Académique Documents
Professionnel Documents
Culture Documents
CHAPTER – 1
INTRODUCTION OF STUDY
To fulfill this academic requirement and being a Student of BBA (Hons), I did my
Internship in Habib Bank University campus branch Peshawar.
The concern of this report is to study and analyze the overall view of the Bank &
services offered by the bank to its customers.
Habib Bank is considered to be one of the most prominent and outstanding bank as far
its reputation and progress is concerned.
The branch performs certain banking services for its customers such as Remittances,
Deposits, Bills, and Clearing etc.
Websites.
SECTION – I
This Section has one Chapter.
Chapter –1
SECTION – II
This section includes the review of Habib Bank Limited. This section is comprised of
four chapters.
Chapter – 2
Chapter – 3
Chapter – 4
Chapter – 5
SECTION – III
This section has three chapters and it is about the Analysis of HBL.
Chapter – 6
Chapter – 7
Chapter – 8
SECTION – IV
This section contains the concluding chapter of the report.
Chapter – 9
CHAPTER– 2
INTRODUCTION OF HBL
The area now constituting Pakistan was, relatively speaking, fairly well provided with
banking facilities in undivided India. In March 1947, there were 3496 Offices of
India Scheduled Banks out of which, as many as 487 were situated in territories now
constituted Pakistan.
The Reserve Bank of India had decided that in the interest of smooth transition it
should continue to function in newly emerging state of Pakistan up-till 30 th September
1948.
Following the announcement of independence plan in June 1947, there was a rush in
banks to transfer funds and accounts. This resulted in a negative effect on banking
service in Pakistan. The banks, which had their Registered Offices in Pakistan,
transferred them to India. In effort to bring about the collapse of the new state by
pushing a deliberately policy of withdrawals, the Indian Bank’s Offices were closed
quickly. The numbers of schedule banks were declined from 487 before independence
to only 195 by 30th June 1948.
deposits of Pakistani Banks stood of Rupees 880 Millions, whereas the advances were
Rupees 198 Million.
In order to regulate the growth of banking on a sound footing, the following measures
were taken to develop the banking system in Pakistan.
1. The State Bank of Pakistan, which is the Central Bank of the Country, was
established on July 1, 1948.
2. The National Bank of Pakistan was established on November 21, 1949. This bank
is to serve as an agent to SBP.
4. In January 1974, all the Commercial Banks were nationalized. The weaker
commercial banks were merged with the stronger ones and five major banking
companies were formed. MCB, ABL and UBL have again been privatized while
Habib Bank was privatized on 29th December 2006.
5. The Pakistan Banking Council was set up for coordinating the activities of the
Nationalized Commercial Banks. The Banking Council formulates policies and
guidelines for the banks.
6. Interest has been eliminated from the banking transactions since July 1, 1985. The
banks are now accepting saving deposits on profit and loss sharing basis.
Modaraba and leasing companies are also operating in Pakistan.
7. The Government of Pakistan has also liberalized the exchange and payments
procedure. The Pakistani Firms and Companies can now maintain foreign
currency accounts in Pakistan on the same basis as non-Pakistani firms and
companies can.
1841, a family business company was established in the name of Khoja Mithabhai
Nathoo in Bombay, which was dealing in steel business with in and outside the Indian
Sub-continent.
In 1891, a young Muslim Lad Habib Ismail got employment in this company. By the
dent of his ability and sincerity to duty, radiated his career and at the age of just 18
years, he not only became shareholder of the company but also President of the steel
market. His four children namely Ahmad Habib, Muhammad Ali Habib, Daud Habib,
and Ghulam Ali Habib, after having educated and grown up, were inducted in the
business of the company and there after the name of the company was changed as
“Habib & Sons”.
Habib Ismail died in 1928 at the age of 53. After the death of their father, the four
sons ran the whole business. Mohammad Ali Habib was younger and rank third in the
age but was the most intelligent among his brothers and a successful businessman. At
that time there was no Muslim Bank in the Sub-Continent. Habib family established
the first financial institution of the Muslims with the name of “Habib Bank Limited”
on the 25th August 1941.
The first branch of Habib Bank Limited started functioning on 30 th August 1941 at
Muhammad Ali Road Bombay, where Quaid-e-Azam Muhammad Ali Jinnah first of
all opened his personal account. At the time of its inception, the bank’s total paid up
capital was Rs.2.5 Million.
Habib family migrated to Pakistan and later on shifted the Bank’s Head Office from
Bombay to Karachi on 7th August 1947 just one week prior to independence, to play
its pivotal role in the development of this newly born country. The mission statement
and its values of HBL are:
Humility
We encourage a culture of mutual respect and treat both our team members and
customers with humility and care.
Integrity
For us, integrity means a synergic approach towards abiding our core values. United
with the force of shared values and integrity, we form a network of a well-integrated
team.
Meritocracy
At every level, from selection to advancement, we have designed a consistent system
of human resource practices, based on objective criteria throughout all the layers of
the organization. We are, therefore, able to achieve a specific level of performance at
every layer of the organization.
Team Work
Our team strives to become a cohesive and unified force, to offer you, the customer, a
level of service beyond your expectations. This force is derived from participative and
collective endeavors, a common set of goals and a spirit to share the glory and the
strength to face failures together.
Culture of Innovation
We aim to be proactively responsive to new ideas, and to respect and reward the
agents, leaders and creators of change.
HBL after partition opened its branches throughout Pakistan to provide finance and
other facilities to the business community. The bank helped handsomely in the
construction of WARSAK dam project, Wapda, & K.D.A. by provided finance and
other facilities.
HBL started its journey on August 25th, 1941 and with the able guidance of its
management, dedication and hard work of its entire staff, it has so far touched the
high peaks of its excellence. It was HBL that introduced service products such as
Credit Cards, ATMs, Travelers Cheques, etc., to the Pakistani Market. Today Habib
Bank 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’s leadership in Pakistan’s corporate arena.
