INTERNSHIP REPORT ON

HABIB BANK LIMITED PAKISTAN

Session

2011-2015

UNIVERSITY OF GUJRAT

DATE OF INTERNSHIP REPORT:

22-07-2013 to 06-09-2013

DEDICATION

Allah Almighty (whose claim (to obedience) cannot be satisfied by those who
attempt to do so)
& His Beloved People.

ACKNOWLEDGEMENT

Thanks to ALLAH Almighty for giving me such a beautiful opportunity and enabling
me to complete my project. Thanks to my loving parents and guardian who help me a
lot at every phase of my life, encouraged me in the days of depression and sacrificed
for my better future.
I am thankful to all of my teachers and my class fellows and friends whom
Cheerfulness and guidance is an asset for me .I am especially thankful to the bank
staff and particularly.

Table of content
Executive Summary

Introduction
Brief history& Overview of the organization
Vision & Mission
Objectives

11
15
16

Organizational structure

19

No. of Employees

20

Work done by Me

21

Product lines

25

Competitors

42

Ratio analysis

43

SWOT Analysis

52

Conclusion & recommendations for improvement

56

Plan of our internship program

58

Training Programme

60

Nature of the organization

74

Annual Financial Statements

77

Bibliography

83

Executive Summary

HBL established operations in Pakistan in 1947 and moved its head office to
Karachi Our first international branch was established in Colombo, Sri Lanka
in 1951 and Habib Bank Plaza was built in 1972 to commemorate the banks 25th
Anniversary. HBL has the largest Corporate Banking portfolio in the country with an
active Investment Banking arm. It encompasses product offerings and services in
Retail Banking and, in recent years, Consumer Banking as well.
Satisfying customers are the only way to stay competitive in today's Market
Place. The balancing act between what customers want and what the HBL can provide
must be optimized in order to maximize HBLs long-term profits.
HBL is expanding its presence in principal international markets including the UK,
UAE, South and Central Asia, Africa and the Far East.
With a domestic market share of over 40%, HBL was nationalized in 1974 and it
continued to dominate the commercial banking sector with a major market share in
inward foreign remittances (55%) and loans to small industries, traders and farmers.
International operations were expanded to include the USA, Singapore, Oman,
Belgium, Seychelles and Maldives and the Netherlands.
HBL is currently rated AA (Long Term) and A-1+ (Short term). HBL is the first
Pakistani bank to raise Tier II Capital from external sources.

Introduction
Habib Bank Ltd is a Banking HBL which is engaged in Commercial &
Retail Banking and related services domestically and overseas. HBL Enjoy
20% of the market Share in Pakistan. Today HBL is truly the bank of the people
Providing its customers convenience and Satisfaction all Over the world. Habib
Bank Plaza, the tallest building in Pakistan, is the proud symbol of HBL leadership
In Pakistans corporate ground. HBL is currently uses rate AA and A1+.
ESTABLISHMENT:
Habib Bank Limited was established by Mr. Ismail
Habib (Late) on August 25, 1942 at Bombay. It was the first
Muslim Bank of the sub-continent. It was Established with a
Paid up capital of Rs. 2.5millon
BRANCHES:
Numbers of branch of HB L 1450.in Pakistan.
Numbers of branch of HBL 55 .in worldwide.
Corporate center 1 Islamic banking.
Registered office:
Habib Bank Limited 4th Floor, Habib Bank Tower
Jinnah Avenue Islamabad, Pakistan.
Phone: 051-2872203 &051-2821183
Fax: 051-2872205

Head office:
Habib Bank Plaza I.I. Chundrigar Road
Karachi 75650 Pakistan.

Phone: 2418000 [50 Lines]

Fax: 021-921751
Auditors:
Taseer Hadi Khalid & co.
(A member firm of KPMG International)
Sh. Sultan Trust Bidg. No. 2
Beaumont Road
Karachi-75530
Pakistan
A.F. Ferguson & Co.
(A member firm of price water house coopers)
State Life Building 1-C
I. I. Chundrigar Road Karachi
Pakistan.

Audit Committee:
Mr. Moez Ahmad Jamal

Chairman

Mr. Sajid Zahid

Member

Mr. Ahmad Jawad

Member

Mr. Salim Amlani

Secretary

Board of Directors:

S u l t a n Al i Al l a n a

Moez Jamal

Chairman

Director

Ah m a d J a w a d

Director

R.Zakir Mehmood

President & CEO

Yas i n M a l i k

Director

Sajid Zahid

Director

Mushtaq Malik

Director

Overview of the Organization

History

The branches of Habib Bank in Pakistan

HBL Plaza in Karachi
Mohammed Ali Jinnah, Pakistan's founding father, realized the importance of
financial intermediation while he was campaigning for the creation of a separate
homeland for the Muslims of India. He persuaded the Habib family to establish a
commercial bank that could serve the Indian Muslim community. His initiative
resulted in the creation of Habib Bank in 1941, with HO in Bombay (now Mumbai),
and fixed capital of 25,000 rupees. The bank played an important role in mobilizing
funds from the Muslim community to finance the All-India Muslim League's
campaign for the establishment of Pakistan. Habib Bank also played an important role
in channeling relief funds to the people hurt in the communal riots and violence that
preceded the departure of the British from India.

After Pakistan was born in 1947, Habib Bank, at the urging of Governor-General
Jinnah, moved its headquarters to Karachi, Pakistan's first capital. This gave Karachi
its first commercial bank of the newly formed Islamic Republic of Pakistan. The
Habib family owned and managed the bank until the Pakistan government
nationalized it on 01 January 1974.

1951 HBL opened the first of 3 branches in Sri Lanka.

1952 HBL established Habib Bank (Overseas).

1956 HBL opened first of 5 branches in Kenya.

1957 or 1958 HBL opened a branch in Aden.

1961 HBL opened the first of what would become 6 branches in the

UK.

1964 HBL opened the first of 4 branches in Mauritius and a branch in

Beirut.

1966 HBL opened the first of 8 branches in the UAE.

1969 HBL opened first of 3 branches and an OBU in Bahrain.

However, HBs branch in Aden is nationalized.

1971 HBL opened an OBU in Singapore and a branch in New York.

1972 HBL opened the first of 11 branches in Oman. HBL constructed

Habib Bank Plaza in Karachi to commemorate the banks 25th
Anniversary.

10

1974 The government of Pakistan nationalized HBL and HBL merged with
Habib Bank (Overseas).

1975 HBL opened a branch in Belgium. HBL also merged with

Standard Bank, a Pakistani bank.

1976 HBL opened a branch in the Seychelles, the first of two branches
in Bangladesh, and a branch in the Maldives.

1979 HBL opened a branch in the Netherlands.

1980 HBL opened a branch in Paris and another in Hong Kong.

1981 HBL established Nigeria Habib Bank with 40% ownership. HBL
also opened a representative office in Teheran.

1982 HBL opened a branch in Khartoum.

1983 HBL opened branch in the Karachi EPZ and a branch in Istanbul.

1984 HBL established Habib American Bank in New York with a

branch each in Manhattan and Queens, and a US International Banking
Facility. HBL also opened a branch in California.

1987 HBL opened in Australia.

1991 The Habib Group established a separate private bank, the Bank
AL Habib, after private banking was re-established in Pakistan. HBL
opened a branch in the Fiji Islands, and took over the Paksistani
branches of failed bank, BCCI.

1992 In Nepal HBL acquired 20% of Himalayan Bank.

1995 HBL established a representative office in Cairo.

1990s HBL established Habib Finance (Australia), and Habib Finance

International Limited, Hong Kong.

2000 HBL established Habib Canadian Bank.

2002 On June 13, 2002 Pakistan's Privatization Commission

announced that the Government of Pakistan had granted the Aga Khan
Fund for Economic Development (AKFED), a subsidiary of the Aga

11

Khan Development Network, rights to 51% of the shareholding in

HBL, against an investment of PKR 22.409 billion (USD 389 million).

