INTERNSHIP REPORT

INSTRUCTURE
SIR SALAMAN ZIA

SUBMITTED BY
MAGHFOOR AHMED (27)

Jinnah campus Rahim Yar Khan

PREFACE
The internship report is prepared to share the experience and knowledge that has gained
during internship. It demonstrates valuable information about banking and financial
analysis done in HBL while worked as an internee. It will describe different departments
in banking sector of HBL where theoretical knowledge was applied. This report projects
theoretical consideration with practical experience, which creates precious innovations in
banking circumstances. This internship is being developed to discuss the key elements
which would play a significant role in development of my personality during this
professional internship.

Moreover, the comparison of financial achievements of HBL with previous years will be
discussed. It will show the results and enhancement of HBL that has expanded during
these years. Very important aspects of banking sector, where a major change is required.
Some suggestions are also mentioned in this document for the progress of banking.

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ACKNOWLEDGEMENT

THE GREAT ASSISTANCE OF THE ALLAH ALMIGHTY, PARENTS AND PEERS, WHO THEY HELPED ME A LOT IN
DEVELOPING A WORTHWHILE CAREER. MOREOVER, HABIB BANK LIMITED (HBL), PAKISTAN’S LARGEST

BANK IN DYNAMIC SCENARIO, HAS PROVIDED ME THE PLATFORM NOT ONLY TO BULID IN CONFIDENCE BUT

ALSO TO SHOW MY CAPABILITIES OF PROFESSIONAL WORKING. I PRESENT MY EXPRESSION OF

APPRECIATION FOR SIR. SALMAN ZIA, A LECTURER OF INTERSHIP. His valuable suggestions proved a
guiding star for me. HBL staff helped me a lot in developing practical approach for work,
hence special thanks are to be presented to them. Mr. Hanif Khan (operation manager)
worked enthusiastically to groom the internee for future understanding to work
independently. One thing that I reminded is about Sir Adnan Javed`s (teller clearing and
remittance) friendly nature which has induced my interest in internship. His responsive
attitude created a pleasant environment for staff and preferably for new trainees like me.

Tribute is presented to the other staff members for their contentment.

Miss Nilofar Asghar (Branch Manger)
Mr. Zulfiqar Ali Khan (Manager Teller)
Miss Binish Malik (Teller clearing and remittance)
Mr. Adeel Javaid (Manager Credit)
Mr. Riaz Hussain Sabir (Credit Officer)
Miss Mehnaz (Customer Relationship Officer, CRO)
Miss Sofia (Teller Cash)

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TABLE OF CONTENT

EXECUTIVE SUMMARY

All the students of BS.Com (Hons) of Islamia University Rahim Yar Khan (IUB RYK)
have an essential requirement to do six to eight weeks internship program in any of the
well reputed organization. The objective of this program was to make student familiar
with banking to gain professional approach while working. Moreover, implication of
theoretical knowledge into practical will be made easier.

Internship in Habib Bank was arranged by the job placement cell of the IUBRYK. It was
a very nice practice involving the use of primary and secondary data with comparison to
theoretical knowledge. This report aims to evaluate the key points of this internship
program. Report starts with the topic evolution of banking. The word 'Bank' is said to
have been derived from the words Bancus or Banque. This history of banking is traced to

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as early as 2000 B.C. While talking about commercial banking in Pakistan, it was very
difficult for Pakistan to build up its own Banking system immediately after independence
without sufficient resources. By 30th June 1948 the number of schedule banks in Pakistan
declined from mere scratch. Today there are more than 7000 branches of commercial
banks along with an established network of supplementary financial institutions. All this
development in the banking sector is the result of untiring efforts of six decades.
This report contains information about HBL’s board of directors, management, mission,
vision and values. HBL’s operations are discussed in light of its working department in
the branches like cash, clearing, foreign exchange and accounts department and also in
light of its services and products which it is offering to customers regardless the fact that
they are an individual of business, public, corporate or agriculture field related customers.
HBL is currently offering phone banking, internet banking and various cash management
services for the facilitation of its customers. HBL’s car to car loan has its own uniqueness
in Pakistan’s banking sector.

