HBL: Analyst briefing – Key takeaways
Habib Bank Limited (HBL) held its corporate briefing to discuss its CYTD financial performance and strategy going forward.
During the year, HBL’s profitability was primarily suppressed due to one-off charges in addition to higher operation costs. The management, however, believes that these charges are non-recurring and will not affect the bank’s profitability, going forward.
HBL’s cost/income ratio currently stands at 76.8% that falls down to 58.3% barring any one-offs. The management shared that the business transformation cost has started to taper off and expected to phase out by the mid of CY20.
HBL is the only bank that has RMB dealership and can perform RMB end-to-end intermediation. The bank is working as a joint lead manager for the issuance of Panda Bonds in the Chinese market.
Briefing on HBL's strategy on global operations, the management shared that HBL aims to be in the top 5 foreign banks for trade volumes between China and Central Asia, GCC, Turkey, and South Asia and thus, plans to keep its global footprint in these regions.
The management shared that HBL is leading the digital banking space by being the only bank to offer and disburse loans via digital app. So far, loans worth over PKR2.2bn have been disbursed to date to more than 15,000 customers.
Moreover, HBL has planned to reduce their foreign liability by 20-30% by the end of this year.
On the back of these developments, management expects ROE to pick up from 6% to over 15% in the coming years, providing cushion to increase the payout ratio. We maintain our BUY stance on the stock.
Habib Bank Limited is engaged in commercial banking and asset management related services in Pakistan and overseas. The Bank's segments include Branch Banking, which consists of loans, deposits and other banking services to agriculture, consumer, small and medium-sized enterprise (SME), and commercial customers; Corporate Banking, which consists of lending for project finance, trade finance and working capital to corporate customers and it also provides investment banking services, including services provided in connection with mergers and acquisitions; Treasury, which consists of trading, fixed income, equity, derivatives and foreign exchange businesses, and it also includes credit, lending and funding activities with professional market counterparties; International Banking, which is engaged in monitoring and reporting purposes and consists of its operations outside of Pakistan, and Head Office/Others. It operates in Pakistan; Europe, Middle East and America, and Asia and Africa.
BMA is amongst the leading financial groups in Pakistan. BMA Capital’s core areas of business include Capital Markets, Corporate Finance & Advisory, Asset Management, and Financial Products Distribution. BMA Capital is the leader in privatisation advisory in Pakistan, having successfully advised on over 50% of all privatisations in Pakistan, by value, in transactions valued in excess of US$4 billion. Recent transactions include joint lead managing the $813 million GDR Offering of 10% of OGDCL on the London Stock Exchange in 2006-07, and advising Etisalat on their successful acquisition of a 26% strategic stake in Pakistan Telecommunications Company Limited (PTCL) for US$2.6 billion, the largest M&A transaction and foreign direct investment in Pakistan’s history. The firm is among the top brokers in the Pakistan equity and treasury markets, and is among a handful of firms that comprehensively cover all segments of the capital markets. This is supported by a very strong and independent research capability, which is quoted regularly in both local and international media. BMA Capital’s retail brokerage brand, BMA Trade, has launched a nationwide network of branches as well as a comprehensive online trading platform, enabling investors across Pakistan to take part in the capital markets.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.