HBL's UK operation came close to being shut down due to regulatory

issues with the Financial Services Authority. The issue was resolved by

converting the operations to a subsidiary. Then Habib Bank Limited

and Allied Bank of Pakistan merged their operations (Habib
contributed its 6 branches and Allied its 4), into a new bank, called
Habib-Allied International Bank, in which Habib Bank has a 90.5
percent shareholding,
while Allied Bank has 9.5 percent. Simultaneously with the transfer of
business to the new bank, both allied and Habib Bank close down all
independent operations in the UK.

2003 HBL received permission to open a branch in Afghanistan.

2004 On February 26, the Government of Pakistan handed over

management control of Habib Bank to AKFED. The Board of
Directors was reconstituted to have four AKFED nominees, including
the Chairman and the President/CEO and three Government of
Pakistan nominees

2006 HBL sold the operations that it had established in Fiji in 1991 to
Bank of South Pacific.

12

Vision
Simply the vision of Habib Bank is mass banking. At the time of formation it
changed its motto from class banking to mass banking. Expedite the economic
growth of the country through spreading the banking services to the doorsteps
of mass people so that they get institutional financial help and participate in
the economic activities of the country.

Mission

To be the trendsetter for innovative banking with excellence and

perfection.

To be the best performing bank in the country and the region.

To exceed customer expectations through innovative financial products

& services and establish a strong presence to recognize shareholders'
expectations and optimize there rewards through dedicated workforce.

Keeping ahead of other competitors in productivity and profitability.

To attain budgetary targets fixed in each area of business.

13

Objectives
Like other business organization the core desire of Habib Bank is to
maximize the profit through saving & loaning money to the life of the
common people. The Objectives of the Habib Bank is given below:
I.

Broad Goal:
As a nationalized commercial organization, Habib Bank belongs to the
people. It implies that it stands for meeting the banking needs of the mass
people of the society.

II.

Operating Goal:
In compliance with the very nature of the organization, the objective in
mind the bank aims at excelling quality and diversified services. To fulfill
its mission Habib Bank has its main objectives as followings:

To provide banking services to people.

To earn profit.

Act as a media of exchange.

To contribute to gross domestic product (GDP).

Maintain a satisfactory deposit mix.

To promote and boost up business sector inside the country.

To help to grow entrepreneurship.

Increase loan portfolio diversification and geographical coverage.

To mitigate unemployment problem.

Provide finance specialized services to the export.

To help to boost economic development.

14

To help in development and industrialization of the country

Service Attitudes:

Habib Bank is a service organization. It will live and prosper on the

quality of service it provides. Hence quality of service must be
maintained at all levels.

Banks image with people should be identified on the quality and

diversity of services that the people aspire to receive.

As a dynamic bank it will remain in search of new field of activity in

line with people economic need. Suggestions by customers and other
people shall receive proper attention so as to help identify new activity
or improve upon present activities.

The bank shall maintain healthy competition with other banks aiming
at excelling services in meeting economic needs of the people.

15

R. Zakir Mahmood
President & CEO
Management

Group Executive,
Corporate Banking
Ayaz Ahmed
Group Executive,
Chief Financial Officer
Jamil Iqbal
Group Executive, MISYS

Business Process Re-engineering

Jamil A. Khan
Group Executive,
Global Operations
Faizan Mitha
Group Executive,
Global Treasurer
Mirza Saleem Baig
Group Executive,
Commercial Banking
Kashif Shah
Group Executive,
Investment Banking
Aly Mustansir
Head of Marketing
& Brand Management

16

Organizational Hierarchy chart

Chairman

President

Board of Directors

SEVP International
Operation

SEVP Finance, Audit &

Administration

SEVP Corporate Banking

& Treasury

SEVP Asset Remedial

Management

SEVP Retail Banking &

Information Technology

SEVP Credit Policy

SEVP Corporate Banking, financial

institute & Project finance

17

Number of Employees

HBL Profile:
Ticker:
2011 Sales:
Major Industry:
Sub Industry:
Country:
Employees:

Habib Bank Limited

HBL
73,498,000,000
Financial
Commercial Banks
PAKISTAN
14123

Detailed description of the department I worked

These are those departments where I worked
1. Deposits /Business development.
2. General banking operational work.
3. International banking(Trade).
4. Credit (Financing).

These are detail of their department.

1.

1. General banking operational work

18

As it is the function of the Bank to the money to any place where there is a
Bank. It is the most easiest and safe way to send money to any place. Bank
charges menial amount as a commission for the remittance. Here in the
Habib Bank Limited Dolat Nagar there is also remittance Department.
There are mostly four methods to remit the money. They Are
i.

Demand Draft (DD)

ii.

Mail Transfer (MT)

iii.

Pay Order (PO)

i.

Demand Draft

It is the most commonly method used for remittance of money. It is very

simple, firstly a form is to be filled in which all details are specified that
where and it which branch the draft is to be sent then the money is
depositor which is called draft and money can by drawn after showing to
the bank of the specified branch of the Bank. Only specified person can
draw the money on that draft. Another method to secure the payment of the
draft could be the crossing of the draft, which means that it will only be
deposited in the payee's account.
To make it more secured and safe the Bank has coded the amount
exceeding Rs. 15000. Only the banker or the person known the actual
amount of the draft in return bank gets a commission which is its mode of
earning.
ii.

Mail Transfer (MT)

19

The money is transferred through mail. One Branch of the bank sends
advice to the branch of the same bank to credit the account of payee. In
this type of transfer the payee must has the Bank account. For example,
now days PTV's licenses are made all over the Pakistan. Bank also gets
commission on the mail transfers.
iii.

Pay Order (PO)

Pay order is less expensive method of transfer money. Normally this

method is used to transfer money inside the city. If it is used city wide, it
takes a long time. The bank charge Rs. 10 which is flat fee the pay order
and an excise duty of Rs, 1 per leaf with holding tax of 20% on the sum
is also taken from the party.
Now if the pay order is to be cancelled or duplicate of the pay order is to
be needed is case of misplacement Rs.20 is to be paid.
2. Finance/Advance Department
This department has been working under the supervision of knowledge
experienced & well qualified banker. Mr. Usama who has been serving this
bank for last 7 years.
This department has been playing one of the primary function of the bank
because a bank is the organization that accept deposits & give advances.
Advances department is one of the most sensitive and important
departments of the bank. The major portion of the profit is earned through
this department. The job of this department is to make proposals about the
loans.

20

The Credit Management Division of Head Office directly controls all the
advances. As we known bank is a profit seeking institution. It attracts
surplus balances from the customers at low rate of interest and makes
advances at a

higher rate of interest to the individuals and business firms. Credit

extensions are the most important activity of all financial institutions,
because it is the main source of earning. However, at the same time, it is a
very risky task and the risk cannot be completely eliminated but could be
minimized largely with certain techniques.
Any individual or company, who wants loan from HBL, first of all has to
undergo the filling of a prescribed form, which provides the following
information to the banker.

There are basically two types of loans.

Fund base

Non-fund base
In fund base the cash is involved while in non-fund base cash is not
involved.
These are following types of advances those are given by the bank.

Cash Finance

Running Finance

21

Any individual or HBL, who wants loan from HBL, first of all has to undergo
the filling of a prescribed form, which provides the following information to
the banker.
Name and address of the borrower.
a)

Existing financial position of a borrower at a particular branch.

b)

Accounts details of other banks (if any).

c)

Security against loan.

d)

Exiting financial position of the HBL. (Balance Sheet & Income

Statement).
e)

Signing a promissory note is also a requirement of lending, through

this note borrower promise that he will be responsible to pay the certain
amount of money with interest.

Product Lines
Services / Products Offered by the bank

Car to car

Car Loan

Credit Cards

Deposit Accounts

Bancassurance

Debit Card

Phone Banking

22

Mutual Funds

23

1.

Credit Cards

Welcome to a world of convenience, flexibility and opportunity. The HBL Credit Card
will add simplicity and excitement to your life. Accepted at over 24 million merchants
worldwide, HBL Credit Card makes shopping fun and paying simple. Make the most
out of your shopping experience with your very own HBL Credit Card.

Gold Card

i.

Convenience

ii.

Security

iii.

Affordability

iv.

Cash Advance

v.

Balance Transfer Facility

vi.