During my internship period in HBL Lahore, I got a chance of working in all different
department of HBL. Duties and learning in each department are given in this report
regarding to the financial performance of the bank in 2009. All the financial indicators
are showing positive results as compared with financial performance in 2008. At the end
of this report I have given my suggestions for the improvement of the bank.

INTRODUCTION OF ORGANISATION

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HBL was the first commercial bank established in
Pakistan in 1947. HBL has grown its branch
network with over 1,450 branches across the
country and a customer base exceeding five million
relationships. HBL presents the largest domestic
multinational bank with a presence in 25 countries,
subsidiaries in Hong Kong and the UK, affiliates in
Nepal, Nigeria, Kenya and Kyrgyzstan and
representative offices in Iran and China. The Bank
is going up its occurrence in principal international
markets including the UK, UAE, South and Central
Asia, Africa and the Far East. Basic areas of
operations include products offering and services
in Retail Banking. HBL has the largest Corporate Banking portfolio in Pakistan with an
active Investment Banking arm. It also offered SME, Agriculture lending programmes
and banking services in urban and rural centers. In UK and GCC, HBL focuses on trade
finance and remittances for the South Asian Diaspora in addition to basic banking
facilities. It has the history that is inextricably linked with the history of Pakistan. As it
continues to grow, both locally and abroad, it strives to embody its brand personality:
honest, approachable, and inclusive. HBL is currently rated AA+ (Long term) and A1+
(Short term)*. It is the first Pakistani bank to raise Tier II Capital from external sources.

HISTORY AND BACKGROUND

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Habib Bank Limited was established
by Mr. Ismail Habib (Late) on
August 25, 1942 at Bombay. The
first international branch was
established in Colombo, Sri Lanka in
1951. It was the first Muslim Bank
of the sub-continent and established
with a paid up capital of Rs. 2.5
million. In the start the total numbers
of branches were twelve. It has
moved its head office to Karachi
while operation in 1947. It has a
domestic market share of over 40%
and was nationalized in 1974. 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 have also been expanded to
include USA, Singapore, Oman, Belgium, Seychelles and Maldives and Netherlands.

MAJOR FUNCTIONAL AREAS WHERE INTERNSHIP WAS

CARRIED OUT:
There are various departments in all the branches of Habib bank to facilitate customer.
Model town, Habib bank branch has following various departments.

1. Account opening department.

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 2. Cash department.
3. Credit department.
4. Lockers department.
5. Bill clearing department.

ACCOUNTS OPENING DEPARTMENT

Basic function of the accounts department is to open new account and facilitate the
customer for the account opening purpose. There are certain formalities which are to be
observed for opening of an account with a Bank. These formalities in brief are as under:

FORMAL APPLICATION:

The customer is to fill "Account Opening Form. It is a formal request by a customer to

the bank to allow him to have and operate the account.

Documents require for opening an account:

⇒ Copy of CNIC
⇒ Service certificate or student card.
⇒ Utility bill

SPECIMEN SIGNATURE:

When the banker is satisfied about the reliability of the customer, he agrees to open the
account. The banker obtains specimen signatures of the customer on the signature book
or on card.

POSTING THE ACCOUNT ON THE SYSTEM:

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The officer has to post the new account on computer system for further processing.
Customer identity card and account number is generated during the process. New account
remains active for one day after that it is blocked by the head office until CNIC of the
customer is verified from NADRA.

CHEQUE BOOK ISSUING:

After the CNIC verification account opening officer has to issue a cheque book to
customer so that he can be able to deposit or withdrawal from his account. Now-a-days in
Habib bank cheque book issuing process is centralized that take 06 days to complete.

