In order to increase its offshore operations and to investment in energy projects, Habib Bank Limited (HBL) has got a loan of $196 million from China Development Bank (CDB). According to the financial report, the bank not only acquired the loan but it has started paying off its installments from December 2017. The basic amount is payable in six installments from December 2017 to June 2020. Moreover, interest payment was also started at LIBOR+2.45%, which is payable semi-annually from last year.
The loan facility by the Chinese bank was a part of the agreement signed with the Pakistani bank. HBL is likely to acquire more loans from the same bank. In 2016, HBL and China Development Bank signed an agreement of $500 million under which medium and long-term foreign currency financing would be provided to the local financial institution.
Under the agreement, the Caribbean Development Bank (CDB) will provide $300 million to Habib Bank Limited for long-term financing of energy projects in Pakistan and $200 million for offshore working capital financing needs.
It will also allow HBL to provide much-needed foreign currency liquidity to finance the development of projects in Pakistan, including those under the China-Pakistan Economic Corridor.
It may be noted that HBL is the only bank in Pakistan having branches in China (Urumqi) and in Gwadar, Pakistan. The bank has been working vigorously in China with plans to influence of maximum opportunities of projects under China Pakistan Economic Corridor (CPEC). HBL was also the first Pakistani bank to offer CNY accounts to its customers in Pakistan.
In spite of the aggressive plans, HBL’s profits dropped by 48 percent in the first half of 2018. The bank, like other modest banks, faced a huge decline in interest income; but, the descending spree of its success was witnessed mainly with the closure of its New York branch and the payment of a huge penalty of $225 million to US authorities.
Recently, HBL also got a loan of $150 million from International Finance Corporation (IFC) to develop its SMEs and agriculture-based portfolios empowering SMEs, women entrepreneurship and rural communities.