Karachi, April 22, 2020: HBL today declared a consolidated profit after tax of Rs 4.1 billion for the first quarter of 2020, a growth of 29 percent over the same period last year. Earnings per share increased to Rs 2.79 compared to Rs 2.08 in Q1’2019. Along with the results, the Board declared a dividend of Rs 1.25 per share (12.5 percent).
Even in the prevailing economic conditions, HBL’s key business lines, especially its core domestic business, remain robust. HBL’s total advances increased by 1.1 percent to Rs 1.2 trillion, with strong performances from its market leading Corporate and Consumer franchises and with renewed growth from the International business.
The Bank remains focused on continued lending to support its customers, with the ADR increasing to 49.6 percent. HBL’s total deposit base, at Rs 2.4 trillion, remains at a healthy level with strong CA and CASA ratios of 35.6% and 82.7 percent respectively.
Compared to the same period last year, the Bank’s average domestic balance sheet grew by Rs 235 billion, based on a 6.0 percent growth in average current deposits and 8.6 percent in average total deposits. This growth, along with higher net interest margins contributed to a 21 percent increase in domestic net interest income over Q1’19. The Bank’s fee income of Rs 4.7 billion remains robust at the domestic as well as the international level. Excluding the impact of the sharp depreciation in the Rupee, the Bank’s total non-fund income was 19 percent higher than in Q1’19.
The Bank’s administrative expenses have increased by 20% over Q1’19. This is primarily a result of higher costs in New York where closure activities have been accelerated to put this significant drag behind us. Consequently, closure costs originally expected later in the year have been recorded upfront and the costs associated with NY should taper off sharply going forward.
The Bank’s NPLs have declined by Rs 1.2 billion over Dec’19 while asset quality and coverage have improved to 6.4 percent and 93.4 percent respectively.
The Bank’s risk weighted assets increased as a result of local market conditions as well as the impact of devaluation on international assets. Nevertheless, HBL’s Capital Adequacy Ratio improved over December 2019, to 15.39 percent, as a result of strong internal capital generation.
HBL entered Q1 2020 on a buoyant note with all engines firing. The first two months of the quarter saw HBL accelerate the business momentum. However, in the later part of the quarter, the global Coronavirus (COVID-19) Public Health crisis had a severe fallout over the global business and the financial system, including HBL. The Bank, while delivering on its performance metrices, met the challenges of the COVID-19 crisis with resolve, passion and an incredible sense of duty to maintain its banking services.
The Bank achieved a 6% increase in its customer base, now touching some 21 million customers. This increase is driven by HBL Konnect, its branchless banking solution and the Bank’s partnership with the Government of Pakistan (GoP) on key initiatives such as Ehsaas Kafaalat, the largest Government-to-Person (G2P) payment program, that provides assistance to women who don’t have an income safety net.
HBL and Ehsaas have also joined forces to enable the delivery of the Ehsaas Emergency Cash program, the largest social safety net initiative in Pakistan’s history. This program has been extended by the GoP, to support the deserving in this period of lockdown due to the ongoing COVID-19 crisis. HBL is leading this effort across Sindh, Balochistan, Punjab and Islamabad Capital Territory, in disbursing approximately PKR 90 billion to an estimated 7.5 million beneficiaries, who are daily wage earners, supporting their families. This is in addition to the 3 million Kafaalat beneficiaries the Bank serves already.
HBL became the first bank to establish its card payment ecosystem on the Contactless technology. Through continuous product innovation, the Cards business volumes have grown 30% versus same period year ago. Employee Banking and Cash Management, both strong indicators of HBL’s market leadership position, have registered an increase of 51 percent and 39 percent respectively.
HBL’s Islamic Banking arm is working with NAPHDA, assisting them in fulfilling their mission of building more than 5 million affordable housing units. HBL enjoys a strong corporate and investment banking presence in Pakistan.
The Bank enjoys leadership position in energy, infrastructure and power projects in ongoing efforts to promote capital market development, deepen secondary markets and provide advisory services. China remains the lynchpin of our International strategy and HBL is the largest executor of CPEC related financing in Pakistan.
The above key drivers of the business reaffirm that HBL’s national presence, largest distribution network, branchless banking platform HBL Konnect, and investment in technology and talent, enables the Bank to continue on its growth trajectory. The Bank continues to use technology to deliver products & services to its customers in a faster, effective and more efficient way, consolidating its leadership position in its chosen segments and entering new business segments.
As Q1 2020 drew towards a strong finish, and the nation rallied behind the 5 th edition of HBLPSL, Pakistan was hit by the ongoing, extraordinary crisis of the global pandemic COVID-19. As Pakistan’s largest bank, HBL’s response to this crisis rests on the four pillars of Resilience, Supporting the Businesses, Helping the most Vulnerable and Giving back to the Community.
HBL has gone to great lengths to help its customers in these challenging times. The Bank remains focused on supporting its customers across various client segments including Corporate, Commercial, Consumer, Islamic Banking and Agriculture. HBL’s Digital Banking Channels such as internet banking, HBL Mobile and HBL Konnect are fully functional. Most of HBL’s 1700 branches and 2,100 ATMs remain open.
The Bank continues to lend money and provide liquidity to its customers. Where customers needed additional flexibility, HBL is working with them to assist them through this period and hopes to be at the forefront of using the liquidity and funding assistance being made available by the State Bank of Pakistan to help its customers navigate a difficult next few months. HBL maintains credit discipline in its fortress balance sheet.
HBL is also distributing 12,000 ration bags to the deserving families, from the coast of Makran to the mountains of Gilgit-Baltistan. Moreover, HBL and the Serena Hotel chain have joined hands in an initiative to provide 30,000 meal-boxes over a period of one month across seven cities to medical professionals battling at the frontline of the COVID-19 crisis in Pakistan.
During Q1 2020, HBL won the 2020 Asiamoney Award for Best Domestic Bank. HBL also won the Pakistan Banking Awards (PBA) 2019 award for Best Bank for Small and Medium Businesses, and the award for Best Investment Banking. Furthermore, HBL won the 2020 Global Diversity and Inclusion Benchmarks Award (GDIB) for Recruitment, Retention, Development, and Advancement.
In conclusion, although no one today knows exactly when this public health crisis will pass, HBL intends to stand alongside its customers as we all emerge from this together. HBL is proud of its staff who have risen to the challenges and have been instrumental in delivering banking services in a difficult environment. Operating in the current circumstances may lead to, in Q2 2020 and even beyond, some increased costs and a corresponding reduction in short term profitability, but this is a worthwhile tradeoff for the longer term standing of our business and our customers.