FINI619 VUsolutions Spring 2011 Habib Bank Limited

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Virtual University of Pakistan Evaluation Sheet for Internship Report Spring 2011
FINI619: Internship Report (Finance) Credit Hours: 3
Name of Student: VUsolutions
Evaluation Criteria Report writing Presentation & Viva voce Final Result t
Result Pass
Students ID:
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AN INTERNSHIP REPORT ON HABIB BANK

4th semester August 5, 2011 VIRTUAL UNIVERSITY
DEPARTMENT OF BUSINESS MANAGEMENT SCIENCES VIRTUAL UNIVERSITY OF PAKISTAN UNI A REPORT SUBMITED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE DEGREE OF MASTER IN BUSINESS ADMINISTRATION (MBA)
LETTER OF UNDERTAKING: LETTER OF INTERNSHIP:
4. ACKNOWLDGEMENT
I am very grateful to Almighty Allah, the most merciful and beneficial who gave me encourages completing this task and made me able to complete the work accessible in the report. I am also thankful to my parents whose prayers make possible to reach this stage. I am highly thankful to my instructor & VUsolutions team who guides me for the completion of this report along with I am thankful to my fellows who helped me and gave me own precious time to complete this report. I am also very thankful to the staff of Habib Bank Water Works Road Branch, Jarawala particularly to RIA Shahzad (branch manager) who helped and guided me throughout this whole work. It was an honor for me to learn and work with:Mr. Ria Shahzad (Branch Manager) Mr. XYZ (Cashier) Mr. DEF (Admininstrator)
5.EXECUTIVE SUMMARY
Every student of master has to practically work for six to eight weeks for more learning of theoretical concept which he read during the session. It is very helpful during practical life and awareness about the economy of the country. This purpose is to explain the student with practical work that how to apply what they have learnt in practical work. It is nice opportunity for the student to have shut relationship in theoretical concept and practical work. I got the chance to get my internship from one of the renowned bank of Pakistan The Habib Bank Limited, Pakistan, it was a nice opportunity for me to apply my theoretical work and learn from seniors having years of experience. All the efforts on the way are summarized in shape of this Internship Report. Internship Report contains the Short History of Banking, Banking in Pakistan, Introduction of Habib Bank Limited, Organization Breakdown structure, Organization Hierarchy Chart, Introduct ion of different departments.
TABLE OF CONTENETS ACKNOWLDGEMENT -------------------------------------------------------------------------- 3 EXECUTIVE SUMMARY ----------------------------------------------------------------------- 4 TABLE OF CONTENETS------------------------------------------------------------------------ 6 EVOLUTION OF BANKING: ------------------------------------------------------------------- 7 BANKING IN PAKISTAN: ---------------------------------------------------------------------- 7 ABOUT HABIB BANK LIMITED: ------------------------------------------------------------- 8 BRIEF HISTORY: ------------------------------------------------------------------------------ 8 ORGANIZATIONAL CHART: --------------------------------------------------------------- 9 BOARD OF DIRECTORS: ------------------------------------------------------------------ 10 ORGANIZATIONAL STRUCTURE:------------------------------------------------------ 10 VISION, MISSION AND VALUES: ------------------------------------------------------- 10 Vision: --------------------------------------------------------------------------------------- 10 Enabling people to advance with confidence and success. ---------------------------- 10 Values:--------------------------------------------------------------------------------------- 10 Our values are the fundamental principles that define our culture and are brought to life in our attitude and behaviors. It is these values that make us unique and unmistakable. Our values are defined below: ------------------------------------------- 10 DEPARTMENTS & RESPONSIBILITIES: ----------------------------------------------- 11 AWARDS: ------------------------------------------------------------------------------------- 59
6. EVOLUTION OF BANKING This history of banking is traced to as early as 2000 B.C. The priests in Greece used to keep money and valuables of the people in temples. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The goldsmiths used to issue receipts for the money and other valuable assets deposited with them. These receipts could be used for settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were fully accepted in payment of debts; then the receipts were drawn in such a way that it entitled any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The second stage in the development of banking thus was the issue of bank notes.
BANKING IN PAKISTAN:
I observed during my internship was that I came to known the historical background of Banking & Financial sector and its improvement and growth since the formation of Pakistan. At the time of partition there were only 631 bank branches in area which came under Pakistani control. But due to blood shed and violence at large scale, most of the branches were closed. At that time Bank of India was acting as central bank for both countries and same currency notes were used in both territories. But Reserve Bank of India was biased and Set down Pakistan on many occasions such as the issue of funds transfer etc. Thus some drastic steps were taken in government sector for the improvement of overall position. The private sector also responded positively. Some of the steps taken by the government in this regard were as under: Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948. Setting up of National Bank of Pakistan in November. Banking Companies Ordinance 1962 for protection and guidance to banks.