HBL has today 1456 branches inside the country, 65 branches outside the country and
two subsidiaries. Other than this the bank has its overseas operations in 25 countries
includes 65 branches, two subsidiaries, two Joint Ventures and two representative
offices.
HBL was privatized in an open auction on 29 th December 2006 and the management
has been handed over to the winner group i.e. Agha Khan Foundation in February
2007. Still after the privatization the objectives and policies are the same and the new
management has so far not introduced their line of action.
The HBL has introduced new facilities like Evening Banking, Gift Cheques, Rupee
Traveler's Cheques, Credit Card System, Short Term and Long Term Schemes for
businessmen, Crore Patti Scheme, and Monthly Income Scheme. It also issues a
monthly publication with the name of Business News Service. Habib Bank is fully
geared to monitor the national economy and play its due role in bringing prosperity to
the country.
Habib Bank is playing a vital role in the Public Sector. After partition, the first major
association of HBL with the Government was the sponsoring of the Pakistan Finance
Corporation Ltd., jointly with the Central and Provincial Government for financing of
cotton. The bank always provided financial and technical support to public sector.
Bank also associated itself with large-scale projects such as Warsak Dams Project,
WAPDA, Pakistan Steel Mill, KDA etc. by providing finances and other facilities.
1. Earning profits for the bank itself and for its Share Holders.
4. To develop Industries both on Large Scale and on Small Scale in the country.
Policy is a limit within which a decision is to be made and assure that the decision
will be consistent with and contribute to objectives. Policies tend to pre-decide issues,
avoid repeated analysis, and give a unified structure to other types of plans, thus
permitting managers to delegate authority while maintaining control. Policies
ordinarily exist on all levels of the organization and range from department policies to
minor or derivative policies applicable to the smallest section of the organization.
1. Managerial Policy
Affairs of Habib Bank are controlled though President and Members Executive
Committee who are normally Senior Executive Vice Presidents of the Bank based at
Head Office. Each Region is headed by Regional Chief Executive and assisted by
2. Marketing Policy
Marketing is the business function that identifies customer needs and wants
determines, which target markets the organization can best serve, designs appropriate
products, services and programs to serve these markets and calls upon everyone in the
organization to "think and serve customers". From a social point of view, marketing
links a society's material requirements and its economic patterns of response. Thus
marketing is a key factor in business success.
Habib Bank also adopts certain marketing techniques to enhance the image of the
bank. Most of the marketing takes place through various Deposit Mobilization
Schemes through advertising in Newspapers and other media and there is more
emphasis on Counter Service to have more satisfied clients who can recommend to
their associates and friends.
The bank has presently one wholly owned subsidiary namely Habib Bank Financial
Services Pvt. Ltd. It has shown improved operational results during the year.
HBL has two wholly owned subsidiaries in Hong Kong and Australia. These
subsidiaries have shown improved operational results. The bank has two joint
ventures, in Nigeria and Nepal. The Habib Nigerian Bank Limited is consistently
declaring good dividend since last several years. The joint venture at Nepal,
Himalayan Bank Limited has shown good progress during its first year of operation.
CHAPTER – 3
However, in 1997 organizational changes were made to reposition the bank and
overcome the above problems and also to give new smart and corporate shape to the
activities of the bank. The organization changed the structure on functional lines. Thus
various groups have been created to carry out different services and functions within
the bank. Following are the various groups, whish are created:
Each group is headed by the group executive and they form policies and strategies.
Each group executive is very experienced and knowledgeable person in his or her
relevant areas of specialization.
In order to fetch business from corporate bodies/big customers all over the country,
this group operates. The main function of this group is to provide better services to
corporate clients, to keep them in their fold and to avoid plugging of their business to
other banks. For this purpose, corporate centers have been established in big cities of
Pakistan, to provide quick & better services to corporate clients.
1. Head Office
Head office of HBL is located in Karachi. It exercises overall control over the bank
and other areas of administration and operations. The head office (HO) has various
functions.
Functions
1. It formulates policies and ensures its implementation by field offices.
2. It supervises and controls operations of RHQ.
3. It deals with foreign donors.
4. Sanctioning of loans.
5. Deals with ministry of finance.
6. Recruitment, training and management of human resources.
Functions of RHQ
The functions of RHQ of HBL are:
1. To implement the policies of Head office (HO).
2. To extend the credit facilities by keeping in view all the prescribed conditions.
3. To recover/collect the existing long-term financial assistance extended by the bank
as per schedule.
4. To extend working capital facilities.
3. Branch Offices
HBL has today 1456 branches inside the country, 65 branches outside the country and
17 subsidiaries. Other than this the bank has its overseas operations in 25 countries
includes 65 branches, 17 subsidiaries, two Joint Ventures and two representative
offices.
Chairman
Board of Directors
Vice President
Credit
Policy
International Banking Group
Regional Office
Zonal Offices
Branches
Head office Karachi is at the apex then comes Regional offices after this Zonal office
comes and under each Zonal office 40-50 Branches operates. There are total 9
Regions and total 48 Zones under these Regions. Similarly total Corporate centers are
12 and total Sub-Corporate centers are 64.Head office is run by President of the bank,
in regional offices, Regional Chief Executive (RCE) sits, while Zonal Chiefs
supervises zonal offices, branches are managed by Managers Sub-Manager assist
them.
The new organizational set up gave HBL several advantages, i.e.; now different
groups concentrate on their respective functions and services, so they can work
efficiently and derive better results. Similarly, there is more delegation of powers
from the central office and the regional office can work more independently. As ‘time
is money’, therefore because of this new system, it helped in reducing the time for
important decision-making. The regional and offices can derive better strategies and
achieving the targets assigned to them.
