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  • SBP imposes penalty of Rs12.8 million on HBL

    SBP imposes penalty of Rs12.8 million on HBL

    KARACHI: State Bank of Pakistan (SBP) has imposed monetary penalty of Rs12.8 million on Habib Bank Limited (HBL) for procedural violations in the area of Customers Due Diligence (CDD) and Know Your Customer (KYC).

    The SBP on Tuesday said that it had imposed monetary penalty on HBL under significant enforcement actions during January 2020.

    The central bank directed HBL to improve the areas of CDD and KYC.

    The SBP imposed Rs219.138 million as penalty on five banks during the month of December 2019 for violating mainly regulations related to foreign trade operations, Customers Due Diligence (CDD) and Know Your Customer (KYC).

    The SBP from July 2019 started public disclosure of penal action against banks. “Enforcement actions are an integral part of regulatory regime which involves imposition of monetary penalties and other actions against institutions and individuals for violations of laws, rules, regulations, guidelines or directives issued by SBP from time to time,” according to a circular issued by the central bank.

    In order to bring more transparency and strengthen market discipline, SBP has decided to publicly disclose significant enforcement actions

    With the latest penal action the total amount of penalty during first seven months (July – January) 2019/2020 increased to Rs1,581.8 million.

  • HBL to complete New York branch closure by March 31

    HBL to complete New York branch closure by March 31

    KARACHI: Habib Bank Limited (HBL) on Monday said that it will complete the closure of its New York Branch by March 31, 2020 in coordination with the New York State banking regulators.

    In information shared with the Pakistan Stock Exchange (PSX), the bank said that upon such closure HBL will no longer operate any bank branch in the United States.

    The bank said that it wishes to thank the State Bank of Pakistan (SBP), the New York State Department of Financial Services, and the Federal Reserve Bank of New York for their consistent support and cooperation through the process of winding down and closing the New York Branch.

    HBL remains committed to engaging in progressive banking practices while ensuring compliance with all international and local laws and regulations across its network, the bank said.

  • HBL plans network expansion in China

    HBL plans network expansion in China

    KARACHI: Habib Bank Limited (HBL) has planned to expand its network in China, according to corporate briefing on Tuesday.

    According to Topline Research, the HBL is planning to expand its network in China. Talks are in advanced stages of giving HBL rep office a branch status, additionally One-Belt One-Road (OBOR) based countries are to be assisted by HBL where Chinese presence is limited.

    Key theme for the bank is focused on key real sectors with segments like Agri financing and SME finance.

    In 2020 the bank is expected to move away from one off costs and move towards a normalized cost to income ratio with a long term target of sub 50 percent.

    Customer base to cross 20 million in the coming year versus 16 million currently, translating into higher fee income going forward.

    Current account are targeted to cross the one trillion mark, keeping cost of deposit low.

    The banks’ focus is on innovation through technology.

    The Bank focuses on “STARS” strategy encompassing:

    • Sustaining Success (maintain position in deposits, IB, treasury and rural banking)

    • Turnaround (revitalization of international division and home remittance)

    • Acceleration (consumer finance)

    • Realignment (commercial banking fis and Islamic banking)

    • Startups (emphasis on branchless banking and digital banking)

    Key Initiatives of the banks are 1) branchless banking through Konnect aimed to capture a new market through smartphones, 2) Power sector prowess through various IB based transactions and 3) Launch of Panda bonds.

    Open position secured to pay New York penalty is winding down by 25-30 percent by end of 2019.

  • SBP penalizes HBL with Rs35.62 million for violating regulations

    SBP penalizes HBL with Rs35.62 million for violating regulations

    KARACHI: State Bank of Pakistan (SBP) has imposed an amount of Rs35.62 million as penalty on Habib Bank Limited (HBL) for violating foreign exchange regulation and customers due diligence.

    According to details of significant enforcement action by the SBP during the month of October 2019 issued on Wednesday, the central bank imposed the penalty on the bank.

    The SBP said that monetary penalty was imposed mainly on deficiencies in the areas of foreign trade operations and customers due diligence.

