HBL

“Habib Bank Limited”
Internship Report
Submitted by:
Zakia Abid
Roll# 06-54
BBA (Hons) 8th semester
Submitted to:
Department of Management Sciences
University of Education
Okara Campus
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DEDICATION
I dedicate it to my respected and beloved parents. Without their
patience, understanding support, and most of love all, the completion of this
work is not possible. I dedicate it to our respected and honorable teachers,
who help me very much in finding data.
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ACKNOWLEDGEMENT
I bow my head to Almighty Allah with gratitude. I would like to
express gratitude to all those who gave me the possibility to complete this
assignment. I am also greatly thankful to my respected parents, who pray
for me. Without the support of our parents, I am nothing. With the guidance
of my parents, I accomplish this task easily. I have no words to express my
gratitude to my advisor Mr. Rai Imtiaz Hussain for his intellectual guidance
without which it could have been rather difficult for me to complete this
report. I am also very thankful to the staff HBL Mandi Road Okara Branch
especially to Mr. CH. Muhammad Arshad (Manager Branch) who provided
me an opportunity to work in friendly environment. It was an honor and
pleasure to work with:
Mr. Muhammad Tariq Javeed (Manager Operations)
Mr. Imdad Ali (Asst. Manager Foreign Trade Department)
Madam Bushra Latif (Public Relation Officer)
Mr. Shoaib Mazhar (Manager Credit Department)
Mr. Rao Abdul Rab Khan (Head cash Department)
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INTERNSHIP REPORT
Report Name: Habib Bank Limited
Organization Name: Habib Bank Limited
Undertaken by: Zakia Abid
Supervised by: Mr. Rai Imtiaz Hussain
Date of Completion: 19th October, 2010
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Table of Contents
1. Introduction 1
1.1 Introduction of Bank 1
1.2 Kind of Banks 1
1.3 History of Banking in Pakistan 3
1.4 List of Banks in Pakistan 4
2. Overview of Organization 7
2.1 Introduction 7
2.2 Organization Brief 8
2.3 History 9
2.4 Vision, Mission and Objectives 10
2.5 Product and Services Offered 11
2.5.1 Products Offered 11
2.5.2 Services Offered 15
2.5.3 Technology used by HBL 17
2.6 HBL at a Glance 18
2.7 A bird’s eye view 19
3. Organization Structure 21
3.1 Structure of HBL 21
3.2 Organizational Chart of HBL 22
3.3 Analysis of Organization Structure 23
4. Operations of HBL 25
4.1 Account Opening Department 25
4.2 Cash Department 30
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4.3 Credit Department 33
4.4 Clearing Department 35
4.5 Foreign Exchange Department 36
4.6 Billing Department 38
4.7 Insurance Department 38
5. PEST Analysis 39
6. SWOT Analysis 42
7. Financial Analysis 46
7.1 Income Statement and Balance Sheet 46
7.2 Trend Percentage Analysis 48
7.3 Component Percentage Analysis 52
7.4 Ratio Analysis 56
7.4.1 Analysis of Short Term Liquidity 56
7.4.2 Analysis of Long Term Risk 60
7.4.3 Analysis of Profitability 62
7.4.4 Analysis of Return 64
7.4.5 Analysis of Market Position 66
7.5 Conclusion 68
8. Learning and Experience 69
9. Conclusion 73
10. Recommendations 74
11.Annexure 75
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1. Introduction
1.1 Introduction of Bank
It has not so far been decided as to how the word “Bank” originated. Some
author’s opinion is that this word is derived from the words “Bancus or Banque’
which mean a bench. Other authorities hold the opinion that the word ‘Bank’ is
derived from the German word ‘Back’, which means “Joint Stock Fund”. It is
therefore, not possible to decide as to which of the opinion is correct, for no record
is available to ascertain the validity of any of the opinions.
It is defined as,
"A financial institution, deals with money and credit. It accepts deposits
from individuals, firms and companies at a lower rate of interest and gives at
higher rate of interest to those who need them.”
1.2 Kinds of Bank
Bank is classified into three types. These are:
I. Classification on the Basis of Function
II. Classification on the Basis of Ownership
III. Classification on the Basis of Domicile
IV. Scheduled Banks Vs Non-Scheduled Banks
I. Classification on the Basis of Function
When bank is classified on the basis of function, it can be divided into:
1. Central Bank
2. Commercial Bank
3. Exchange Bank
4. Saving Bank
5. Agricultural Bank
6. Industrial Bank
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1. Central Bank
The function of the central bank is to regulate the flow of money and credit
in order to promote efficiency, stability and growth in the country.
2. Commercial Bank
The commercial banks have been the most effective mobilizes of savings
and have been providing working capital to trade, commerce & industry.
3. Exchange Bank
The exchange banks mainly deal with international trade.
4. Saving Bank
The saving banks collect and keep the small savings of public.
5. Agricultural Bank
The agricultural banks are set up to provide financial assistance to the
agriculturists.
6. Industrial Bank
The industrial bank provides short, medium, and long term credit to the
industries.
II. Classification on the Basis of Ownership
When bank is classified on the basis of ownership, it can be divided into:
1. Public Sector Bank
2. Private Sector Bank
3. Cooperative Bank
1. Public Sector Bank
These are owed and controlled by the Govt. e.g. National Bank
2. Private Sector Bank
These are owed by private corporations such as HBL, ABL, MCB etc.
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3. Cooperative Bank
Cooperative are a integral part of the cooperative movement which aims at
the promotion of thrift, self-help and mutual aid amongst agriculturists and others
with common economic needs so as to bring about better living, better business
and better methods of production etc.
III. Classification on the Basis of Domicile
When bank is classified on the basis of ownership, it can be divided into:
1. Domestic Bank
2. Foreign Bank
1. Domestic Bank
Those banks which are registered ad incorporated within the country are
called domestic banks.
2. Foreign Bank
Those banks which have their origin and head offices in the foreign country
are called foreign banks.
IV. Scheduled Banks Vs Non-Scheduled Banks
Scheduled Bank means enlisted bank. It means that the bank which is
enlisted as recognized bank with the central bank is called as scheduled bank.
Non-Scheduled bank are such banks that is not enlisted in the schedule of central
bank.
1.3 History of Banking in Pakistan
The partition plan was announced on June 3, 1947 and August 15, 1949
was fixed as the date on which independence was to take effect. It was decided
that the Reserve bank of India should continue to function in the dominion of
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Pakistan until September 30, 1948 due to administrative and technical difficulties
involved in immediately establishing and operating a Central Bank.
At the time of partition, total number of banks in Pakistan were 38 out of
these the commercial banks in Pakistan were 2, which were Habib Bank Limited
and Australia Bank of India. The total deposits in Pakistani banks stood at Rs.880
million whereas the advances were Rs.198 million. The Governor General of
Pakistan, Muhammad Ali Jinnah issued the order for the establishment of State
Bank of Pakistan on 1st of July 1948.
In 1949, National Bank of Pakistan was established. It started with six
offices in former East Pakistan. There were 14 Pakistani scheduled commercial
banks operating in the country on December 1973. The Pakistan Banking Council
prepared banks amalgamation schemes in 1974 for amalgamation of smaller banks
with the five bigger banks of the country. These five banks are as under:
1. National Bank of Pakistan
2. Habib Bank Limited
3. United Bank Limited
4. Muslim Commercial Bank Limited
5. Allied Bank Limited
In early 90’s after the failure of nationalization policy, Government went
for privatization of financial institution. In last ten to fifteen years banking sector
in Pakistan has shown tremendous growth. Due to its remarkable growth, banking
sector of Pakistan has become very attractive for foreign investors. Many investors
have already invested and still many more to come.
1.4 List of Banks in Pakistan
There is some list of scheduled banks that are operating in Pakistan.
I. Central Bank
 State Bank of Pakistan
II. Public Sector Banks
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 First Women Bank
Limited
 National Bank of
Pakistan
 Habib Bank Limited
III. Privatized Banks
 Allied Bank Limited
 United Bank
Limited
 Muslim Commercial
Bank Limited
IV. Specialized Banks
 Industrial
Development Bank of Pakistan
 Punjab Provincial
Cooperative Bank
 Zarai Taraqiati Bank
Limited
 Federal Bank of
Cooperativeness
V. Private Banks
 Askari Commercial
Bank Limited
 Arif Habib Bank
Limited
 Bank Alfalah
Limited
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 Bank Al-Habib
Limited
 Faysal Bank Limited
 Habib Metropolitan
Bank Limited
 JS Bank Limited
 KASB Bank Limited
 MCB Bank Limited
 Mybank Limited
 Soneri Bank Limited
 Standard Chartered
Bank (Pakistan) Limited
 NIB Bank Limited
 SAMBA Bank
Limited
VI. Provincial Banks
 The Bank of Punjab
 The Bank of Khyber
VII. Islamic Banks
 BankIslami Pakistan
Limited
 Meezan Bank
Limited
 Dubai Islamic Bank
Pakistan Limited
 Daqood Islamic
Bank Limited
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VIII. Foreign Banks
 Barclays Bank PLC
 CitiBank N.A.
 HSBS Bank Middle
East Limited
 Oman International
Bank S.A.O.G.
 Deutsche Bank AG
 The Bank of Tokyo -
Mitsubishi UFJ Limited
IX. Micro Finance Banks
 KASHF
Microfinance Bank Limited
 Khushali Bank
Limited
 Rozgar
 The First Micro
Finance Bank Limited
 Pak Oman
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2. Overview of Organization
2.1 Introduction
HBL is the prime Bank in country, established in 1941, having its
registered head office in Karachi. It was nationalized in 1974, but on 26th February
2004 it was privatized by Government of Pakistan and taken over by Aga Khan
Fund for Economic Development (AKFED). They acquired 51 percent of shares
of HBL.
It is one of the largest Banks of Pakistan with 1466 branches inside country
and 112 overseas offices (presence in 25 countries) at different destinations around
the world covering 5 continents. It internationally operates in countries including
USA (New York), United Kingdom (London, Manchester, Birmingham), Scotland
(Glasgow), Belgium (Brussels), France (Paris), Lebanon (Beirut), Netherlands
(Rotterdam), Turkey (Istanbul), Kenya, Mauritius, Seychelles, Nigeria,
Afghanistan, Bahrain, Oman, UAE, Iran, Sri Lanka, Sudan, Kuwait, Bangladesh,
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Egypt, Hong Kong, Singapore, Maldives, Indonesia, China and Australia.
Currently HBL is having customer base of over 6 million.
2.2 Organization Brief
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Particulars Descriptions
Name Habib Bank Limited
Date of Incorporation August 25, 1942
Banking Ordinance 1984
Nature of Business Commercial, Investment and Islamic Banking
• Lahore Stock Exchange

