Asiamoney Best Bank Awards 2017: Pakistan
Best Domestic Bank: Habib Bank (HBL)
Habib means ‘beloved’ or ‘friend’ in Urdu, Pakistan’s official language. But it could just as easily mean solid and secure, for that’s how many Pakistanis feel about their biggest private-sector bank, with its 1,600 branches across the country.
Controlled by the Aga Khan’s Fund for Economic Development, Habib exudes stability in a famously difficult market that’s steadily coming out of tough times.
Helmed by former Citibanker Nauman Dar since 2012, HBL continued its solid showings in 2016 to post net profits of Rs34.2 billion ($327 million), slightly down from an exceptional 2015, when HBL had banked a series of one-off capital gains.
Dar says that on a year-to-year comparison, 2016 saw profits come in around 10% higher than the year before. HBL’s balance sheet also grew 13% from 2015 to reach Rs2.5 trillion.
HBL now banks more than 9 million customers in Pakistan. It has launched important initiatives in areas such as banking for women, social media and biometrics.
In corporate banking, HBL added 3,000 new small and medium-sized enterprise clients during 2016, and now has 13,000 SME clients. Its trade finance business rose 22% in 2016.
With a presence in 24 countries beyond Pakistan, HBL is also trusted among Pakistan’s far-flung diaspora, who used it to send over a quarter of the $20 billion Pakistanis remitted home last year.
Best Corporate and Investment Bank: Allied Bank
Allied Bank (ABL) only launched its investment banking business 12 years ago, but the fifth-largest commercial bank in Pakistan has quickly won a deserved reputation as the country’s best in financing and capital raising.
That includes stepping into deals other Pakistani banks are wary of, notably handling one of Pakistan’s biggest-ever transactions for a state-owned enterprise. In December, ABL completed the $1.3 billion refinancing for Pakistan’s electricity-generation unit via the state’s special purpose vehicle, Power Holdings Ltd. This is controversial stuff in Pakistan, with the state’s commitment to the IMF to privatize its grid. As ABL explains, debt impacts the electricity supply chain, resulting in liquidity crunches and a constant “need for bank borrowings, which banks were reluctant to provide.”
The power deal was the biggest of a busy year for Syed Ali, ABL’s head of corporate and investment banking. But it wasn’t the only sovereign deal he handled in 2016. ABL transacted $3.2 billion-worth of deals last year.
In March, it was the lead arranger for a $408 million deal on behalf of the finance ministry, handled through ABL’s offshoot in Bahrain. As ABL explains: “The government of Pakistan was facing immense pressure…which created the need for US dollar funding from commercial banks. ABL, as usual, played a pivotal role in providing an immediate financing solution.”
ABL says its corporate loan portfolio increased by around Rs10 billion ($95 million) in 2016, while it banked a handy Rs3.8 billion in dividend income from its equity portfolio. Among its growth areas are loans and financing deals related to the China-Pakistan Economic Corridor.
Best Bank for SMEs: UBL
Small and medium-sized enterprises have been somewhat neglected by Pakistani bankers in recent years, despite accounting for around 90% of the 3.2 million private businesses in the country and contributing about a third of GDP. SMEs play a vital role in Pakistan’s economy, but many still struggle to access funding.
According to the World Bank, commercial bank lending to SMEs in Pakistan is currently less than 6% of total bank lending, much lower than Pakistan’s south Asian neighbours.
UBL sees SME inclusion as a critical next phase in Pakistani growth. Spurred on by the central bank, UBL joined up in March with the World Bank’s International Finance Corporation to bring SMEs into the financial mainstream. UBL has created a series of products targeting SMEs, tailored for specific industries, such as rice huskers. And its branchless Omni platform was expanded by associations with the UN’s World Food Programme and WHO among others, to provide cash management and loan services to agriculture SMEs.
Such initiatives, allied with UBL’s strong position in areas that are crucial to smaller companies including treasury services, payments and FX, as well as lending, have made the bank the one to watch in SME.
