Habib Bank Limited (HBL) has received authorization from the State Bank of Pakistan (SBP) to establish a special subsidiary for increasing capacity in the agriculture sector, according to President and CEO Muhammad Aurangzeb.
Speaking at the launch event of the bank’s Impact and Sustainability Report-2022, Aurangzeb stated that the bank received authorization from the SBP two weeks ago to establish a special subsidiary called “Zarai” (agriculture), which will assist small and medium-sized farmers.
The program provides farmers with many facilities and services including storage space, farming equipment, crop production inputs such as seed and fertilizer, and agronomic support.
The bank would continue to lend for agricultural projects. Zarai will provide non-financial services, while farm finance will be maintained on the HBL balance sheet. Aurangzeb added that because agricultural financing is at the top of the bank’s bucket list, the portfolio reached an all-time high of Rs. 50.6 billion in 2022. HBL has provided approximately Rs. 4 billion to Pakistan’s social uplift over a decade, contributing approximately Rs. 580 million in 2022.
The top bank executive remarked that Pakistan endured issues due to the IMF program over the last six months, but now there are many things that banks can do in terms of sustainable financing since the government has finally received an IMF loan.
Aurangzeb also mentioned a recent green bond his bank helped manage. The Water and Power Development Authority issued its first green 10-year Eurobond for $500 million two years ago, where foreign investors followed the bond’s debut and offered WAPDA investments totaling $3 billion, which was six times the minimum amount.
The issuer’s lead was JP Morgan. Deutsche and Standard Chartered were the co-book runners, with HBL serving as co-manager.
Other green initiatives include Green Taxonomy (GT) which HBL developed on its own. The mechanism will facilitate directing capital flows to green projects. With a 27 percent increase in funding, HBL Foundation has deepened its contribution across key areas of need, ranging from health to education.
Meanwhile, HBL has funded the building of two purpose-built villages, comprising 100 homes each in Qamber Shahdadkot and Larkana in Sindh. The cost of these refabricated villages that are equipped with solar panels is over Rs. 264 million.
By 2030, the bank hopes to have zero coal-related exposure. According to HBL’s Impact and Sustainability Report- 2022, the bank’s funding and support enabled two wind projects and one solar power project to attain commercial operations in 2022, as part of the bank’s focus on renewable energy initiatives.