SECRECY:

The secrecy of depositor’s account is the responsibility of every official who are engaged
in the bank service.

TYPES OF ACCOUNTS:

Individual accounts:
Individual accounts are the most common personal investment accounts. It should be
opened by single person.

Joint account:

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A joint account occurs when two or more than two customers have one account. The
parties to a joint account are considered in law as they are one person.

Business accounts:
Business accounts can be opened by institutions, companies, partnerships, trusts and non-
profit organizations.

BOOKS RELATING TO CUSTOMERS:

Pay-in-Slip
After the money has been deposited in bank the payment slip has to be filled by
customer. The purpose of this book is to provide the customer with the bank’s
acknowledgement for receipt of money to be credited his account.

Cheque Book
A cheque book contains a number of cheques, which is given to a customer upon written
request and after marking the payment for the cheque book. It enables a customer to
make withdrawal from his account or make payment to various parties by issue of
cheques.

GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT:

The banker may close the account of the customer due to following reasons:
i. Notice by a Customer
ii. Death of a Customer
iii. Customer’s Insanity
iv. By order of court

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I) Notice By Customer
The banker closes the account of the customer on the application of the customer for
closing his account.

II) Death Of Customer

On death of his customer, the bank must stop payment on cheques drawn on him by the
deceased customer because the death revokes his authority to pay such cheque. The heirs
or the executors of the deceased customer are not authorized to operate on the account; it
can act only in accordance with provisions mentioned in the letter of probate issued by a
competent courts.

III) Customer’s Insanity

If the customer becomes insane or mental it terminates the banker’s authority to act as his
customer’s agent. Since the banker-customer relationship comes to in end, in such a
situation, it is usually considered that the banker’s authority to pay his customer’s
cheques is revoked by notice of insanity. However, the bankers treat their customers as it
unless a fairly inclusive evidence of the customer’s insanity is available to them.

IV) Order of Court

A court of law may provide a banker with an order in garnish proceeding in execution of
a decree prohibiting him from honoring a customer’s cheque.

CASH DEPARTMENT

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Cash Department is very sensitive and risky part of the bank. Very causations and
competent personnel are needed for the job. HBL has really such a diligent staff with
appreciable competencies and will to do work. Main function of cash department is to
deal with cash payment and cash receipts.

Cash deposit procedure:

The customer fills the pay slip. The cashier receives the pay slip and cash. He counts the
cash and makes the detail of the notes at the back of the pay slip. Then he compares the
detail with amount written on slip and signs the pay slip. Then he credits the entries in the
computer by serial no, account type, Account number and amount. Put the stamp of the
“cash received” on the payment slip. The first portion is for bank record while other one
is given to the customer.

Cash payments procedure:

When a customer comes to withdraw a certain amount from his account, he brings a
cheque along with him. In this case the following steps are taken.
The cashier receives the cheque and checks it whether it is post dated or predated.
Cheque can be cashed within six months. A predated cheque cannot be cashed. He takes
two signatures at the back of the cheque from the bearer. He gives the cheque for posting
at the computer. The computer checks out whether there is balance in the account or not.
Other instructions are also received e.g. blocked, frozen, Etc. the posting is done in the
computer and the cheque is stamped posted with the serial number and date. He gives the
cash to bearer and the respected account is debited.

Online fund transfer:

Another function of the cash department is of online transfer of funds.

Customer has given filled remittances form with cash or without cash to the cashier in
cash department who will then credits the beneficiary account.

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Balancing cash at the end and transferring excess cash:
At the day end cash department is responsible for balancing the cash. Physical cash
should be balanced with the amount in the computer. Model town branch’s limit for cash
is 40 million which it can keep within the branch over the night excess cash is transferred
to NBP.