Internet shopping

Green Card

24

i.

Convenience

Instead of paying with cash, simply present your HBL Credit Card to the
shopkeeper and pay for anything you want.
Bill Payments
We'll pay your bills on your behalf and charge the amount to your HBL Credit
Card. You can give one-time standing instructions to pay your monthly bills.
Check the amount in your monthly card statement and make the payment with
your regular card payment.
SMS Alerts
For all transactions, an SMS alert will be sent to you on your mobile phone to
confirm that the transactions have been conducted by you. A nominal fee will
be charged for this service.
E-Statements
You can enroll for an e-statement with a simple call. An e-statement with
details of all your transactions will be sent to your specified email address
every month. You wont have to wait for your paper statement any more or
have to worry about storing it.
Statement by Fax
HBL Credit Card also offers the facility of receiving your card statement by
fax. Just give us a call and your last card statement will be faxed to you at the
fax number specified by you

ii.

Security.

25

Your HBL Credit Card ensures your money stays completely secure. You cannot lose
cash if you dont carry it. In the unlikely event that your card is stolen, call us at HBL
Phone Banking and your card will be blocked immediately.
iii.

Affordability

Buy Now, Pay Later

HBL Credit Card gives you the flexibility to buy what you want, when you
want and pay for it later. A credit card statement will be sent to you every
month with details of all your purchases. You will have 21 credit free days to
make the payment from the statement date. Please pay at least 3 days in
advance if you make your payment by cheques to allow enough time for
clearance.
Pay As Much As You Want
You have the freedom to pay the entire outstanding amount on your card
statement or as little as 5% of the outstanding balance in your statement. The
remaining amount will be transferred to next months statement. A nominal
service charge will be applied to the unpaid amount each month.
Lower Rate Every Year
Just make sure all your HBL Credit Card payments are made before the due
date and you will benefit from a reduction in the rate of service charges at the
end of each year.
iv.

Cash Advance

If you require cash urgently, you can go to any specified HBL branch and
withdraw cash at the counter. You can also go to any 1 Link ATM in Pakistan
and
more than 780,000 ATMs and financial institutions worldwide displaying the
Visa/Plus logo. You can withdraw cash up to the available cash advance limit
on your HBL Credit Card. For Cash Advance, nominal service charges will be
applied from the withdrawal date.

26

v.

Balance Transfer Facility

With your HBL Credit Card Balance Transfer Facility, you have the
opportunity to pay off balances you owe to other banks through your HBL
Credit Card at lower service charges.
vi.

Internet shopping

Enjoy a hassle free shopping experience and shop from a choice of online
merchants, all from the comfort of your home. To activate /de-activate the
service please call 111-111-425

2. HBL Car Loan

HBL Car Loan helps you get your preferred car through a simple and hasslefree process, backed by superior service and support. Now you can drive a car
you always wanted.

Car Showroom

Car Navigator

Choice of either a new local/imported car or a reconditioned imported car.

Repayment options ranging unto 7 years.

Upton 85% of financing for the car of your choice.

27

Insurance at all times for complete peace of mind and security.

Round the clock support available through

3.

HBL Phone Banking;

PHONE BANKING

Your bank is just a phone call away. You can now call HBL Phone Banking and save a
trip to the branch. Your query will be resolved in a single telephone call from
anywhere and at anytime.

28

You can place your requests and queries, track the status of your repayment/loan
account and avail other value-added services through HBL Phone Banking.
Eligibility Criteria

Salaried
Individuals

Self-Employed
Business persons/Professionals

Citizenship

Pakistani

Pakistani

Age

22-60 years

22-65 years

Minimum
monthly income

Rs. 20,000

Rs. 25,000

Documentation
Salaried Individuals

Copy of CNIC

2 recent passport size photographs

Latest original salary slip and personal bank statement for last 3 months

Self-Employed Business persons/Professionals

Copy of CNIC

29

2 recent passport size photographs

Bank statement for last 6 months and bank letter confirming details of
account

Proof of business

Home Loan
HBL yet not offered home loan in the future the management of the HBL will
offered Home loan also.

Types of accounts offered by the bank

Term Accounts
HBLs Term Accounts are offered in a variety
of tenure with deposits as low as Rs.10, 000.
HBL Advantage Account
Term
10 year
5 year
3 year

Profit
18%
15%
14%

30

1 Year

12%

Multiple options for tenure and profit payout

Loan facility up to 90% of deposit

Minimum required investment as low as Rs. 25,000

Special Notice Time Deposit

7 days or 30 days (and over) notice

Minimum deposit of Rs. 10,000

Balances less than Rs. 1 million

Balances equal to and greater than Rs. 1 million

Returns range from 0.75% to 4% depending on notice period and amount

Term Deposit Receipts

3 month term deposit

Minimum balance of Rs. 10 million

Returns range from 0.75% to 2.25%

Minimum investment of Rs. 20 million except in the case of 1 month

IPDC

where minimum investment is Rs. 100 million

Available in 1 month, 3 month, 6 month, 12 month and 3 year terms

Profit paid on maturity

Rates on IPD are conveyed on a daily basis by the Treasury Division

31

Remittance Munafa plus Deposit (Certificates)

Available in 1 year, 3 year and 5 year certificates
Profit disbursement is monthly, quarterly, bi-annually, annually and on
maturity
Profit paid on maturity
Returns range from 7.8% to 11%
Current Account
Non-profit bearing
No transaction limits
Minimum balance of Rs. 10,000. If the average balance falls below this
amount, then service charges will be deducted
No restriction on anyone opening a Current Account (as long as
regulatory
guidelines are met)
Basic Banking Account (BBA)
No minimum balance
No service charges
Savings Account

Profit paid bi-annually

32

Minimum average balance of Rs. 10,000

5% profit per annum

HBL Value Account

7% profit per annum*

Profit credited every 3 months

Deposit ranges from Rs. 10,000 to Rs. 100,000

Flexibility of withdrawals

HBL Supervalu Account

7.25% profit per annum*

Profit credited every 3 months

Deposit ranges from Rs. 100,000 to Rs. 500, 00

Flexibility of withdrawals

Remittance Munafa Plus Saving Account

Remittance Based (no credit allowed except remittance)

Daily Basis Product

Tiered

Monthly profit

Minimum average balance of Rs. 10,000

Less than Rs. 20,000 earns 0.10% profit

Rs. 1 million and above earns 5% profit

33

Special Saving Bank Deposit Scheme

Daily Basis Product
Tiered
Monthly profit
Minimum balance of Rs. 20,000
Returns unto 8%

Daily Munafa plus Deposit Account

Daily Basis Product

Tiered

Monthly profit

Minimum balance of Rs. 50,000

Returns unto 8%

FC-SB

Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros)

and GBP (UK pound)

Tiered product, with rates depending on choice of currency

To earn profit, minimum balance in USD, EUR and GBP is 1,000

Interest is payable on a quarterly basis

34

HYFFD (High Yield Foreign Currency Fixed Deposit)

Available in 1 month, 2 month, 3 month, 6 month and 12 Month in USD,

EUR and GBP

Tiered product, with rates depending on choice of currency and term

Profit paid on maturity only. No interim interest is payable.

Tabeer Children Education:

35

An insurance plan that enables parents to cover education and marriage costs.

DEBIT CARD

HBL Visa Debit Card allows you to pay for your purchases directly from your bank
account. You dont have to carry cash and your monthly statement provides you with
a complete record of all your transactions so you can manage your expenses with
ease.