Listed in • Karachi Stock Exchange
• Islamabad Stock Exchange
• Credit Card
• Debt Card
Product Portfolio
• Phone Banking
• Deposit Accounts
Branch Network 1466 branches inside country and 112 overseas offices
Habib Bank Plaza,
Head Office I.I.Chundrigar Road,
Karachi-75650, Pakistan.
4th Floor, Habib Bank Tower,
Registered Office Jinnah Avenue,
Islamabad, Pakistan.
Web Address www.habibbankltd.com
2.3 History
Habib Bank Limited was established by Mr. Ismail Habib on August 25,
1942 on the desire of Quaid-e-Azam Muhammad Ali Jinnah, father of the nation.
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It was established with paid up capital of Rs.2.5 million. It was the first Muslim
bank of sub continent. Quaid-e-Azam first of all opened his personal account.
The first branch of HBL started functioning on 30th August, 1942 at
Muhammad Ali Road Bombay, In 1942, on the desire of Quaid-e-Azam, 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.
At the time of independence, the areas which now constitute Pakistan were
producing only agricultural products raw material for indo-Pak subcontinent.
Partially no industries were there to process the raw material; therefore the raw
material was exported from Pakistan. There were 19 non-Indian foreign Banks
which were engaged in the export of crops from Pakistan with only two Pakistani
Banks i.e. HBL and the Australia Bank. The circumstances were completely un-
certain.
Following the announcement of the independence plan in June, 1947, the
Banks included those having their registered offices in Pakistan, transferred them
to India in order to bring a total collapse of the new state. It had been decided that
the Reserve Bank of India would continue to function in Pakistan so that the
problem of demand and time liabilities, coinage, currencies, exchange rate etc be
settled between India and Pakistan and the Indian Notes would continue to be
legal tender in Pakistan till 30th September, 1948.
At a time when this newly born country was at whirlwind of crises, it was
HBL which fulfilled generously the financial needs of all its sectors, paid salaries
to the employees of all Govt. departments, helped in the establishment of State
Bank of Pakistan which the Quaid-e-Azam inaugurated on July 1st, 1948. HBL
after partition opened its branches throughout Pakistan to provide finance and
other facilities to the business community. In association with HBL, the Govt.
sponsored Pakistan Finance Corporation Limited for financing of cotton. The
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Bank helped handsomely in the construction of WARSAK DAM PROJECT,
WAPDA, & K.D.A. by provided finance and other facilities.
2.4 Vision, Mission and Objectives
Vision:
“Enabling people to advance with confidence and success”
Mission:
“To make our customers prosper, our staff excel and create value for
shareholders”
Our Band:
“Our brand identity is the outward expression of what we stand for as an
organization. This is summarized in our vision, mission and is supported by our
values.”
Our Values:
Our values are the fundamental principles that define our culture and are
brought to life in our attitudes and behavior. It is our values that make
us unique and unmistakable.
Our values are defined below:
 Excellence
 Integrity
 Progressiveness
 Customer Focus
Objectives:
Following are the main objectives of HBL are:
 To earn profit for the Bank itself and for its shareholders.
 To promote and boost up business sector inside the country.
 To provide employment opportunities to people.
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 To help in development and industrialization of the country.
 To provide loan and advances to help out in self employment schemes.
Symbols of HBL:
This symbol of HBL contains Bismillah at top, word under Bismillah and
then lion under sword. This symbol depicts….
I. Bismillah Islamic Culture and Values
II. Sword Power
III. Lion As a symbol of strength
Logo:
“The power to lead”
2.5 Product and Services Offered
2.5.1 Products Offered
Habib Bank Limited offers the following products to its customers:
• HBL Auto Finance
• HBL Flexi Loans for Salaried Personnel
• HBL i-Card
• HBL House Financing Loans
• HBL Easy Access
• HBL Fast Transfer
• HBL e-Bank
• HBL Phone Banking
• Amaan and Tabeer Plan
• Deposit Accounts
• HBL Car Loans
• Lockers
1. Auto Finance
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Habib Bank Auto Finance, a lease product, designed to offer you an
economical way for owing the car of your choice. Some characteristics are:
 Lowest down payment and monthly rentals.
 Fixed repayment tenures of 36, 48 and 60 months.
 Lowest processing charges.
 Insurance premium rates as low as 3%.
 All locally assembled new cars can be financed through this scheme.
2. HBL Flexi Loan
HBL had introduced a unique loan system for the middle income serving
people in various public sectors. It is basically meant for those in service people
who earn more than Rs.5000 per month. This loan meets the petty requirements of
the salaried class. Since the introduction of this scheme Rs.6 billion is advanced
throughout the country. The maximum limit of this loan is Rs.3,000,000.
3. HBL i-Card
HBL i-Card is used for dual purposes-a debit card and an ATM card and
provides you the direct access to cash in your account.
• HBL i-Card as your Debit Card
When payment is made at any merchant location using the card,
exact purchase amount is deducted from your account.
 Convenient, secure, quick and easy payment option.
 Nationwide acceptability at various merchant locations.
 Free of charge debit card transactions.
• HBL i-Card as your ATM Card
 Offer a number of facilities such as cash withdrawal, Funds
transfer, Balance Inquiry, Mini Statement, and PIN Change etc.
 Accepted across all over the country.
4. HBL House Finance
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HBL provides the facility of house finance. The financing available for:
 Purchase of house
 Home improvement and renovation
 Self Construction
Some Characteristics are:
 Lowest marl-Ups leading to affordable monthly installments.
 5 years fixed Rates/ one year Floating Rate available.
 Lowest processing charges and quick processing.
 Financing tenures ranging from 3 to 20 years.
 Financing limits of up to Rs.7.5 million.
5. HBL Fast Transfer
This service provides a unique solution for overseas Pakistanis to send
money back home in a swift and convenient manner.
6. HBL Credit Card Payments
 Maximum loan up to Rs.1,000,000.
 Lowest mark-up-compared to any credit card.
 Choice of 12, 24, 36, 48 and 60 months for payback.
 Quick processing
 Full Credit Life insurance
 Available from over 400 designated branches throughout Pakistan.
7. HBL E-Bank
It provides services via a dedicated communication link on the internet. The
E-Banking services provide “anytime, anywhere” banking to all 6 million
customers. This service, designed to be user friendly, assures secured access and
confidentiality.
8. HBL Phone Banking
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Now the bank is just call away. Customer can now call HBL Phone
Banking and save a trip to the branch. His query will be resolved in a single
telephone call from anywhere and at anytime. It can help us in T-Pin generation
and informing the customers about their bank balance.
9. Amaan and Tabeer Plan
HBL and New Jubilee Life Insurance Company Limited (NJLI) introduce
Amaan (Retirement Plan) and Tabeer (Child Education & Marriage). These
products have been designed keeping HBL’s customer base as the focus and will
provide life insurance along with an investment option.
10. Deposit Accounts
HBL also offers the different kind of deposit accounts to their customers
whether he may be individual, business customers. These accounts are:
1. Current Accounts
2. Saving Accounts
3. Basic Banking Accounts
4. Foreign Currency Accounts
11. HBL Car Loan
HBL Car Loan helps customers to get their preferred car through a simple
and hassle-free process, backed by superior service and support. Now customer
can drive a car he always wanted.
12. Lockers
Lockers are available in many of the HBL branches in different sizes like
small, medium and large; some branches also have extra large and cubical lockers.
Only the account holders can avail the facility of lockers. The annual rent will be
directly debited from their respected accounts at the start of the year. Key deposit
is refundable at the time handing over the locker to bank. For the staff of HBL key
deposit is not required and also the annual rent is very low for them.
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2.5.2 Services Offered
Habib Bank Limited offers the following services to the customers:
 Consumer Banking
 Cash Management
 Utilities
 Transferring of Money
 Issuance of Letter of Guarantee (L/G)
 Islamic Banking
 Zarai Banking
1. Consumer Banking
Habib Bank Ltd. has always tried to cover for this requirement and along
with its normal consumer banking services it has very often introduced quite a few
innovative services in the market in order to satisfy its customers. As we already
know Habib Bank Ltd. was the first bank to introduce Traveler’s Cheques in
Pakistan, and the Habib Bank Master Card was the first to be introduced in the
region.
2. Cash Management
Our Cash management Services cover local and cross border payments,
collections, account services and liquidity management for both corporate and
institutional customers.
3. Utilities
For the convenience Habib Bank always stands in the way like other banks,
to provide as per standing order facilities to the customers like, bank paid
Electricity Bills, Phone Bills, Gas Bills and other utilities expenses on the behalf
of customer.
4. Transferring of Money
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The bank provide facility of transferring of money from one place to
another place within the country as well as outside Pakistan the bank receive
normal changes as per their schedule of charges declared half yearly from their
customers for transferring the money. The various channels of remittance are as
under:
1. Demand Draft (DD)
2. Telegraphic Transfer (TT)
3. Mail Transfer (MT)
4. Muhafiz Transfer Cheques (TC)
5. Issuance of Letter of Guarantee (L/G)
The bank issue letter of guarantee on behalf of their customers financing
customer authorities export promotion bureau Sui nothern gas pipeline, other
government agencies as requested by their customers.
6. Islamic Banking
Islamic Banking is a growing market segment that offers attractive
opportunities to potential and existing customers. At HBL, Islamic Banking offers
Shariah compliant products and services to meet the short term and long term
requirements of business, trade and industry.
It includes:
 Ijarah (Leasing) Medium to long term facility foe vehicles, plant
and machinery leased out to the client on rental
basis.
 Musharaka Medium to long term facility for vehicles, plant
and machinery on joint ownership basis.
 Trade Services Letter of Credit Facility, Collection of Foreign
Bills, Collection of Local Bills, Letter of
Guarantees.
Some services offered by our branches that are:
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1. ATM / Debit Card Facility
2. Foreign / Inland Remittances
3. Utility Bills Collection
4. E-banking / Internet Banking Services
5. 24/7 Phone Banking Services
7. Zarai Banking
HBL Zarai Banking facilities are spread across the country and provide
financing through more than 800 of our branches. HBL ensures easy access to
farmers in rural areas. HBL Zarai Banking provides loans to small scale land
owing farmers as well as large institutionalized and alliance based finance,
enhancing agricultural harvest and, in turn, economic output of the country. HBL
Zarai Banking enables farmers to invest in premier quality seeds, fertilizers,
pesticides, agricultural implements and non-farms setups through its various
product programs. Some are:
1. Crop Inputs
2. Farm Implements
3. Tractors/Agricultura
l Vehicles
4. Livestock
5. Poultry
6. Fish Farming
2.5.3 Technology used by HBL
Software used by HBL:
HBL is enjoying the competitive advantage of vast operational area. There
are two types of branches come under HBL network. One type is the online
branches whereas other type is batch branches (offline branches). So obviously
HBL uses two types of different software. All batch branches use SIMEX
software whereas online branches use MYSIS.
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2.6 HBL at a Glance
Operational & Financial Aspects
Year Deposits Advances Profit (Pre- Assets Branches