Best Digital Bank: Tameer Bank
|Ali Rias, Tameer Bank|
Pakistanis like their corporate clichés, their ‘gamechangers’, ‘brand ambassadors’ and ‘paradigm shifters.’ But there’s one bank in Pakistan where the term ‘superbrand’ seems to sit right, barely a decade after it was rolled out – Tameer Bank, led by Ali Rias, and its easypaisa system.
Easypaisa is Pakistan’s first branchless bank, launched jointly by Norwegian telecom giant Telenor and Tameer Bank in 2009. They recognized that financial inclusion is a formidable challenge in developing countries like Pakistan.
Leveraging Telenor’s mobile network – the telco has 30% of the mobile phone Sim market, easypaisa offers the unbanked an extensive portfolio of financial services: savings, payments, transfers and much else beyond, even education services. And it does so with an innovative but simple system, via apps and texts, totalling around 800,000 transactions every day.
Easypaisa claims to be the world’s third-largest branchless banking service, serving an estimated 22 million users via 75,000 outlets in more than 800 Pakistani villages, towns and cities, easily the largest footprint in the country of any Pakistani bank.
It also helps that easypaisa has a powerful advocate in Pakistan central bank governor Ashraf Wathra. Now in his fourth year in the chair at the State Bank of Pakistan, Wathra has made financial inclusion a top priority of his governorship. This year saw Tameer founder Nadeem Hussain step away after he and partners sold their 49% of the bank to Telenor. Hussain had around 25% of Tameer, with the remaining stake held by the World Bank’s International Finance Corp and other Pakistani investors.
Best International Bank: Standard Chartered
Standard Chartered is much more than the last international bank still standing when it comes to this award. True, foreign banks such as HSBC, Barclays, RBS, ABN Amro and Citi have either sold or scaled back their operations in Pakistan in recent years.
But Shazad Dada’s StanChart Pakistan, the country’s sixth-largest bank, whose 101 branches generated a healthy Rs15.2 billion ($145 million) in profit in 2016, is a serious domestic player in Pakistan in its own right.
Dada says Pakistan is a “key engine of growth” for the wider London-based Standard Chartered Group. StanChart is longest-standing foreign bank in Pakistan; it dates its franchise there from 1863.
StanChart Pakistan is looking to cement its position with its digital banking platform, which should help it maintain its leadership in mobilizing low-cost deposits. Islamic banking services are also a strong point.
That’s all very impressive, but its genuine clout in Pakistan banking was perhaps best evidenced in September when it co-managed Islamabad’s first foray into the sovereign sukuk market since 2014. Timed to coincide with Pakistan’s successful exit from three years under IMF care, the $1 billion deal was heavily oversubscribed to investors in Europe, the US and the Middle East, an eloquent statement that Pakistan was back into favour with international investors after years in the wilderness.
And, with the giant China-Pakistan Economic Corridor project gaining momentum, it might also suggest that perhaps the likes of HSBC, Barclays et al were premature to exit an increasingly exciting contest.
Best Bank for CSR: First Women Bank
Part microfinancier, part bank, First Women Bank Ltd’s very raison d’etre is corporate social responsibility, namely to help half the Pakistani population – its women – have access to financial services.
FWBL was set up in 1989 at the direction of Pakistan’s late prime minister Benazir Bhutto as a vehicle for female village empowerment in a country that doesn’t have a stellar record in such matters. That culture is evident in its charter, which is all about trying to correct Pakistan’s entrenched gender and income imbalances.
It was evident in its motto too: ‘The world’s only bank for women’, a phrase that used to be true until it found imitators in India and the Middle East. When First Women Bank lends to private companies, it requires that at least 50% of the firm be owned by women. It also requires those companies have a woman in the top managerial slot.
These are the kind of requirements that a host of new funds in the US and Europe are demanding under the guise of gender-lens investment. While such initiatives often grab global attention, it is worth remembering where it all started.
FWBL has helped lift thousands of Pakistani village women out of poverty, often taking their menfolk with them. And it has done so while run on commercial lines.
Jointly owned by a consortium of Pakistani banks – HBL, UBL and NBP amongst them – FWBL has historically boasted one of global banking’s highest loan-recovery rates, consistently above 95%, which would seem to suggest that the poor, and in particular its women, are worth banking on.
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