A Brief About

House Building Finance Corporation

House Building Finance Company Limited

Prepared by:Syed Sayef Hussain

Acting Managing Director

From 1952 to 2006

Since 2007

April 2014

HBFCL is very strict about security of loans. It boasts of unique and comprehensive knowledge of property documentation, revenue records and related matters. In HBFCL, people know their technical job very well.

That’s why we in HBFCL claim that, we are not just a company, rather, we are an invaluable national housing institution!

The strength of HBFCL

Balance Sheets of 1952 and 2013

Particulars 1952 2013

Cash & Banks 0.734 307.465

Loans & Advances -- 9,739.411

Investments 4.150 10,472.535

Other Assets 0.063 1,041.869

Total Assets 4.947 21,561.280

Particulars 1952 2013

Capital & Equity 4.947 2,823.692

Borrowings -- 11,392.300

Other Liabilities -- 7,345.288

Total Liabilities 4.947 21,561.280

1952 2013

(Rupees in million)

Note: In Minimum Capital Requirement (MCR) of Rs.6.0 billion, HBFCL is deficient by about Rs.3.2 billion. HBFCL suggests that, by converting the borrowings (credit lines received from SBP) to capital to the required extent, this deficiency can be easily removed. SBP can, on its own, do this, or can use a vehicle like NBP for this purpose.

VISIONTo be the prime housing finance institution of the country, providing affordable housing solutions to low and middle income groups of population by encouraging new constructions in small and medium housing (SMH) sector.

HBFCL’s Mission and Vision

MISSION

To be a socially responsible and commercially sustainable housing finance institution.

CORE VALUES

• Integrity• Customer focus• Commitment to

excellence & innovation

S/No Particulars No. of Accounts

1. Total no. of accounts opened 461,427

2. Total NPLs to date 40,269

3. Total fraud and forgery cases 1,675

4. Total delinquencies 41,944

5. Ratio of delinquencies (5 over 1) 9.09%

Disbursements & DelinquenciesSince inception to date

NOTE:Under HBFC Act 1952, HBFC was not allowed to write off any Principal amount, hence delinquency has piled up to the extent stated here, giving the NPL ratio in present portfolio as more than 60%, which is unrealistic.

Current portfolio positionOutstanding A/Cs 55,951

Non-performing A/Cs 41,941

NPL ratio on count 74.97%

NPL ratio on rupee 54.00%

History of Disbursements & Recoveries

* Up to March 2014

Since inception

Total disbursements 52.4 billion

Total recoveries 74.6 billion

Net inflow 22.2 billion

Presently outstanding 12.8 billion

Percentage of net inflow 42%

Year-wise detail of disbursements and recoveries:

YearNo. of Accounts

SanctionedDisbursed Amount

Recovered Amount

Up to 2002 416,464 30.79 38.1

2003 5,892 1.5 2.8

2004 7,597 2.5 2.5

2005 5,996 2.2 2.9

2006 5,716 2.3 3.8

2007 6,812 3.4 3.3

2008 6,130 3.9 3.2

2009 716 0.7 3.6

2010 992 0.6 3.4

2011 1,510 1.1 3.3

2012 1,588 1.3 3.2

2013 1,674 1.6 3.7

2014* 340 0.5 0.8Total: 461,427 52.4 74.6

History of Credit Lines• In distant past, HBFC used to issue debentures to raise funds for its business.• Since 1973 till 2002, HBFC was given Credit Lines by SBP on guarantee of

Federal Government for 10 years’ term on profit and loss sharing.• A brief about the credit lines is given below:

• With the approval of the Federal Government and concurrence of the State Bank, HBFCL wants to have debt-equity swap of part of the outstanding dues to meet minimum capital requirements.

Total amount received since 1973 till 2002 35,830.9 million

Total amount repaid to SBP 24,588.6 million

Total markup/profit paid to SBP 10,573.7 million

Principal outstanding as of to date 11,242.3 million

Planned Future Disbursements

Year EndYearly Housing Finance

Cities of attention Number of

accountsAmount

(Rs. in Bn/Yr)

2015 5,980 2.200 50

2016 11,000 4.000 85

2017 17,250 6.000 125

2018 22,500 9.000 150

2019 35,000 12.000 150

2020 40,000 15.000 150

• We are looking for “cash cow” for business growth.• We intend to focus on housing project financing and town development.• We intend to enter into real estate market for generating required funds.• We would like to address tenure mismatch in housing finance, where

lending are for a very long period, whereas fund available in the market are for very short period.

• To cope with this mismatch, SBP and IFC is already working for establishment of mortgage refinance company on the initiative of HBFCL. This needs to be expedited.

• Housing finance specific Prudential Regulations are the need of the day. Presently housing finance, which are backed by invaluable real estate, are being treated and regulated as highly unsecured consumer financing.

Way Forward

Old HBFC

Up to 2006

New HBFCSince 2006

Organizational Structure of HBFCL

R.O.

Z.O

B.O

B.O

Administrative Coverage

Current Planned

HO 1 1

RO 3 3

ZO 10 10

BO 51 51

RPO - 29*

Rep.OH.O.

Z.O

KeyH.O. Head OfficeR.O. Regional OfficeZ.O. Zonal OfficeB.O. Branch OfficeRep. O Representative Office

Z.O

Z.O

Rep.O

B.O

B.O

Rep.O

Rep.ORep.O

*To cater remote areas of the country, SBP’s permission has been sought to open ROs

Options regarding HBFCL

• The Pakistan Government may like to make HBFCL fully effective • The following options have been evaluated (CMHC, Canada):

– Option 1: Restructure and activate HBFCL to the fullest– Option 2: Close HBFCL and start up a new mortgage lender– Option 3: Close HBFCL and rely on existing mortgage lenders to serve

Pakistan

• Recommendation: Restructure and Activate– Offer some of government’s and SBP’s holdings to some strategic investors including National Bank of

Pakistan– Offer some portion to capital to the market, to enhance the worth of Government’s holdings– Accordingly serve the nation and the vote bank

The end