Rupees in Rupees in tax) Rupees in
millions millions Rupees in million
millions
1941-
24.0 10.3 0.4 27.0 2
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1947 266.0 63.7 1.5 321.2 21
1973 7579.8 4005.1 113.0 11679 749
1974 8592.8 6212.4 211.8 15,531 1084
1990 120680.2 81140.9 731.0 228,799 1904
2001 283,445 167,225 2224 333,751 1516
2002 328,182 167,523 4088 403,013 1473
2003 360,648 183,654 5469 434,932 1470
2004 404,629 258,306 7146 486,982 1469
2005 432,545 316,681 13833 528,893 1425
2006 459,140 349,432 20532 590,291 1425
2007 517,481 354,980 10199 654,652 1477
2008 437,098 74,622 16254 696,712 1464
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2.7 A bird’s eye view
Year Important Events
1941 Commenced operation.
1942 Deposits reached 20 million rupees.
1943 Moved operations from Bombay to Karachi on the Quaid’s Request.
1946 First Banking Scheme Started for the Muslim Youth.
1947 HBL head office transferred to Pakistan.
1966 Silver Jubilee.
1974 Bank was Nationalized.
1991 Golden Jubilee
1997 HBL was Reorganized.
2004 HBL was Privatized.
Largest Private Commercial Bank in Pakistan with branch network of

2006 1477 branches within Pakistan and 65 international branches in 26
Countries.
HBL introduces the Credit Card and Enhanced Saving accounts

2007
i-Card and Auto cash became inactive.
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2008  Most innovative Global Trade Finance award
 Best bank in Pakistan award
 HBL milestones---busiest brands awards
 Pakistan’s Largest Banking Network .

2009  The Best Emerging Market Bank in Pakistan
 HBL among Top 500 Global Financial Brands
2010  HBL’s wins best emerging market banks award in Pakistan
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3. Organization Structure
An organization needs a structure which provides the framework for
successful operations. The operation of organization involves the number of
activities, which are related to decision making and communication of these
decisions. These decisions must be well coordinated so that the goals of
organization can be achieved successfully.
3.1 Structure of HBL
At present the Bank operates through one central and 23 Regional Offices
and 1439 branches, all over Pakistan. The president and Executives Committee
look after the affairs of the Bank. Each Regional Head Quarter is headed by a
Chief Executive and assisted by General Manager Operations and General
Manager Support Services. The Regional Head Quarter controls the branches in
their area. Overseas operations consist of 65 main branches, two affiliates, two
representative offices and two subsidiaries.
President, from Head Office at Karachi controls the officers of the Bank
with the help of the senior management. Functional responsibilities of the Banks
are broken into seven groups known as:
1) International Operations Group
2) Corporate Banking and Treasury Investment Group
3) Retail Banking and Operation Group
4) Finance, Audit and Administration Group
5) Assets Remedial Management Group
6) Credit Policy Group
7) Corporate Bank, Financial Institutions and Project Finance Group
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3.2 Organizational Chart of HBL
A chart defines the line of authority in an organization and its departments.
It is a sort of visual presentation of the organizational structure. It specifies the
duties and responsibilities of the personnel of the organization. The Organizational
chart of HBL is given below.
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3.3 Analysis of Organizational Structure
The purpose of an organizational structure is to help in creating an
environment for human performance. Although the structure must define the task
to be done, the rules so established must also be designed in the light of abilities
and motivation of the human recourse available. By analyzing the organizational
structure of HBL presence of the following elements can be found in its structure.
1. Centralized Decision Making
By looking at the organizational structure of HBL would be found that the
structure at HBL is a critical one. All the decisions are made at the top
management level and the subordinates have to obey these decisions. This trend in
the decision making shows a pattern of rigidity in structure of HBL.
2. Downward Communication
Communication is the process by which information is exchanged and
understood by two or more people in the organization. Downward communication
is the message and information sent from top management to subordinates in a
downward direction. Managers can communicate downward to the employees
through speeches, massages in company publications, information leaflets, tucked
into pay envelops material on bulletin boards, policy and procedure mandates.
The same pattern is followed at HBL. No doubt it’s a very traditional
approach but it can create problems because it ignores the receiver of the
communication because the issuer of policies and procedures does not ensure
communication. In reality may the messages communicated downward are not
understood perfectly.
3. Chain of Command
The chain of command is an unbroken line of authority that links all
persons in an organization and shows who reports to whom. By analyzing the
organizational structure it can be found that there is a scalar principle followed
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within the Bank because each and every person knows to whom one can report.
The authority and responsibility for different tasks and duties are different, as well
as, every one knows the successive levels of management all the way to the top.
4. Authority and Responsibility
The chain of command tells about the authority structure of HBL. Authority
is the formal and legitimate right of the manger to make decisions, issues orders
and allocates resources to achieve organizational desired outcomes. By analyzing
the chain of command of HBL, one can come to the conclusion that, as there is
scalar pattern followed at the organizational setup of HBL. Therefore it is implied
that everyone in his position knows that what is one’s authority and what is the
responsibility and the authority it allocated.
5. Delegation
Delegation is the process, which managers use to transfer the authority and
responsibility to position below in the hierarchy. Most organizations today
encourage managers to delegate authority to the lowest possible level to provide
maximum flexibility to meet customer needs and adapts to the environment. But at
HBL no such system prevails the managers try to keep as much of the authority as
they can and if some authority is delegated it is sure that it will be misused.
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4. Operations of HBL
There are few departments on which general or day to day banking of HBL
composes. These are basically the departments of HBL. There details are as under:
1. Account Opening department
2. Cash Department
3. Advances/Credit Department
4. Clearing Department
5. Foreign Exchange Department
6. Billing Department
7. I.T. Department
8. Insurance Department
4.1 Account 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.
Types of accounts:
There are different accounts that can be opened in the bank. These are:
1. Individual Accounts
2. Joint Accounts
3. Business Accounts
1. Individual accounts
Individual accounts are the most common personal investment accounts
opened by single person.
2. Joint Accounts
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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.
3. Business accounts
Business accounts can be opened by institutions, companies, partnerships,
trusts and non-profit organizations.
Some other accounts that can be opened in banks for the request of
customer that is:
1. Current Accounts
2. Saving Accounts
3. Basic Banking Accounts
4. Foreign Exchange Accounts
1. Current Accounts
Current account is also called demand deposit. In the current account two
types of account come that is:
• Simple Accounts
• HBL Freedom Accounts
Simple Accounts:
Simple accounts of HBL is open with Rs.1,000. In this account minimum
balance of Rs.5,000 is required. Any Amount less than Rs.5,000 the bank will
charge Rs.58 per month on the remaining balance. This type of accounts is mainly
open for the individuals, who can draw money any time from the bank. This is the
main function of this account. There is no interest paid by the bank on this sort of
account. It is used for the security of money. For simple accounts, the charges on
cheque book and ATM cards are deducted form his account balance.
HBL Freedom Accounts:
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A freedom account of HBL is open with Rs.25,000. Any Amount less than
Rs.25,000 the bank will closes that account. The freedom account is mainly open
for the business man, who can draw money any time. Such type of accounts
provides the unlimited free online, ATM cards, bank statements and free cheque
book facilities. There is no interest paid by the bank on this sort of account. No
profit is given and zakat is not deducted.
2. Saving Accounts
Saving accounts are opposite of current account. These sorts of accounts
are provided to encourage savings habits. The function of the saving accounts is to
save the surplus money of the people by giving them good interest rate. There are
different classifications of saving accounts, like as short, medium and long term
saving plans. Each set has its own unique characteristic.
Such types of account are:
• Simple Saving Accounts
• HBL Value Accounts
• HBL Advantage Accounts
Simple Saving Accounts:
The simple saving account of HBL is started from Rs.5,000. In this account
minimum balance of Rs.20,000 is required. 5% annually profit is given to such
types of account holders. Any Amount less than Rs.20,000 the bank will charge
Rs.58 per month on the remaining balance. Zakat is deducted, if any person does
not want to deduct zakat, a performa will be given that should be attached with the
application of the new account. There is no demand for taking the money; you can
draw the money at any time.
HBL Value Accounts:
The value accounts of HBL is started from Rs.5,000. In this account
minimum balance of Rs.20,000 is required. 7% quarterly profit is given to such
29
types of account holders. Any Amount less than Rs.20,000 the bank will charge
Rs.58 per month on the remaining balance. Zakat is deducted, if any person does
not want to deduct zakat, a performa will be given that should be attached with the
application of the new account. In one month, you take money for two times,
otherwise the bank will deduct the charges from your remaining balance.
HBL Advantage Accounts:
In this account, accountholders fixed the some specific mount for the short
time period. These periods may be 3 months, 6 months, and 12 months.In this
account, at least Rs.25,000 is required. 10.25% annually profit is given to such
types of account holders. The bank can give the businessman whole part as a loan.
Zakat is deducted, if any person does not want to deduct zakat, a performa will be
given that should be attached with the application of the new account.
3. Basic Banking Account (BBA)
This account is basically introduced to cater needs of student and salaried
persons. We can say that it is an aspect of corporate social responsibility of bank.
It is similar to current account as no interest is paid. There will not be any
deduction or penalties in case of minimum balance. The only precaution to operate
this account to make sure that balance should not be zero or negative. A person
can do transactions two times in one month either depositing the money or
withdrawing the money.
4. Foreign Exchange Accounts
HBL offers Foreign Currency Accounts in multiple currencies as savings and
term accounts. Such type of accounts offered in 3 currencies like as, USD (US
dollar), EUR (Euros) and PKR (Pak Rupees) and other currencies.
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.
30
Documents require for opening an account:
 Copy of CNIC Card
 In case of salaried person attested copy of service certificate
is obtained.
 In case of student, student ID card is obtained.
 For jointly operated account obtain survivorship mandate.
Specimen Signature:
When the Banker is satisfied about the integrity of the customer, he agrees
to open the account. The Banker obtains the specimen signatures from the
customer on the signature book or on card.
Posting the account on the system:
When all requirements are fulfilled by the applicant, the procedure of
account opening starts. To open an account of any type, bank officer has to go
through five different windows of MYSIS, and then the account holder
information is sent for verification.
1) ANC stands for Add New Customer
2) CIM stands for Customer Additional Information Maintenance
3) CAA stands for Customer Account Address
4) OCA stands for Open Customer New Account
5) ZYC stands for Know Your Customer
Allotment of Account Number:
After going through the procedure above mentioned an account number is
given to the customer. This gives the guarantee to accountholders that nobody can
use their account number. After allotment of account number it remains block for
two days as the verification process is in process in these two days.
Specialty of Account Number:
31
Fourteen digits account number is allotted to the HBL account holder. The
first four digits are code of HBL branch where account is going to be opened,
afterward eight digits are customer account serial number and last two digits
indicates type of account.
Check Book Issuing:
After the CNIC verification account opening officer has to issue a cheque
book to customer so that he can be able to make withdrawal from his account.
Now a day 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
engaged in the Bank service.
Books Relating to the Customers:
1. Pay-in-Slip
When money is to be deposited in the bank the pay in slip is to be filled.
The object of this book is to provide the customer with the bank’s
acknowledgement for receipt of money to be credited his account.
2. Cheque Book
A chequebook 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
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iv. By order of court
4.2 Cash Department
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 number, account type, account
number and amount. Then he puts 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. The cashier receives the cheque and checks it
whether it is postdated 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. When 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.
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. P.M.C
33
branch’s limit for cash is 40 million which it can keep within the branch over the
night excess cash is transferred to SBP.
Online Fund Transfer:
Another function of the cash department is of online transfer of funds.
Customer has give filled remittances form with cash or without cash (from account
transfer) to the cashier in cash department who will then credits the beneficiary
account. These receivables are than further classified as under
 Inter bank transfers
 Intra bank transfers
 Bankers Cheques
 Online transfers
All those cheques which are of same branch or bank (e.g. HBL) are termed
as online transfer provided that both concern branches are online. Cross stamps are
engraved in front of instrument received to make it ownership of bank.
1. Intra Bank Transfers
When an account holder presents a cheque of another party who is also the
account holder of same branch, funds are transferred immediate by using online
system and available for usage. This is known as intra Bank transfer.
2. Inter Bank Transfers
When an account holder (may be of same branch but should be of HBL)
presents a cheque of another party (account holder of HBL any other branch),
funds are transferred immediate by using online system and available for usage.
This is known as inter bank transfer.
3. Bankers Cheques
Bankers Cheque is recently introduced by HBL to replace old concept of
pay order and demand. This step was undertaken to make banking operations more
customer friendly as well as brought simplicity in banks operations. Pay Order
34
was made for local funds movement and Demand Draft to make payments in
outside region. But now for all customers, banker’s cheque is issued. The issuance
procedure is same as earlier. Customer has to fill Remittance form which includes
all relevant information.
4.3 Credit Department