No Interest

Ease & Security

No Liability

International Recognition& Acceptability

Spending Limits

Free Account Statement

24 hour Customer Service

Global Customer Assistance Service

36

HBL has a long history of being a partner of growth for business and industry. We
provide tailored banking solutions to business customers of all sizes in a wide range
of industries.
We cater to the needs of a broad spectrum of clients. To do this, the business banking
group is segregated by the size of the customer. For customers with an annual
turnover between PKR 50 million to PKR 300 million, our Commercial Banking
group provides a wide range of products that meet specific customer needs.
The Corporate Banking Group focuses on personalized services to large corporate
borrowers who need tailored facilities. The Corporate Bank manages a diverse
portfolio, being an active player in a multitude of sectors including textiles, sugar,
leather, pharmaceuticals, fertilizer, petrochemicals, power, aviation, automotive,
telecom, oil and gas and FMCGs.
The Investment Banking Group is a market leader. It provides innovative capital
strategy solutions to major local and multinational entities.
HBL offers a wide range of products and services for its business customers. They are
as follows:

37

Competitors
Local Private Banks in Pakistan

Allied Bank of Pakistan Limited

Arif Habib Rupali Bank Limited

Askari Commercial Bank Limited

Bank Al Habib

Bank Al Falah Limited

Faysal Bank Limited

MCB Bank

United Bank Limited

38

RATIO ANALYSIS

Ratio Analysis is an important and age-old technique of financial analysis. Ratios are
important and helpful in the reference that:

These simplify the comprehension of financial statement and tell the

whole story of changes in the financial conditions of the business.

39

These provide data for inter-firm comparison. The ratios highlight the
factors associated with successful and unsuccessful firms, also reveal
strong and weak firms.

These help in planning and forecasting, these can assist management in

its basic functions of forecasting, planning, coordination and control.

These help in investment decision in case of investor and lending

decision in case of Bankers etc.

However, the ratios are only indicators, they cannot be taken as final regarding
good and bad financial position of the business other things have also to be seen.

1. RETURN ON EQUITY
Dividing profit after taxation by shareholders equity. ROE compares net profit
after taxes to the Shareholders Equity.
This ratio is calculated as:

ROE=Profit after taxes/Shareholders Equity

40

2012

29.42%

2011

33.61%

2. RETURN ON ASSETS:
This ratio shows the efficiency of organization that how efficiently utilizes their
assets. This ratio relates profits to assets.
It is calculated as:
Profit after Tax/Total Assets

2012

3.60%

2011

4.60%

3. EARNING PER SHARE:

N.P.A.T

No. Of outstanding shares

2012

24.47%

2011

24.30 %

41

4. RETURN ON DEPOSIT:
N.P.A.T * 100 Total Deposit
2012

4.65 %

2011

5.22 %

1.

CASH/DEPOSIT RATIO:

This ration is obtained by dividing cash by current liabilities / liabilities.

This ratio shows that the cash is enough for payment of current liabilities or not.
It is calculated as cash Ratio=Cash/current liabilities
Or
=Cash/Total Deposit

2012

= 11.99 %

2011

= 13.58 %

6. INTEREST INCOME/TOTAL INCOME RATIO:

Interest Income

Total Income

2012

87.36 %

2011

83.13 %

42

7. NET PROFIT MARGIN:

This ratio measure the firms profitability of sales/ interest earned after taking
account of all expenses and income taxes.
This ratio can be calculated as:
Net profit margin ration= Net Profit after taxes / interest earned *100

2012

33.54%

2011

39.92 %

8. AVERAGE PROFIT PER BRANCH:

Profit Net

No. Of Branches

2012

Rs. 14,984,990.25

2011

Rs. 14,878,715.4

9. OPERATING EXPENSE RATIO:

Non markup expense

Gross income

2012

27.72 %

2011

21.96 %

43

10. TOTAL ASSET TURNOVER:

Interest/markup earned*100

Total asset

2012

9.02 %

2011

7.74 %

11. RISK ASSETS TURNOVER:

Net interest income after provision

Risk assets

2012

65.98 %

2011

68.11%

12. ADVANCES TO TOTAL DEPOSITS:

This ratio show that how much efficiently the bank advances the deposits of
their customer to borrower.
It is calculated as.
Advances deposit ratio = Advances/ deposit

2012

79.48 %

2011

74.96 %

44

13. DUE FROM BANK TO DUE FROM BANK:

Landing to financial institution* 100

Borrowing

from

financial

institution

2012

18.09 %

2011

2.66 %

Organization analysis in comparison with its industry (or with its

competitors)
Competitive advantage spells out the uniqueness' of the organization vis--vis
its competitors. so the HBL also have uniqueness in its dealing with customers
and also have uniqueness in his strategy with other their competitors. Business
analysis is imperative for the organization to ascertain the mood and the
conditions for starting or consolidating a business venture. Business strategy
analysis involves analysis of the organizational strategy to create a sustainable
competitive advantage
primary objective of competitor analysis is to understand and predict the rivalry,
or interactive market behavior, between firms in their quest for a competitive
position in an industry. Therefore the HBL also always analyze their competitors
Banks

Toward this end, researchers have examined factors that influence

competitive and patterns of entry into and exit from rivals' markets However,
researchers have made limited effort to investigate the prebattle competitive
relationship between rivals and the extent to which it may predict rivalrous
behavior in the market. This omission is due partly to the restricted conceptual
treatment of competitor analysis, which has not fully incorporated the essential
antecedents that affect a firm's competitive activity, let alone considered them in
an

integrated

way.

45

Intensity of rivalry, one of Porter's (1980) well-known five forces driving

competition, has remained mainly a theoretical construct confined to the
industry level. In terms of analyzing firms competing in an industry, the
strategic-group far the most popular and relevant. However, researchers who use
this approach have largely ignored the market context in which competitors
carry on their battles and the extent to which two firms actually compete directly
against each other. Although the marketing literature recognizes the importance
of the market context, its contribution has been primarily in analyzing
competitors and competition at the brand or individual-market level rather than
at the firm level. Other approaches usually represent a high degree of abstraction
and rely primarily on managers' or researchers' subjective perceptions, which
often are too remote to be linked to competitive behaviors in the market Thus
far, some of the most fundamental questions in competitor analysis have
remained unexplored 1985). For example, how can researchers studying
competition differentiate among players in an industry to explain each player's
market behaviors? How can a firm, before launching an attack, assess its
prebattle relationship with a given rival and the resultant likelihood that this
rival would retaliate? How can a firm gauge which opponent is most likely to
attack its markets? How can strategists differentiate among a set of competitors
to allow the firm to allocate appropriate resources and attention to each? Finally,
although the importance of competitor analysis and interfirm rivalry is well
recognized, there has been no systematic attempt to integrate the two topics.
This article seeks to provide a conceptual link by proposing two firm-specific,
theory-based constructs: the market commonality and the resource similarity
between a given pair of competitors. Taking the firm as the basis for analysis, I
argue that each firm has a unique market profile and resource endowment and
that a comparison with a given competitor along these two dimensions will help
to illuminate the competitive relationship between them and to predict how they
may

46

attack (or respond to) each other in the market. This firm-specific
conceptualization also leads to the idea of competitive asymmetry, the notion
that a given pair of firms may not pose an equal threat to each other. I first offer
a number of propositions that use market commonality and resource similarity
to predict competitive attack and response. I also propose measures to assess
market commonality and resource similarity along with a demonstration of how
such measures could be implemented. The article ends with a number of
implications for research and practice.

Future prospects of the organization.

The structure of the Banking markets has changed radically over the last decade while
in contrast the futures markets more or less maintained the status quo. But now the
futures markets are in catch-up mode as evidenced by the emergence of some dark
pools and, Banking firms are beefing up their technology to take advantage of what is
coming down the pike. For the future aspects the HBL should be make itself active
and also efficient and effective in the banking field and get the competitive advantage.
That when occur truly when the HBL produce new products and services to their
customers. The HBL should also introduce the new technologies in the Banking field
before their competitors and provide the facilities to their customers and get the
customer's loyalty . The HBL should also provide the better service than their
competitors and also should give the full response in the any branch.
The HBL also should improve their computerized system in the bank and the bank in
the future also want to trained their employees in any technology and also will
provide the new technology that facilitate the customers of the HBL

SWOT analysis of organization in the business sector

47

HBL is considered to be a very sound bank in the financial circles. The bank
where the customers can safely keep their money as long as they want. In
SWOT analysis the best strategies accomplish in organizations mission by:
1.Exploiting opportunities and strengths.2.Neutralizing its threats and3.Avoiding
its weaknesses. Following is a list of SWOT of HBL
Strengths

A skill or capability that enables HBL to conceive and implement its

strategies.

The officers of HBL are considered as one of the most able professionals

in the banking world.

