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Presentation On Marketing of HBFC Products & Project Financing By: Muhammad Iqba l Shad Chief Manager (Marketing) Marketing Division, Lahore 2

HBFC New Vision & Mission Vision HBFC to be the prime Housing Finance Institution of the country, providing affordable housing solutions to low & middle income group s of population by encouraging new construction in small and Medium Housing (SMH ) sector Mission HBFC to be socially responsible & commercially sustainable housing finance institution 3

Products 4

For Construction or Purchase Ghar Aasan Scheme For Repair & Renovation Shandar Ghar Scheme 5

Strengths of HBFC Corporate HBFC being pioneer Housing Finance Institution of the Country HBFC being a public sector Organization. HBFC having old relationships with the clients. 6

Trust of people on

Strengths of HBFC (Cont.. Brands A Shariah Complaint Scheme Clubbing of Family Income permissible No hid es Constant Life Insurance Coverage to the extent of original amount disburseda unique policy. Free construction period 9/12 months. No repayment of principal d uring moratorium period. No negative profession. No negative area. Every legaliz ed scheme having amenities of life. Fixed rates repayment schedule No pre-paymen t charges Minimum processing fee 7

Steps Taken for Improvement Induction of new professional Managers & Qualified staff. Establishment of franc hise offices. Up-gradation of HBFC offices. Making of HBFC website more informat ive, customer friendly & interactive 8

LIST OF Focal Points Sr. No. 1 2 3 4 5 6 7 Name of Officer Mr. Illyas Hassan Akhtar, Assistant Manager (F&A) Mr. Ather Mehmood Iqbal Manage r (Law) Syed Sabir Ali Assistant Manager Mohammad Ghayas Zonal Manager Mr. Zulfi qar Ali Hakro Assistant Manager (OPS) Rana Muhammad Saleem District Manager Quet ta Mr. Sami Dad Khan Manager (Audit) Zone Lahore Multan Faisalabad Gilgit Sukker Quetta Islamabad 9

LIST OF Focal Points (Cont.. Sr. No. 8 9 10 11 Name of Officer Mr. Sheraz Farooq Assistant Manager Mr. Mehtab Alam Bukhari Assistant Manager (Investment) Mr. Akhtar Hussain Pathan Mr. Rustam Khan Manager Zone Karachi HP Zone Hyderabad Abbotabad 10

Marketing Competition Market segmentation Advertising Campaigns & Promotions Positioning 11

Competition 1952 - 2000 2000 2006 Challenge:very scenario. Virtual Monopoly 25 Competitors (More are entering) From monopolistic situation to a competitive market Strategy:friendly, Think Out of Box, Be Customer and time & cost efficient. 12

Main Competitors Name of Bank / NBFIs ABN AMRO ALFALAH * CITI BANK FAYSAL BANK * HBL NBP MEEZAN BA NK * UNION BANK Markup Floating Fixed 9.5% 15% 9.5% 9% 9.5% 9.5% 9% 9.5% 9% 10% 14% 14% 15% 15% 14% 14% Revisable after 5 years Rate Revisable after 10 years Qu arterly floating 9% For Salaried 10% For Business SPECIAL FEATURE PICIC 9.5% 14% 13 * Represent Islamic Mode of Finance

Market Segmentation LOAN/INVESTMEN T CLASSIFICATION AREAS INVESTMENT Slabs Rs.0.1 to 0.2 million Model villages & Towns MONTHLY INCOME RANGE AGE Micro Rs.3000 to 6000 18 to 55 year Small Rs.0.2 to 1 million Tehsils & Towns Rs. 6,000/- to 30,000/18 to 55 year Lower Medium Upper Medium High Rs.1 to 2.5 Urban Areas Rs. 30,000/- to 75,000 18 to 55 Year Rs2.5 -5 million Big cities / DHQ (FSD, MTN, Pindi etc.) 5 big cities posh Areas (KHI, LHR, ISL, PINDI, Rs. 75,000/- to 150,000/18 to 55 year Rs. 5 7.5 million Rs. 150,000/- to 225,000/18 to 55 year 14

EMPHASIS SMH FINANCING (For Micro Housing Finance a separate company in the name of Social housing comp any is being formed) 15

Advertising Billboards Hoardings Print & Electronic Media Website Seminars & conferences Ex ibitions Brochures 16

Campaigns & Promotions Opening of Representatives offices in small Districts and Tehsils to facilitate the clients & promote sales. Participation in the leading exhibitions on housing & construction industry Low Cost Housing Scheme in Gwadar City LOW Cost Housing Scheme of Taiser Town, Malir Karachi. Low Cost Housing Scheme of Khuda-Ki- Bast i in collaboration with Saiban Lahore. Making arrangements for sponsoring low-co st Housing schemes in other cities HBFC being a pioneer Housing Finance Institut ion in SMH sector is sponsoring Low Cost Hosing Schemes in the country; 17

Customer Retention HBFC provides Investment facility for repair & renovations to all its regular ex isting partners HBFC provides additional Investment Facility to all its existing partners for additional construction on the Income & Guarantee of their blood r elations HBFC existing clients are also eligible for 2nd Investment on closure o f 1st loan availed by them. 18

Positioning HBFC SMH Business Competitors 25 Banks- High net worth clients Posh Localities Focus on Purchase Name Lending