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:
1. Guarantees
2. Mortgages
3. Pledge
4. Promissory Note
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
A mortgage is the transfer of an interest in specific immovable property for
the purpose of security the payment of money advanced, which may raise a
liability. The transfer is called a mortgagor.
3. Pledge
35
In a pledge the ownership remains with pledge, but the pledge has the
exclusive possession of property until the advance is repaid in full. In case of the
default, the pledge has the power of sale after giving due notice.
4. 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.
Types of Advances
The advances which are given by Habib Bank Limited are as under:
1. Demand Finance (Ordinary Loan)
2. Running Finance (Overdraft)
1. Demand Finance
Demand Finances are those advances which are allowed in lump sum for a
fixed period and are repayable lump sum or in installments. It is also called
Ordinary Loan. It may be:
1. Demand Finance (Packing Credit)
Scheme introduced by SBP for exporter of carpet, surgical
instruments, at zero percent rate of interest. Banks provides at
concessional rate of interest.
2. Demand Finance (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.
3. Demand Finance (Staff)
Loans are offered to the staff of the following four categories.
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i. House Building Loans against mortgage of property.
ii. Loan for purchasing vehicles.
iii. Loan equivalent to month’s salary.
2. Running Finance
Running finance 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 and as a line of
security defense to meet his commitments. It may be:
I. Unsecured
Under such type, the bank pay upon the personal security of the
customer’s mentioned on the customer’s account.
II. Secured
Under this type, 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
4.4 Clearing Department
Every bank performs both as a paying as well as collecting functions on
behalf of its customer. It is however an important function of crossed cheques. A
large part of this work is carried out through the bankers clearing house. A
37
clearing house is a place where representatives of all the banks of a city get
together and settle the receipts and payments of cheques drawn on each other
bank. As the collecting banker runs the certain risks in receipt of their ownership,
the law has provided certain protections to the banks.
The basic function of clearing department arises when HBL account holder
deposits cheque of another bank to collect its payment on his behalf or HBL
account holder gives a cheque to any other party concerning to any other bank.
Usually a cheque is sent through clearing is credited to the depositor account day
after tomorrow. In this regard there are two types of clearings:
 Inward Clearing
 Outward Clearing
1. Inward Clearing
Inward clearing means all those cheques which are issued by account
holders to other parties and now these cheques are presented for payment (in term
of amount of cheque credit to presenter account).
2. Outward Clearing
Similarly when outside parties issue some cheque to our account holders,
they deposit these cheques in Cheque Receipts Department. Afterward these
cheques, as relating to other banks operating in country, are sent to clearing
department or further process. Clearing department sends these cheques to
respective banks and after realization of cheque, funds are credited to the account
of respective customer. In this regard there are two types of clearing
i. Intra city clearing
ii. Intercity clearing
These cheques are sent through NIFT. Time for realization may differ in
case of remote areas.
4.5 Foreign Exchange Department
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International trade is growing and with the development of international
trade it has become more imperative. A country devotes more attention for the
foreign exchange. It is more important in case of developing countries. It is need
of time, that a country should conserve its foreign exchange resources.
The foreign exchange term refers to the principles that determine the rate of
exchange. It covers following three senses:
1. The mechanism or system by which international obligations or
indebtedness are fulfilled.
2. The currency of one country is exchanged for that of another.
3. 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.
Necessary Documents required for L/C:
 NTN (National Tax Number)
 Tax Authority registration certificate
 Chamber of Association’s trade certificate
 Type of Business
 NIC
 Registration Number
 Application for Letter of Credit
Charges:
For L/C following charges are applicable;
 Commission
39
 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 that is Importer makes payment before
delivery of goods.
2) Open Account that is Importer makes payment after receiving
the goods.
Issuing foreign exchange accounts cheques books:
Another function of foreign exchange department in HBL 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.
4.6 Billing Department
In this department, a person sits there to collect the bills that may be the Sui
Northern Gas Bill, Electricity Bills, and Phone Bills. After collecting the bills, he
signs on the bills and obtains the payment. When he obtains the payment, he
counts the money and if the correct amount of money is obtained, he gives the
receipt to the customers. One copy of receipt is recorded to the billing department
register. At the end, he writes the summary of collecting account of the bills and
submits this report to the operation manager.
4.7 Insurance Department
Insuatance department deals with Amaan (Retirment Plan) and Tabeer
(Child Education and Marraiage Plan). These products have been designed
40
keeping HBL’s customer base as the focus and will provide life insurance along
with an investment option.
Amaan (Retirement Plan):
Amaan is a pension plan that provides an opportunity for growth through
investment in a balanced portfolio with post-retirement income benefits. The plan
covers life insurance and gives attractive returns on investment to its customers.
Tabeer (Child Education and Marriage Plan):
Tabeer is a plan that provides parents with a means to accumulate a fund
over a period of time which can then be used to pay for a child’s education or
marriage. Plans are available for both under and over 45 years of age.
5. PEST Analysis
HBL is taken from the logo
"The power to lead"
PEST analysis stands for" Political, Economic, Social, and Technological
analysis" and describes a framework of macro-environmental factors used in the
environmental scanning component of strategic management. So, we have applied
the PEST Analysis into the respective divisions:
1. Political / Legal Factor
2. Economic Factor
3. Social Factor
4. Technological Factor
Graphical Representation
41
1.
Political/Legal Factor
Government policies affect the banking sector. Various banks in the
cooperative sector are open and run by the politicians. They exploit these banks
for their benefits. Sometimes the government appoints various chairmen of the
banks. Various policies are framed by the SBP looking at the present situation of
the country for better control over the bank.
42
Banks are strongly affected by the political and legal considerations. This
environment is composed of regulatory agencies and government law that
influences and limits various organization and individuals. Mostly these laws
create new opportunities for business. Business legislation has following main
purposes:
1. To protect banking companies from unfair competition
2. To protect from unfair business practices adopted by banking
companies
3. To protect the interest of the society from unbridled business
behavior.
2. Economic Factor
A banking market requires better consumer market in volume along with
higher borrowing power. The available borrowing power depends on:
 Customer income
 Saving rates
 Consumption patrons
 Rates of interest
 Budget deficits
 Exchange rates
 Cost of living
 Inflation
All these factors affect the banking in Pakistan. Inflation represents a rise in
general level of prices of goods and services over a period of time. It leads to
erosion in the purchasing power of money. Different fiscal and monetary policies
affect the inflation rates. Customer’s income is low but they open the accounts, in
this way at the end their rupees are deducted if there is less balance as
requirements of the accounting in a bank. Budget deficits are also creating the
43
problem in banking sector. Rate of interest is the main factor that affects the
banking in Pakistan.
3. Social Factor
Social Factor also affects the business. They show in which people behave
in the country. A society is shaped by beliefs, norms and values. People in a
society consciously and unconsciously interact with:
 Themselves and others
 Organization
 Society
 Nature
Following are the main factors. Which arises because of change in socio-
cultural environment?
1. Consciousness about services
2. Concern for environment
3. Improved customer relation
4. Changes in the life style
5. Literacy rates
4. Technological Factor
Forces of technological advancements have played the most dramatic role
in shaping the lives of people. The rate of change of technology has greatly
affected the rate of growth of economy. New technology is creating deep rooted
affects which could be observed in long run. The improvement techniques
involved in online banking, phone banking, mobile banking, and ATM.
6. SWOT Analysis
44
SWOT analysis is a tool for auditing an organization and its environment.
It is the stage of planning and helps marketers to focus on key issues. SWOT
stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and
weaknesses are internal factors. Opportunities and Threats are external factors.
HBL is considered to be a very sound bank in the financial circles. This is
the bank where customers can safely keep their money as long as they want. In
SWOT analysis the best strategies accomplish in organization’s mission by:
 Exploiting opportunities and strengths
 Neutralizing its threats and