Similarly there are regional offices of corporate group, Retail banking group, ARM
group and Finance and Audit group.
HOK RGB
3.11 ORDER OF SENIORITY IN THE HBL
Table – B: Grade Structure At Habib Bank Limited
Region
S. No. Designation Equivalent Grade
N.W.F.P
1. President/Chairman Grade 22
2. Senior Executive Vice President
Peshawar (SEVP) Grade 21
3. Executive Vice President (EVP) Grade 20
Region
4. Senior Vice President (SVP) Grade 19
5. Additional/Assistant Vice President (AVP) Grade 18 – 19
HBL,
6. Officer Grade I Grade 18
University
7. Officer Grade II Grade 17
Campus,
8. Officer Grade III Grade 16
Peshawar
9. Clerk, Cashier etc.
10. Non Clerical Staff (Peon, Gunman etc.)
CHAPTER – 4
General banking refers to the day-to-day business of bank, under the supervision of
manager of a branch. General or day-to-day banking of HBL consists of various
departments, which are explained below:
The application is presented at the branch with the initial amount of deposit for credit
of his account. The amount is centered in the passbook and is singed by the
responsible officer of the bank; finally a checkbook is issued to the account holder, for
withdrawal of money. Minimum Amount required for opening an account in HBL is
Rs. 1000 presently.
4. Certified true copy of the memorandum and articles of association (in case of
limited companies).
5. Certified true copy of rules and regulations or By-laws (in case of association etc).
7. List containing names and signatures of the Directors/office bearers duly certified
by CLA/Registration Authority.
9. If the signatures are Shaggy (that is the person is unable to write proper and
distinct signatures) three attested pictures of the individual/s opening account are
taken.
10. Letter of employment in case of individual account opening who are employed
somewhere.
11. Students opening accounts are need to show their student card showing that they
are students of a particular institute.
c. The bank is authorized to honor, whether the account is in credit or not cheques,
bill of exchange, notes or other orders drawn, accepted, accept endorsement, act
on any instructions, and accept any receipts or other documents relating to the
account signed or made by authorized person(s) on behalf of the
firm/company/association.
The customer is bound to follow the rules and regulations of the bank.
b. PLS saving accounts are opened for individual (single or joint), charitable
institutions, provident and other funds of benevolent nature of local bodies,
autonomous corporations, companies, associations, and education.
HBL offers 7-30 day’s special notices time deposit so that a person can make best use
of idle funds even if it is available for a week.
Similarly schemes are available for five years where profit is payable at the end of
fifth year or also available is a scheme in which profit is payable on monthly basis.
a. PLS Khas term deposits are accepted for a period ranging from one and half year
to five years in multiple of six months.
b. Profit declared from time to time is paid only once at the time of
enactment/redemption of the receipt on maturity.
c. Yearly/yearly closing.
d. No profit/return will be paid after expiry of notice period if the deposit is not
withdrawn.
4. Current account holder can get his or account statement on daily basis, weekly
basis or monthly according to his or her requirement.
A Cheques book is issued to the customers with the help of which they are able to
withdraw cash whenever they need it. Cheque is an order drawn on bank to pay
specified amount of money to the person mentioned in the order/cheque.
2. Order Cheque
If the word bearer is struck off from the cheque, it becomes order cheque. It is
encashable on the counter, but the holder must satisfy the bank that he is the proper
man, if the officer deems it necessary.
3. Crossed Cheque
Crossed cheques are not payable in cash at the counter of the bank, but can be
collected by only the banker who would credit the proceeds. When two parallel lines
are struck on the cheque face and the word & co. are written in between these two
lines, this makes the cheque cross.
The cheque particulars are entered in the system, than the officer verifies the signature
of the drawer from specimen scanned in the MISYS system. Then he passes over the
cheque to the cashier who calls the token no. and makes payment to the bearer of the
cheque.
4.3 CD DEPARTMENT
CD Department performs very important functions in the retail banking of Habib
Bank. CD Department supervises the activities of cash department and their actions at
cash and receipt counters. The important function of CD department are maintaining
the records of saving accounts holders, their signature instructions, their balances,
from for opening of accounts, scrutiny of the computerized statements, sending of
statements to the customers and issuance of other relevant letters to the customers etc.
4.4.1 Clearing
Clearing means settlement of receipts and payments between bankers. It means
money transaction in the form of cheques. Clearing is performed between different
banks through clearing house.
a. Outward Clearing
It includes cheques lodged for payment on other banks on behalf of its own clients.
Cheques are sent to clearing house through local main branch.
b. Inward Clearing
It includes the cheques drawn on the bank by other banks and the customers receive
payments.
5. All schedule are noted in the clearing house statement Amount of Cheques is
written in ‘delivered’ and ‘to pay’ columns.
6. After balancing the outward clearing, the pay-in-slips are released to the C.D.
Department.
7. After balancing a transfer debit voucher is prepared.
8. The instruments, schedules etc. are delivered to the messenger from the main
branch.
d. Pay Order
Pay order is used for the transfer of money within the limits of city or it is used for
local transfer only. It is a semi-negotiable instrument, usually presented by banks.
Balancing of cashbook means that all transactions have been properly recorded with
their respective vouchers.
Account department also prepare weekly and monthly statements to reflect the
efficiency and financial position of a particular branch.
1. Statement of Affairs
This statement includes the assets and liabilities of the branch, trends in deposits,
finances, income and expenditure of the week etc.
1. Total amount of advances made by the branch at the end of the month.
2. Progress in the specific sector financing such as agriculture.
3. Position and amount of stuck advances in the branch.
4. Provisioning against stuck up advances.
However it is very risk, for the minimization of risk the banker usually applies the
five criteria or Five C’s of credit. Which are given below:
4.8.1 Character
The reputation for honesty and integrity of the person/organization seeking credit is
known as its character. It is the most important of the five. Lenders assess character
by looking at a potential borrower’s history of loan repayments or if new borrower
then the lender may also ask for references (firms or banks with whom the borrower
has done business in the past).