I observed that HBL employees interact with their clients as if they are

their personal friends and discuss about their problems as their own.

HBL has got a reliable and easy to use internal computer system. Every

information regarding the transactions in customers deposits has been

computerized.

HBL maintained its data properly.

HBL has very good security system.

HBL is the larger commercial bank in Pakistan with the network of over

1439 domestic and international branches.

Being the pioneer of banking in Pakistan, HBL is the oldest and is the

richest in experience.

HBL focuses on consumer banking by lucrative schemes, products and

services suiting best to the wants and demands of the customers.

HBL has opened all its branches at commercial areas so that the customers

or clients face no problems in reaching to the bank.

48

The band is always on the look to improve its services both to the domestic

as well as overseas customers.

Human resources development and introduction of new technology

towards modern banking.

24 hours cash access and safe payment products for high value transaction.

Having potential to encounter the competitive environment in the market.

Veteran and experience private management group also involved in other

interests like, textile and cement industry.

Customer enjoys the services at the residential localities.

Weaknesses

Highest number of branches effecting the proper maintenance and

difficulty in providing same working environment at the each branch

Poorer system of recovery of the system is a threat to bankruptcy.

Lack of customer feed back.

Low job satisfaction.

Poor ATMs Service

Inconsistency in efficiency and working atmosphere due to the largest of

branches.

Sense of insecurity in the employees serving at low profitable branches

due to the down sizing.

Females feel uneasy in an environment among the male workers.

Victim of political, legal and socio-cultural pressures

.Lack of professionalism in the branch employees mostly.

Opportunities

Huge untapped market potential in consumer banking

49

In opportunity exist, in form of opening of ladies banking section within

the branch which is entirely a new idea and it will attract customer.

Opportunity for developing value added services combined with corporate

banking relationships, cash management services to large and medium sized

corporate clients.

Growing policies of government on business and commerce sector provide

HBL opportunities to take advantages of these policies to meet efficiently with

the business people to solve their problems with the instant cash and financing
facilities.

Govt. is taking very bold steps to promote IT in Pakistan. HBL has an

opportunity to improve in technology.

Large international network which principally focuses on trade finance

with Pakistan can be utilized to tap trade activities in other markets. In addition,
services such as cross border / offshore financing for corporate customers can be
enhanced.

Customer feedback on different products and accounts has really improved

the bank performance and encourage the atmosphere for other future policies.

HBL also has an opportunity to expand its new technological advancement

like; tele banking and internet banking facilities in order to serve the customer
more efficiently, specially

E-banking facility is also a new opportunity which is a flourishing

business in foreign countries and can also be here, if HBL takes the initiatives.

Further reduction in intermediation costs possible, with improving

technology.

Due to efficient and veteran management group, HBL can also improve Ill

and expand its foreign operation successfully.

50

Habib Bank Limited provides opportunity to utilize its skills and

efficiencies in leasing business.

Threats

An area in the environment that increases the difficulties the organizations

achieving high performance.

Consolidation in the banking sector resulting in increased competition.

Shortage of trained and specialized staff at lower executive and officer

levels

The threat of inconsistency and government policy regarding to business

and economics sectors, specially political and regional situation which makes
the environment uncertain.

Growing global technological advancement.

Strict regulation by government over credit facilities to the customers as Ill

as to meet the prudential.

Loss of confidence of overseas customers due to freezing of accounts.

Facing more competition by foreign banks in the market.

Foreign banks are flourishing in field of consumer financing.

Also the increasing operation of private banks.

Highly attractive and advance services by foreign banks to their customers.

Conclusion & recommendations for improvement

Recommendation I Propose
1)

I will give following suggestions for the better function of the Bank:

2)

The management should provide better arrangement for the

employees.

51

3)

The daily newspapers and journals should be provided to the

employees and customers visiting there.

4)

A separate hajj applications acceptance counter should be provided to

overcome inconveniences faced by the customers.

5)

A separate ladies counter should be there

6)

The Bank management should be very careful while granting the

loans.
7)

Personal interests should not be given importance and customers

8)

Personal credit worthiness must be carefully scrutinized public

relation desk should be established in each and every branch for guidance as
well as redresses of grievance of customers at the spot.
9)

Online Banking should be introduced in all the branches.

10)

Aggressive publicity campaign must be introduced through press and

Electronic media for new products and scheme by initiating vigorous

marketing policy.
11)

New talent / professionals should be hired to coupe with the

competitive demand in the industry.

12)

Information technology should be introduce in all the branches to

enhance the efficiently.

13)

The commission on government rashed enhanced / made rational to

increase the Banks profitability.

14)

The financial statement should be made more transparent and

reliable.
15)

Consumer financing should be initiated to capture the market share.

16)

Employees induction, promotion and transfer should always be made

on merit.

52

17)

To motivate the employees their remuneration / salaries should be

made at par with top tier Banks.

Plan of Our internship program

A brief introduction of the branch
Habib Bank Limited main Dolat Nagar branch is the center of the employee of
different organizations, cotton, grain business and farmers. According to its location
majority of its accounts holders are businessmen and employees of different
organizations and as well as it has huge accounts of the farmers those are the brokers
of wheat and cotton. This Branch work under the very experienced Manager Mr.
Mazhar Iqbal. He is very talented and hardworking person he tries to make hard to
improve the progress of the branch by leaps and bunds. He manage his employees
very efficiently also motivated them according to his work and encourage them. The
employees of this branch are also well experienced. Every employee of the branch
guide the customers properly. As the working of the branch is organized so different
are made in order to make the working easier and error free. Every person of the
branch done his duty beautifully.

53

Starting and Ending dates of Internship

I start my internship at HBL from 22-07-2013 to 06-09-2013. I completed six weeks
in the HBL and in these six weeks I get great experience from different departments
of the HBL.

The departments in which I got training and the duration

of training
These are departments where I get training
1. Deposits /Business development.
2. General banking operational work.
3. International banking(Trade).

54

4. Credit (Financing).

Training program
Introduction of all the departments
There are some Names of the departments
1. Account Department
2. Remittance Department
3. Utility bills
4. CD In charge Department
5. Finance department
6. Cash Department
7. Agri -Finance Department
Principles of Advances
There are five principles, which must be duly observed while advancing
money to the borrowers.
Safety
Liquidity
Dispersal
Remuneration
Suitability

55

a.

Safety

Bankers funds comprise mainly of money borrowed from numerous

customers on various accounts such as Current Account, Savings Bank
Account, Call Deposit Account, Special Notice Account and Fixed Deposit
Account. It indicates that whatever money the banker holds is that of his
customers who have entrusted the banker with it only because they have full
confidence in the expert handling of money by their banker. Therefore, the
banker must be very careful and ensure that his depositors money is advanced
to safe hands where the risk of loss does not exist. The elements of character,
capacity and capital can help a banker in arriving at a conclusion regarding the
safety of advances allowed by him.

b.

Character

It is the most important factor in determining the safety of advance, for there is
no substitute for character. A borrowers character can indicate his intention to
repay the advance since his honesty and integrity is of primary importance. If
the past record of the borrower shows that his integrity has been questionable,
the banker should avoid him, especially when the securities offered by him are
inadequate in covering the full amount of advance.
It is obligation on the banker to ensure that his borrower is a person of
character and has capacity enough to repay the money borrowed including the
interest thereon.

56

c.

Capacity

This is the management ability factor, which tells how successful a business
has been in the past and what the future possibilities are. A businessman may
not have vast financial resources, but with sound management abilities,
including the insight into a specific business, he may make his business very
profitable. On the other hand if a person has no insight into the particular
business for which he wants to borrow funds from the banker, there are more
chances of loss to the banker.
d.

Capital

This is the monetary base because the money invested by the proprietors
represents their faith in the business and its future. The role of commercial
banks is to provide short-term capital for commerce and industry, yet some
borrowers would insist that their bankers provide most of the capital required.
This makes the banker a partner. As such the banker must consider whether the
amount requested for is reasonable to the borrowers own resources or
investment.
e.