 Avoiding its weaknesses
1. Strengths
45
 A skill or capability that enables HBL to conceive and implement its
strategies.
 HBL is the larger commercial bank in Pakistan with the network of over
1466 domestic and international branches.
 Being the pioneer of banking in Pakistan, HBL is the oldest and is the
richest in experience.
 The officers of HBL are considered as one of the most able professionals in
the banking world.
 HBL has got a reliable and easy to use internal computer system. HBL
maintained its data properly.
 HBL has very good security system.
 HBL focuses on consumer banking by innovative 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.
 The brand is always on the look to improve its services both to the domestic
as well as overseas customers.
 24 hours cash access and safe payment products for high value transaction.
 Having potential to encounter the competitive environment in the market.
 Customer enjoys the services at the residential localities.
 HBL enjoys deep relations with all most all industries in Pakistan
2. Weaknesses
 There is week communication system in overall HBL as well as inside
branches.
 Highest number of branches effecting the proper maintenance and difficulty
in providing same working environment at the each branch.
 Poorer system of recovery is a threat to bankruptcy.
46
 Lack of customer feedback.
 Low job satisfaction.
 Poor ATM’s 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 downsizing.
 Females feel uneasy in an environment among the male workers.
 Lack of professionalism in the branch employees mostly.
3. Opportunities
 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.
 Government is supporting very bold steps of bringing and promoting IT
in Pakistan. HBL has an opportunity to improve its technology.
 Large international network which principally focuses on trade finance
with Pakistan can be utilized to tap trade activities in other markets.
Financing power of customers should be enhanced in this way.
 Customer feedback on different products and accounts has really
improved the bank performance and encourage the atmosphere for other
future policies.
47
 HBL also has an opportunity to expand its new technological
advancement more effectively like; phone-banking and internet banking
facilities in order to serve the customer more efficiently.
 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.
 Due to efficient management group, HBL can also improve and expand
its foreign operation successfully.
 HBL provides opportunity to utilize its skills and efficiencies in leasing
business.
4. Threats
 Prevailing circumstances increases the difficulties the organization’s
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.
 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.
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7. Financial Analysis
7.1 Income Statement and Balance Sheet
Habib Bank Limited
Summarized Profit & Loss Account
As At December 31, 2009.
(Rupees '000)
2005 2006 2007 2008 2009
32,343,20 43,685,74 50,481,02
Mark up / interest earned 63,376,047 76,076,347
6 0 1
13,204,03 19,153,95
Mark up / interest expensed 7,327,603 26,525,556 33,405,813
7 7
25,015,60 30,481,70 31,327,06
NET MARK UP 3 3 4
36,850,491 42,670,534
Provision against non-performing loans 2,974,665 2,863,207 8,238,227 6,904,919 8,794,560

Provision against off-b/s obligations 128,851 -45,438 -54,626 372,598 -51,396
Provision against in investments -82,568 -13,697 -84,310 1,909,887 346,495
Bad debts written off directly 0 0 0 0 0
3,020,948 2,804,072 8,099,291 9,187,404 9,089,659
21,994,65 27,677,63 23,227,77
INTERSET INCOME AFTER PROVISION 5 1 3
27,663,087 33,580,875
PLUS: Non mark-up/interest income

Commission and brokerage income 2,938,000 3,931,710 3,420,051 4,518,408 5,316,479
Income / gain on investments 1,726,336 1,219,623 2,472,663 1,300,975 597,018
Income from dealing in foreign currency 1,402,521 1,102,358 1,487,374 2,374,318 1,913,115
Other income 1,787,443 2,235,805 2,643,076 3,088,994 3,333,000
10,023,16
7,854,300 8,489,496 11,282,695 11,159,612
4
29,848,95 36,167,12 33,250,93
PROFIT BEFORE INTETEST 5 7 7
38,945,782 44,740,487
LESS: Non mark-up/interest expense

15,697,46 17,149,23 18,297,27
Administrative expenses 21,425,361 22,745,955
4 2 9
Other provisions / write offs 249,033 122,510 -276,111 200,163 210,190
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3,540
Other charges 68,483 54,898 85,152 64,751
Worker welfare's fund 0 0 0 323,575 399,166
16,014,98 17,326,64 18,106,32
22,013,850 23,358,851
0 0 0
13,833,97 18,840,48 15,144,61
PROFIT BEFORE TAXATION 5 7 7
16,931,932 21,381,636
LESS: Taxation
Current 4,076,848 7,144,846 7,220,717 8,308,611 8,095,642
Prior year -39,397 -39,067 1,668,562 233,100 -1,095,355
Deferred 149,975 -965,607 -3,828,699 -2,473,891 980,600
4,187,426 6,140,172 5,060,580 6,067,820 7,980,887
12,700,31 10,084,03
PROFIT AFTER TAXATION 9,646,549
5 7
10,864,112 13,400,749
Habib Bank Limited

Summarized Balance Sheet
(Rupees '000)
2005 2006 2007 2008 2009
ASSETS
Cash and balances with banks 33,051,049 46,310,478 55,487,664 56,533,134 79,839,836
Balances with other banks 31,813,513 35,965,048 27,020,704 39,364,297 40,366,687
Lendings to financial institutions 12,272,248 6,550,128 1,628,130 6,193,787 5,352,873
107,384,47 119,587,47 177,942,25 129,833,44
Investments 216,467,532
0 6 1 6
316,881,63 349,432,68 382,172,73 456,355,50
Advances 454,662,499
5 5 4 7
Other assets 14,481,818 17,765,291 27,346,111 34,588,444 41,116,582
Operating fixed assets 11,166,195 11,954,876 13,780,555 14,751,252 16,766,668
Deferred tax asset 1,842,977 2,725,486 6,613,372 12,186,848 9,205,944
528,893,90 590,291,46 691,991,52 749,806,71

TOTAL ASSESTS 5 8 1 5
863,778,621
LIABILITIES AND EQUITY
LIABILITIES
Bills payable 5,776,325 5,737,457 15,418,230 9,828,082 10,041,542
Borrowings from financial institutions 34,904,352 56,392,270 58,994,609 46,961,165 52,542,978
432,545,16 459,140,19 531,298,12 597,090,54
Deposits and other accounts 682,750,079
5 8 7 5
Sub-ordinated loans 0 0 3,100,000 3,954,925 4,212,080
Liabilities against assets to lease 0 0 0 0 0
Other liabilities 15,180,213 15,578,177 19,943,126 25,663,411 29,862,144
50
0
Deferred tax liability 0 0 0 0
488,406,05 536,848,10 628,754,09 683,498,12

TOTAL LIABILITIES 5 2 2 8
779,408,823
EQUITY
Share capital 6,900,000 6,900,000 6,900,000 7,590,000 9,108,000
Reserves 2,051,371 17,802,584 19,821,455 23,656,044 27,527,380
Unappropriated profit 23,079,826 20,475,080 28,341,670 31,933,178 38,498,335
Total equity given to the equityholders 32,031,197 45,177,664 55,063,125 63,179,222 75,133,715
Minority interest 846,801 913,317 965,642 890,099 1,143,241
Surplus on revaluation of assets 7,609,852 7,352,385 7,208,662 2,239,266 8,092,842
TOTAL EQUITY 40,487,850 53,443,366 63,237,429 66,308,587 84,369,798
528,893,90 590,291,46 691,991,52 749,806,71

TOTAL LIABILITY & EQUITY 5 8 1 5
863,778,621
7.2 Trend Percentage Analysis

The process of dividing each expense item of a given year by the same
expense item in the base year is known as Trend Percentage Analysis. This allows
for the exploration of changes in the relative importance of expense items over
time and the behavior of expense items as sales change.
Comparing analytical data for a current period with similar computation for
prior years afford some basis for judging whether the condition of the business is
improving or worsening. This comparison of data over time is sometimes called
horizontal or trend analysis. The changes in financial statement items from a base
year to following years are expressed as trend percentages to show the extent and
direction of change.
 First, a base year is selected and each item in financial statement for
the base year is given a weight of 100%.
 Second step is the express each item in the financial statement for
following years as a percentage of its base year amount.
51
Trend percentage analyses of HABIB BANK LIMITED are given on
next pages.
Habib Bank Limited

Trend Analysis of Summarized Profit & Loss Account
2005 2006 2007 2008 2009
Mark up / interest earned 100.00% 135.07% 156.08% 195.95% 235.22%

Mark up / interest expensed 100.00% 180.20% 261.39% 361.99% 455.89%
NET MARK UP 100.00% 121.85% 125.23% 147.31% 170.58%
Provision against non-performing loans 100.00% 96.25% 276.95% 232.12% 295.65%

Provision against off-b/s obligations 100.00% -35.26% -42.39% 289.17% -39.89%
Provision against in investments 100.00% 16.59% 102.11% -2313.11% -419.65%
Bad debts written off directly - - - - -
100.00% 92.82% 268.10% 304.12% 300.89%
INTERSET INCOME AFTER PROVISION 100.00% 125.84% 105.61% 125.77% 152.68%