4.8.2 Capacity
The measure of a borrowers ability to live up to the terms of a credit agreement and to
pay off an obligation as promised is known as its capacity. Lender (banker) measures
it by evaluating the statements of assets and liabilities on the credit application of the
borrower.
4.8.3 Collateral
The security for the loan usually an asset with enough that it could be sold to satisfy
the obligation-is called collateral.
4.8.4 Capital
Capital means the financial resources that a borrower has available to assure the
lender that the credit is secure. For this, the creditor looks at a business’s financial
statements or an individual’s credit application.
4.8.5 Conditions
It refers to the current economics environment. It also affects the borrower’s ability to
repay the loan.
2. Cash Credit
Cash Credit is advanced to commercial industrial concerns either against pledges or
hypothecation of goods and products etc. The bank allows the business firm to borrow
up to a certain limit either in lump sum or in installments.
3. Demand Loans
IT is a long-term loan, usually advance made to the borrower in lump sum, for
meeting the long-term capital requirements of the borrower. These are secured by
pledging real estates property, plants, machinery, stocks, and bonds etc. These are
mostly development loans for setting up and developing of industries etc.
4. Agricultural Finance
As Pakistan is an agro-based country and agriculture is the important sector of
economy. HBL also makes advances to this sector of economy in two ways:
Production Financing is made for the purchases of seeds, pesticides and chemicals etc.
Loans are paid in lump sum, but its duration is short one.
Development Financing is made for the purpose of purchasing farm machinery, and
development of barren lands. This is long-term facility and is paid in installments.
5. Staff Financing
HBL also provide financing facilities to its staff; help them to fulfill their needs.
These loans are given for different purposes.
2. The deposit can be opened from, residents & non-residents including Pakistani,
& foreign nationals.
4. These bonds are exempted from levy of wealth tax for the period for which
such bonds are hold until maturity of such bonds.
5. Also exempt from income tax and Zakat deductions as long as the holders hold
these bonds.
HBL though its foreign exchange department is providing very important services to
its local customers as well as Pakistan living aboard. HBL’s services are beneficial for
students, expatriates and businessmen equally and also serving the economy of the
country at the same time.
The basic need of MISYS is to get and utilize information for quick decision-making
thus reducing time factor and competitor’s actions.
In HBL all branches, which are computerized have computers with each department
in charge, which are also linked with main server, where all data is stored; although,
staff performs tradition file processing too. The main server is also linked with HOK
can get direct information and the branch also sends them statements in CD or
cartridge. MIS department prepares:
a. Report of daily basis cash on hand.
b. Weekly statements of affairs for SBP return.
c. Weekly Deposit/Advance/Agriculture finance report to RHQ.
d. Consolidate position currency wise for Foreign Exchange department.
Quarterly statements of size wise deposit statement.
CHAPTER - 5
HBL PRODUCTS AND SERVICES
1. Corporate Banking
2. Investment Banking
3. International Banking
4. Commercial Banking
5. Retail Banking.
The following are brief descriptions of various products and services offered by HBL
to its customers:
HBL’s Investment Banking capabilities are designed to leverage its large capital base,
product expertise and human capital to help its clients in meeting their strategic and
4. Domestic Bonds, Euro Bonds, Loan Syndications (> one year), Medium Term
Notes (TFCs), High Yield, term Loans and Debt Private Placements.
Lending: (Loans) Disposing of money or property with the expectation that the same
thing (or an equivalent) will be returned.
Units dedicated to service small and medium sized business are located at Karachi,
Lahore, Faisalabad, Gujranwalla and Sialkot. Each unit has Relationship managers
with in-depth knowledge of the market. These relationship managers assist existing
and potential customers with their financial needs.
4. General Products
iii. Foreign currency export finance: Dollar financing for pre & post shipment
requirements (FCEF)
Import Finance
iii. Foreign currency import finance: Dollar financing for import requirements
(FCIF)
iv. Letter of credit: for importing inventory & capital goods (LC)
General Products
1. Letter of Guarantee (LG)
2. Current Accounts: Non-interest bearing account for your daily banking needs.
4. Habib Bank Easy Access: Real time “online banking” at commercial centers
for customers online transfer/deposit of payments.
6. ATM: Now, adding more convenience, the customers can also use the ATMs of
other partner banks.
Investment Assistant (IA)
IA has been created specifically to assist expatriate Pakistanis who are interested in
investing in Pakistan. Using Commercial Banking as a platform, we will be providing
information of legislative, regulatory and financial nature to prospective investors to
help them setup their businesses in Pakistan.
Habib Bank Flexi Loans is a personal loan product, which is available for salaried
individuals for a variety of reasons. Whether it is for a child’s education, a much
needed vacation, a daughter’s wedding or even just a shopping spree, HBL Flexi
Loans is a flexible financing scheme which can actually provide the much needed
cash to fulfill all such requirements.
3. Available throughout Pakistan from over 400 designated Habib Bank branches
Table – C:
Access customer’s accounts from your desktop any time any where across the globe
and avoid the hassles of branch banking.
All it takes is a Dial up to the Bank or access hblE bank site. No extra charges, no new
hardware / software and no more frequent visits to the Bank and the time wasted in
arranging appointments, traveling, parking and queuing at the Bank for ordinary
money management requirements.