Establishment of specialized banks, such as ADBP (1952); o HBFC (Nov, 1952) o P1CIC (Oct, 1957) o IDBP (Aug. 1961) o NDFC (Jan, 1973) In 1990 the government decided to denationalize all the nationalized institutes. For this purpose, amendments were made to Nationalization Act 1974 and two nationalized banks were privatized. Along with this a permission to open banks in private sector was also granted. The- privatized banks are; o MCB taken up by a private group in April, 1991 o ABL taken up by its own employees in September, 1991. o UBL taken up by UAE party in 2002. o December 29, 2003 HBL was taken by AKFED ABOUT HABIB BANK LIMITED: BRIEF HISTORY: HBL was the first commercial bank established in 1947. HBL is one of the largest commercial bank of Pakistan. It accounts for a substantial share (20%) of the total commercial banking market in Pakistan with a network of 1,705 domestic branches; 55 overseas branches in 26 countries spread over Europe, the Middle East, Far East, Asia, Africa and the United States; 3 HBL wholly owned Subsidiaries namely Habib Bank Financial Services (PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and Habib Finance Australia Ltd. Sydney; 2 Joint Ventures namely Habib Nigeria Bank Ltd. (40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran and Egypt. HBL is currently rated AA+ (Long term) and A1+ (Short term)*. It is the first Pakistani bank to raise Tier II Capital from external sources. Business Operations
1. Banking Sector Overview 2. HBls Performance Overview 3. Products and Services Personal Banking Corporate Banking Online Services . Virtual Banking Islamic Banking 4. HBLs Competitive Strategies
ORGANIZATIONAL CHART PRESIDENT BOARD OF DIRECTOR MEMBER EXECUTIVE BOARD REGIONAL CHIEF ZONAL CHIEF BRANCH MANAGERS
BOARD OF DIRECTORS Sultan Ali Allana Chairman
Sajid Zahid Director Ahmed Jawad Director Sikandar Mustafa Khan Director Moez Jamal Director
ORGANIZATIONAL STRUCTURE HBL is organized along functional lines with eight core divisions namely Corporate & International Banking, Retail Banking, International Banking, Audit & B.R.R., Credit Policy, Asset Remedial Management (ARM), Information Technology Group and Human Resources Group. VISION, MISSION AND VALUES Vision: Enabling people to advance with confidence and success. Mission: To make our customers prosper, our staff excel and create value for shareholders. Values: Our values are the fundamental principles that define our culture and are brought to life in our attitude and behaviors. It is these values that make us unique and unmistakable. Our values are defined below:
Excellence Integrity Customer Focus Meritocracy Progressiveness PRODUCTS AND SERVICES OFFERED BY HBL PRODUCTS:
o HBL Muhafiz Rupee Travellers Cheques o HBL Auto Finance o HBL Flexi Loans for salaried personnel o HBL LifeStyles Financing Scheme o HBL i-Card o HBL House Financing Loans o HBL Easy Access o HBL Fast Transfer o Haryali Agricultural Loans o HBL E-Bank DEPARTMENTS & RESPONSIBILITIES: During my internship, I came to known about the following departments functioning in my branch 1. 2. 3. 4. 5. 6. 7. Account opening department. Cash department. Credit department. Lockers department. Bill clearing department. Foreign exchange department. I.T department
Account opening department: In this department customer open the account in the bank. This account. These require many document to open this account: Copy of CNIC Utility bill Student card Provisional receipt Address of customer Specimen Signature of the customer Posting the account on the system Cheque book issue to the customer Secrecy of the customer Types of the Account 1. Individual account 2. joint account 3. Business account 4. Current account 5. Saving account Individual account: Bank opens this account by individually. It involves single person only. Bank opens this account for one person. Joint account: Bank opens this account by one or two person. The two people use one account in the bank. Bank considers one account by two people. The two people of joint account show one account according to the law. Business account: give facility to the customer for opening new account with the bank that they allow him and operate this
In this account, bank only business transaction. It is opened by companies, institution, organization and partnership business. It is purpose of deal with the businessmen. Current account: Bank opens current account to every person. Usually, some current account have to pay interest by the customer but its rate is low other accounts. Current account offers any facilities to the customer which is mentioned below: Debit card Cheque book to the customer Automatic bill payments from account Overdraft facility Clearing services etc. Bank ay close this account due to some reason: 1. Death of a customer 2. Notice by a customer 3. Customer insanity Death of a customer: In the case death of the customer, bank may close the account and stop all transaction related to the person. Bank stop further transaction such as cheque issue, money transfer etc. Notice by the customer: Bank may close this account on the demand of the customer. Customer gives application to the bank for closing this account. Customers insanity: Bank terminates this account due to mental of the customer. Bank stop this transaction with this customer. It is all too easy for the customers needs by the desires of others within a bank who interpret the customer needs through their own prism. His insanity of the customer, to the knowledge of the bank, has the effect of revoking this authority, and the bank would not be necessary in paying the acceptances. That the bank has not been officially notified of the customer's insanity does not indicate
Reason for closing customer account:
Cash department Cash department has vital role in the banking sector. All cash transaction represent in this account such as cash received fro customer, import and export transaction, bill payment etc. It involves cash payment and receipt transaction in it. These are following perform various function in this department: Acceptance of deposit Cheque payment Collection of funds Remittances Transfer of funds from one account to another Verification of signature Posting Heading of prize bond
There are some functions of cash department in the bank: Receipts and payments: Cash will be received by the Receipts from the customers in the bank. In the receipts, the name of the account holder, account number, name of the branch, dates etc are involved. Customer must also make certain that the receipts are signed by the person which deposit cash. In some cases, cash is received from receipt department. Deposit cash in customer account: When the customer wants to deposit amount in his account .T he a c co u nt in w h ic h t he c a s h w ill be deposited. Then customer will receive amount and credit the customers account that shows increase in customers bank accounts. Cheque encashment procedure: The cash is paid to the customer in the cash department such as: Cheque is drawn on some branches Cheque is not posted on date It should be bearer cheque
Payment of cash: A ft er po st ing t he c he q u e t he o p er at io n ma na g er c a nc e lle d t he c he q ue a nd r et ur ne d ba c k to ca s hie r . e in c a s h p a id T he c a s hie r e nt er s t he c he qu