CREDIT DEPARTMENT

1. Introduction
2. Securities.
3. Types of credits

Introduction
The function of credit department is to lend money in the form of clean advances, against
promissory notes, as well as secured advances against tangible and marketable securities.
The bankers prefer such securities that do not run the risk of general depreciation due to
market fluctuations.
Common Securities for the banker’s advances are as under:-

Securities
1. Guarantees
When an application for advance cannot offer any tangible security, the banker may rely
on personal guarantees to protect himself against loss on advances or overdraft to the
applicant.

2. Mortgage

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A mortgage is the transfer of an interest in specific immovable property for the purpose
of security the payment of money advanced or to be advanced by way of loan, and
existing or future debt, or the performance of an engagement which may rise to a
pecuniary liability. The transfer is called a mortgagor, the transferee a mortgage.

3. Hypothecation

When property in the shape of goods is charged as security for a loan form the bank the
ownership and possession is left with the borrower, the goods are said to be
Hypothecated The essence of hypothecation is that neither the property in the goods not
the possession of them are possession is left with the borrower, the goods are said to be
Hypothecated the essence of hypothecation is that neither the property in the goods not
the possession of them are possessed by the lender, but the security is granted by means
of letter of hypothecation, which usually provides for a banker’s charge on the
hypothecation goods.

4. Pledge
In a pledge the ownership remains with pledge, but the pledge has the exclusive
possession of property until the advance is repaid in full. While in case of default the
pledge has the power of sale, after giving due notice.

5. Promissory Note
Sometimes promissory note is also accepted as a security, "A promissory note is an
instruments in writing containing an unconditional undertaking signed by the maker, to
pay on demand or at a fixed or determinable future time a certain sum of money only, to
or to the order of certain persons, or to the bearer or the instrument." A promissory note is
incomplete until has been delivered to payee or the bearer. Moreover, the sum promised

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in a promissory note may be made by two or more makers who may be liable there on
jointly and severally.

Types of Advances
The advances which are given by Habib Bank Limited are as under:

1. Demand Finance (Ordinary Loan)

Demand Finances are those advances which are allowed in lump sum for a fixed period
and are repayable lump sum or gradually in installments.

a. Demand Finance (Packing Credit)

Scheme introduced by State Bank of Pakistan for exporter of carpet, surgical instruments,
at zero percent rate of interest. While many banks provides at concessional rate of
interest.

b. Loan ordinary (Demand Finance to Students)

Qarz-e-Hasana Scheme Loans are allowed to the students, teachers without any interest
or mark up with the recommendations of the MPA or MNA.

c. Demand Finance (Staff)

Loans are offered to the staff of the following four categories.
i. House Building Loans against mortgage of property.
ii. Loan for purchasing vehicles.
iii. Loan equivalent to month’s salary.

2. Running Finance (Overdraft)

Running finance (old name overdrafts) are advances, which are generally, given to meet
temporary requirements of the customers. A good customer use the banks running
finance limit as a mean of protecting his credit in the market.

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Types of Running Finance

I. Unsecured
The bank pay upon the personal security of the customer’s mentioned on the customer’s
account under such type of over draft.

II. Secured
Under this type of overdraft the bank allows his customer to withdraw more than his
deposits after giving security against the amount overdrawn.

The securities against which they given are:

i. Share certificate, saving certificate
ii. Deposits
iii. Mortgage of property
iv. Guarantee of person

Small Loans
Loans allowed to contractors clearing and forwarding agents.

3. Finance against The Foreign Bills (Fafb)

The advance facility is allowed both to local foreign bills and is classified as under:-

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i. FAFB (Local) advance against Railway receipts and truck receipt, a company
with bills of exchange and invoices, are given under this head.
ii. FAFB (Foreign) advances against foreign bill, covering bills of exchange bills of
lading airway bills of exchange bills of lading airways bills etc.

4. Agriculture Loans

Loans to the farmers with holding up to 25 acres for meeting their short terms, medium
and long terms Agricultural production requirements, such as:

i. Agricultural inputs
ii. Tube wells
iii. Live Stock Framing
iv. Land improvement

5. Industrial Loans
Besides the short-term loans which play a part in working capital medium and long-term
loans are also given to industrial sector for purchase of machinery and other capital
nature goods.