Deposit Slab
Eligibility:
Features
2. Checking Account
3. No profit is paid.
4. Service Charges Rs. 52/- per month if average balance is less than Rs. 20,000/-
PLS saving account PLS –7/30 days special notice time & PLS
PLS term deposit receipt (PLS TDR) PLS KHAS term deposit receipt (PLS KHAS TDR)
PLS special saving deposits (SSD F.I TDR (3 months financial institution TDR)
PLS monthly income scheme *rate of return on PLS deposit July-Dec 2005.(3 years)
Habib Bank also provides payment of utility bills services to its valued customers.
Debit cardholders. Your Card entitles you to discounts and savings on your purchases
at your favorite outlets. Thus, not only do you enjoy convenience, safety and
international acceptability on your Card, but also you can save on your daily
purchases. So, make each shopping spree exciting by availing Value offers at our
partner shops and outlets.
Facilities
1. Worldwide acceptability
5.5.11 Lockers
Habib Bank also provides locker facilities to its valued customers at very reasonable
charges.
Habib Bank also provides Hajj / Umra services to its customers. All branches of
Habib Bank Limited are now equipped with special Hajj/ Umra customer, where one
cannot only get Hajj/ Umra forms but helpful officers assist in filling in the relevant
details.
CHAPTER – 6
CRITICAL ANALYSIS
Critical analysis is based on the general observation and point out towards the short
comings/weaknesses of HBL as observed during the internship. These observations
generally reflect the different aspects of HBL and weaknesses in different areas,
which needs to be overcome. Following are the critical analysis of HBL university
campus branch Peshawar.
HBL is the largest bank of our country with an excellent network of branches but it
has certain flaws even in management functions.
1. The leaders or managers at upper level are having expertise in their fields but
branch leadership is not very well and often the managers don’t have even the
basic knowledge of management and communication.
3. The branches are staffed with usually old employees, who have the ability to
carry out routine works excellently but there is lack of new ideas or these
employees needs further training.
4. HBL is not keeping pace with the changing market environment, the main
reason for which is lack of new policies, and also the existing policies remain
unchanged for a long period of time.
7. The foreign exchange department is usually staffed by one officer, thus his
absence causes problem for the customers.
10. There is dearth of innovation as compared with foreign banks, private banks or
international banks. That is, with banks of this much caliber it should offer
more products and services.
11. Although in HBL, there are computers in different offices, but they are not
utilizing this tool in full capacity and are using it for typing and calculation
only.
12. Counter services are not satisfactory and usually process at counter takes more
time, than it should have.
13. Branch’s internal seating arrangement and environment is also not satisfactory
in most of the branches.
14. Similarly for customers, usually less sitting places are available and that are
also in deteriorate condition, furniture is also not neat and clean in most of the
branches.
15. The necessary stationary for the use of customers are also not adequate at the
peak hours.
16. Brochures are also found to be available in lesser quantities and usually not
provided in time to customers.
17. Informing customers (i.e. bank statements etc) are also done at long intervals (6
months), which is too long interval.
18. The behavior of the staff is also not according to the marketing approach to
words the customer. They usually behave in very bureaucratic way; they are
not providing personalized banking, as the new private banks do.
19. The employees of the bank are also experienced but most of them are not well
educated i.e. most of them are graduates but they are not aware of the modern
business administration knowledge and updates.
20. Similarly the outlook of the staff is also orthodox and don’t present to the
customers a smart image of the bank but rather presents a dull image, unlike
private banks where presentation style is also of great importance.
21. The bank lacks an information center, wherefrom the researches can get data.
Even there is so much lack of information, that at branch level the employees
are not aware of the basic decisions and information.
23. One problem is also that in HBL, there are employees, who have no work at all
that is, it has some surplus employees, but there is not clear policy about their
fate and this creates confusion and uncertainty among all employees.
25. The freezing of FCAs has also affected the confidence of people on the
banking sector in particular and HBL in general
26. There are also culture hurdles, which are in the way of banks like, provision of
services to ladies especially in backward areas, HBL has done nothing in this
field, other wise it could have a new segment of customers.
27. There is also absence of a proper database, and in this era of information
technology, it is a tragedy that a huge organization like HBL doesn’t have a
proper database system, which can help the bank and the bank could improve
its services based on this.
CHAPTER – 7
SWOT ANALYSIS
SWOT is an acronym for an organization’ strengths, weaknesses, opportunities and
threats. A SWOT analysis consists of sizing up a firm’s internal strengths and
weaknesses and its external opportunities and threats. It is a tool, to get a quick
overview of a firm’s strategic situation. In the following lines the SWOT analysis of
HBL is given;
7.1 STRENGTH
1. The largest bank in Pakistan with largest number of branches through out the
country.
2. Has market leadership in providing products and services to the customers over
the year.
6. Has more branches and therefore accessible to more potential customers than
any other bank.
7. HBL is ahead on experience curve than any other bank in Pakistan Has
experienced, world-class top management.
9. HBL has the ability to cope with the pressure of competition and has several
times out of competition successful.
12. HBL has the goodwill of the people and it is also an asset to it.
13. Has presence in all parts of the world. Thus also providing services to
Pakistanis outside the country.
14. Offer attractive schemes and more saving for customers from time to time.
15. HBL’s credit card is more acceptable than any other Pakistani bank credit card.
16. Bank’s management has the motivation to make it best bank of the country.
7.2 WEAKNESSES
1. At present HBL has narrow product line and offers very little for the customers.
3. Marketing skills of the bank are good but they have little presence at different
medias.
4. The lower level management lacks clear direction and is not having the
managerial depth.
11. Branch’s internal environment don’t presents smart image of the bank in most
of the cases.
14. More complicated and long procedure of account opening then any bank in the
country.
7.3 OPPORTUNITIES
1. Add new products/services to its product line.
2. Bank should take interest in the new market segments like IT business,
software business etc.
6. Increasing credit facilities to lower groups, thus reducing the risk of loss and
also improving the image of the bank.