    “The bank has been advised timelines to bring improvement in the system/controls to avoid recurrence of such lapses / violations in future.”

    With the latest penal action the total amount of penalty during first four months (July – October) 2019 increased to Rs1,158.62 million.

    The SBP has taken penal action against three banks for violating procedures in the areas of Know Your Customer (KYC) and Customers Due Diligence (CDD) and imposed fine to the tune of Rs133.32 million during the month of September 2019.

    The SBP imposed penalty of Rs56.61 million on Askari Bank, Rs63.805 million on Meezan Bank Limited and Rs12.906 million on MCB Islamic Bank Limited.

    In addition to penal action, the banks have been advised to strengthen its process related to KYC/CDD, in order to avoid occurrence of similar violations in future.

    The SBP imposed penalty amounting Rs805.1 million on 10 banks for violating anti-money laundering, due diligence of customers and foreign exchange regulations during the month of August 2019.

    The central bank issued details on Friday about action taken by the SBP against banks in order to plug loopholes in the banking system.

    The SBP initiated to make public the action taken by the central bank from July 2019 against commercial banks for violating prevailing rules and regulations and amount of penalty imposed on such banks.

    In the latest release of enforcement measures by the SBP also included action against leading banks including Habib Bank Limited and MCB Bank etc.

    The highest amount of penalty of Rs320.08 million has been imposed on Habib Bank Limited followed by MCB Bank of Rs159.152 million, Dubai Islamic Bank of Rs77.97 million.

    Following of are the significant enforcement actions by SBP during August-2019.

    01. Dubai Islamic Bank dated August 01 & 02, 2019:

    Violations in the areas of AML/CFT, Asset Quality

    Monetary penalty of Rs77.974 million was imposed mainly on deficiencies in the areas of AML/CFT. Moreover the bank has been advised timelines to rectify the operational lapses and improve the control environment to avoid recurrence of such lapses/violations in future.

    02. Habib Bank Limited dated August 02 & 03, 2019:

    Violations in the areas of AML/CFT, Consumer Protection

    Monetary penalty of Rs320.08 million was imposed mainly on deficiencies in the areas of AML/CFT and erroneous deduction of service charges from customers. The bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such lapses/violations in future.

    03. MCB Bank Limited dated August 03, 2019:

    Violations in the areas of AML/CFT, Asset Quality

    Monetary penalty of Rs159.152 million was imposed mainly on deficiencies in the areas of AML/CFT. The bank has been advised timelines to improve the KYC/CDD processes and integrate eKYC system with core banking system.

    04. Silkbank Limited dated August 03, 2019:

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs53.879 million was imposed mainly on violations of non-surrendering of unclaimed deposits, non-classification of loans and adjustment lending. Moreover, the bank has been advised timelines to classify advances & create provision there against and conduct

    05. Bank Alfalah Limited dated August 03, 2019

    Violations in the areas of FX Operations

    Monetary penalty of Rs52.795 million was imposed mainly on violations of foreign exchange regulations such as restrictions to remit import advance payments, export documentation and non-submission of documents against advance payments.

    06. Allied Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs32.755 million was imposed on breach of various limits of Equity Investment/related party and deficiencies in customer due diligence process. The bank has been advised timelines to bring equity Investment and exposure to related party group within the prescribed limit and revise KYC/CDD process.

    07. Sindh Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality, FX Operations

    Monetary penalty of Rs15.088 million was imposed mainly on deficiencies in customer due diligence practices, imprudent lending practices, non-classification of loans. Moreover, in view of the strategic deficiencies in Transaction monitoring system & name screening process, the bank has been advised an action plan/timelines for replacement of their existing TMS and acquiring of name screening solution.

    08. Summit Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs13.072 million was imposed mainly on deficiencies in customer due-diligence process, mis-utilization of loans and non classification of loans. The bank has been advised to timely update customer profiles & properly document the reasons of large value transactions.

    09. JS Bank Limited dated August 05, 2019

    Violations in the areas of AML/KYC, Asset Quality, Corporate Governance

    Monetary penalty of Rs70.307 million was imposed mainly on deficiencies in customer due-diligence process, mis-utilization and non classification of loans etc. The bank has been advised timelines to enhance its systems/process for customer risk profiling (CRP), transaction monitoring and identification of Politically Exposed Persons (PEPs).