r eg is t er e d a nd p a ys a g a ins t t he second signature of receiver on the back of the cheque. Credit department A simple but practical definition of credit is "the ability to buy with a promise to pay," in other words, to obtain present value for a promise to pay in the future. The word "credit" is derived from the Latin "credo. The banker knows that he may be asked to expand credit. He first satisfies himself that the ability is such as to defend assurance. This information is obtained from personal knowledge of the borrower. Trade inquiries are directed to people selling goods to and competitors of the borrower. If all this information is satisfactory, the capital factor is studied in the borrower's financial statement which balance sheet should be taken off at normal intervals. This ratio is often called the 2 to 1 ratio, but differs in business. In short, the distinguish between a safe risk and an unsafe one that is the quality that marks the good banker. This is including different latter issue in the credit department: Establishment of letter of credit: In case party enjoying regular limit, the L.C is established without adopting the procedure mentioned above. However the amount of L.C should not exceed the regular limit. The major non-fund based facilities that are considered as a part of regular credit facilities are letter of Credit a n d B a n k G u a r a n t e e .Ba nk s c ha r g e co mmis s io n fo r t he s e r vic e s r e nd er ed by t he m a nd c o mmit me nt s on t he p a ct of t he ba nk t he s e a r e a llo w e d a ft e r ma k ing o ut a ve r y c a r e fu l and detailed assessment of borrowers requirement. Types of credit These are many types of credit of habib bank which are given below: Demand finance: Packing credit Demand finance to student Loan to staff 1. loan for purchasing vehicles 2. loan correspondent to months salary
Loans are offered to the staff in various categories
3. mortgage loan Running finance: It include old name overdraft which are meet requirements to the customer. For example: secured 1. share certificate 2. deposits 3. mortgage of property etc unsecured Which are diifernt forms given below
DEPOSIT DEPARTMENT Bank deals in money and they are merely mobilizing funds within the economy. They borrow from one person and lend to another, the difference between the rate of borrowing lending forms their spread or gross profit. Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities. REMITTANCES DEMAND DRAFT: Demand draft is a written order drawn by a branch of a bank upon the branch of same or any other bank to pay certain sum of money to or to the order of specified person. It can be issued to the customers as well as non customer against cash chaque and letter of instruction. Demand draft is negotiable instruments that can be negotiating at any time before its cancellation. Its Legal provisions are same as that of cheque. Following parties are involved in demand draft:
Applicant issuing branch Drawee branch Beneficiary A demand draft may be issued against the written request of the customer before issuing it must be seen that the demand draft is in order. The DD application must be scrutinized by the counter clerk in respect of following points. There should be branch where payment is to be made. Full name of payer should be mentioned. Amount in words and figures must be same The applicant on two places should sign application.
TELEGRAPHIC TRANSFER: Telegraphic transfer means the transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements just like a telegram. Telegraphic transfer is not negotiable and the funds are not payable to bearer. Minor cannot avail this facility. In telegraphic transfer the bankers use secret codes. One code is with issuing person and the second is with an other person. When they combine the codes its become an amount that is called check. The payment is made after the confirmation of the check. Following parties are involved in TT Applicant Drawing branch Drawee branch Beneficiary
Following important things should be included in TT: Full name of the beneficiary or account number should be mentioned in the application form. Instruction regarding mode of payment should be obtained. A record in the remittance outward register should be maintained. All the remittance must be controlled through number or codes.
PAY ORDER: Pay order is an instrument through which payment can be made from one bank to another bank. Pay order is meant for bank own payment but in practice they are also issued to customers. Following parties are involved in pay order: Applicant issuing branch Payee
MAIL TRANSFER: Mail transfer is not negotiable and the procedure of it is same with the procedure of DD.When a customer request the bank to transfer his money from this bank to any other bank of the branch of same bank in the city, outside the city of outside the country the first thing he has to do is to fill an application form. In which he states that I want to transfer the money from this bank to that specific bank by mail. If the customer is the account holder of this bank, the bank will debit his account and the concerned officer will fill forms to make the mail transfer complete.
If the customer is not the account holder of the bank, then firstly he has to deposit the money and then rest of the procedure will be adopted to transfer his money.
SBP ERF Scheme SBP had introduced this scheme to promote country s export and to earn foreign exchange. This scheme is operated through authorized dealers under SBP control. This scheme had been amended by time to time. Features: Concessions rate of markup as compare to commercial banks rate of markups. Export refinance allow to exporters via authorized dealers. In case of default, the SBP recover its principal loan amount, markup & penalty through the bank to which exporter has submitted his refinance claim. Refinance allows against value added products i.e. garments, print, dyed cloths, bed sets. Proceeds repatriated through banking channels. Allow credit loan amount within 248 hrs. Misutilization of SBP funds has been prohibited, if any violation occurs SBP imposed penalty.
Risk: If the exporter has been / will be defaulted the laps of funds of authorized dealers. Cheating or misuse of funds, SBP may cause to impose not any penalty but also termination of bank employee or change of management or authorized dealers reputation may destroy.
How to operate this scheme? SBP ERF scheme
Part I
Part II
Preshipment Party request letter L/C sales contract Undertaking DP note Form D Proof of purchase of raw material
Post shipment Party request L/C sales contract Under taking DP note Form D Commercial invoice Bill of Lading Form E Part A
EE statement total realization & negotiation SBP financed Form E & not availed SBP finance
EF statement it include total realization but on which Form E SBP finance availed not include.
This means after making a shipment the exporter prepare all relevant shipping documents and evidence of shipment. The exporter contact his bank w.r.t to lodge the documents and send a one set of shipping documents to export finances department to allow him post shipment part I under SBP scheme. Required documents at the time of finance allow to party D/Pnote Under taking on non judicial stamp paper L/C Party request letter Form D Commercial invoice
Penalties: Non shipment 37 paisa/1000 per day Short shipment Delayed shipment Late submission of documents to SBP
How to avoid from penalty of non shipment? Provide proof of shipment against relevant sales contract or L/C on which finance obtain Substituted the old L/C or contract with new one after assurance that against new L/C.
Restrictions/prohibitions Evidence of shipment submit to SBP within 180 days or within time period fixed by SBP In case of substitution against new L/C or sales contract make sure that the exporter has not availed pre or post shipment finance through any other bank.