7. If new schemes are introduced for the overseas Pakistanis, then bank can get
the business of remittances more than any other bank or ”Hundi Business”.
8. In December 2006 the bank is privatized and the opportunity is there to capture
the market because in private sector the bank can do better than in government
sector. As all over the World Bank is usually of private nature.
7.4 THREATS
1. Increasing no. Of private/foreign banks in the country.
2. Global technological advancement.
3. Political –economical situation of the country.
4. Reduction in the business activities in the country.
5. Reducing rates of the savings in different segments of people.
6. Deteriorating confidence of people in banks.
7. Uncertainties of the investors.
8. Provision of better services by the private banks.
9. Lacks of consistency in Govt. Policy.
For SWOT analysis, we can conclude that the management of the bank should adopt
systematic planning for the bank’s growth, taking with them all management levels of
the bank, discover new segment of the customers, offering newer schemes for its
customers. Similarly HBL has more customer and their needs, then it will become
again the market leader.
CHAPTER - 8
ANALYSIS OF FINANCIAL RATIOS
8.1 RATIOS
Ratios are a valuable analytical tool when used as part of a through financial analysis.
They can show the financial standing of a particular organization, with in a particular
industry. But ratios alone can sometimes be misleading.
Ratios are just one piece of the financial jigsaw puzzle that makes up a complete
analysis. They cannot be used in isolation. Seasonally can distort ratios, as a
demographic and economic factor like cyclicality.
Many balance sheet ratios are not as helpful with service organizations that don’t
carry much inventory in interpreting financial ratios to assess the firm’s performance
and status. The basic inputs to ratio analysis are the firm’s income statement and
balance sheets for periods to be examined.
The financial statements being compared should be dated at the same point in time
during the year. If they are not, the effect of seasonally may produce erroneous
conclusions and decision.
2. When the ratios of one organization are compared with those of another or with
those of the organization it self over time, result can be distorted due to
inflation. Inflation can cause the book values of inventory and depreciable
assets to differ greatly from their through replacement values.
1. Liquidity ratios
2. Debt ratios
3. Profitability ratios
Liquidity, activity and debt ratios primary measure risk. Profitability ratios measure
return. In the near term the important elements are liquidity, activity and profitability,
because these provide the information that is critical to the short-run operation of the
organization.
1. Networking capital.
2. The current ratios.
TABLE – E
8.3.1.2Current Ratios
A measure of liquidity calculated by dividing the organization’s current assts by its
current liabilities i.e.
The current for the previous year that is 31st December 2006.
Current ratio=0.170
The current ratio for the year that is 31st December 2007.
Current ratio=84136498/608810966
0.18
0.16
0.14
0.12
000’s 0.1
Rs in 0.08
0.06
0.04
0.02
8484 Internship Report On Habib Bank Ltd. 61
0
2006 2007
Years
Chapter – 8 Analysis of financial
ratios
Conclusion
The ratio is showing that in 2006 for every Rs 1 of liabilities the bank had Rs. 0.170
of assets as compared to 0.138 rupee for every 1 rupee in the year 2007 . The
liquidity ratio of the bank has declined but it is not at all danger sign if we consider
the economics ups and downs that affected the industry as a whole.
TABLE-F
2006 2007
The debt total assets ratio for the previous year that is 31st December 2006.
The debt to total assets Ratio for the year that is 31st December 2007
0.91
Conclusion
0.9095
In the year 2006, for Rs. 1 assets to debt is Rs. 0.91, where as in the year 2007, for Rs.
1 assets, 0.909
0’s debt stands at Rs 0.9086
00
0.9085
So this ratio shows that the bank has effectively used the assets in the year 2006.
in
Rs 0.908
0.9075
2006 2007
years
TABLE-G
2006 2007
The debt to shareholder’s equity ratio for the previous year that is 31st December
2006.
The debt to equity Ratio for the year that is 31st December 2007
12
Conclusion
11.9
This means
11.8 that for each Rs. l brought by shareholders, the Creditors have brought Rs. 11.966 and
11.7
Rs. 11.4211.6
during the years, 2006, and 2007 respectively, to finance Habib Bank limited. In 2007 the
11.5
11.4
Rs in 000’s
11.3
11.2
8484 Internship Report On Habib Bank Ltd. 64
11.1
2006 2007
years
Chapter – 8 Analysis of financial
ratios
debt of the bank has increased which is not a good sign. The bank thus, should bring some more
equity in order to be more stable.
TABLE- H
2006 2007
The return on total investment for the previous year that is 31st December 2006
Return on total investment for the year that is 31st December 2007
Conclusion
0.025
0.02
This ratio shows that the Bank has earned 0.0145 Rupees for every 1 Rupee
0.015in Assets in the year 2007 as compared to the 0.0213 rupees in the year
investment
000’s
2006.
Rs in 0.01
0.005
8.3.3.2 Net Profit Margin
0
TABLE- I 2006 2007
Years
2006 2007
The net profit margin for the previous year that is 31st December 2006
Net Profit Margin Ratio for the year that is 31st December 2007
Conclusion
0.45
0.4
0.35
This ratio indicates the net income per rupee of revenue. In 2007 1 rupee of revenue
0.3
contributes
0.250.322 to net income while in 2006 it was 0.4166.
000’s
0.2
0.15
Rs in
8.3.3.1 Return
0.1
on Equity (ROE)
It measures
0.05 the earning power on shareholders’ book value investment. A high return
0
on equity often reflects
2006the firm’s acceptance
2007 of strong investment opportunities and
Years
effective expense management. Higher the ratio more the risk for entity, and more
returns for shareholders.
TABLE- J
2006 2007
The return on equity for the previous year that is 31st December 2006
Conclusion
0.3
0.25
This ratio shows that there is 28% return on equity in the year 2006 as compared to
0.2
the 18% in the year 2007.