    10. Habib Metropolitan Bank Limited dated August 19, 2019

    Violations in the areas of FX Operations

    Monetary penalty of Rs10 million was imposed mainly on a violation of foreign exchange regulations relating to splitting of the import advance payments into smaller transactions.

    The SBP imposed penalty of Rs184.64 million upon four commercial banks for violating laws related to Anti-Money Laundering (AML)/Know Your Customer (KYC) during the month of July 2019.

    The central bank on Thursday said that these penalty amount was imposed during the month of July 2019 against banks included: The Bank of Punjab; JS Bank Limited, Bank Al Habib Limited and Soneri Bank.

    The SBP imposed penalty of Rs13.072 million against The Bank of Punjab on July 15, 2019 for violating in areas of foreign exchange operations.

    In addition to penal action, the bank has been advised to improve its internal processes, the SBP said.

    The Bank of Punjab was again penalized with Rs16.119 million on July 18, 2019 for violating in areas of AML/KYC, unclaimed deposits.

    In addition to penal action, the bank has been advised for improvements in the areas of AML/KYC, the central bank added.

    The SBP penalized JS Bank Limited with penalty amount of Rs48.211 million on July 23, 2019 for violating in areas of AML/KYC.

    In addition to penal action, the bank has been advised to conduct a thorough review of relationship accounts, the SBP said.

    The SBP imposed penalty of Rs51.75 million upon Bank Al Habib Limited on July 25, 2019 for violating in areas of AML/KYC, FX Operations.

    In addition to penal action, the bank has been advised to update its systems and processes, and provide appropriate trainings to the concerned officials, the SBP said.

    The SBP imposed penalty of Rs55.48 million upon Soneri Bank Limited on July 25, 2019 for violating in areas of AML/KYC, Asset Quality, FX Operations.

    In addition to penal action, the SBP advised the bank to improve areas of AML/KYC and credit risk monitoring.

  • SBP imposes Rs805 million penalty on 10 banks for violating AML, due diligence, forex regulations

    SBP imposes Rs805 million penalty on 10 banks for violating AML, due diligence, forex regulations

    KARACHI: State Bank of Pakistan (SBP) has imposed penalty amounting Rs805.1 million on 10 banks for violating anti-money laundering, due diligence of customers and foreign exchange regulations during the month of August 2019.

    The central bank issued details on Friday about action taken by the SBP against banks in order to plug loopholes in the banking system.

    The SBP initiated to make public the action taken by the central bank from July 2019 against commercial banks for violating prevailing rules and regulations and amount of penalty imposed on such banks.

    In the latest release of enforcement measures by the SBP also included action against leading banks including Habib Bank Limited and MCB Bank etc.

    The highest amount of penalty of Rs320.08 million has been imposed on Habib Bank Limited followed by MCB Bank of Rs159.152 million, Dubai Islamic Bank of Rs77.97 million.

    Following of are the significant enforcement actions by SBP during August-2019.

    01. Dubai Islamic Bank dated August 01 & 02, 2019:

    Violations in the areas of AML/CFT, Asset Quality

    Monetary penalty of Rs77.974 million was imposed mainly on deficiencies in the areas of AML/CFT. Moreover the bank has been advised timelines to rectify the operational lapses and improve the control environment to avoid recurrence of such lapses/violations in future.

    02. Habib Bank Limited dated August 02 & 03, 2019:

    Violations in the areas of AML/CFT, Consumer Protection

    Monetary penalty of Rs320.08 million was imposed mainly on deficiencies in the areas of AML/CFT and erroneous deduction of service charges from customers. The bank has been advised timelines to bring improvements in its systems/controls to avoid recurrence of such lapses/violations in future.

    03. MCB Bank Limited dated August 03, 2019:

    Violations in the areas of AML/CFT, Asset Quality

    Monetary penalty of Rs159.152 million was imposed mainly on deficiencies in the areas of AML/CFT. The bank has been advised timelines to improve the KYC/CDD processes and integrate eKYC system with core banking system.

