HBL’s Aurangzeb Sees Brighter Times for Pakistan Despite Bailout

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Euromoney, October 19 2018

In a country with twin deficits and a 13th bailout in recent memory, one might wonder if former JPMorgan banker Muhammad Aurangzeb regrets becoming Habib Bank CEO – but instead he sees a path to a better outlook for his country.

Aurangzeb left a successful career job at JPMorgan earlier this year to take the reins at Habib Bank (HBL), Pakistan’s biggest lender.

It seems a grim time to take such a role – Pakistan faces twin deficits and has just agreed a tough bailout with the IMF – but he sees reasons to be positive.

Euromoney meets Aurangzeb in Bali early one morning on the sidelines of the IMF annual meeting. It’s an opportune time and place to meet, as the previous day Pakistan met with the IMF to seek its 13th bailout since the 1980s.

Aurangzeb sees the macro position as one of three elements influencing the outlook for banks in Pakistan, the others being technology and the regulatory environment, but the macro is certainly the one in the headlines.

He calls the twin deficit “devilishly structural”.

“On the fiscal side, pretty simply, we need to increase the tax base,” he says. “On the current-account deficit side, remittances have been relatively robust; the issue has been exports not being as strong as one would expect,” partly, he says, as a consequence of the currency peg being set too low.

However, despite that, he says “by and large when rates are going up it is generally good news for the industry”.

At the end of the 2017 financial year, HBL had almost Rp2 trillion in deposits, 86.4% of which was current and savings accounts; while some of that will be repriced, so will the loan book.

“Also, normally when we have volatility in exchange markets, it’s good for the industry if you’re on the right side of it,” says Aurangzeb. “Clients come in for their hedging needs and there is a boost to the treasury side.”

The optimistic view of the bailout, he says, “is that once the country gets into an IMF programme it creates a floor, in terms of bringing a level of certainty”.

Continues. Full article: https://www.euromoney.com/article/b1bg09954pdw1r/hbls-aurangzeb-sees-brighter-times-for-pakistan-despite-bailout?copyrightInfo=true

Chris Wright
Chris Wright
Chris is a journalist specialising in business and financial journalism across Asia, Australia and the Middle East. He is Asia editor for Euromoney magazine and has written for publications including the Financial Times, Institutional Investor, Forbes, Asiamoney, the Australian Financial Review, Discovery Channel Magazine, Qantas: The Australian Way and BRW. He is the author of No More Worlds to Conquer, published by HarperCollins.

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