0.15
Rs in 000’s
0.1
0.05
0
2006 2007
Years
S.NO 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
ratios
8484
Shareholders Equity & revaluation
1 surplus 13,162 4,519 12,534 12,814 19,707 23,485 31,190 40,331 52,530 62,272
Chapter – 8
2 Total Assets 289,862 305,217 328,605 333,751 403,037 434,932 487,765 528,894 594,062 691,992
3 Total Deposits 237,964 250,858 266,052 283,445 328,182 360,648 404,629 432,545 459,140 531,298
4 (Net of Provision) Advances 137,124 160,301 174,894 167,225 167,523 183,654 259,089 316,882 349,433 382,173
Total Expenditure
7 10,133 11,731 12,233 11,736 11,811 9,803 13,789 15,766 17,204 18,382
11 Home remittances 18,002 15,464 22,545 22,267 38,229 46,326 47,423 54,759 66,656 79,322
12 Imports 70,700 76,133 92,508 82,600 118,689 139,515 162,402 153,392 189,125 178,684
13 Exports 67,300 73,118 78,751 93,900 95,901 118,642 134,090 118,882 117,593 129,742
Analysis of financial
From the analysis of the annual report the bank’s home remittances show up trend, it
is because of large-scale remittance is coming through Hundi and haw alas. However,
69
14 Number of Branches 1,773 1760 1,755 1,516 1,473 1,470 1,469 1,470 1,477 1,489
15 Number of staff 23,096 23,033 22,779 19,352 19,005 18,800 18,625 16,314 14,572 14,552
Chapter – 8 Analysis of financial
ratios
in the year 2000, there is an abrupt increase in home remittance. In 2001, it was a little
increased in home remittances i.e. Rs. 22,267 million and in 2002, it again increases
to Rs. 38229 million. In 2006, the value of home remittance was Rs. 66,656 million,
which is little bit, increased in 2007 i.e. Rs. 79,322 million. The number of branches
of the bank is increasing slowly from 1989 to 1996. But from the year 1998, perhaps
due to mergers and closures of branches, it is on the decreasing, Similar is the position
of the number of staff which was on decreasing from 1998 to 2007 and this sudden
decrease of near about 8000 is being shown by the annual report. This drastic decrease
occurred due to the offer of Golden Hand Shake to the staff by the management of the
bank. This was done for right sizing of the bank in order to cut the administrative cost,
which was on very high side.
The expenditure section of the annual report shows that it was running on the
increasing side from the year 1998 to 2000. Investment of the bank is on increasing
trend. Total deposits of the bank are also on upward trend. Reserve funds have also
increased in the year 2007.A sum of Rs 0.551 billion has been injected in to the paid-
up capital of the bank in the year 2000. In 2004, 2005 the bank’s expenditure was
increased i.e. Rs. 13789 million and Rs. 15766 million, which was increased in 2006
i.e. Rs. 17,204 million. In 2007 it again increased to Rs. 18,382 million.
However HBL is still one of the biggest banks of the country and if proper utilization
of SWOT method is made, the bank can regain its market share, which was previously
near about 54% and now it is approximately 20%.
This bank is the oldest bank of the country and it has played a very vital role in the
economy of Pakistan it has provided lubricant to the wheel of economy of Pakistan, it
has provided finances to the various sector of the economy e.g.
Industrial sector.
Agricultural sector.
Commercial sector
Salaried class.
The bank has already played a very vital role at the time of independence of Pakistan.
It has facilitated the transfer of money from India to Pakistan for “Muhajereen”. I
admit that the slog of Habib Bank limited really is based on facts.
Since 1998 Habib Bank owner equity is showing inconsistency. The lowest level of
Habib owner equity is in1998 i.e., Rs.13, 162 million and in 1999 it dropped to Rs.4,
519 million that increased to Rs.12, 534 million in 2000.In 2001 it dropped to Rs
12,814, in 2002 it again increased to Rs 19,707 which further increased to Rs 52,530
in 2006 & in 2007 there was very big increased i.e. Rs 62,272 million.
Rs. in 000’s
70,000
40,000
30,000
20,000
10,000
0
2003 2004 2005 2006 2007
years
14,000
12,000
Source: HBL Annual Report 2007
Until 1995 the bank was consistent in its profit taxation; in 1996 it made a loss of Rs.
10,000
8,000
3, 441 million, which was followed, by a loss of Rs. 6,802 million in 1997. The bank
made a profit6,000
Rs. in 000’s
of Rs. 1,521 million in 1998, but in 1999, it again made a loss of Rs.
4,000
8,850 million. However, the bank was once again made a profit of Rs. 463 million in
2,000
2000. In 2001, the profit of the bank increased to 1112, which increased to 4018 in
0
2003.In 2006 the bank2003
made a profit
2004 of 12700,
2005 which
2006was followed,
2007 by a profit of
years
10,084 in 2007.
Rs. in 000’s
9,000
8,000
7,000
6,000 Source: HBL Annual Report 2007
5,000
4,000
3,000
2,000
8484 Internship Report On Habib Bank Ltd.
1,000 72
0
2003 2004 2005 2006 2007
years
Chapter – 8 Analysis of financial
ratios
The bank is consistently making provisions at high rate, this may be because of the
loans paid under undue influence in past. In 2002, it made a total provision of Rs.2450
million. In 2003, the bank made a provision of Rs.5804 million, whereas in 2004 it
made a provision of Rs.2552 million. In 2005, the bank made a provision of Rs.3270
million, which dropped to Rs. 2927 million in 2006. In 2007 the bank made a
provision of Rs 7823 million
Total Assets:
In 2003, it was about Rs. 434,932 million; in 2004, the assets were increased to Rs.
487,765 million; in 2005, it increased to Rs. 528,894 million.
