HBL held its inaugural “Investor Day” conference on Zoom, led by the President Mr. Muhammad Aurangzeb alongside senior bank management. Different business areas of the bank were discussed.
Key takeaways from the session are below:
Digital Business
· HBL has invested heavily in digitizing its customer experience over the past few years. They plan to transform the banks approach over the coming years.
· For example, management decisions will be more data driven, customers will receive real time information and the banks will switch focus on providing solutions rather than products.
· Its key strategies are to: 1) Accelerate financial services in Pakistan – HBL are trying to bank the unbanked 100mn adults in the country 2) Regional relevance – Improve flows between industries, merchants and countries, and 3) Innovation & Technology – pivot to a technology company with a banking license using more AI. The key goal at the end is to have end-to-end digitization meaning the customer must have a fully digital experience.
· HBL has over 2mn customers using the mobile application, and has a growth of additional 50,000-60,000 customers every month which could potentially end up to approximately PKR 900bn transacted through the application by the end of the year.
· With HBL Konnect app the bank plans to make it possible to deposit and withdraw money without the use of a branch manager.
· HBL has partnered with Katalyst lab to help startups and women led startups.
· Furthermore, the bank has partnered up with the Government of Punjab to give large scale subsidies to farmers; already over 500,000 farmers have been served.
· The bank is also looking to build a car loan application in the near term.
· HBL has made its first investment into fintech with an announcement this morning in a startup called “Finja” and is expected to continue making investments in this market.
· The bank has invested in firebase, SAP and CLM. This enables to track different activities of the customers as they go through mobile app.
· Digital currencies: HBL would support any initiative by the SBP to develop digital currencies, which are different to crypto currencies.
· The bank has focused on developing QR solutions for the retail business. That said, the bank aims to combine physical hardware and software based solutions.
Islamic Banking
· The bank’s Islamic network will reach 940 branches and windows by the end of 2021. 2020 saw the start of establishing standalone Islamic branches and 200 windows are to be converted into branches.
· Islamic deposits, financing and investments have doubled over last 5 years
· Geographical presence is expected to increase from 186 cities to over 300 cities by the end of this year.
· New products are expected in the consumer finance segment such as Islamic personal finance and credit cards.
· Similar product structure for credit cards to be followed as that in Malaysia and Middle East.
· Commercial/SME trade volumes grew 4x in 2020 while corporate trade volumes doubled.
· HBL focuses extensively on promoting mortgage and construction finance through islamic banking, and for the first time in Pakistan, the bank came up with fixed rate home financing for upto 20 years.
· The bank aims to launch a subsidiary in 2022/2023.
Rural Banking and Development Finance
· HBL is the market leader with 31% share of farmer financing.
· The bank offers a holistic product suite targeting crop as well as non-crop segment.
· HBL is the first bank to finance an Electronic Warehouse Receipt (EWR). The EWR gives financial institutions information on commodities on real time basis. It also allows lending to farmers with reduced transaction and operational risks.
· HBL is the only bank with a “Farm app” that provides actual crop/farm assessment.
· Through its “Kissan Ki Awaaz” platform the bank connects with farmers to improve their financial literacy and understand their problems.
· HBL is the first bank to integrate its system with Punjab Land Record Authority (PLRA). Punjab digitizes its rural land records. HBL has become a one stop shop for data extraction etc
· HBL is the sole bank that has a Board-level Development Finance Committee that was formed in 2018. Development Finance aims to reach the underserved and marginalized sectors of the economy.
· HBL’s agronomy and Konnect teams go to farmers with digital devices to open accounts, create crop plans, and apply for in-kind loans, all through the “HBL Pay” application.
China Business
· “China coverage” of the bank started in 2012 which even predates CPEC. It aims to expand customer base by focusing on locally registered Chinese companies, engage with public stakeholders on phase 2 of CPEC, target Gwadar expansion projects and target direct financing of Chinese entities in Pakistan under CPEC phase 2.
· Rigorous AML/KYC procedures are in place. Payment Service Units look at the KYC process when a transaction goes through. Prevention lists exist by the regulator on global level as well. Early warning mechanisms are in place to detect credit risk.
· HBL has handled CPEC transactions worth over USD 6bn in various roles.
· The bank has various strong partnerships with Chinese institutions such as CICC (largest investment bank in China). The bank also collaborates with People’s Bank of China (PBOC) and State Administration of Foreign Exchange (SAFE) for promotion of RMB-PKR direct business.
· HBL is the only Pakistani bank that offers rates for both CNY and CNH, which gives the customer the advantage of being able to choose pricing basis.
· The bank aims to more than triple its China business revenue by 2025.
Courtesy – AHL Research