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HBL is not a stranger to “firsts” in Pakistan’s banking sector. Having been the first in crossing the Rs1 trillion and then Rs 2 trillion deposit base – HBL became the first bank in Pakistan to record a net markup income in excess of Rs100 billion, as it announced its financial results on Wednesday. The country’s largest commercial bank paid another Rs1.25 per share as final dividend, taking the full-year dividend to rs5/share, as the pretax profits soared by an impressive 31 percent.

The gradual loan book expansion continued in 2019 as HBL’s advances in the domestic market neared Rs1 trillion, growing by 3.5 percent ahead of market growth. The found-again mojo in the international market ensured HBL expanded its footprint beyond the borders, which helped the bank register an advances growth of 8 percent over December 2018, with Rs1.16 trillion in advances.

The considerably average interest rates throughout the year, along with sizably increase in earning assets, led to significant increase in markup earned. Although, investments continue to be the major chunk of the asset pie, higher average earning yields on advances meant, return on advances, had the biggest bigger share in markup earned. This should not be an odd reading for banks but has not happened often in Pakistan of late.

The fee and commission income continued to lend able support to the bottomline, constituting 80 percent of the non mark-up income. The loss incurred on sale of securities was by and large mitigated with gain on foreign exchange.

On the liabilities front, HBL raked in impressive numbers, with a 14 percent increase in yearend deposits over December 2018 – to Rs2.4 trillion. The growth is way above industry deposit growth and is phenomenal given the general economic slowdown around. Despite higher interest rates, the cost of deposits was managed rather well, as evidenced from improvement in NIMs.

The deposit composition continues to grow in the right direction as the low-cost deposit mix is fast becoming the center of deposit strategy. HBL’s CASA stood at 82.6 percent in December 2019, which is phenomenal given the deposit size and the fact that the bank has international footprint as well.

The operating expenses have increased at a higher than desired pace ever since the New York episode. But a great portion of these costs could also be viewed as investments in compliance and control, so as to further strengthen the compliance process. HBL has continued to grow its digital footprint, with HBL Konnect growing rapidly. For A bank that aims to be a “Technology company with a Banking license”, HBL Konnect should just be the beginning of what is potentially a long journey.