800,000
100,000
0
2003 2004 2005 2006 2007
years
20,000
18,000
16,000
14,000
Source: HBL Annual Report 2007
000’s
12,000
The bank total expenditure
in
10,000
increased drastically in 2003 to reach to a level of Rs.9803
million from Rs.11,
8,000811 million in 2002.The bank total expenditure for the year 2004
Rs.
6,000
4,000
2,000
8484 Internship
0 Report On Habib Bank Ltd. 74
2003 2004 2005 2006 2007
years
Chapter – 8 Analysis of financial
ratios
were Rs.13, 789 million. In 2005, the bank’s total expenditure increased from the
previous year i.e.Rs.15, 766.In 2006, it increased to Rs.17, 2004.In 2007 it again
increased to Rs.18, 382.
200,000
180,000
160,000
Source: HBL Annual Report 2007
140,000
The bank net investment
120,000
000’s is mostly increasing. In 2003, the bank’s net investments
were Rs. 158,871100,000
million. In 2004, the bank’s net investment was Rs.134, 523 million
Rs. in
80,000
which decreased quite
60,000
a lot. In 2005, the value of net investment is declined to
Rs.107, 384 million. In 2006 the bank’s net investment increased from the previous
40,000
20,000
year i.e. Rs.119, 587 million.
0
In 2007 the value of net investment of bank was Rs.177,
942 million. 2003 2004 2005 2006 2007
years
8.6.7 Advances Net:
The bank has been able to achieve a high advances level, which means that they are
utilizing the resources. The advances made in 2003 were of Rs. 183,654 million,
which grew to Rs. 259,089 million in 2004. In 2005, it increased to Rs. 316,882
million. In 2006 it increased, but little one i.e. Rs. 349,433 million. In 2007 it again
increased to Rs. 382,173. Following is shown in the figure.
450,000
400,000
350,000
8.5.8 Total Income
300,000
000’s
250,000
in
200,000
Rs.
150,000
100,000
50,000
0
2003 2004 2005 2006 2007
years
45,000
40,000 Source: HBL Annual Report 2007
35,000
The bank’s net income is increasing but to this the total expenses are also
000’s
30,000
in
25,000
increasing at a20,000
higher rate. In addition, there is very inconsistency among the
Rs.
CHAPTER – 9
9.1 INNOVATION:
First and the foremost thing I have found out is that the process of innovation is slow.
They can offer a lot new products and services in the country being one of the
strongest institutions of the country. E.g. they can make use of mobile technology for
facilitating their customers which have been started by some banks but they can offer
even new services by its use.
MISYS:
1. E-statement
2. Email
3. ATMs
4. Clearing House
5. Employee’s track record etc.
1. E-Statement
If bank uses modern It technology to inform their customer instead of E-Statement,
2. Email
Email has enabled the banks to send information to the customer in due course of
time.
3. ATMs
ATM has facilitated the customer to draw the required amount without facing any
difficulty from the bank within the 24hrs. as and when he/she wishes to draw amount
from that bank and its branches in the country. Askari Bank has recently introduced
mobile ATMs. HBL should introduce mobile ATMs in order to compete their
respected competitor.
4. Clearing House
If bank uses modern IT technology in their clearing House department (to send the
checks to different branches of same bank within the city). It will save the time.
Delays in any form should be avoided, so that customers are not discouraged from the
bank services. And the full attention must be given to the customers because they are
often right.
9.6 PROMOTION
Promotion is not made on seniority or merit basis. Junior people having family
background or relatives of bank executives arrange their promotions through back
door thus depriving people from their due right. The strict rules & procedures should
be formulated to discourage this practice.
Evaluation of efficiencies & performance should not only be based on the total
volume of deposits; but it should be based on complete budgeting, profit earned or
loss incurred i.e. how much new customers are attracted to the bank.
and how a bank can serve more at a low cost, how can procedural difficulties can be
removed and what customers expect from the banking institutions.
2. The functions & procedures of the bank should be published in booklets &
provided free of cost to the customers.
CONCLUSION
The HABIB bank which was established in Bombay in 1941 with a paid up capital of
Rs 25,000 only, was shifted to Karachi, it was registered as a joint stock company for
carrying on all types of banking activities.
In early years, it has been largest subscriber to the Pakistan govt. & provincial
government’s loan and treasury bills, but with the passage of time it becomes more
enterprising in the credit field.
The banking system of Pakistan was badly disrupted immediately after independence.
Vigorous efforts were made to rehabilitate the system, with the Habib bank playing a
pivotal role in the scheme of re-organization of commercial banking.
The bank was nationalized in 1974 and from that year onward & to date is operating
as a public sector institution.
This has been providing credit facilities to a number of sectors at subsidized rates
under various arrangements. Export finance, local manufactured machinery,
government borrowing for commodity operations, mandatory production credit to
small farmers & direct industrial investment. The bank has been providing one
window financing facility to meet the local and foreign currency requirement of the
industrial projects & thus proved to be a successful vehicle to transform the
government policy of rapid industrialization into reality.
As a responsibility of using the various foreign currency credit lines, provided by the
World Bank & Asian Development Bank, the bank has been discharging its obligation
in a manner satisfactory to the financing agencies & to the best interest of the country.
In the conclusion one can say that the Habib bank has played a big role in the creation
& development of the country.
One thing significant about this institution is that it has always scarified monetary
considerations over national interest. This fact raises Habib bank above all, in the
service of Pakistan.
BIBLIOGRAPHY
1. Habib Bank Ltd., (2007). Annual Report. Karachi.. Habib Bank Ltd., (2006).
Annual Report. Karachi.
7. S.A. Meenai. Money Banking in Pakistan. 3rd Edition, Oxford University Press,
8. 1984, PP-111-123-284.
12. http://www.google.com