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Best domestic bank
|Muhammad Aurangzeb, HBL|
Since Muhammad Aurangzeb took over as president and chief executive nearly two years ago, Pakistan’s biggest commercial bank has turned around and moved on from the compliance and reputational issues of the past.
Profits before tax at HBL rose 34% year on year in 2019, revenues climbed 25%, net interest income jumped 24%, total domestic deposits increased 13.5%, advances were up 8% and return on average assets inched higher from 0.4% to 0.5%.
All the signs show that HBL is recovering, following a $225 million fine for compliance breaches by New York’s bank regulator in 2017. That chapter has nearly come to an end, with HBL’s New York branch set to close on March 31.
The bank still has some headaches, in particular an investigation by the United Arab Emirates’ central bank into alleged violations of anti-money laundering and terrorism-finance laws. But these problems also date back to 2017, and HBL has put stricter compliance processes in place since then.
Aurangzeb has worked hard to address the causes of these problems since he took over as chief executive in April 2018. The top-line numbers prove that he is steering the bank in the right direction. And the fact that most, if not all, of HBL’s businesses performed strongly last year is further testament to his leadership.
HBL has a 13% market share of lending to small and medium-sized enterprises in Pakistan as of September 30, 2019. Its SME book was about $356 million, up 12.3% year on year.
The bank’s commercial banking division also outperformed, with the lending book rising 21% in Pakistani rupee terms. The unit also scored a record high profit after tax, equivalent to $14.9 million in the year to September 30, 2019.
In corporate and investment banking, HBL’s franchise was strong, with senior bankers focusing on diversification of sectors and working with sponsors with a good track record. The bank led the way in the healthcare sector, for instance, an industry that does not traditionally see much bank lending.
HBL was quick to focus on Pakistan’s growing ties with China as a source of business. The bank is the only one in Pakistan to have a dedicated China coverage desk – and is on track to open a branch in Beijing in the third quarter of this year. It has about 22 people in that team, across four cities in Pakistan, and has a mainland-focused relationship manager based in the UAE. The bank is working on a planned panda bond for the Pakistan government.
Best corporate and investment bank
|Shahid Ali Habib, Arif Habib Limited|
In a year when IPOs dried up, Arif Habib still managed to act as a consultant to textile company Interloop, the only firm to list in Pakistan last year, raising about $36 million.
But the lack of such deals also spurred Arif Habib, led by chief executive Shahid Ali Habib, to evolve from being just an IPO house to a bigger capital markets player.
This is evident in its revenue breakdown. While 70% to 75% of corporate and investment banking revenues were from equity capital markets deals before, now roughly one third comes from ECM, with another third each coming from Arif Habib’s debt platform and advisory divisions.
Arif Habib has IPO mandates in the pipeline, as well as a handful of debt deals, government privatizations and both buy-side and sell-side advisory positions, setting the stage for a strong 2020.
Best international bank
|Rehan Anwer, Credit Suisse|
Credit Suisse plays to its core strengths and has shown its long-term commitment to the country time and again.
Best digital bank
|Sima Kamil, UBL|
United Bank Limited (UBL) had a remarkable performance in 2019 thanks to the digital strategy it put in place about 18 months ago.
For starters, it was the fastest growing digital bank in Pakistan. The number of digital customers crossed one million in January this year, up from about 300,000 a year earlier. Its digital portfolio grew by three times, thanks to UBL offering its clients a digital end-to-end on-boarding platform through which customers can use the bank’s app.
These efforts have paid off handsomely. About 53% of UBL’s total new customers across the bank are now brought on board digitally, versus just 5% in 2018. About 15% of bank transactions happen online.
Sharjeel Shahid, UBL’s head of digital banking, points out that the firm’s efforts with digitalizing its business are having a big impact on costs. About 15% of banking traffic has moved out of branches to digital channels; as a result, UBL’s cost-to-income ratio per customer has decreased.
The firm is considered one of the most progressive banks in the country. There is good reason for this. UBL has a dedicated digital design lab to help boost its digital transformation and customer experience team to understand customer needs and behaviour. UBL liaised with IBM and other financial technology firms and companies focused on user experience to bring in best practice.
Such a transformation is not easy in Pakistan, given that less than 15% of adults have a formal bank account. But UBL, led by chief executive Sima Kamil, markets its digital banking offers through TV and radio to raise awareness of how simple banking can be through online channels.
Best bank for SMEs
|Basir Shamsie, JS Bank|
It has also set its sights on supporting differently abled people in business by introducing a new loan facility.
JS Bank has big ambitions. It wants to hit PRs59 billion in SME lending by the end of 2020, and PRs70 billion next year. It plans to boost its trade business further to add more SME customers, something it started in November 2019. Over the last four months, for instance, 250 SMEs have signed up to take advantage of JS Bank’s trade business. The firm offers a one-window solution by servicing the financing, trade, cash management and payroll. Last year, its trade business saw about $1.93 billion in terms of volume. With such strong emphasis on the SME franchise, JS Bank’s goals are well within its reach.
Best bank for CSR
And thirdly, it took a lead in Pakistan’s solar power market, financing more than 120 projects for commercial, residential and agricultural purposes.
In addition, in the field of education, JS Bank financed about 30 schools last year, helping them to expand their network and raise their education standards.
JS Bank is the only bank in Pakistan to have a certified green office. It has also tried to lead by example, introducing carbon reduction measures in its own operations. It has done this by measuring energy and paper consumption, increasing use of solar power and automating more of its processes to reduce documentation. Its humanitarian efforts have not gone unnoticed. During flash floods in the Sindh province, the bank supplied food and offered free medical camps.