How to calculate penalty? Non shipment 180 days *1000000* 0.37/1000=66600 Short shipment Finance amount 1000000 Shipment 800000 Short shipment amount =200000
180 days *200000*0.37/1000=13320 In case of post shipment only late repayment of finance penalty is involved. Part B
The authorized dealers provide this finance facility to exporters against their EE statement. From the export earning during of one fiscal year the SBP sanction a limit of 50% for the a ailment of the ERF part II. In the EE statement all foreign bills realized and negotiated during a period of 01-07-04 to 30-06-05 are included in this statement. Documents required at the time of sanction of finance D/P note Under taking on non judicial paper
Party request letter Short fall in EE statement penalty: Days*amount of finance*rate(0.37)/day/1000 Short fall in EF: SBP calculate case to case basis daily product and match this with his EF performance, if he avail excess Refinance from SBP and Business performance is short the SBP imposed a short fall penalty. Total short product*number of days*0.37/180 Demand Finance & Running Finance: Demand finance: This is common form of financing to commercial industrial concerns and is made available either on pledge or hypothecation of goods, produce or merchandise. In demand finance the party is finance up to certain limit either at once or as and when required. The party due to facility of a paying mark prefers the financing up only on the amount it actually utilizes. Running Finance: This form of financing was known as Overdraft when a bank customer requires temporary accommodation, his banker allows withdrawals from his account and running finance thus occurs. The accommodations generally allowed against collateral security. The customer is in advantageous position in a running finance because he has to pay mark up only on balance outstanding against him on daily products basis. Pledge: It is entitled to the exclusive possession of the property until the debt is charged. Hypothecation: When the property in the goods is charged as security of loan from the bank but the ownership & possess
FAPC & FAFB
FAPC (finance against packing credit): It is a type of banks own source finance provided to clients engaged in export trade. As the term packing indicates that the credit line is granted to an exporter for the purpose of packing merchandise for shipment to an importer abroad. An exporter should give documentary proof to the bank consist of L/C in favor of exporter indicating the description of the merchandise, the purchase price, date of delivery along with other terms. FAFB(finance against foreign bills): It is a post shipment finance facility which is provided by the banks to its clients after providing the evidence of shipment, he contacts his bank to request him to lodge the documents. He then provide the request letter with sale contract to grant him finance & this department grant him finance (90% value of commercial invoice).
Imports and exports department

Exports: Introduction and registration: Imports and exports act 1950 have empowered the federal Govt to control the import and export in Pakistan. Pakistan is developing country and like other developing countries its imports exceeds than exports. To control this situation the registration of import and export has been made obligatory under the registration order 1993. The authority of registration has been given to export promotion bureau. No importer and exporter who has no granted registration shall indent, import and export of any good into or out of Pakistan. The requirements for getting registration are as under: Application form. Photocopy of I.D card. Copy of memorandum and article of association (in case of limited company). Ownership deed of office. Fee payment. Certificate of incorporation.
Applicant should regular taxpayer. The major exports from Pakistan are surgical goods, sports goods hand noted goods, leather goods, textile goods, etc.
Export procedure: All the exports work under the imports and exports act that is changed by the state in every year. When the importer send the L.C to bank in respect to import or when the L.C comes to the advising bank from the issuing bank then the concerned officer allot the number to the L.C and get registered. The concerned officer write down the name of issuing bank and the party name in a register and intimate the party about L.C. the exporter after receiving the L.C from bank will prepare the documents as per the L.C usually the following documents have to be prepared by the exporter: Bill of lading Covering letter E- Form Bill of exchange Packing list Commercial invoice Quota documents in case of quota country Certificate of origin Special custom invoice
The export form (E-FORM): E-FORM means export form which is the first and foremost requirement for the exports from Pakistan. It is control instrument by Govt of Pakistan by which it monitors the receipts from exports and checks the goods that are transferred without foreign exchange. all banks which are engaged with the foreign exchange are required to
print and maintained the E form that is checked by the state bank of Pakistan. For export an e form is issued by the bank on the request letter of a company. Two separate registers are maintained by the bank one for his use and the other one are for the requirement of the SBP. On issuance of E forms the banker lists it in the register and makes sign from the exporters. Banks record the name of party, amount, the goods description, port of destination, importer name port of loading etc.
The functional utility of E-FORM: The export form has four copies. The exporters and banks use it. Without it the exporter can not make export. These copies are used as: Original copy is for SBP that is checked by the higher authority. Duplicate copy is for the bank use that is upraised by the custom authorities. Triplicate for the use to report of SBP at the time of payment received. Quartiplacte is for the company used.
Usage of E- FORM: E- FORM is an important document for export. It has its own importance such as this form is used as a checker means it monitor that what things are going abroad and in return what things we are getting. So it creates a check and balance on the foreign exchange. It shows the total quantity and quality of the goods that is sending to another country. An E Form shoe the party worth that is very helpful for the party and the bank. Bank can create a party limit for the credit on the behalf of it and a party can arrange a loan for its future requirements from the bank. It shows the terms of payment by the importer and the delivery terms by the both parties that is helpful in case of any discrepancy during the contact.
Short shipment notice: A shipment may be cancelled by the importer or exporter due to many reasons. The cancellation of the export letter is called short shipment notice. In this situation the company has to inform the bank. Company has to give a written letter to the bank that he is not the export so please cancelled their e form. On the other hand bank at the time of receiving the letter will stop the e form and cancelled the all documents. IMPORTS Imports regulation: Import is being regulated by the ministry of commerce and the government of Pakistan under the import and export act: Categories of imports: Imports are classified into the following categories: Commercial sector imports Industrial sector imports Public sector imports
Registration of importers: A person who wants to approach the bank for importing goods from abroad, he should have to get himself registered with the export promotion bureau under registration of imports and exports act. He must fulfill the following conditions before getting himself registered: NIC NUMBER NATIONAL TAX NUMBER MEMBER OF REGISTERED ASSOSITATION Documentary letter of credit:
A documentary letter of credit is an instrument or document issued by the bank on the behalf of a customer, authorizing a beneficiary to draw a draft and drafts or sometimes the requirement of a draft, which will be honored, on presentation by the bank if drawn accordance with the te3rm and condition specified in the letter of credit. It is the written undertaking by the bank (issuing bank) pay to the seller (beneficiary) at the request or as per the instruction given by the opener (applicant) pay at sight or at the future date, a stated sum of money against the required documents. The documents include the commercial invoice, certificate of origin, insurance policy or certificate and the documents of transport relating to the mode sending goods. L/C is therefore is an arrangement of security for the parties. The conditional guarantee is related to the documents only and not on the underlying goods or services.