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Bills Clearing Department

Introduction
Every bank acts in two way i.e.
i. Paying Bank
ii. Collecting Bank
Here in theory, no legal obligation on a banker to collect cheques, drawn up to other
banks for a customer. It is, however, an important function of crossed cheques. A large
part of this work is carried out through the N.I.F.T. (National Institutional Facilitation
Technologies (Pvt.) Limited).
NIFT is a joint venture between a consortium of six major banks and private sector. It is
responsible for the establishment and management of automated clearinghouse facilities
in Pakistan. NIFT is proactively involved in the modernization of payment systems in
Pakistan.

Function Of Clearing Department

The following are the main functions of clearing department.

4. To accept transfer deliveries and clearing cheques from the customer of the
branch and to arrange for their collection.
5. To arrange the payment of cheque drawn on the branch and given for collection to
any other branch of Habib Bank of Pakistan or any other members, or sub-members of
the local clearing area..
6. To collect amounts of cheques drawn on members, sub-members of the local
clearing house, sent for collection by those Habib Bank Limited, branches which are not
represented a the local clearing area.

Procedure of Depositing Cheques In Clearing Department

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Whenever a customer wants to deposit cheque, etc, he fills a pay in slip and hands it over
the counter along with the instruments he wants to deposit with bank. As far as possible,
the customer desire that on of the staff member fill in a slip for him, he should be obliged
promptly.
One portion of the perforated pay in slip is handed over to the depositor and the portion
becomes the regular portion of a credit voucher

Types of Cheques Collected By Clearing Department

a. Transfer Cheques
Transfer cheques are those cheques, which are collected and paid by the same branch of
bank.

b. Transfer Delivery Cheques

Transfer Deliver cheques are those cheques, which are collected and paid by two
different branches of a bank, situated in the same city.

c. Clearing Cheques
Clearing cheques are those cheques in which the payee (Person who deposit cheques for
collection) and the drawer of a cheque maintain the account with different banks.

These clearing instruments are handed over to NIFT after posting necessary stamps and
checking them for any errors. Then further process of clearing is carried on the behalf of
NIFT.

BRIEF DETAIL OF OTHER AREAS

FOREX DEPARTMENT

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International trade is growing and with the development of international trade it has
become more imperative. For many countries to devote more attention to their
complicated mechanism of foreign Exchange, It is more important in case of developing
countries. It is the need of time, that a country should conserve its foreign exchange
resources.

Meaning of Foreign Exchange

The foreign exchange term refers to the principles that determine the rate of exchange. It
covers following three senses:
i. The mechanism or system by which international obligations or indebtedness are
fulfilled.
ii. The currency of one country is exchanged for that of another.
iii. The principles on which the people of world settle their debts to one another.

Letter of Credit:

It is a negotiable instrument through which the bank of the exporter deals with bank of
the importer through the guarantee of a bank. There are different parties involved in the
L/C, e-g importer, exporter, importer bank, exporter bank, and advisory bank. LC
involves banking channels in foreign trade to mitigate risk.

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The procedure of opening of an L/C is as follow:
⇒ The first thing is the Performa invoice. The Performa invoice is a
document (say a clip), which is, sends by the exporter to the importer and includes
the information like. Descriptions of goods, what type of goods you are needed
and what are the quality, rate and originating country etc.
⇒ Before to open a L/C the bank also consider that the goods which the
importer is importing is allowed by Govt. of Pakistan or not. It is because that the
importer is not allowed to import those goods which are prohibited by the Govt.
of Pakistan.
⇒ The importer is asked to show the membership certificate of any chamber
of commerce and industry affiliated with the Pakistan federation of chamber of
commerce and industry.
⇒ Fill the import form of the govt. of Pakistan, which is the proof of this that
there is no objection on the goods, which the customer is importing.
⇒ What type of goods you are needed and what are the quality, rate and
originating country etc.

