Topline Flash Note: Habib Bank Limited (HBL): Corporate Briefing Takeaways
- The bank has made major inroads this year in key segments such as consumer lending (up 19% YTD), trade (market share up to 10.8% from 9.4% last year) and home remittances (29% YoY jump with market share up to 8.2%). The bank is aiming to increase share in the remittances segment to double digits in 2021.
- Channel migration towards digital solutions has reduced OTC transactions by 30%, which has become a key performance metric in order to increase efficiency. Going forward, target for transactions through alternative delivery channels (ADC) is around 85%.
- 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 current portfolio stands at Rs24bn.
- To recall, 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. Additionally, under relief scheme by SBP, the bank has deferred Rs90bn worth of loans and Rs23bn have been restructured. This is 13% of the total loans deferred.
- The bank feels that the easing cycle is over for now. Tightening is expected in May-2021 by 100bps. NIMs however are expected to contract by a minimum 100bps as the full affect of re-pricing sets in.
- The bank had earlier remitted additional capital to the Beijing branch, which has now gained approval from all parties. The branch is expected to be fully operational by the end of 2020, where focus will be laid on SOEs and organizations in a bid to expand footprint in the East. Additionally, a second branch is in the works and is expected to be opened soon.
- IFRS as of now is due to be implemented from Jan 1, 2021, but the bank believes in a possible extension of 6 months. There will be limited impact on earnings, as only incremental charge will come through P&L while main portion will be adjusted with retained earnings.
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.
Topline Securities is one of the fastest-growing brokerage houses in Pakistan. It has strong Equity Brokerage, Economic/ Equity Research, Commodity Trading and Corporate Finance & Advisory functions.
Topline Securities has been endowed with numerous awards by renowned international financial organizations. The highlights of which consists of the award for ‘Best Local Brokerage House of Pakistan’ by Asiamoney Brokers Poll (the largest Asia-focused equity services provider poll) in 2016 and ‘Best Equity Brokerage House’ by CFA Society Pakistan in 2015.
Previously, Topline Securities held the title for ‘Best Brokerage House’ for 4 consecutive years (2011-2014) by Asiamoney Brokers Poll. Other awards include the ‘Best Salesperson’ award by Asiamoney for 6 consecutive years (2011-2016), the ‘Arabia Fast Growth 500’ award and ‘Pakistan Fast Growth 100’ award in 2012 and 2013 by AllWorld Network.
JCR-VIS, a credit rating agency providing independent rating services in Pakistan has assigned initial rating of “A-2” for short term and “A” for long term to Topline Securities. Topline Securities is registered as Underwriter, Book Runner and Research Entity with Securities & Exchange Commission of Pakistan (SECP).
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