All over Country Construction ( increasing Housing Stocks) 19

Prudent Credit Assessment

Project / Bulk Financing for Housing Sector 20

Eligibility criteria Builders/ Developers should possess valid builder / developer license from Build ing Control Authority, where applicable. Builders/Developers undertaking develop ment of sites or construction of housing project must have at least five years e xperience and good track record in the construction of housing projects / develo pment of sites. Have timely completed development of sites / construction of min imum three housing projects of reasonable size. CIB report in respect of sponsor s of the project i.e. firm as well as its Directors or Partners is positive. Cle ar and marketable title to the land free from all encumbrances, charges and lien s on which the project will be built in case it is offered as an equity of the b uilders/sponsors. No construction shall commence without an approved building pl an or approved layout plan by a competent authority, where applicable. Where HBF C is involved in the purchase of and development of sites with the developers th e land shall be free from all encumbrances and debt equity ratio shall be follow ed as prescribed by HBFC as per rules. Audited Balance Sheet of the company if i t is a Private or Public Limited Company. 21

How to apply The builder will apply to the Managing Director, HBFC Head Office, Karachi on th e prescribed application form of HBFC (Copy enclosed at annex A, through authorize d person of the Company/Builder, with non refundable processing fee as below: 1. If project consisting upto 50 flats/houses only Rs.10,000/2. If project consist ing from 51 flats/houses to 100 flats/houses only Rs. 25,000/3. If project consi sting above 100 flats/houses Rs.50,000/The application shall be supported with the photocopies of the following documen ts. 22

Documents Relating to Company a) Registration certificate of the firm. b) Memorandum and Articles of Associati on/Partnership Deed. c) Detail of Administrative and technical set up (Names, Qu alification & Experience). d) Valid PEC (Pakistan Engineering Council) License a nd relevant experience of the Architects and Engineers engaged for the supervisi on/ construction of the Project. e) Builders License. f) Membership certificate o f ABAD, where applicable g) Any other documents required by HBFC. 23

Documents Relating to Financial Standing a) Last audited balance sheet. a) Income Tax Assessment Order of the firm for th e last two years or acknowledgement/copy of the return submitted by the Builder/ company for the last two years; a) Bankers confidential report on financial credi bility of the firm as well as its Directors / Partners. 24

Title Documents a) b) c) d) e) All documents concerning ownership of land. Concept plan (at the time of submission of application The Builder/Company will submit the approved B uilding Plan before sanction; Permission to Assign (if applicable) Non encumbran ce certificate. f) g) NOC for construction/sale of housing units from the concerned Authority. Any other document (s) relating to title of the Project. 25

Valuation The operation division will get the Project cost valued by at least two approved Valuers of PBA. The cost will be born by the Builder/Company. Legal & Financial Scrutiny After completion of the above formalities, the case file of the Project will be sent to the Legal branch for scrutiny of title to the project (The Legal Branch will clear the case within 7 working days) On receipt of the clearance from the Legal Branch, the file will be sent to the Finance Division Head Office, Karachi for financial scrutiny; (The Finance Division will submit the financial scrutin y report within 7 working days) Once the title is cleared by the legal advisor / legal branch and initial financial scrutiny by the finance division is complete , the case will be submitted to the project committee for examination in the lig ht of the guidelines given in the resolution passed by the Board of Directors in its 4/2003 meeting held on 2807-2003. 26

Preparation of Investment Proposal After receiving recommendation of the Project Committee, the Operation division will prepare a proposal for investment within 7 working days. Audit The case will be forwarded to audit Division of HOK for audit. The audit departm ent will clear the case within 7 working days. Approval of Investment Approval of Investment shall be made by the Project Committee in 15 working days . 27

Issuance of Term Sheet After approval of the project financing, a Term Sheet containing the terms & con ditions on which bridge/bulk financing is approved will be issued to the builder within 15 working days time. Post Approval Formalities The builders will submit contractors All risk Insurance Policy from an insurance company listed on stock exchange. ii. Personal Guarantees of each Director/Partn er. iii. Legal vetting of draft of Murabaha and other Agreements. iv. Completion of formalities, Execution of Agreements regarding equitable or registered mortg age, as the case may be. i. 28

Disbursement Banking arrangements a) The account will be opened with the bank to be nominated by HBFC which will b e operated by HBFC and the builders under the escrow banking arrangement. b) All transactions including disbursement and collection of money on account of booking of flats/housing units and subsequent installments from the allottees a nd withdrawals for the construction of the project under pre agreed terms will b e made through collection account. c) Payment from the allottees on account of b ooking and subsequent installments shall be made through Account Payee cheques o nly which will be deposited in the same bank account. 29

Debt / Equity Ratio The debt / equity ratio for projects financing has been set as 70:30. Rate of Profit The Assets and Liability Committee shall determine the rate of profit for bulk/b ridge finance in general or on case to case basis. Syndication Committee The Project syndicate Committee will comprise of Managing Director one member fr om the Assets and Liability Committee and one member from the Project Committee; 30

Release of fund Release of fund from the disbursement bank account shall be in installments base d on actual construction activity. At each stage of construction, the stage of c onstruction of Project shall be assessed by the recommended Project Monitor from HBFC, before the release of funds from the disbursement bank account. 31

Thank you 32