Establishment of letter of credit

Procedure:
The person applying for the letter of credit must be registered with the EPB. The opening bank verifies this registration or otherwise exemption. This is mentioned in the I form. The importer also shows the valid certificate of an organization membership. A category pass book is issued by the EPB for registered importer specifying his category. This book is centralized by the centralized banks in the city. It is not necessary for the bank to hold the original copy of the pass book of all the importers. But some times the importer gets L.C from more than one bank so the bank have to hold the photo copy of this pass book. The applicant can get the application from any branch of the Habib Bank Limited. However only some branches are authorized to open L.C. That branches how are not authorized have to contact with the authorized branches to open an L.C. The authorized branches in such case require the certificate from the applicant branch that the required formalities are fulfilled and the approval was obtained with required margin. For establishment of letter of credit, the importer requests the opening bank with the following documents:
1) Application and agreement form IB-8: Credit application form is an agreement between the bank and the customer on the basis of which the letter of credit is opened. This form contains the undertaking of the importer that get the documents from the bank at the mark up price. It contains the following information: Name and address of importer. Name and address of exporter. Amount in foreign currency. Terms of credit. Description of goods. Origin of goods. Port of loading and discharge. Last date of shipment. Foreign bank charges. Terms of shipment. (Partial shipment or transshipment) Insurance cover note, policy no, and name of insurance company. Forward booking. Mode of transmission. Import registration no. Any other documents required. Detailed documents.
2) Performa invoice/ purchase order: A Performa invoice is quotation of seller containing the description and the specification of the goods, price, and terms of the sale. Some times the exporter has their agent in the country. The agent must be registered from the EPB. 3) Insurance cover note: All the goods imported under the documentary credit must always be insured. In accordance with our country import policy, insured must be issued by a Pakistani insurance company or the foreign company operating in Pakistan and such company must be approved by the bank. Insurance covered based on the following: It is issued in the name of issuing bank A/C importer. The rider should cover against war. The port of shipment and the port of destination. Amount of premium prepaid. Shipment period. The description of goods should be the same as per the form.
4) Appendix B: This Performa replaces the import license and is submitted along with L.C application form duly filled in triplicate. It is conditional undertaking that the imports
goods are not banned, not smuggled. It is also an undertaking that if the bank is unable to arrange the said currency the importer have to purchase it from other banks or from any other place. It includes the details and description of goods, codes, class, type, source of import, country of import, Performa invoice no etc.
5) I FORM: This form is used at the time of retirement of documents against L.C established earlier for reporting to the transaction to SBP through the bill of entry deptt. It has four copies that is used as follows: Original is for the use of SBP. Duplicate for the authorized dealer to be used for processing exchange control. Triplicate for the authorized dealer record. Quartiplacte is for the submission in SBP in the case of import where the documents are not retired. Approval for establishment of letter of credit After scrutiny of the documents, IB-8 along with attached documents is put before the corporate head for approval. If the amount of application exceeds the power of the corporate head the branch concerned prepared the memorandum for the corporat e banking head for obtaining his approval. In case party enjoying regular limit, the L.C is established without adopting the procedure mentioned above. However the amount of L.C should not exceed the regular limit. Types of letter of credit: 1) Revocable credit:
The letter of credit that can be cancel with the consent of importer, without giving any prior information to the exporter. 2) Irrevocable letter of credit: The letter of credit that can be cancelled by the mutual consent of the both parties. Only one party cannot cancel it. 3) Irrevocable confirmed letter of credit: When an issuing bank authorizes and or request to an other bank to confirm his irrevocable credit and adds its confirmation. Such confirmation constitutes a definite undertaking of such bank in addition to that of the issuing bank. There are following other letter of credits: 1. Revolving Credit 2. Transferable Credit 3. Back to Back Credit 4. Green Clause Credit 5. Red Clause Credit 6. Clean Documentary Credit 7. Transit Credit 8. Stand by Credit 9. Sight Credit Parties to a credit: The applicant: The applicant of the letter of credit is called the importer or buyer. The buyer requests to the bank to open a documentary letter of credit in favor of the seller. Opening bank (issuing bank or importer bank):
At the request of the importer an issuing bank issues a credit under the instructions in the favor of the seller. Advising bank: An advising bank is a bank in the sellers country. The issuing bank forwards the advice of the credit by mail or by any mode to the correspondent bank in the exporter country as instructions of the opener. Beneficiary (exporter): The person or body receiving the letter of credit from the importer that is opened in favor of him. Confirming bank: The bank that on the requests of the issuing bank adds confirmation to a credit. It is definite undertaking of the confirming bank, in addition to the issuing bank. Negotiating bank: It May or may not be the advising bank. An authorized bank that gives the value to the draft for processing and payments. Reimbursing bank: Reimbursing bank is the bank, which on the behalf of the opening bank, honors the Reimbursing claim lodged by the negotiating bank.
Modes of payment:
Sight letter of credit: The seller submit all the documents with draft in the importer country Complying with the all terms and conditions. The payments are made on the presence of the documents.
Usance letter of credit: Under these circumstances it is agreed that the payment will be made after a specified period. So the payment is made after or on the expiry of that date.
Risks for importer and exporter: Importers risks: He does not know the seller. He does not know that goods will be delivered in time. He does not know how to check the goods.
Exporters risks: He does not know the buyer. He does not know the credit worthiness of the buyer. He does not wait for payment. He does not wait for exchange control. Buyers and sellers obligations: The sellers obligations: Provision of goods as per contract. License authorization and formalities. Contract of carriage and insurance. Delivery at time. Transfer of risk. Division of cost. Notice to buyer.
Proof of delivery. Good checking marking and packing. Other obligations.