    04. Silkbank Limited dated August 03, 2019:

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs53.879 million was imposed mainly on violations of non-surrendering of unclaimed deposits, non-classification of loans and adjustment lending. Moreover, the bank has been advised timelines to classify advances & create provision there against and conduct

    05. Bank Alfalah Limited dated August 03, 2019

    Violations in the areas of FX Operations

    Monetary penalty of Rs52.795 million was imposed mainly on violations of foreign exchange regulations such as restrictions to remit import advance payments, export documentation and non-submission of documents against advance payments.

    06. Allied Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs32.755 million was imposed on breach of various limits of Equity Investment/related party and deficiencies in customer due diligence process. The bank has been advised timelines to bring equity Investment and exposure to related party group within the prescribed limit and revise KYC/CDD process.

    07. Sindh Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality, FX Operations

    Monetary penalty of Rs15.088 million was imposed mainly on deficiencies in customer due diligence practices, imprudent lending practices, non-classification of loans. Moreover, in view of the strategic deficiencies in Transaction monitoring system & name screening process, the bank has been advised an action plan/timelines for replacement of their existing TMS and acquiring of name screening solution.

    08. Summit Bank Limited dated August 03, 2019

    Violations in the areas of AML/KYC, Asset Quality

    Monetary penalty of Rs13.072 million was imposed mainly on deficiencies in customer due-diligence process, mis-utilization of loans and non classification of loans. The bank has been advised to timely update customer profiles & properly document the reasons of large value transactions.

    09. JS Bank Limited dated August 05, 2019

    Violations in the areas of AML/KYC, Asset Quality, Corporate Governance

    Monetary penalty of Rs70.307 million was imposed mainly on deficiencies in customer due-diligence process, mis-utilization and non classification of loans etc. The bank has been advised timelines to enhance its systems/process for customer risk profiling (CRP), transaction monitoring and identification of Politically Exposed Persons (PEPs).

    10. Habib Metropolitan Bank Limited dated August 19, 2019

    Violations in the areas of FX Operations

    Monetary penalty of Rs10 million was imposed mainly on a violation of foreign exchange regulations relating to splitting of the import advance payments into smaller transactions.

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    SBP imposes penalty on four banks for violating AML/KYC

  • HBL declares 51 percent decline in net profit during first quarter

    HBL declares 51 percent decline in net profit during first quarter

    KARACHI: Habib Bank Limited (HBL) on Thursday declared 51 percent decline in net profit during the first half ending June 30, 2019.

    The profit after tax of the bank declined to Rs3.927 billion during first half (January – June 2019) as compared with Rs8.128 billion in the corresponding half of the last year.

    According to half yearly financial results submitted to Pakistan Stock Exchange (PSX), the bank said that its results for the first half 2019 were impacted by two specific market events.

    The further 15 percent depreciation in the value of rupee, which was impacted Rs 6 billion.

    A 9 percent fall in the continuously declining PSX, which was impacted Rs1.9 billion.

    The incremental impact of these, compared to the first half of 2018, is Rs4.8 billion. “Resultantly, reported profit before tax of Rs9.9 billion for first half 2019 is Rs4.2 billion or 30 percent lower than for the same period last year.”

    The bank further said that the retrospective imposition of super tax on 2017 earnings has increased the effective tax rate for the half year to 60 percent.

    Profit after tax for the first half 2019 is therefore Rs3.9 billion compared to Rs 8.1 billion for the first half of 2018.

    Earnings per share for the period under review are at Rs 2.53.

    The bank said that its core domestic business continued to grow steadily. Total deposits increased by 6.8 percent, crossing the Rs. 2.0 trillion mark, with half the growth coming from current accounts.

    The domestic mix of current accounts improved by 66bps to 38.2 percent while the CASA ratio of 85.2 percent was just below December 2018 levels of 85.4 percent.

    Domestic advances increased marginally over December 2018 levels but the strong run-up in 2018 resulted in average advances for the first half 2019 being 25 percent (Rs 180 billion) higher than in the first half of 2018.

    The Consumer business continued its steady growth with average consumer loans increasing by 17 percent over the first half of 2018.