Necessary Documents required for L/C:

⇒ NTN
⇒ Tax Authority registration certificate
⇒ Chamber of Association’s trade certificate
⇒ Type of Business

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 ⇒ NIC
⇒ Margin
⇒ Registration No.
⇒ Application for L/C

On providing these documents the importer will be given the L/C form named as
IB-8.

Contents of IB 8:
1. Request for LC
2. Rate
3. Importer and Exporter’s particulars
4. Amount
5. Terms
6. Partial Shipment (Allowed, not allowed)
7. Transshipment (Allowed, Not Allowed)
8. Port of Loading and destination
9. Payment Mode

I. Sight
On seeing the documents the importer has to pay.

II. At Sight and Negotiation:

It means that exporter will submit his documents with the bank and immediately asks for
payment.

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III. Acceptance:
On showing the documents to the importer, the bank asks him to accept that he will pay
within 30, 60, 90, 120, 180 etc days.

10. Documents Required:

 Certificate of Origin.
 Commercial Invoice
 Bill of Lading / Air way bill.

Charges:

For L/C following charges are applicable;

 Commission
 Postage
 L/C Advising commission
 L/C amendment Commission
 L/C confirmation Commission
 L/C Negotiation Commission

Payment Mode:

In foreign trade payment modes are:

1) Advance Payment: Importer makes payment before delivery of goods.
2) Open A/C: Importer makes payment after receiving the goods.

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Issuing foreign exchange accounts cheques books
Another function of foreign exchange department in Jinnah Chowk branch is to issue
foreign exchange accounts cheques books to customers on request. This process is not yet
centralized. Cheque book is issued within 15 minute of receiving request from customers
after making necessary register entries and posting stamps on it.

FINANCIAL ANALYSIS

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RATIO ANALYSIS OF THE HBL:

“An index that relates two accounting numbers and is obtained by dividing
one number by other”
Ratio Analysis is an important and age-old technique of financial analysis. It
simplifies the comprehension of financial statements. Ratios tell the whole
story of changes in the financial condition of business. It provides data fro
inter firm comparison. Ratios highlight the factors associated with successful
and unsuccessful firm. They also reveal strong firms and weak firms, over-
valued and under valued firms. It helps in Planning and forecasting. Ratios
can assist management, in its basic functions of forecasting, planning, co-
ordination, control and communication. Ratio analysis also makes possible
comparison of the performance of different divisions of the firm. The ratios
are helpful in decision about their efficiency of otherwise in the past and
likely performance in future. Ratios also help in Investment decisions in the
investors and lending decisions in the case of bankers etc.
Following are the main types of ratios that I am going to calculate in this
report to compare and highlight the financial performance of Habib bank in
2009 with 2008.
 Return on Equity Ratio
 Return on Assets
 Loan to Deposit

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Return on Equity Ratio

2010 2009
Return on Equity Ratio

Net Profit after tax X 100

Owner Equity

Net Profit after tax 3815020 2853886

Owner Equity 82590218 84369798

Return on equity 4.62 3.38

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Interpretation:
The past two years data shows an improvement in the return on equity which is a
positive sign. The Bank should have to continue its policies. By observing the audited
account I found that this improvement is due to increase in the Net profit which is good
sign.
Return on Assets Ratio

2010 2009

Return on Assets

Net Profit after tax X 100

Total Assets
Net Profit after tax
3815020 2853886
Total Assets
843528320 863778621

Return on Assets
.45 .33

Interpretation:
Return on assets ratio shows an improving trend. This ratio shows that the both the Net
profit and Total Assets has improved in 2010 than 2009. But net profit has increased
more rapidly.

