EUR 75.00 For Business Accounts Only

Topline Flash Note: Habib Bank Limited (HBL): Conference Call takeaways

• Habib Bank Limited’s (HBL) deposits have increased by 4% QoQ while YTD growth clocked in at 12%. Current Accounts saw a growth of 1% QoQ, while Fixed accounts increased by 6% QoQ. As a result, CASA stands at 82% as of Sep-2020 (vs. 83% in Dec-2019).
• The bank’s investment book as of Sep-2020 constitutes (1) 37% of T-bills vs. 38% in 2Q2020 (44% in Dec-2019) and (2) 48% of PIBs vs. 48% in 2Q2020 (45% in Dec-2019). IDR has increased to 65% as of 3Q2020, from 60% in 2Q2020. Revaluation surplus on the investment book stands at Rs19bn, down from Rs30bn in Jun-2020.
• The loan book has declined by 2% YTD due to lower commodity financing and corporate lending. The bank feels that there may be growth in 4Q2020, which could potentially help the bank close the year on the same level as last year. Although the overall loan book has declined, the focus on lending particularly in the consumer segment has paid off with the bank reaching Rank 2 in Auto Financing.
• The bank’s management expects single digit growth in loan book for 2021 as industries recover following COVID-19. The view on the loan book stems from a survey conducted by the bank of ~350 clients. In the survey, 80% of the responses indicated that the production and sales levels will be back to pre-COVID levels by the end of this year.
• The bank booked a Rs3.8bn provision charge under loans for 3Q2020, bringing 9M2020 provisioning for loans to Rs8.8bn. These provisions are precautionary despite the improving outlook on loans for next year.
• Cost to Income has come down further to 58% for 9M2020, from 61% in from 1H2020. The longer term target for the bank is to keep the ratio below 50%, which they feel can be achieved in ~2 years.
• Dividend retention for Jun-2020 and Sep-2020 quarters has helped improve the bank’s Tier-I CAR, which as of Sep-2020 stood at 13.8%, while Total CAR was at 17.7%.

The bank has remitted additional capital to the Beijing branch, which has now gained approval from all parties. The branch is expected to be fully operational by Nov-2020, where focus will be laid on SOEs and organizations in a bid to expand footprint in the East.