    Overseas deposits and advances both increased in US dollar terms with the impact more pronounced in Rupees.

    HBL’s total deposits thus grew by 7.8 percent over December 2018 to Rs 2.3 trillion with net advances of the Bank up by 5 percent to Rs 1.1 trillion.

    Average domestic deposits, driven by Rs 62 billion growth in average current accounts, increased by around Rs 100 billion.

    The average balance sheet thus increased by Rs 135 billion (6 percent). The net interest margin in the domestic business improved by 59 bps as earning asset yields improved significantly due to re-pricing of loans and rollover of maturing investments at higher rates.

    Domestic net interest income for the first half of 2019 is thus 18 percent higher than for the same period last year.

    With a 14 percent improvement from the international business in Dollar terms, total net interest income for HBL increased by 20 percent, to Rs 47.7 billion.

    Fee income continued to improve, increasing by 16 percent over the first half 2018, to Rs 10.7 billion as international fees were restored to their prior year levels.

    Domestic fee growth of 15 percent was robust, achieved due to strong performances from the card related business, trade fees and investment banking income.

    The sale of previously impaired equities resulted in a realized capital loss of Rs 1.8 billion, but with no overall P&L impact.

    “Excluding this, income from treasury related activities increased to Rs 3.4 billion in the first half of 2019 compared to Rs 2.8 billion in the same period last year,” the bank said.

    Core non mark-up income for the first half of 2019, excluding the revaluation loss on the Bank’s open position and the capital loss described above, increased by 13 percent YoY to Rs 15.8 billion.

    Headline administrative expenses for the first half of 2019 increased by 24 percent to Rs 45.0 billion. This was largely driven by an increase in the ongoing remediation, legal and regulatory costs related to the Bank’s New York branch.

    The substantial impact of Rupee depreciation on international expenses and the incremental cost of HBL’s new office building also contributed to the expense growth.

    Excluding these major items, expenses increased by 11 percent.

    Total provisions for the first half of 2019 are Rs 511 million. Net reversals in the domestic business continue, although they are considerably lower, notwithstanding an improved recovery performance.

  • HBL declares 32 percent decline in net profit for first quarter

    HBL declares 32 percent decline in net profit for first quarter

    KARACHI: Habib Bank Limited (HBL) has announced 32 percent decline in profit after tax to Rs3.177 billion for first quarter of year 2019 as compared with Rs4.68 billion in the same quarter of the last year.

    The earnings per share also declined to Rs2.08 for the period as compared with Rs3.12 in the same quarter of last year.

    Analysts at Arif Habib Limited said that though the profit declined in first quarter as compared with the same quarter of the last year but it grew by 26 percent on quarter on quarter basis (QOQ) despite higher tax rate this quarter.

    Major drivers for earnings this quarter that have contributed to a remarkable 116 percent QoQ increase in PBT include a total gain on foreign exchange income and derivatives compared to a hefty loss last quarter.

    Moreover a net reversal was booked this quarter against a heavy provisioning expense booked last quarter. A dividend of PKR 1.25/share was also announced for the quarter.

    NII of the bank settled at PKR 23.4bn for 1QCY19, rising 19 percent YoY as 63 percent higher interest expense was offset by the 39 percent rise in mark-up income. NII registered an uptick of 12 percent QoQ as well.

    NFI of the bank depicted healthy improvement of 22 percent YoY / 60 percent QoQ. The bank booked a profit on FX income (and derivatives) of a total PKR 637mn compared to a staggering loss of PKR 3bn during 4QCY18 and PKR 478mn during 1QCY18. Moreover, fee income of the bank showed an impressive jump of 18 percent YoY.

    The bank booked a net reversal of PKR 83mn compared to a hefty provisioning expense of PKR 3.2bn during 4QCY18 (owing to impairment charge on the equity book).

    Higher OPEX (+21 percent YoY / 21 percent QoQ) owing to NY remediation/business transformation costs continued for the bank.

    Effective tax rate was set at 62 percent for 1QCY19 vis-à-vis 36 percent SPLY due to additional super tax being booked this quarter on CY17 earnings.