HBL doubled its profits in 2020 from a year ago. This is as good as it gets especially considering 2020 was not a particularly easy year around the word for doing business. How smoothly HBL managed to sail through the tough times is a testament to its prudent approach and the fact that size matters in the banking business. The bank also declared a final cash dividend of Rs3/share, taking the full-year payout to Rs4.25/share.

There is hardly a blot one can find in HBL’s profit and loss statement, despite much of the reporting period falling under the pandemic peak. At the core of performance was the phenomenal growth in the deposit base, which expanded to a whopping Rs2.8 trillion – by far the highest in the industry. The 15 percent growth in deposits over 2019 also beats the industry average deposit growth in the same period by quite a margin.

The seeds of success are sown in the bank’s inherent strength of widespread operations, and prudence, which came handy during the year. HBL managed to add Rs400 billion to its domestic deposit base. Most of the deposit addition was in the right direction, as the ever-improving CASA ratio of 86.6 percent clearly depicts. The bank added over Rs200 billion in saving accounts and a little over Rs100 billion in current account during the year, leading to improved CA and CASA ratio. The impact is also reflected in a double-digit decline in markup expense during the year, as the cost of deposit was brought down from previous year.

While investments in lucrative government securities remain the preferred asset class for multiple reasons, HBL did not shy away from expanding its exposure in consumer loans. HBL’s consumer lending portfolio crossed Rs75 billion, as interest rates receded opening a window of opportunity. The single largest growth was observed in auto financing which grew by over 50 percent year-on-year, as HBL maintained the top spot in consumer financing.

There were gains in non markup income as well despite pressure on fee, commission income, which remained lower primarily due to depressed economic activities, especially in the first half of 2020. The gain on sale of securities more than made up for that, at Rs7 billion, from a loss in excess of Rs2.6 billion reported in the same period last year.

HBL’s cost to income ratio improved drastically from 73.5 percent in 2019 to 58.5 percent in 2020, as the bank posted its highest ever total income, and managed to keep a tight lid on administrative expenses despite challenges. HBL’s loan book quality has never been in question and it continued as the infection ratio dipped to an all-time low of 6.3 percent, which is adequately provided for.

The Bank managed to leverage its digital channels to great use, as the mobile and internet banking transactions nearly doubled during the year. The branchless banking platform also saw the volume surge by a massive 157 percent. As things have slowly started to look up in terms of macroeconomic indicators, HBL seems well poised to further solidify its leadership status with exemplary controls, in the months and years to come.