Liquidity

Liquidity means the possibilities of recovering the advances in emergency,

because all the money borrowed by the customer is repayable in lump sum on
demand. Generally the borrowers repay their loans steadily, and the funds thus
released can be used to allow fresh loans to other borrowers. Nevertheless, the
banker must ensure that the money he is lending is not blocked for an undue

57

long time, and that the borrowers are in such a financial position as to pay
back the entire amount outstanding against them on a short notice. In such a
situation, it is very important for a banker to study his borrowers assets to
liquidity, because he would prefer to lend only for a short period in order to
meet the shortfalls in the

wording capital. If the borrower asks for an advance for the purchase of fixed
assets the banker should refuse because it shall not be possible for him to
repay when the banker wants his customer to repay the amount. Hence, the
baker must adhere to the consideration of the principles of liquidity very
careful.
f.

Dispersal

The dispersal of the amount of advance should be broadly based so that large
number of borrowing customer may benefit from the bankers funds. The
banker must ensure that his funds are not invested in specific sectors like
textile industry, heavy engineering or agriculture. He must see that from his
available funds he advances them to a wide range of sector like commerce,
industry, farming, agriculture, small business, housing projects and various
other financial concerns in order of priorities.
Dispersal of advances is very necessary from the point of security as well,
because it reduces the risk of recovery when something goes wrong in one
particular sector or in one field.
g.

Remuneration

A major portion of the bankers earnings comes form the interest charged on
the money borrowed by the customers. The banker needs sufficient earnings
to meet the following:
a)

Interest payable to the money deposited with him.

58

b)

Salaries and fringe benefits payable to the staff members.

c)

Overhead expense and depreciation and maintenance of the fixed

assets of the bank.

d)

An adequate sum to meet possible losses.

e)

Provisions for a reserve fund to meet unforeseen contingencies.

f)

Payment of dividends to the shareholders.

h.

Suitability

The word suitability is not to be taken in its usual literary sense but in the
broader sense of purport. It means that advance should be allowed not only
to the carefully selected and suitable borrowers but also in keeping with the
overall national development plans chalked out by the authorities concerned.
Before accommodating a borrower the banker should ensure that the lending
is for a purpose in conformity with the current national credit policy laid
down by the central bank of the country.

Cash Finance
Cash finance is the biggest loan given to the businessmen, industrialists.
After the proper investigation and documentation these finances are given
and genuine property is pledged as a matter of security. These loans are
taken for the purchase of stocks etc. the bank appoints its staff of two or
three persons at the place where that stock is lying. This is a very common
form of borrowing by commercial and industrial concerns and is made
available either against pledge or hypothecation of goods, produce or
merchandise. In cash finance a borrower is allowed to borrow money from

59

the banker up to a certain limit, either at once or as and when required. The
borrower prefers this form of lending due to the facility of paying
markup/services charges only on the amount he actually

utilizes. If the borrower does not utilize the full limit, the banker has to lose
return on the un-utilized amount. In order to offset this loss, the banker may
provide for a suitable clause in the cash finance agreement, according to
which the borrower has to pay markup/service charges on at least on self or
one quarter of the amount of cash finance limit allowed to him even when he
does not utilize that amount.

Bank also keeps three records of the stock and current position. a notice is
also written at the place that the stock are pledged with the bank To get
these types of loan prior permission from the zonal office of the HBL is
also required the bank gets back its principal amount and also markup for
the loan. The rate of markup is Rs. 0.521/1000 per day.
Document Required For the Loan
1. Demand Promissory Note DP Note
This document is filled in by the party that promises to pay the amount
whenever it is demanded.
2. Facility Letter
This is the requisition of the finance facilities to the bank by the party.
3. Balance Confirmation
After the approval of loan this letter is written by the party that such
amount is in the account of the party.

60

4. Letter of Pledge (IB26)

For the getting of the cash finance a letter of pledge is to be given to the
bank that such property is to be pledged with the bank as a security.
5. Letter of Guarantees (IB 29)
A letter for the personal guarantees is also required, in which the guarantee
from a sound person to the party is attached with the application.
6. Agreement for Financing (IB 6)
This agreement for the short term medium term/long term on the markup
basis. At most these are the documents required in attaining of the loan.
Running Finance
When a customer borrows from a banker a fixed amount repayable either
in periodic installments or in lump sum at a fixed future time, it is called a
loan. When bankers allow loans to their customers against collateral
securities they are called secured loans and when no collateral security is
taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for
the period agreed upon, and the borrowing customer has to pay interest on
the entire amount. Thus the borrower gets a fixed amount of money for his
use, while the banker feels satisfied in lending money in fixed amounts for
definite short periods against a satisfactory security.
This is the most common form of bank lending. When a borrower requires
temporary accommodation his banker allows withdrawals on his account
in excess of the balance which the borrowing customer has in credit, and

61

an overdraft thus occurs. This accommodation is generally allowed against

collateral securities. When it is against collateral securities it is called

Secured Overdraft and when the borrowing customer cannot offer any
collateral security except his personal security, the accommodation is
called a Clean Overdraft. The borrowing customer is in an advantageous
position in an overdraft, because he has to pay service charges only on the
balance outstanding against him. The main difference between a cash
finance and overdraft lies in the fact that cash finance is a bank finance
used for long term by commercial and industrial concern on regular basis,
while an overdraft is a temporary accommodation occasionally resorted to.

Demand Financing/Loans
When a customer borrows from a banker a fixed amount repayable either
in periodic installments or in lump sum at a fixed future time, it is called a
loan. When bankers allow loans to their customers against collateral
securities they are called secured loans and when no collateral security is
taken they are called clean loans.
The amount of loan is placed at the borrowers disposal in lump sum for
the period agreed upon, and the borrowing customer has to pay interest on
the entire amount. Thus the borrower gets a fixed amount of money for his
use, while the banker feels satisfied in lending money in fixed amounts for
definite short periods against a satisfactory security

3. ACCOUNT DEPOSIT DEPARTMENT: It controls the following activities:

62

a)

A/C opening.

b)

Issuance of cheque book.

a)

Current a/c

b)

Saving a/c

c)

Cheque cancellation

d)

Cash

Account Opening
The opening of an account is the establishment of banker customer
relationship. Before a banker opens a new account, the banker should
determine the prospective customers integrity, respectability, occupation
and the nature of business by the introductory references given at the time of
account opening. Preliminary investigation is necessary because of the
following reasons.
i.

Avoiding frauds

ii.

Safe guard against unintended over draft.

iii.

Negligence.

iv.

Inquiries about clients.

There are certain formalities, which are to be observed for opening an

account with a bank.

Formal Application

63

Introduction

Specimen Signature

Minimum Initial Deposit

Operating the Account

2.

Pay-In-Slip Book

3.

Pass Book

4.

Issuing Cheque Book

a) Qualification of Customer
The relation of the banker and the customer is purely a contractual one,
however, he must have the following basic qualifications.

He must be of the age of majority.

He must be of sound mind.

Law must not disqualify him.

The agreement should be made for lawful object, which create legal

relationship

Not expressly declared void.

b) Types of Accounts
Following are the main types of accounts

64

1)

Individual Account

2)

Joint Account

3)

Accounts of Special Types

Partnership account

Joint stock HBL account

Accounts of clubs, societies and associations

Agents account

Trust account

Executors and administrators accounts

Pak rupee non-resident accounts

Foreign currency accounts1

Issuing of cheque book:

This department issue cheque books to account holders.
Requirements for issuing cheque book
a) The account holder must sign the requisition slip
b) Entry should be made in the cheque book issuing book
c) three rupees per cheque should be recovered from a/c holder if not then
debit his/her account.
Current account

65

These are payable to the customer whenever they are demanded. When a
banker accepts a demand deposit, he incurs the obligation of paying all
cheques etc. drawn against him to the extent of the balance in the account.
Because of their nature, these deposits are treated as current liabilities by the
banks. Bankers in Pakistan do not allow any profit on these deposits, and
customers are required to maintain a minimum balance, failing which
incidental charges are deducted from such accounts. This is because the
depositors may withdraw Current Account at any time, and as such the bank is
not entirely free to employ such deposits.