Buyers obligations: Payment of price. License authorization and formalities. Contract of carriage and insurance. Taking Delivery at time. Transfer of risk. Division of cost. Notice to seller. Proof of delivery. Inspection of goods. Possible problems in international trade: Non-payment. Delay in delivery. Financing, how and against what. Currency restrictions. Regulatory restrictions. Documentation and mode of settlement. ICC rules and INCO terms.
HUMAN RESOURCE DEPARTMENT

FUNCTIONAL RESPONSIBILITIES:
Right Now the responsibilities assigned to HR department at Corporate Center can be categorized under three heads: Staff matters / Basic HR Functions Expenses control Security matters Now Ill discuss these one by one: : Background: The banking council of Pakistan was responsible for the recruitment, selection and allocation of human resources. After the dissolution of the Pakistan Banking Co uncil, the Banking & Financial Services Commission of Pakistan is responsible for these activities. Procedure: Staff requirements are met according to the changing needs of macro environment scenario and particularly the arising needs of the bank itself. A need analysis is conducted. After assessing the human resources requirements and screening of the applications, most probably, the suspects are invited for a written test. Short listed candidates are called for an interview for personality and social appraisal. Interviews are a mix of direct and indirect interviewing techniques and information required. The selected candidates are sent for training of six months training from MDIs. The training is through the lectures regarding banking procedural guidelines and other behavioral aspects. After the completion of training employees are allocated to different offices. The effective management of people in an organization requires an understanding of motivation, job design, reward systems, and group influence.

Recruiting Retention Succession planning Risk Management Diversity in our workforce Management information Progressive compensation and benefits design and implementation Employee communications and relations

Training needs analysis, program design and implementation Tra eeds imp Performance evaluat ion Work-life initiatives
CREDIT & ADMINISTRATION DEPARTMENT The responsibility of providing administrative support for the lending activities of the Bank, and day-to-day monitoring of credit-exposure, is vested in the Credit Administration Department (CAD).
FUNCTIONAL RESPONSIBILITIES:
The main responsibilities under this department are: Implementation of credit facility and their maintenance according to terms of credit approved. Ensure that standard loan documentation for each credit facility is maintained and the correctness & completeness of such documentation and also responsible for custody of all credit files. Maintain the safe custody of all collateral as per banks standard operating procedures; undertake periodic evaluation and inspection of hypothecated/ pledged inventories in accordance with the terms of credit. Ensure compliance with Institutional credit policies & procedures Local regulatory requirements. Prepare various portfolio composition reports and other documentation for submission to GRMs & RMs.
CREDIT FACILITY IMPLEMENTATION PROCEDURE:
Upon approval of credit proposal, the credit proposal and approval are handed over to CAD. Now CAD determines the nature of documentation required and on receipt of same ensures that all legal documents are obtained and are legally enforceable. After all these activities it can release the facility for utilization.
MARKETING DEPARTMENT The marketing department in HABIB BANK LIMITED is very strong. It is the main source of gaining and maintains the customers that can give a large profit to the bank. There are five relationship managers in Habib bank and every person is responsible for the credit of his party.
CUSTOMER DEALING:
HBL corporate center only deal with the following categories of business: The organization that have minimum 250 million sales in a year. The organization that have availed 80 million finance Agri based industry. HBL do not deal with the agriculture sector. PROCEDURE FOR CREDIT APPROVAL: It is the responsibility of the relationship manager to provide or fulfill the requirement of the customer by checking his financial and position. The procedure of credit approval starts with the credit proposal. First of all the customer request to the bank for credit and on the behalf of him the RM check the memorandum. The Memorandum includes: The company information. Purpose of credit. Assessment of management. Risks. Financial analysis. Third party or other bank information. Conclusion and recommendations.
Then the RM sends it to the authorities who accept or reject the proposal. If they accept the proposal they announced a credit range for the party. At the end RM sends the proposal to CAD deptt custody and check.
EXCESS FACILITY CREDIT BY RM:
Relationship manager is authorized to provide the excess facility to the customer than the credit line. It may be up to 10 percent of excess amount OR 12.5 million Whichever is less?
It is not more than 15 days if the customer wants to increase this facility he has to contact with the head office.
TYPES OF CREDIT FACILITY:
1) fund based: It is first type of credit facility. In this facility the bank actually provides fund to customers. 2) non fund base: Second type of credit facility that does not provides fun but only give the guarantee. If the customer is unable to make the payment at maturity date then bank will be responsible to make the payment.
10. PLAN OF INTERNSHIP PROGRAMME Every body knows that knowledge does not increase without practice .practice is an important mean to improve the knowledge. Therefore university provides internship programmed of six to eight week in different organization during MBA so that we could able to apply in theoretical concepts to practical. th th I started internship on 5 may to 25 June in water works road branch of habib bank. Work done by me in HBL in different departments: 1. Account opening department. 2. Data punching department. 3. Public dealing department. ACCONTS OPENING DEPARTMENT In this account department I gain the particle knowledge about opening. This department deals with opening account and saving account for its customer and all matters regarding there off. The customer opening account/saving accounts can be categorized as following: 1) individual 2) firm 3) company 4) trust
5) staff 6) others
OPENING AN ACOOUNT:
In order to open an account first of all the customer has to fill a form prescribed by the bank. The person is required to bring some reference or introduction for opening the account. Introducer may be a person who has an account with HBL. Some important information regarding introducer e.g. the name and account number of the introducer is written on the space provided on the specimen signature cards. Then in order to find out whether he is a true introducer or not a letter is sent to him thanking him for this introduction, so that any thing wrong may come into notice. There are different requirement for different types of accounts and account holders. An important thing is that the customer should have a corporate customer. The corporate customer limit is 40 million and this branch always deals the corporate customer. General rules for opening an account: One person can open only one account in the same branch with the same category. In the event of death of an account holder the credit balance will be transfer to the heirs of the diseased individual account. Services charges will be deducted periodically as prescribed from time to time on the accounts that are under the limit of specific account. Services charges are not applicable on that accounts that are prescribed as exempted. A distinctive number will be allotted to the each account. The bank can close those accounts that are under the minimum limit of the bank.