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Loan to Deposit Ratio

2010 2009

Loan to Deposit

Loans/Deposits*100

Advances
434231297 454662499

Deposits 672069296 682750079

Loan to deposit ratio 64% 66%

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Interpretation:

Loans to deposit ratio show an increasing trend in 2009 as compare to 2010. This trend is
observed as the advances and deposits both are increasing but advances are decreasing
more rapidly than deposits.

SWOT ANALYSIS

STRENGTHS

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Strength can be defined as an area where a company is best at doing something or a
feature that puts the company at an advantage in comparison to its competitors. HBL
enjoys the following strengths:

 HABIB BANK is a well established bank enjoying long history of over 65

years of experience and profitable operation.
 HBL is the largest private bank in Pakistan now and people trust is very
high.
 It has the largest branch network among private banks of Pakistan.
 HBL has been very effective in controlling costs as it successfully
restructured itself after its privatization. During this process more than 1,600
employees were relieved under a golden handshake scheme and 110 branches
were closed.
 Excellent branches appearance gives an edge to HBL over other banks.
The branches are well furnished even in less developed areas where other banks’
branches give a poor view.
 HBL has the ability to bring innovative products and services like
personalized service, electronic funds Transfer, sophisticated financial products
such as electronic banking, auto-teller machines and evening banking.
 The Bank’s Rupee Traveler Cheques have been market leaders for the past
six years.
 HBL’s car to car financing scheme is unique in auto loan segment.
 Habib bank is an internationally recognized name in banking services and
products.
 HBL has forged strategic alliances with international banks for expanding
its network further, both locally and internationally.

WEAKNESSES

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A weakness is defined as an area in an organization where the organization is not as good
at doing something as its competitors or a thing which an organization lacks thus putting
the organization at disadvantage in comparison to its competitors. Based on the above
definition, HBL has the following weaknesses.

 Lack of communication between bank and customers about terms and

condition of products and services. Like centralization of cheque book issuing
process.
 Employees at branch level are not properly motivated to work by heart.
They take the all routine activities as a boring job.
 Most of the employees lack managerial training as they are not properly
educated. Due to seniority, they have moved up on the hierarchy line to Grade-I,
II or III positions having hardly bachelor degrees. This type of senior staff cannot
apply the modern and innovative techniques of management in decision making.
 Mission of HBL is not well defined.
 Though HBL is second largest bank in Pakistan, yet the fact remains that it
is not market leader as NBP. Its total assets are always less than NBP total assets.
 Now as it is a privatize bank that is why GOVERNAMENT support to
HBL decreased as it was in past

OPPORTUNITIES

An opportunity can be defined as a change in external environment which if properly

exploited with the organizational strengths will result in enhanced sales, market share, or

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income. Using its strengths, HBL can avail the following opportunities. Opportunities
require explanation therefore I have used headings instead of arrows.

E-Banking

Generally speaking, three factors, quickness, easiness and cheapness have become the
catchwords for the competitiveness and usefulness of all the business operations.
Particularly it is commonplace today to say that banking is undergoing a radical
transformation. The symptoms are new products, new players, new channels etc. This
transformation is taking place across all sectors of the banking industry. That is why
Habib bank urgently needs to improve their ability, to think strategically about IT
investments. Only those banks that use their technology resources effectively have the
opportunity to secure real competitive advantage in this fast-changing industry through
real product or service differentiation.

High mark up rates

Of late markup rates have increased considerably. Present rates are 4% above KIBOR
i.e. 16% appx. High markup rate has decreased the interest of people in loaning from
from banks. Habib bank can increase its income by offering loan at lower interest rate
than other banks.

Online Banking

It is doing banking transactions through our home P.C. The banks that do business
through net have Websites. The customer clicks into the Website and gets the history of
the bank. Then he can demand the necessary application form through the net. He fills in

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the form and passes it on to the bank. The Online banking is fast gaining ground in
Pakistan. Some software companies are also offering network-banking facilities. So
Habib bank should focus heavily on providing online banking faculties to its customers.
Currently it is doing the same.