Until a few decades back, the proportion of Current Deposits in relation to

Fixed Deposits was very small. In recent years, however, the position has
changed remarkably. Now, the Current Deposits have become more important;
but still the proportion of Current Deposits and Fixed Deposits varies from
bank to bank, branch to branch, and from time to time.

Saving account
Savings Deposits account can be opened with very small amount of money,
and the depositor is issued a cheque book for withdrawals. Profit is paid at a
flexible rate calculated on six-month basis under the Interest-Free Banking
System. There is no restriction on the withdrawals from the deposit accounts
but the amount of money withdrawn is deleted from the amount to be taken for
calculation of products for assessment of profit to be paid to the account
holder. It discourages unnecessary withdrawals from the deposits.
In order to popularize this scheme the State Bank of Pakistan has allowed the
Savings Scheme for school and college students and industrial labor also. The
purpose of these accounts is to inculcate the habit of savings in the

66

constituents. As such, the initial deposit required for opening these accounts is
very nominal.
Cheque cancellation:
This department can cancel a cheque on the basis of;
a)

Post dated cheque

b)

Stale cheque

c)

Warn out cheque

d)

Wrong sign etc

Cash
This department also deals with cash. Payment of cheques, deposits of
cheques etc.

5.

Agri Finance Department

At HBL Agri Finance we understand the peaks and troughs of farming. Thats
why we have designed our lease, loan and hire-purchase agreements to match
your income situation. On an arable or dairy farm, for example, cash flow is
tight early in the year when you are buying stock and feed. You may have a
surplus at harvest time or when you receive the single farm payment.

67

We simply arrange to take high repayments when cash flow is good and lower
ones at quieter periods. If necessary, you can even hold off payments during
periods when your income is under pressure.
Flexible loan
Our lease, loan and hire-purchase agreements do not just apply to farms. We
also help finance equipment used by local authorities, landscape gardeners and
sports clubs in caring for grounds. Unlike buying equipment outright, this
allows you to spread your payments over several yearly budgets. If club
membership is an issue, it means you can spread costs fairly between present
and future members. For more information, contact your local HBL Agri
Finance
Area sales executive

Nature of the organization

Accepting Deposits
The primary function of HBL is to accept and receive surplus money from the
people, which they willingly deposit with the Bank. Like all other Banks, HBL
also take incitation to attract as much depositors as it can. They offer different
deposit schemes to its customers, which includes the following types. These
schemes as follow.
Current Deposits

68

This type of account is often maintained by the business

Current deposits are those deposits on which Bank offers no interest but it allows
the account holders to withdraw their money at any time they want without giving
any prior notice to the community, which requires large sums of money very often
for their business transaction.
Profit and loss sharing account (Saving)
Saving deposits or PLS is those accounts on which Bank offers a lower rate of
interest. After the Islamization of the Banking system in the country it has been
given the name of PLS saving account. The Bank undertakes to repay deposits on
demand up to a certain amount.

Fixed deposits
Fixed deposits are those which can be withdrawn only after the maturity period. In
this type of deposits the Bank allows high rates of interest depending on the time
period of deposits. The shorter the period of deposits, the less will be the interest and
vice versa.
Making Loans and advances
The second most important function of HBL is to provide financing facility to its
customers. These loans and advances are usually made against document of title to
goods, marketable securities, and personal securities. HBL charges different interest

69

rates on these loans and advances depending on the terms and conditions settled with
the customers. Following types of loans and advances are made available to the
customers.
Demand Finances
Demand finances are those finances which are given to the borrowers for specified
period and can be called back without any prior notice. It is a single transaction
finance. It can be long term, medium term and short term. Mark up is also charge.
Here the amount can be withdrawn once at the time of disbursement.
Running Finance
HBL provides these finances against the security of current assets like shares, bond,
cash crops like cotton and other cashable commodities. The borrowers account is
opened with the Bank with the amount of the total loan provided or allowed to the
borrower. The borrower is allowed to withdraw any amount from his account within
the specified limit and interest is charged only on the amount actually withdrawn.

Over Draft
This type of facility is usually given to very loyal clients. This allows them to
withdraw over and above the amount held by them in their account, and interest is
charged only on the amount, which is withdrawn in excess of the amount actually
held in their account.
Discounting bills of exchange
Discounting bills of exchange can also be considered as a form of loan because it
allows the holder to get the bill encased before the maturity period. A bill of exchange
is usually issued by the importer of goods to the exporters, which allows them to be
paid in their own currency after three months time. If the exporter needs the money

70

before the maturity of the bill of exchange, he can get his money from the Bank by
discounting the bill of exchange. The Bank utilizes their surplus funds by discounting
the bills of exchange at their market worth i.e. Bank pay to the holders of the bill on
amount equal to their face value after deducting interest at the current rate for the
maturity period of the bill. Our stated objective of being a premier emerging market
bank.

Annual Financial Statements

Balance Sheet
As at December 31, 2012

2010

2011

2012
Ru
pee's in 000

cash and balances with treasury banks

32465976

39683883

39631172

71

balances with other banks

lendings to financial institutions
investment-net
advances-net
operating fixed assets
deferred tax assets-net
other assets-net

6577017
21081800
63486316
198239155
9054156
172373
11031450

3807519
1051372
113089261
218960598
16024123
0
17868761

4043100
4100079
96256874
262510470
17263733
0
19810476

342108243 410485517 443615904

Liabilities
Bills payable
Borrowings
deposits and other accounts
sub-ordinate loan
liabilities against assets subject to finance lease
deferred tax liabilities-net
other liabilities

7089679
23943476
257461838
1597440
0
0
11171496

10479058
39406831
292098066
479232
0
1180162
11722493

10551468
22663840
330274155
0
0
437137
21253250

301263929 355365842 385179850

Net assets

40844314

55119675

58436054

5463276
24662426
5530973
35656675
5187639
40844314

6282768
34000638
5130750
45414156
9705519
55119675

6282768
36768765
9193332
52244865
6191189
58436054

Represented by:
Share capital
Reserves
Unappropraited profit
Surplus on revaluation pf assets-net of tax

Profit and Loss Account

For the year ended December31, 2012.

2010

Mark-up/ return / interest earned

Mark-up/ return / interest expensed
Net mark-up/ interest income

25778061 31786595 40043824

4525359 7865533 11560740
21252702 23921062 28483084

Provision for diminution in the value of investments-net

Provision against loans and advances-net

121197
1014540

2011

105269
2959583

2012

2683994
1335127

72

Bad debts written off directly

Net mark-up/ interest income after provision
Non mark-up/ interest income
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Gain on sale of securities-net
Unrealized loss on revaluation of investments
classified as held for trading
Other income-net
Total non-mark-up/ interest income

47000
199
0
1182737 3065051 4019121
20069965 20856011 24463963
2311235
811801
692010
605865

2634610
632300
693408
1500865

2866729
617554
727564
740429

-13105
570505
1000149
4991416 6448227
25061381 27304238

-103198
942362
5791440
30255403

Non-mark-up/ interest expense

Administrative expenses
Other provisions/ (reversal)-net
Other charges
Total non-mark-up/ interest expense
Extra ordinary/ unusual item

6482592
11411
66708
6560711
0

7546878
10120
830839
8387837
0

Profit before Taxation

18500670 21308035 21867566

Taxation - Current year

- Prior years
- Deferred

5701443
593497
63332
6358272

Profit after Taxation

12142398 15265562 15374600

Unappropriated profit brought forward

4990260
Transfer from surplus on revaluation of fixed assets-net
of tax
32166
5022426

5426116
-3743
573830
5996203
0

6442356
-1294473
894590
6042473

7341257
-864824
16533
6492966

5530973

5130750

11855
5542828

21319
5152069

Profit available for appropriation

17164824 20808390 20526669

Basic and diluted earnings per share - after tax

23.4

24.3

24.47

Balance Sheet
Vertical Analysis
Balance Sheet
As at December 31, 2012.

