KARACHI: The Habib Bank Limited (HBL) will commence its banking operation from Beijing by the end of this year, the bank official said in a corporate briefing to the analysts on Friday. The bank is also working to obtain permission from the Chinese government for its second branch, he added

The Chinese and Pakistani governments had already given final approval to the HBL, an analyst at Topline brokerage house said in his report. “The first branch is expected to be fully operational by the end of 2020, where the focus will be laid on SOEs and organizations in a bid to expand footprint in the East,” the official said in his briefing. Additionally, a second branch is in the works and is expected to be opened soon, he added.

The State Bank of Pakistan (SBP) had already given approval to HBL in December 2019 to become the first Pakistani bank in China. HBL will offer financial services to its clients in Beijing, China’s capital city.

In its corporate briefing, the analyst said, HBL 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.

The bank has reduced OTC transactions by 30%, which has become a key performance metric in order to increase efficiency. Going forward, the 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 analyst said. The bank feels that there may be growth in fourth-quarter of 2020, 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 two in Auto Financing. The current portfolio of HBL stands at Rs 24 billion.

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 Rs 90 billion worth of loans and Rs 23 billion have been restructured. This is 13% of the total loans deferred.


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