Commission and brokerage income 100.00% 133.82% 116.41% 153.79% 180.96%
Income / gain on investments 100.00% 70.65% 143.23% 75.36% 34.58%
Income from dealing in foreign currency 100.00% 78.60% 106.05% 169.29% 136.41%
Other income 100.00% 125.08% 147.87% 172.82% 186.47%
100.00% 108.09% 127.61% 143.65% 142.08%
INCOME BEFORE INTEREST 100.00% 121.17% 111.40% 130.48% 149.89%

Administrative expenses 100.00% 109.25% 116.56% 136.49% 144.90%
52
Other provisions / write offs 100.00% 49.19% -110.87% 80.38% 84.40%
Other charges 100.00% 80.16% 124.34% 94.55% 5.17%
Worker welfare's fund - - - 100.00% 123.36%
100.00% 108.19% 113.06% 137.46% 145.86%
PROFIT BEFORE TAXATION 100.00% 136.19% 109.47% 122.39% 154.56%
LESS: Taxation
Current 100.00% 175.25% 177.12% 203.80% 198.58%
Prior year 100.00% 99.16% -4235.25% -591.67% 2780.30%
Deferred 100.00% -643.85% -2552.89% -1649.54% 653.84%
100.00% 146.63% 120.85% 144.91% 190.59%
PROFIT AFTER TAXATION 100.00% 131.66% 104.54% 112.62% 138.92%
Habib Bank Limited

Trend Analysis of Summarized Balance Sheet
2005 2006 2007 2008 2009
ASSETS
Cash and balances with treasury banks 100.00% 140.12% 167.88% 171.05% 241.57%
Balances with other banks 100.00% 113.05% 84.93% 123.73% 126.89%
Lendings to financial institutions 100.00% 53.37% 13.27% 50.47% 43.62%
Investments 100.00% 111.36% 165.71% 120.91% 201.58%
Advances 100.00% 110.27% 120.60% 144.01% 143.48%
Other assets 100.00% 122.67% 188.83% 238.84% 283.92%
Operating fixed assets 100.00% 107.06% 123.41% 132.11% 150.16%
Deferred tax asset 100.00% 147.88% 358.84% 661.26% 499.51%
TOTAL ASSESTS 100.00% 111.61% 130.84% 141.77% 163.32%
LIABILITIES
Bills payable 100.00% 99.33% 266.92% 170.14% 173.84%
Borrowings from financial institutions 100.00% 161.56% 169.02% 134.54% 150.53%
Deposits and other accounts 100.00% 106.15% 122.83% 138.04% 157.84%
Sub-ordinated loans - - 100.00% 127.58% 135.87%
Liabilities against assets subject to lease - - - - -
Other liabilities 100.00% 102.62% 131.38% 169.06% 196.72%
Deferred tax liability - - - - -
53
TOTAL LIABILITIES 100.00% 109.92% 128.74% 139.94% 159.58%
EQUITY
Share capital 100.00% 100.00% 100.00% 110.00% 132.00%
Reserves 100.00% 867.84% 966.25% 1153.18% 1341.90%
Unappropriated profit 100.00% 88.71% 122.80% 138.36% 166.81%
Total equity given to the equityholders 100.00% 141.04% 171.90% 197.24% 234.56%
Minority interest 100.00% 107.85% 114.03% 105.11% 135.01%
Surplus on revaluation of assets 100.00% 96.62% 94.73% 29.43% 106.35%
TOTAL EQUITY 100.00% 132.00% 156.19% 163.77% 208.38%
TOTAL LIABILITIES AND EQUITY 100.00% 111.61% 130.84% 141.77% 163.32%
Conclusion:
Habib Bank Limited is a financial and service organization. The analysis of
Habib Bank Limited has shown a modest growth over the past few years showing
healthy increases in the profit of the company.
According to the Trend Percentage Analysis,

The numbers of share remains the same from 2005 to 2007 and afterwards
it increases in 2009. The reason for increasing shares is to raise funds for the
company. The total liabilities show the positive trend as they increased year by
year, which shows that the company’s financial position is healthy. The total
assets also showed the positive trend as they are increasing year by year, because
HBL has the good quantity of assets, which leads the company upward.
Income earned by HBL showed the positive trend as the income increased
year by year, which shows that the HBL has good amount of deposits and reserves
and it showed the better position of the HBL. Operative income also showed the
good position because interest income showed the positive trend and it is
increased. That’s why HBL maintains its profit before tax and after tax. Net profit
after tax also increased year by year that shoed that HBL has a large amount of
deposits and reserves
Overall, trend percentage analysis showed the good position of HBL.
54
7.3 Component Percentage Analysis
Component percentage indicates the relative size of each item included in
the total known as component percentage analysis. It is also known as vertical or
static analysis, which refers to the review of financial information for only one
accounting period.
Financial statement item that is used as a base value. Vertical analysis

discloses the internal structure of the firm. It compared with the prior years to
determine whether the company's financial condition is improving or deteriorating
over time. All other accounts on the financial statement are compared to it.
 In the balance sheet, for example, total assets equal 100%. Each
asset is stated as a percentage of total assets.
 Similarly, total liabilities and stockholders' equity are assigned 100%

with a given liability or equity account stated as a percentage of the total
liabilities and stockholders' equity.
 For the income statement, 100% is assigned to net sales with all
revenue and expense accounts related to it.
55
Component percentage analyses of HABIB BANK LIMITED are
given on next pages.
Habib Bank Limited

Vertical Analysis of Summarized Profit & Loss Account
2005 2006 2007 2008 2009
Mark up / interest earned 100.00% 100.00% 100.00% 100.00% 100.00%

Mark up / interest expensed 22.66% 30.23% 37.94% 41.85% 43.91%
NET MARK UP 77.34% 69.77% 62.06% 58.15% 56.09%
Provision against non-performing loans 9.20% 6.55% 16.32% 10.90% 11.56%

Provision against off-b/s obligations 0.40% -0.10% -0.11% 0.59% -0.07%
Provision against in investments -0.26% -0.03% -0.17% 3.01% 0.46%
Bad debts written off directly 0.00% 0.00% 0.00% 0.00% 0.00%
9.34% 6.42% 16.04% 14.50% 11.95%
INTERSET INCOME AFTER PROVISION 68.00% 63.36% 46.01% 43.65% 44.14%

Commission and brokerage income 9.08% 9.00% 6.77% 7.13% 6.99%
Income / gain on investments 5.34% 2.79% 4.90% 2.05% 0.78%
Income from dealing in foreign currency 4.34% 2.52% 2.95% 3.75% 2.51%
Other income 5.53% 5.12% 5.24% 4.87% 4.38%
24.28% 19.43% 19.86% 17.80% 14.67%
INCOME BEFORE INTEREST 92.29% 82.79% 65.87% 61.45% 58.81%

Administrative expenses 48.53% 39.26% 36.25% 33.81% 29.90%
Other provisions / write offs 0.77% 0.28% -0.55% 0.32% 0.28%
Other charges 0.21% 0.13% 0.17% 0.10% 0.00%
Worker welfare's fund 0.00% 0.00% 0.00% 0.51% 0.52%
56
49.52% 39.66% 35.87% 34.74% 30.70%
PROFIT BEFORE TAXATION 42.77% 43.13% 30.00% 26.72% 28.11%
LESS: Taxation
Current 12.60% 16.36% 14.30% 13.11% 10.64%
Prior year -0.12% -0.09% 3.31% 0.37% -1.44%
Deferred 0.46% -2.21% -7.58% -3.90% 1.29%
12.95% 14.06% 10.02% 9.57% 10.49%
PROFIT AFTER TAXATION 29.83% 29.07% 19.98% 17.14% 17.61%
Habib Bank Limited

Vertical Analysis of Summarized Balance Sheet
2005 2006 2007 2008 2009
ASSETS
Cash and balances with treasury banks 6.25% 7.85% 8.02% 7.54% 9.24%
Balances with other banks 6.02% 6.09% 3.90% 5.25% 4.67%
Lendings to financial institutions 2.32% 1.11% 0.24% 0.83% 0.62%
Investments 20.30% 20.26% 25.71% 17.32% 25.06%
Advances 59.91% 59.20% 55.23% 60.86% 52.64%
Other assets 2.74% 3.01% 3.95% 4.61% 4.76%
Operating fixed assets 2.11% 2.03% 1.99% 1.97% 1.94%
Deferred tax asset 0.35% 0.46% 0.96% 1.63% 1.07%
TOTAL ASSESTS 100.00% 100.00% 100.00% 100.00% 100.00%
LIABILITIES
Bills payable 1.09% 0.97% 2.23% 1.31% 1.16%
Borrowings from financial institutions 6.60% 9.55% 8.53% 6.26% 6.08%
Deposits and other accounts 81.78% 77.78% 76.78% 79.63% 79.04%
Sub-ordinated loans 0.00% 0.00% 0.45% 0.53% 0.49%
Liabilities against assets subject to lease 0.00% 0.00% 0.00% 0.00% 0.00%
Other liabilities 2.87% 2.64% 2.88% 3.42% 3.46%
Deferred tax liability 0.00% 0.00% 0.00% 0.00% 0.00%
TOTAL LIABILITIES 92.34% 90.95% 90.86% 91.16% 90.23%
57
EQUITY
Share capital 1.30% 1.17% 1.00% 1.01% 1.05%
Reserves 0.39% 3.02% 2.86% 3.15% 3.19%
Unappropriated profit 4.36% 3.47% 4.10% 4.26% 4.46%
Total equity given to the equityholders 6.06% 7.65% 7.96% 8.43% 8.70%
Minority interest 0.16% 0.15% 0.14% 0.12% 0.13%
Surplus on revaluation of assets 1.44% 1.25% 1.04% 0.30% 0.94%
TOTAL EQUITY 7.66% 9.05% 9.14% 8.84% 9.77%
TOTAL LIABILITIES AND EQUITY 100.00% 100.00% 100.00% 100.00% 100.00%
Conclusion:
Habib Bank Limited is a financial and service organization. The analysis of
Habib Bank Limited has shown a modest growth over the past few years showing
healthy increases in the profit of the company.
According to the Component Percentage Analysis,