2011

2012

2011

73

2012

%
39683883 39631172 9.67
3807519
4043100
0.93
1051372
4100079
0.26
113089261 96256874 27.55
218960598 262510470 53.34
16024123 17263733 3.90
0
0
0.00
17868761 19810476 4.35

cash and balances with treasury banks

balances with other banks
landings to financial institutions
investment-net
advances-net
operating fixed assets
deferred tax assets-net
other assets-net

%
8.93
0.91
0.92
21.70
59.18
3.89
0.00
4.47

410485517 443615904 100.00 100.00

Liabilities
Bills payable
Borrowings
deposits and other accounts
sub-ordinted loan
liabilities against assets subject to finance lease
deferred tax liabilities-net
other liabilities

10479058
39406831
292098066
479232
0
1180162
11722493

10551468
22663840
330274155
0
0
437137
21253250

2.95
11.09
82.20
0.13
0.00
0.33
3.30

2.74
5.88
85.75
0.00
0.00
0.11
5.52

355365842 385179850 100.00 100.00

Net assets

55119675

58436054

6282768
34000638
5130750
45414156
9705519
55119675

6282768
36768765
9193332
52244865
6191189
58436054

Represented by:
Share capital
Reserves
Unappropraited profit
Surplus on revaluation pf assets-net of tax

Balance Sheet
Horizontal Analysis
Balance Sheet
As at December 31, 2012.

2010

2011

2012

2010
2011
Rupee's in 000
%
%

74

2012
%

cash and balances with treasury banks

balances with other banks
lendings to financial institutions
investment-net
advances-net
operating fixed assets

32465976
6577017
21081800
63486316
198239155
9054156

39683883
3807519
1051372
113089261
218960598
16024123

39631172
4043100
4100079
96256874
262510470
17263733

100
100
100
100
100
100

22.23
-42.11
-95.01
78.13
10.45
76.98
100.00
61.98

22.07
-38.53
-80.55
51.62
32.42
90.67
100.00
79.58

deferred tax assets-net

other assets-net

172373
11031450

0
17868761

0
19810476

100
100

342108243 410485517 443615904 100

19.99

29.67

7089679
10479058 10551468 100
23943476 39406831 22663840 100
257461838 292098066 330274155 100

47.81
64.58
13.45

Liabilities
Bills payable
Borrowings
deposits and other accounts

sub-ordinted loan
1597440
liabilities against assets subject to
finance lease
0
deferred tax liabilities-net
0
other liabilities
11171496

479232

100

-70.00

48.83
-5.34
28.28
100.00

0
1180162
11722493

0
437137
21253250

100
100
100

0.00
0.00
4.93

0.00
0.00
90.25

17.96

27.85

301263929 355365842 385179850 100

Net assets

40844314

55119675

58436054

5463276
24662426
5530973
35656675

6282768
34000638
5130750
45414156

6282768
36768765
9193332
52244865

Surplus on revaluation pf assets-net of

tax
5187639
40844314

9705519
55119675

6191189
58436054

Represented by:
Share capital
Reserves
Unappropraited profit

Vertical Analysis
Profit and Loss Account
For the year ended December31, 2012.

2011

Mark-up/ return / interest earned

31786595 40043824 100

2012

2011

2012
100

75

Mark-up/ return / interest expensed

Net mark-up/ interest income

7865533 11560740 24.745 28.87

23921062 28483084

Provision for diminution in the value of investments-net

Provision against loans and advances-net
Bad debts written off directly

105269
2959583
199
3065051
20856011

2683994
1335127
0
4019121
24463963

0.3312 6.7026
9.3108 3.3342
0.0006 0

Fee, commission and brokerage income

Dividend income
Income from dealing in foreign currencies
Gain on sale of securities-net
Unrealized loss on revaluation of investments

2634610
632300
693408
1500865

2866729
617554
727564
740429

40.858
9.8058
10.753
23.276

classified as held for trading

Other income-net
Total non-mark-up/ interest income

-13105
1000149
6448227
27304238

-103198
0.2032 1.7819
942362
15.51 16.272
5791440 100
100
30255403

5426116

7546878

Net mark-up/ interest income after provision

65.613 61.093

Non mark-up/ interest income

Non-mark-up/ interest expense

Administrative expenses
Other provisions/ (reversal)-net
Other charges
Total non-mark-up/ interest expense
Extra ordinary/ unusual item
Profit before Taxation
Taxation - Current year
- Prior years
- Deferred
Profit after Taxation

35.545
-3743
10120
0.0245
573830
830839
3.759
5996203 8387837 39.279
0
0
0
21308035 21867566 139.58
6442356 7341257 42.202
-1294473 -864824
8.4797
894590
16533
5.8602
6042473 6492966 39.582
15265562 15374600 100

Unappropriated profit brought forward

5530973
Transfer from surplus on revaluation of fixed assets-net
of tax
11855
5542828
Profit available for appropriation
20808390
Basic and diluted earnings per share - after tax
24.3

49.499
10.663
12.563
12.785

49.087
0.0658
5.404
54.556
0
142.23
47.749
-5.625
0.1075
42.232
100

5130750
21319
5152069
20526669
24.47

Horizontal Analysis

76

Profit and Loss Account

For the year ended December31, 2012.
Mark-up/ return / interest earned
Mark-up/ return / interest expensed
Net mark-up/ interest income

2010

2011

2012

2010 2011

25778061 31786595 40043824 100

4525359 7865533 11560740 100
21252702 23921062 28483084 100
100

Provision for diminution in the value of

investments-net
121197
Provision against loans and advances-net
1014540
Bad debts written off directly
47000
1182737
Net mark-up/ interest income after
provision
20069965
Non mark-up/ interest income
Fee, commission and brokerage income
2311235
Dividend income
811801
Income from dealing in foreign currencies
692010
Gain on sale of securities-net
605865
Unrealized loss on revaluation of
investments
classified as held for trading
Other income-net
570505
Total non-mark-up/ interest income
4991416
25061381
Non-mark-up/ interest expense
Administrative expenses
6482592
Other provisions/ (reversal)-net
11411
Other charges
66708
Total non-mark-up/ interest expense
6560711
Extra ordinary/ unusual item
0
Profit before Taxation
18500670
Taxation - Current year
5701443
- Prior years
593497
- Deferred
63332
6358272
Profit after Taxation
12142398
Unappropriated profit brought forward
4990260
Transfer from surplus on revaluation of
fixed assets-net of tax
32166
5022426
Profit available for appropriation
17164824
Basic and diluted earnings per share - after
tax
23.4

2012

23.31
73.81
12.56

55.34
155.47
34.02

-13.14
191.72
-99.58
159.15

2114.5
31.60
-100.0
239.82

20856011 24463963 100

3.92

21.89

2634610
632300
693408
1500865

2866729
617554
727564
740429

13.99
-22.11
0.20
147.72

24.03
-23.93
5.14
22.21

-13105
1000149
6448227
27304238

-103198
942362
100
5791440 100
30255403 100

75.31
29.19
8.95

65.18
16.03
20.73

5426116
-3743
573830
5996203
0
21308035
6442356
-1294473
894590
6042473
15265562
5530973

7546878
10120
830839
8387837
0
21867566
7341257
-864824
16533
6492966
15374600
5130750

100
100
100
100

-16.30
-132.80
760.21
-8.60

16.42
-11.31
1145.4
27.85

100
100
100
100
100
100

15.17
13.00
-318.11
1312.54
-4.97
25.72

18.20
28.76
-245.7
-73.89
2.12
26.62

105269
2959583
199
3065051

2683994
1335127
0
4019121

100
100
100
100

100
100
100
100

11855
21319
5542828 5152069
20808390 20526669
24.3

24.47

77

Reference & Sources used (Should be provided in Report)

I collect this information from,

78

1. Habib Bank Limited of Pakistan, Annual Reports

2. State Bank of Pakistan Prudential Regulation for Corporate and Commercial
Banking.
3. State Bank of Pakistan BPRD Circulars
4. Dawn Newspapers for updated information
5. Instruction Circulars of National Bank Limited
6. Economic Reviews for Banks and their activities
7. State Bank of Pakistan, Website, http://www.sbp.gov.pk
8. Habib Bank's website, http://www.hbl.com
I also visit & complete 6 weeks internship in Habib bank Limited Dolat
Nagar branch for collecting data.

79