Asiamoney best bank awards 2020: Pakistan


Best Domestic Bank: HBL

Best Corporate & Investment Bank: Arif Habib

Best International Bank: Credit Suisse

Best Digital Bank: UBL

Best Bank for SMEs: JS Bank

Best Bank for CSR: JS Bank

Award winners

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.

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Best corporate and investment bank
Arif Habib

Shahid Ali Habib, Arif Habib Limited

Arif Habib Limited is among the leading brokerages and investment banking firms in Pakistan. During Asiamoney’s awards period, the non-banking finance company made its mark in corporate finance and advisory, even though growth concerns and rising debt put pressure on the economy.

Despite a relative lack of deals, Arif Habib still managed to capture the lion’s share of the corporate and investment banking market in Pakistan, and reported a rise of 25% in revenues last year, versus 2018.

Its success was thanks to a deep understanding of Pakistan’s markets. For instance, Arif Habib focused on big deals by blue-chip companies in 2019. It was the buy-side adviser for the leveraged buyout of Luna Pakistan, a rare LBO in the country. When Engro Polymer & Chemicals raised PRs8.75 billion ($57 million) from the sukuk market, Arif Habib was lead adviser and arranger. And it worked on Hub Power Company’s rights issue, conventional debt and sukuk transactions. Bankers at the firm say the revenue jump last year was driven by its involvement in these deals.

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.

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Best international bank
Credit Suisse

Rehan Anwer, Credit Suisse

Credit Suisse is a pioneer in Pakistan: it is one of the first bulge-bracket investment banks to start coverage of the south Asian country.

In a challenging year – thanks to the uncertain political environment and concerns around Pakistan’s rising budget deficit – the Swiss bank was an outlier. It closed four deals in 2019, including two loans worth a total of $405 million to the Pakistan ministry of finance, a $30 million facility to LCL Investment Holdings and a $250 million financing for Pakistan International Airlines that came with no guarantee from the government.

Credit Suisse was the sole adviser for both of the finance ministry loans, the sole bookrunner on LCL and a joint bookrunner for the airline company’s fundraising. It is still working on two other structured finance deals.

On the M&A front, the bank was selected as a sell-side adviser to the government for the privatization of two power plants – one of the largest privatizations in the country’s history – and is working on the sale of a majority stake in K-Electric.

Its standing in Pakistan was reflected in its share of wallet last year. The bank earned $2.5 million in investment banking revenues in Pakistan, giving it a chunky 52% of the market, according to Dealogic data.

Under the leadership of Rehan Anwer, co-head of investment banking and capital markets for southeast Asia and frontier markets, Credit Suisse has positioned itself as the go-to bank for both the government and corporations when it comes to investment banking mandates.

Credit Suisse plays to its core strengths and has shown its long-term commitment to the country time and again.

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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.

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Best bank for SMEs
JS Bank

JS Bank does not even rank among the top 10 largest banks in Pakistan, but when it comes to lending to small and medium-sized

Basir Shamsie, JS Bank

enterprises, it is up there in the top three by size.

As of December 2019, the commercial bank had nearly 22,000 SME clients. Admittedly, lending to SMEs declined marginally to PRs42.7 billion ($277 million) as many of its customers grew enough to cross the SME threshold, but the firm made up for that by adding more than 5,500 new SMEs to its client roster in 2019.

JS Bank’s focus areas have been clear under chief executive Basir Shamsie. It puts great emphasis on small enterprises led by women, financing more than 2,000 of such businesses and launching a business loan specifically for women entrepreneurs last year.

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.

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Best bank for CSR
JS Bank

Last year was a big one for JS Bank when it came to corporate and social responsibility.

First, it became Pakistan’s first and only financial institution to be accredited by the Green Climate Fund, thanks to which it can apply for funding of up to $250 million per project.

Secondly, it became fully compliant with the State Bank of Pakistan’s green banking guidelines, establishing an internal environmental and social risk management framework to create awareness around those risks associated with lending.

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.

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