HBL’s financial position started getting stronger and stronger from year
2005 as they improved in almost all kinds of sections in which they can earn profit
by increasing their income and makes more money by accepting the deposits. The
HBL’s net profit after taxation also rose too much in greater proportion over all
the last five years but decreased in year 2008 as compare to the last few years
because people does not believe in making the more deposits in banks because of
freezing the accounts.
Since HBL has short term investments and huge amount of bank deposits
that definitely have improved their income and gain the trust of its customers. So
HBL really improved in much greater proportion in increasing their income from
year 2005 and continued their progress until now. The HBL’s liabilities showed
the healthy trend because HBL has not paid any differed liability.
Overall, HBL showed the healthiest trend throughout all the five years.
58
7.4 Ratio Analysis
Ratio analysis involves the method of calculating and interpreting financial
ratios to analyze and monitor the firm’s performance. The basic inputs to ratio
analysis are the firm’s income statement and balance sheet.
Ratio Analysis enables the business owner/manager to spot trends in a
business and to compare its performance and condition with the average
performance of similar businesses in the same industry. The analysis is used to
provide indicators of past performance in terms of critical success factors of a
business. This assistance in decision-making reduces reliance on guesswork and
intuition and establishes a basis for sound judgment.
Financial ratio analysis groups the ratios into categories which tell us about
different facets of a company's finances and operations.
7.4.1 Analysis of Short Term Liquidity
A firm’s ability to satisfy its short term obligations as they become due is
known as liquidity of the firm. Liquidity refers to the solvency of the firm’s
overall financial position------ the ease with which it can pay its bills.
Trade creditors; creditor for expenses; commercial banks; short term
lenders are concerned with the short term financial position or liquidity of the unit.
Management is also interested in knowing how efficiently working capital is being
utilized by the business. Shareholders and long term creditors are also interested in
studying the prospectus of dividend and interest payment.
59
Liquidity ratios usually consist of:
1. Net Working Capital
2. Current Ratio or Working Capital Ratio
3. Acid test Ratio or Quick Ratio or Liquid Ratio
1. Net Working Capital

The difference between the current assets and current liabilities of is known
as net working capital. It may be positive or negative.
Formula:
Net Working Capital = currentass ets − currentlia bilities
Calculation:
2005 2006 2007 2008 2009
Current Assets 515,884,733 575,611,106 671,597,594 722,868,615 837,806,009

Current Liabilities 453,501,703 480,455,832 566,659,483 632,582,038 722,653,765
Net Working Capital 62,383,030 95,155,274 104,938,111 90,286,577 115,152,244
NET WORKING CAPITAL
120,000,000
100,000,000
80,000,000
60,000,000
40,000,000
20,000,000
0
2005 2006 2007 2008 2009
NET WORKING CAPITAL
60
Source: HBL Annual Report
Interpretation:
Greater the net working capital lowers the risk of technically insolvency
and better the position of company in debt paying. It shows the positive trend
through out the year and showed the better and healthiest position of the bank.
2. Current Ratio
Current ratio or Working capital ratio indicates the liquidity of current
assets or the ability of the business to meet its maturing current liabilities.
Formula
currentass ets
Current Ratio =
currentlia bilities
Calculation:
2005 2006 2007 2008 2009
Current Assets 515,884,733 575,611,106 671,597,594 722,868,615 837,806,009

Current Ratio 1.14 1.20 1.19 1.14 1.16
CURRENT RATIO
1.20
1.19
1.18
1.17
1.16
1.15
1.14
1.13
1.12
1.11
1.10
2005 2006 2007 2008 2009
CURRENT RATIO
61

Interpretation:
Current ratio showed the good position because it focuses on the deposits
and reserves. And HBL can pay its short term obligations within the one period.
HBL maintain its position of 1:1 throughout the year.
3. Acid Test Ratio
It establishes a relationship between liquid assets and current liabilities.
Liquid ratio is also known as quick ratio or acid test ratio.
Formula
liquidasse ts
Liquid Ratio =
currentlia bilities
Calculation:
2005 2006 2007 2008 2009
Liquid Assets 515,884,733 575,611,106 671,597,594 722,868,615 837,806,009

Quick Ratio 1.14 1.20 1.19 1.14 1.16
QUICK RATIO
1.20
1.19
1.18
1.17
1.16
1.15
1.14
1.13
1.12
1.11
1.10
2005 2006 2007 2008 2009
LIQUID RATIO
62

Interpretation:
Quick ratio is equal to the current ratio because in the quick ratio there is no
inventory. And HBL can pay its short term obligations within the one period. HBL
maintain its position of 1:1 throughout the year.
7.4.2 Analysis of Long Term Risk
These ratios help us interpreting repays long-term debt in the contract.
1. Solvency Ratio
This ratio establishes relationship between total liabilities and total assets.
Formula
totalliabi lities
Solvency Ratio =
totalasset s
Calculation:
2005 2006 2007 2008 2009
SOLVENCY
Total Liabilities RATIO
488,406,055 536,848,102 628,754,092 683,498,128 779,408,823
Total Assets 528,893,905 590,291,468 691,991,521 749,806,715 863,778,621
Solvency Ratio 0.92 0.91 0.91 0.91 0.90
63

0.93
0.92
0.92
0.91
0.91
0.90
0.90
0.89
2005 2006 2007 2008 2009
SOLVENCY RATIO
Interpretation:
This shows the positive trend throughout all the five years. In 2009, it
showed the better position of long term liquidity.
2. Debt to Equity Ratio
This ratio establishes relationship between total liabilities and equity.
Formula
totalliabi lities
Debt to equity Ratio =
euity
DEBT TO EQUITY RATIO
Calculation:
2005 2006 2007 2008 2009
Total Liabilities 488,406,055 536,848,102 628,754,092 683,498,128 779,408,823

Equity 40,487,850 53,443,366 63,237,429 66,308,587 84,369,798
Debt to Equity Ratio 12.06 10.05 9.94 10.31 9.24
64

14.00
12.00
10.00
8.00
6.00
4.00
2.00
0.00
2005 2006 2007 2008 2009
DEBT TO EQUITY RATIO
Interpretation:
This shows the negative trend throughout all the five years. In 2009, it
showed the better position of debt because lower this ratio, better its position. It
showed that the creditors are protected in case of solvency.
7.4.3 Analysis of Profitability
The main objective of a business concern is to earn profit.
1. Net Profit Ratio
Net profit
NET PROFITratioRATIO
expresses the relationship between NPAT and sales.
Formula
netprofit
Net Profit Ratio = ×100
netsales
Calculation:
2005 2006 2007 2008 2009
Net Profit 9,646,549 12,700,315 10,084,037 10,864,112 13,400,749

Net Sales 32,343,206 43,685,740 50,481,021 63,376,047 76,076,347
Net Profit Ratio 30% 29% 20% 17% 18%
65

30%
25%
20%
15%
10%
5%
0%
2005 2006 2007 2008 2009
NET PROFIT RATIO
Interpretation:
Higher the ratio, better the position of the company but it showed negative
trend. In 2009, it showed the good position of HBL.
2. Operating Profit Ratio
Operating profit ratio is calculated by dividing the EBIT by sales.
Formula
operatingp rofit
Operating
OPERATING PROFITProfit
RATIORatio = ×100
netsales
Calculation:
2005 2006 2007 2008 2009
EBIT 29,848,955 36,167,127 33,250,937 38,945,782 44,740,487

Net Sales 32,343,206 43,685,740 50,481,021 63,376,047 76,076,347
Operating Profit Ratio 92% 83% 66% 61% 59%
66

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005 2006 2007 2008 2009
OPERATING PROFIT RATIO
Interpretation:
Operating profit ratio is pure because it only measures the profit earned on
operations and throughout all the years it showed the good position.
7.4.4 Analysis of Return

Equity investor wants to know how efficiently companies utilize resources.
1. Return on Assets
ROA measure
RETURN the efficiency with which management has utilized assets.
ON ASSET
Formula
netprofit
Return on Assets = ×100
totalavera geassets
Calculation:
2005 2006 2007 2008 2009
Net Profit 9,646,549 12,700,315 10,084,037 10,864,112 13,400,749

Average Total Assets 508,329,619 559592686.5 641141494.5 720899118 806792668
ROA 6% 6% 5% 5% 6%
67

7%
6%
5%
4%
3%
2%
1%
0%
2005 2006 2007 2008 2009
RETURN ON ASSETS
Interpretation:
ROA measures effectiveness of management in generating profit with
available assets. Higher this ratio, it is better and it showed good position.
2. Return on Equity
ROE measures firm's efficiency at generating profits from every unit of
shareholders' equity.
Formula
RETURN ON EQUITY
NPAIT
Return on Equity = ×100
equity
Calculation:
2005 2006 2007 2008 2009
Net Profit 9,646,549 12,700,315 10,084,037 10,864,112 13,400,749

Equity 40,487,850 53,443,366 63,237,429 66,308,587 84,369,798
ROE 24% 24% 16% 16% 16%
68

25%
20%
15%
10%
5%
0%
2005 2006 2007 2008 2009
RETURN ON EQUITY
Interpretation:
ROE measures effectiveness of management in generating profit with
equity. Higher this ratio, better the position because it includes both P/S and C/S.
7.4.5 Analysis of Market Position
It showed the market position of HBL by calculating EPS and BVPS.
1. Earning Per Share (EPS)
It is calculated
EARNING PERby dividing the net profit and number of shares of C/S.
SHARE
Formula
NPAIT
Earning Per Share = ×100
numberofsh aresofcomm onstock
Calculation:
2005 2006 2007 2008 2009
Net Profit 9,646,549 12,700,315 10,084,037 10,864,112 13,400,749

No. of shares of C/S 690,000 690,000 690,000 759,000 910,800
EPS 14.0 18.4 14.6 14.3 14.7
69

20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2005 2006 2007 2008 2009
EARNING PER SHARE
Interpretation:
It showed that number of rupees earned on the behalf of each outstanding
share of C/S. Overall, it showed the good position throughout all the five years.
2. Book Value per Share (BVPS)
It is calculated by dividing the equity and number of shares of C/S.
Formula
equity
Book ValuePER
per Share = ×100
BBOK VALUE SHAREnumberofsh aresofcomm onstock
Calculation:
2005 2006 2007 2008 2009
Equity 40,487,850 53,443,366 63,237,429 66,308,587 84,369,798

No. of shares of C/S 690,000 690,000 690,000 759,000 910,800
BVPS 58.7 77.5 91.6 87.4 92.6
70