Any sum to be deposited in the account should be accompanied by paying in slip showing the party account number and the name. Account holder can only withdraw the sum of money by his own account by cheque. Cheque should be signed by the account holder by the specimen given by the bank. Post dated and defective cheque is not accepted. If statement of account spoiled a new will be issued on cost. Any change in the address should immediately communicate to the bank. The account holder wishing to close the account must surrender the cheque book. Account may be transfer from one branch to another same branch without any charges etc.
Data punching
Data punching means feeding of data collected into the computer daily or weekly. We punch data daily which include in the account. First, we enter transaction of customer on the basis of buying and selling daily in the customer account then we punch customer data one by one according to dates and sequence. Through data punching, we can easily transfer the data and money to another account and determine the account information. After debt and credit amount, we punch data according to their account in the computer so that we could check data easily. We make cash debit vouchers.cash credit vouchers,sundry debtor and sudry credit vouchers,transfer vouchers,internal account vouchers ,cross branch vouchers. We give detail in the system .these all
Public dealing
Public dealing means have good behavior with the public for increasing efficiency and growth. Bank deals with the customer and provides information of accounts and others which relates to the accounts. Bank guides that how to open account and forms fill to open new account. Bank issues cheque to the customer for opening new accounts. Bank asks to the customer about their needs and requirements and fulfill on time.
Following are includes in public dealing: Accounts Opening, Check book issuance, Standing instructions, Marking stock payments, Debit Credit card issuance, Activation of dormant accounts, Making inoperative account into operation, Recovering of multiple charges availing bank facilities, issuance of bank account statements Open new accounts to the customer. Issuance cheque to the customer. Provides information for opening new account to the customer. Establish good behavior with the customer to increase our product and services. To solve their problems which create open accounts etc.
13 .Financial Analyses
Balance Sheet As at December 31, 2007 Assets Cash & Balances with Treasury Banks Balances with other Banks Landings to Financial Institutions Investments Advances Other Assets Operating Fixed Assets Deferred Tax Asset 2010 2009 2008
(Rupees in '000) 81,516,883 35,990,301 30,339,344 245,016,986 434,998,560 15,876,545 8,835,326 34,478,466 887,052,411 79,527,191 29,560,309 5,352,873 209,421,147 432,283,588 16,475,939 8,172,590 40,333,882 821,127,519 10,041,203 48,121,649 653,452,460 4,212,080 26,204,580 5 6,533,134 39,364,297 6,193,787 129,833,446 456,355,507 34,588,444 14,751,252 12,186,848 749,806,715 9,828,082 46,961,165 597,090,545 3,954,925 2 5,663,411
Liabilities Bills Payable Borrowings From Financial Institutions Deposits and other Accounts Subordinated Loans Liabilities against assets subject to finance lease Other Liabilities Deferred Tax Liability
9,774,749 37,430,333 721,069,137 4,281,835 24,971,618
797,527,672 Net Assets Represented By: Shareholder's Equity Share Capital Reserves Un appropriate Profit Total equity attributable to the equity holders of the Bank Minority Interest Surplus on revaluation of assets - net of tax 8 9,524,739 742,031,972 79,095,547 683,498,128 6 6,308,587
10,018,800 27,671,813 4 4,121,103 8 1,811,716 7,713,023 8 9,524,739
9,108,000 25,801,889 36,325,458 71,235,347 7,860,200 79,095,547
7 ,590,000 23,656,044 3 1,933,178 6 3,179,222 8 90,099 6 6,308,587
Profit and Loss Account For the year ended December 31, 2007 Mark-up/return/interest earned Mark-up/return/interest expensed Net Mark-up/interest income Provision against Non-performing loans and advance-net Reversal/provision against off-balance sheet obligations Reversal of provision against diminution in value of investments Bad debts written off directly Net mark-up/interest income after provisions Non-market/interest income Fee,commision and brokerage income Income/gain on investments Income from dealing in foreign currencies other income Total non-mark-up/interest income Non-market/interest expense
2010 7 9,999,852 3 4,090,368 4 5,909,484 7 ,559,458 3 0,895 3 89,273 7 ,979,626 3 7,929,858
2009 2008 (Rupees in '000) 74,751,375 63,376,047 33,088,536 26,525,556 41,662,839 36,850,491 8,276,180 (51,396) 1 ,387,354 9,612,138 32,050,701 6,904,919 3 72,598 1,909,887 9,187,404 27,663,087
4 ,928,705 6 07,440 2 ,893,454 2 ,619,905 1 1,049,504 4 8,979,362
4,620,148 452,823 1,692,776 3,176,865 9,942,612 41,993,313
4,518,408 1 ,300,975 2 ,374,318 3 ,088,994 1 1,282,695 3 8,945,782
administrative expenses other provision offs-net other charges Total non-mark-up/interest expenses Profit Before Taxation Taxation current prior years deferred Profit after taxation Attributable to: Equity holders of the Bank Minority Interest Basic and diluted earnings per share 2 3,053,860 21,733,407 21,425,361 1 78,148 372,957 2 00,163 1 78,700 3 ,540 64,751 5 11,373 397,668 3 23,575 2 3,922,081 22,507,572 22,013,850 2 5,057,281 19,485,741 16,931,932 9 ,331,828 7 ,827,137 6 94,898 (1,079,473) (582,499) 4 39,434 9 ,444,227 7 ,187,098 1 5,613,054 12,298,643 8 ,308,611 2 33,100 (2,473,891) 6,067,820 10,864,112
1 5.58
1 2.28
1 1.83