Corporate Banking Terminal (Cbt)

Large corporate customers can log into the bank's database and have access to their
accounts/transactions from their business houses. This facility has still not been started
for customers in Pakistan. So Habib can focus on that.

Automatic Teller Machine (ATM)

This system is known as "Any Time Money" because it allows customers who have an
ATM card to withdraw money at any time from the bank without interacting with human
teller. Since the ATM machine can be installed anywhere like petrol bunks, markets,
railway stations etc, and can well be linked to the main computer. It allows customers to
transact with the bank 24 hours a day and 365 days a year. They allow the customers to
transfer money to and from accounts to view account information, to receive cash. It can
also be used to deposit cheques and cash into the accounts. No bank in Pakistan is
offering this service currently. So an opportunity exists for Habib bank to differentiate.

Rate of return

The range and choice of products available & offered by the commercial banks is limited.
Rates of Return / Profits on Deposits are so low and unattractive that very limited options

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are available to the depositors. They do not match the current rate of inflation. HBL
differentiate and increase it is deposit by offering attractive rate of return on deposits.

THREATS

Threat can be defined as a change in external environment which if not met with proper
strategies will result in loss of revenues, market share, or income. In the context of HBL’s
external environment, the following potential threats exist:

 Other private commercial bank with sound profitability is also a threat to

HBL e.g. UBL, Alfalah, MCB etc
 The Rupee Travelers Cheque (RTC) sales volumes may be affected on
account of regulatory restriction imposed by SBP on issuance of large value
denominations.
 For the last of 2 to 3 years, Pakistan is facing economic and political
instability which is a big threat.
 Foreign banks are flourishing in field of consumer financing.
 Afghan war and Iraq war has a deep effect on the economy of Pakistan,
which has affected HBL.
 Increased regulations from State Bank of Pakistan may affect its business.

SUGGESSIONS

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As we seen from the previous analysis of the financial statements I have realized that that
Habib Bank is performing very well since its inception. It is quite difficult to give
suggestion to improve the banking conditions Habib Bank Limited. As we know that
nothing is perfect, there is always a room for improvement, so I will recommend
following suggestions for HBL:
⇒  Employees Training programmes must be introduced on continuous basis
so that Employees have understanding with the latest developments especially
with the customers.
⇒  Bank should introduced incentive plans for employees on regular basis so
that if employees may work whole heartedly for the welfare of their organization.
While giving incentives qualification, work, experience, hard work and such other
factors must be considered.
⇒  Mismanagement of resources must be avoided as much as possible as it
decreases profit but also discourage hard worker and honest employees.
⇒  Fresh graduates must be recruited. As the combination of Experienced
and fresh can produce better results and it will improve the efficiency of
management.
⇒  Habib Bank is going towards mobile banking but the problem is that a
common client has no idea of its usage due to lack of marketing. I think that a
proper marketing programme must be launched for client’s awareness.
⇒  Banks different schemes must be conveyed to the targeted customers so
that to have a reasonable share in market.
⇒  Bank should help the society by providing interest free loans to the
Talented Students.
⇒  Online Banking should be introduced in all the branches.
⇒  To motivate the employees their remuneration / salaries should be made at
par with top tier Banks.

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⇒  Aggressive publicity campaign must be introduced through press and
Electronic media for new products and scheme by initiating vigorous marketing
policy.
⇒  Bank should adopt such an induction plan that when a customer opens his
account with the bank he should be supplied with a booklet which enables him to
know the procedure of filing the cheques, pay-in-slip etc. It will save a lot of time
of the bank staff afterward during the conduct of the account of that customer.
⇒  The attitude of the bankers with all of their customers is not the same; they
pay more attention and good service to some of the customers and neglect a major
portion of them. Some of the customers approach to the bank officials and get
their work done before others; it is not a good practice. All the customers should
be treated equally.
⇒  HBL should increase its communication with customers about the terms
and conditions of its different products and services

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