100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2005 2006 2007 2008 2009
BVPS
Interpretation:
It showed the good position throughout the five years. If book value is less
than market price, the value of BVPS is overpriced and if book value is greater
than market price, the value of BVPS is under priced.
7.5 Conclusion
Net working capital showed the positive trend through out the year and
showed the better and healthiest position of the bank in paying the debt. Current
ratio showed the good position because it focuses on the deposits and reserves.
And HBL can pay its short term obligations within the one period. Quick ratio is
equal to current ratio because there is no inventory.
Solvency ratio shows the positive trend throughout all the five years. In
2009, it showed the better position of long term liquidity. Debt to equity ratio
shows the negative trend throughout all the five years. In 2009, it showed the
better position of debt and the creditors are protected in case of solvency
Net profit showed the negative trend because of lower deposits and
reserves. Operating profit ratio is pure because it only measures the profit earned
on operations and throughout all the years it showed the good position.
71
ROA measures effectiveness of management in generating profit with
available assets. Higher this ratio, it is better and it showed good position. ROE
measures effectiveness of management in generating profit with equity. Higher
this ratio, better the position because it includes both P/S and C/S.
EPS showed that number of rupees earned on the behalf of each
outstanding share of C/S. Overall, it showed the good position throughout all the
five years. BVPS showed the good position throughout the five years. If book
value is less than market price, the value of BVPS is overpriced and if book value
is greater than market price, the value of BVPS is under priced.
Overall the position of HBL seems to be good as compared to its
competitors that are BAL, Meezan Bank Limited, Allied Bank Limited and Askari
Bank Limited.
8. Learning and Experience

As everybody know that knowledge without practice is sterile. In order to
give vent to this idea an Internship program of eight weeks has been arranged
during BBA. In this regard on 7th June 2010, I was asked by HR officer in HBL
regional office Sahiwal to go to Habib Bank Mandi Road Okara branch to start an
internship of eight weeks there. During this period I got a chance to work and
learn the work of different departments of the bank.
Filling of an Account Opening form:
My duty was in Accounts department is to filling an account opening form.
I came to know the procedure for filling the form to open an account, different
types of stamps required and about signature of the staff. Documents required to
be attached with the form.
 Copy of CNIC
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 In case of salaried person, service ID is required.
 In case of student, student ID is required.
And then I came to know how to post an account on system after filling the
form. Then I came to know about different accounts with the terms and conditions
of each type.
1. Current Account
2. Freedom Accounts
3. Basic Banking Account
4. Advantage Account
5. Value Account
Issuance of Cheque Books:
The assignment of issuing Cheque books is giving to me. It is issued to
those customers whose accounts are operated by the bank. Cheque books in two
different are issued for the current accounts and for profit and loss sharing
accounts.
Remittance Department:
Remittances are sums of money sent in payment for or against something.
The remittance department is mainly concerned with these payments. My work in
the remittances department is to filling the remittance form for those persons who
are illiterate and then after filling this form the remittance manager enters the data
on the computer and then he gives the remittance receipt to the customer for their
personal record. It may be:
1. Banker’s cheque (in other words either to make demand draft or pay
order but commonly this word is used against DD and PO)
 Demand draft is used for payments to out of city.
 Pay order is used for payments within the city.
2. Inter bank transfers
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3. Intra bank transfers
Clearing Department:
This is an extra ordinary banking facility which is provided to the public in
this if they are maintaining an account with the HBL they can lodge cheque of any
bank in Pakistan, which will be collected and credited to their respective accounts
through the process of clearing. In this representatives of various banks are
gathered at SBP and exchanges the cheque presented to them for debit of the
respective accounts and in second round of meeting provide each other the fate of
those cheques to be credited to respective accounts.
When people present the cheque of any other bank for clearing, first enter
the cheque into the clearing register of the bank. Then this cheque sent to the NIFT
for clearing. NIFT is the department which is created by the SBP for clearing the
checks of different banks.
Deposit Section:
In the deposit section the amount of rupees deposited are carried out in two
ways. One is that the customer wants to deposits the money in his/her account
directly in monetary terms, while the second way of depositing the money is
through cheque. In both the cases I observed the following procedures.
 When a person deposit through cash, then a voucher is filled for the
customer with the descriptions of the account number, amount deposited
title of account, name of branch and name of customer. After filling this,
depositor sign on the voucher and the amount is paid to cashier who
stamped it and signs the voucher. After it a carbon copy of voucher is
given to depositor which assures that this person deposited the cash in
his account.
74
 When a person deposits through the cheque, same procedure is
followed. But in the voucher cheque number is mentioned with the
branch name. After submitting the voucher, a carbon copy is given to
depositor that assures that this person deposited the cash in his account.
Payment Section:
I observed that if a person wants to take the cash, he submits the cheque in
the counter, and the counter accepts the cheque by checking the characteristics of
the cheque. When he assures that he is the right person who has its own cheque, he
gives the exact rupees given to that person that is written on the cheque.
This section also provides the payment to the different sectors of Pakistan.
So, it can be said that this is one the distinct features of HBL, that it provides
services to the Govt. departments to distribute their salaries every month. The
prominent examples include army, rangers, police, education, and public works,
etc.
Collection of Utility Bills:

I observed that a person sits there to collect the bills that may be the Sui
Northern Gas Bill, Electricity Bills, and Phone Bills. After collecting the bills, he
signs on the bills and obtains the payment. When he obtains the payment, he
counts the money and if the correct amount of money is obtained, he gives the
receipt to the customers. One copy of receipt is recorded to the billing department
register. At the end, he writes the summary of collecting account of the bills and
submits this report to the operation manager.
Insurance Department:
In this department, I observed that how to motivate the customers about
their insurance plans. Two types of insurance plans are mostly used that are
75
Amaan and Tabeer Plans. Insurance manager tells the customers about their
polices , rules and regulations and they also tells that this showed the impact in the
future that increases their deposits and gives the benefit in the future and it also
helps in providing the good education to their children and helps in marriage of
your children. In this way, when they gives the some briefing to their customers ,
then one or two customers are agree to do for insurance. And then account is
opened and then fills the application form, then more proceedings are continuous
until the insurance plans retired.
9. Conclusion
Habib Bank Limited is a financial and service organization. Habib Bank
Limited is clearly the first choice of everyone who believes in qualitative approach
of banking an environment of highly responsible people. Bank is enjoying a
healthy market share and taste of good status in terms of its operative features and
customer support. HBL is clearly the best bank operating in Pakistan. Corporate
and commercial functions are distinguished features of HBL experiencing a good
reputation and reasonable mark up with respect to prevailing market mark up with
assurance of satisfaction and support. HBL has more customers as compare to
76
other banks, if they given proper attention to every customer then in few years it
will be the leading bank of the country (asset point of view).
10. Recommendations
I have realized that that HBL is performing very well since its inception. It
is quite difficult to give suggestion to improve the banking conditions of HBL. 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.
77
 Bank should introduced incentive plans for employees on regular
basis. 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.
 Proper marketing programmes 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.
 The bank charges high service charges as compared to the other
banks, so these should be lowered down.
 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.
 HBL should increase its communication with customers about the
terms and conditions of its different products and services.
11. Annexure
All data and information are gathered from the annual reports of Habib
Bank Limited…………
 www.habibbankltd.com.pk
 http://www.google.com.pk
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 http://www.kse.com.pk/
 http://www.sbp.org.pk/
 http://www.scribd.com/
79

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“Habib Bank Limited”

I dedicate it to my respected and beloved parents. Without their

work is not possible. I dedicate it to our respected and honorable teachers,

who help me very much in finding data.

assignment. I am also greatly thankful to my respected parents, who pray

of my parents, I accomplish this task easily. I have no words to express my

especially to Mr. CH. Muhammad Arshad (Manager Branch) who provided

me an opportunity to work in friendly environment. It was an honor and

pleasure to work with:

Mr. Muhammad Tariq Javeed (Manager Operations)

Mr. Imdad Ali (Asst. Manager Foreign Trade Department)

Madam Bushra Latif (Public Relation Officer)

Mr. Shoaib Mazhar (Manager Credit Department)

Mr. Rao Abdul Rab Khan (Head cash Department)

Report Name: Habib Bank Limited

Organization Name: Habib Bank Limited

Undertaken by: Zakia Abid

Supervised by: Mr. Rai Imtiaz Hussain

Date of Completion: 19th October, 2010

2.2 Organization Brief

Date of Incorporation August 25, 1942

Banking Ordinance 1984

Nature of Business Commercial, Investment and Islamic Banking

• Lahore Stock Exchange

Web Address www.habibbankltd.com

 Fixed repayment tenures of 36, 48 and 60 months.

 Lowest processing charges.

 Insurance premium rates as low as 3%.

 Lowest mark-up-compared to any credit card.

 Choice of 12, 24, 36, 48 and 60 months for payback.

8. HBL Phone Banking

Year Deposits Advances Profit (Pre- Assets Branches

Year Important Events

1941 Commenced operation.

1942 Deposits reached 20 million rupees.

1943 Moved operations from Bombay to Karachi on the Quaid’s Request.

1946 First Banking Scheme Started for the Muslim Youth.

1947 HBL head office transferred to Pakistan.

1966 Silver Jubilee.

1974 Bank was Nationalized.

1991 Golden Jubilee

1997 HBL was Reorganized.

2004 HBL was Privatized.

Largest Private Commercial Bank in Pakistan with branch network of

HBL introduces the Credit Card and Enhanced Saving accounts

 Pakistan’s Largest Banking Network .

 HBL among Top 500 Global Financial Brands

2010  HBL’s wins best emerging market banks award in Pakistan

Cash Deposit Procedure:

4.3 Credit Department

 Neutralizing its threats and

Provision against non-performing loans 2,974,665 2,863,207 8,238,227 6,904,919 8,794,560

PLUS: Non mark-up/interest income

LESS: Non mark-up/interest expense

Habib Bank Limited

528,893,90 590,291,46 691,991,52 749,806,71

LIABILITIES AND EQUITY

488,406,05 536,848,10 628,754,09 683,498,12

TOTAL EQUITY 40,487,850 53,443,366 63,237,429 66,308,587 84,369,798

528,893,90 590,291,46 691,991,52 749,806,71

7.2 Trend Percentage Analysis

Habib Bank Limited

2005 2006 2007 2008 2009