KARACHI: Silkbank Limited has accorded in-principle approval to Habib Bank Limited (HBL) to conduct due diligence of the consumer portfolio of Silkbank, a bourse filing said.

HBL had approached Silk Bank Limited seeking concurrence to HBL to apply to State Bank of Pakistan (SBP) to proceed with the due diligence of the consumer portfolio of Silkbank.

As Fauji Foundation will not be proceeding with the due diligence process of Silkbank, HBL is exploring the possibility of HBL’s potential acquisition of Silkbank’s consumer portfolio comprising credit cards, running finance and personal installments loans.

To highlight, HBL has the highest advances in the industry at Rs1.2 trillion as of December 2020, translating into an Advances to Deposit Ratio (ADR) of 42 percent.

Meanwhile, Silkbank’s advances stood at Rs105 billion as per its latest available annual accounts (CY19). Silkbank has the highest exposure in real estate and construction of Rs26.1 billion, individuals at Rs23.4 billion and Rs17.7 billion to wholesale and retail sectors.

“The divestment of Silkbank’s portfolio would help HBL to increase its portfolio size and net interest income (NII) expansion,” A.A.H Soomro at Kasb Securities said.

Silkbank Limited, formerly known as Saudi-Pak Commercial Bank, is a Pakistani commercial bank which is based in Karachi, Pakistan. It has a branch network of 123 in 39 cities. https://www.silkbank.com.pk

Habib Bank Limited is a Pakistani multinational bank based in Habib Bank Plaza, Karachi, Pakistan. HBL major shareholding lies with the Aga Khan Fund for Economic Development which is based in Geneva, Switzerland. https://www.hbl.com