Total CAR increasing to 17.9%. CAR is the ratio of a bank’s capital in relation to its risk-weighted assets and current liabilities. It is decided by the central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.

The Bank’s total deposit base, according to its press release, closed at Rs2.8 trillion, with robust Current Account (CA) and Current Account Saving Account (CASA) ratios of 35.1% and 83.1% respectively. Average domestic deposits increased by a multi-year high of nearly 20% over Q1 2020, with average current accounts rising by more than Rs120 billion. This led to a nearly Rs500 billion expansion in the Bank’s average balance sheet in Q1 2021. Consequently, despite a much lower interest rate environment, net interest income rose to Rs32.5 billion, a 16% growth over Q1 2020.

HBL’s market-leading Consumer business continues to outperform in multiple aspects, with loans growing to nearly Rs85 billion; total advances of the Bank were maintained at Dec 2020 levels of Rs1.2 trillion. The total non-fund income of the Bank has grown by 42% over Q1 2020 to Rs8.2 billion. Fees and commissions continued to accelerate, increasing by 25% over Q1 2020 to Rs5.9 billion.

Expenses remain well contained despite the Bank’s continued investments in people and technology. The Bank reduced its administrative expenses by 7% over Q1 2020 as the cost to income ratio (excluding capital gains) improved to 58.4% in Q1 2021 from 81.4% in Q1 2020. Total Non-Performing Loans (NPLs) of the Bank declined by Rs0.7 billion over Dec 2020, with the infection ratio remaining stable at a record low of 6.3%. The Bank’s total coverage improved to over 100%, with the specific coverage at 86%.

HBL extends its international footprint with a branch in Beijing

Commenting on the bank’s performance, Muhammad Aurangzeb, President & CEO – HBL said, “The Bank’s growth momentum continues in the new year with all activity drivers showing an upward trajectory. The growth was broad-based across all business lines, with a strong performance from the deposits, cards, trade, and consumer finance businesses. The revenue growth was ably supported by a more stringent operating cost regime.

In Q1 2021, HBL extended its international footprint by becoming the first Pakistani bank to open a branch in Beijing, China. HBL Beijing has become HBL’s second branch and its managing branch in China; both branches in Beijing and Urumqi are equipped with foreign exchange and RMB license to better facilitate customers’ requirements in multiple currencies. HBL remains the largest executor of CPEC related project financing in Pakistan, it had opened its first branch in Urumqi in November 2019 and was one of the three banks from South Asia and the MENA region that was allowed banking operations in mainland China.

In this respect read GVS special report on CPEC: Where we stand on CPEC? Looking Forward, Global Village Space CPEC Edition, Oct 2020

HBL doubles its Mobile & Internet Banking

HBL is actively working on enhancing the digital experience of its clients across the network. Digital transactions continue exponential growth with HBL’s Mobile Banking and Internet Banking volumes more than doubling from Rs95 billion in Q1 2020 to Rs212 billion in Q1 2021. Konnect App users reached 1.8 million with transaction volumes portraying a 77% growth over Q1 2020. HBL Mobile app users also reached 2 million with a 127% growth in traction volume over the same period last year.

Transactions through the Bank’s E-commerce merchants also doubled over the same period last year. HBL expanded its POS network to nearly 31,000 terminals and spend on the Bank’s 6.2 million debit and credit cards grew nearly 40%. In Q1 2021, the Bank increased its trade market share to over 12% with a nearly 50% YoY growth in volumes, while home remittances and cash management also exhibited high double-digit growth.

Under ‘HBL Pay’ all onboarding and payment solutions for businesses were consolidated under a single platform. In Q1 2021, the Bank launched a Cognitive Robotics initiative for internal process digitization, to complement the digital initiatives being undertaken for customer channels. HBL continues to be the only bank in Pakistan enabling its customers to avail both a credit card and personal loan through its app.

New HBL site with improved UI and UX

In Q1 2021, HBL, according to its press release has successfully launched a refreshed website. The new easy-to-navigate User Interface (UI) and User Experience (UX) features help customers find products and services best suited to their needs and enjoy a seamless banking experience. This has made the HBL website more user-friendly facilitating transactions for its customers.

HBL retained its Number One position in Consumer Finance. The Bank came first in Credit Cards, Debit Cards, Merchant Acquiring, Personal Loans, and second in Auto Loans. Personal loans at Rs38.7 billion delivered a growth of 16% over the same period last year.  Auto finance recorded an increase of Rs3 billion, 57% over the same period last year.  Credit and Debit Cards business recorded the highest ever spend / usage generated on any card in Pakistan.

Through the eBanc Roshan Digital Account (RDA), a special investment account created for overseas Pakistanis, since its launch over 21,000 Pakistanis from 130 countries have set up RDA accounts and remitted more than USD 130 million in a short span of three months.

HBL expands its Islamic Banking 

HBL’s Islamic Banking, with the addition of a dedicated HBL Islamic Commercial Centre, Trade Hub, and Branch in Karachi, now provides Shariah-compliant financial services from over 911 branches/windows nationwide. Supporting the Government of Pakistan’s vision of providing Affordable Housing Units, to underserved segments of society through Naya Pakistan Housing and Development Authority, HBL also became the first bank in Pakistan to enter a partnership with Akhuwat Foundation.

See also: HBL Islamic Banking

HBL maintained its position as the lead private sector financier of the agriculture sector, with a 30% market share. The Bank’s Development Finance Group (DFG) has successfully launched pilots on major food crops involving optimized agronomy advisory for each farmer by agronomists employed by HBL.

HBL continues to retain its leadership position in the corporate and investment banking space in Pakistan. In Q1 2021 the Bank successfully concluded several transactions across various sectors including oil & gas, real estate, and renewable/conventional power generation, and maintained momentum by securing several advisory & arrangement mandates. HBL maintains its lead in the market in adopting Environmental, Social & Governance (ESG) principles. During Q1 2021 HBL successfully completed a series of modules on Social Risk Management led by CDC UK under its capacity-building initiative. The Bank has also initiated a phase-wise rollout of its SEMS Policy across its international network.

During Q1 2021, HBL won the 2021 Asiamoney Award for Best Domestic Bank. HBL also won the “Best Customer Franchise”, “Best Bank for SME” and “Best Investment Banking” by the Pakistan Banking Awards. And continuing with the bank’s response to the challenge of the Pandemic, with the strong support of the Board, HBL arranged to make available Covid-19 vaccines to all staff working at the Bank, adding to its industry-leading benefits for its employees.”