Cash Flow Statement For the year ended December 31, 2007 CASH FLOWS FROM OPERATING ACTIVITIES Profit before taxation Less: Dividend income and share of profit of associated and joint venture companies Gain on sale of investments - net
2010
2009 (Rupees in '000)
2008
25,057,281 (318,539) (288,836) (607,375) 24,449,906 1,666,058 389,273 7,559,458 (65) 69,755 (16,993) 209,043
19,485,741 (281,152) (171,403) (452,555) 19,033,186 1,670,958 1,387,354 8,276,180 (268) 257,155 (29,386) 321,561
16,931,932 ( 1,111,810) (197,242) (1,309,052) 15,622,880 1 ,625,943 1 ,909,887 6 ,904,919 8 ,077 8 54,925 ( 41,840) 5 72,761
Adjustment for: Depreciation/amortization/adjustments Reversal against diminution in the value of investments Provision against Non-performing loans and advances-net of reversals Amortization of premium on investments Gain on sale of property and equipment-net Miscellaneous provisions
9,876,529 34,326,435 Increase/decrease in operating assets Government securities Landings to financial institutions Loans and advances Other assets-net Increase/decrease in operating liabilities Deposits and other accounts Borrowings from financial institutions Bills payable Other liabilities-net 11,883,554 30,916,740 11,834,672 27,457,552
(24,986,471) (10,274,430) 5,859,907 (29,400,994)
840,914 (4,851,108) (1,951,264) (5,961,458)
(4,565,657) ( 81,087,692 (6,355,923) ( 92,009,272 6 5,792,418 ( 12,033,4440 (5,590,148) 5 ,657,085 53,825,911 (10,725,809) (11,600,790) ( 22,326,599)
Income tax paid-net Net cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Net investments in securities, associated and joint venture companies Dividend income received Fixed capital expenditure Proceeds from sale of fixed assets Effect of translation of net investment in foreign branches subsidiaries and joint ventures Net cash flows from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Sub-ordinate Loans Dividend Paid Net cash flows from (used in )financing activities Increase in cash and cash equivalents during the year Cash and cash equivalents at beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of the year
67,616,677 81,053,273 (10,691,316) 4,098,973 (266,454) 260,126 (1,350,947) 4,083,696 55,307,960 89,496,068 60,233,401 114,451,350 (10,137,565) (12,265,104) 50,095,836 102,186,246
(35,957,034) (78,588,907) 319,465 624,628 (948,433) (1,835,161) 51,667 104,288 308,619 1,689,707
37,444,490 2 37,291 ( 2,662,833 1 08,033 3 ,037,018 38,163,999
(36,225,716) (78,005,445)
(5,450,436) (5,450,436) 8,419,684 108,541,351 546,149 109,087,500 117,507,184
(4,173,059) (4,173,059)
(58,868) ( 2,730,251 (2,789,119)
20,007,742 1 3,048,281 84,639,657 7 5,518,830 4,440,101 89,079,758 109,087,500 7,330,320 82,849,150 9 5,897,431
Liquidity Ratios
The liquidity of a firm is measured by its ability to satisfy its short term obligations as they come due. These are includes: Current Ratio: Current ratio = current asset/current liabilities 2010 Rs. In 000 843738619/770745837 1.0947041 2009 Rs. In 000 772621047/737819892 1.0471675 2008 Rs. In 000 666335481/679543203 0.9805638
1.1 1.08 1.06 1.04 1.02 1 0.98 0.96 0.94 0.92 2010 2009 2008
habib bank limited
Comments: The current ratio of 2010 and 2009 is quite acceptable as compare to 2008. It means that its current ratio is less liquid. There is small increase in industrys ratio which can meet the short term obligations of 2010 and 2009 as compare to 2008. Acid Test Ratio:
1 0.8 0.6 0.4 HABIB BANK LIMITED
0.2 0
2010
Acid test ratio =
2009 2008
current
asset inventories prepaid expanses/current liabilities.
2010 Rs. In 000 843738619-434998560 /770745837 0.5303176
2009 Rs. In 000 772621047-432283588 /737819892 0.4612744
2008 Rs. In 000 666335481-45635507 /679543203 0.9134077
1 0.8 0.6 0.4 HABIB BANK LIMITED
0.2 0 2010 2009 2008
Comments: The acid test ratio indicates good sign in the overall liquidity of industry. It is a small increase in the acid test ratio. Working capital: Working capital = current asset/current liabilities 2010 Rs. In 000 843738619/770745837 1.0947041 2009 Rs. In 000 772621047/737819892 1.0471675 2008 Rs. In 000 666335481/679543203 0.9805638
1.1 1.0 8 1.0 6 1.0 4 1.0 2 1 0.9 8 0.9 6 0.9 4 0.9 2
HABIB BANK LIMITED
2010 2009 2008
Comments: Working capital ratio is increasing than previous ratio. In the year of 2010, the current assets is high than current liabilities. Therefore, working capital ratio is also high as compare to others year because its assets and liabilities are lower.
Leverage Ratios
The leverage ratio may be defined as financial ratio which is magnification of risk and return introduced through the use of fixed cost financing such as debt and preferred stock
Leverage ratios measure the degree of protection of suppliers of long term funds. These include: Times Interest Earned= Earning Before Interest and Taxes (EBIT)
Interest Expenses
2010 Rs. In 000 2 3,922,081/34090368 0.7017255
2009 Rs. In 000 22,507,572/33088536 0.6802227
2008 Rs. In 000 22,013,850/26525556 0.829911
0.9 0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 2010 2009 2008
HABIB BANK LIMITED
Comments: The time interest ratio shows the lower value. Firm is not able to fulfill its interest obligations. It is also called interest coverage ratio. Debt Ratio: Debt Ratio= Total liabilities/ total assets. 2010 Rs. In 000 797,527,672/887,052,411 2009 Rs. In 000 742,031,972/821,127,519 2008 Rs. In 000 683,498,128/749,806,715
0.8990762 0.9036745 0.9115658
0.915 0.91 0.905 0.9 HABIB BANK LIMITED
0.895 0.8 9
2010 2009 2008
Comments: These values indicate that the firm has financed close to total of its assets with debt. The higher this ratio, the greater the firms degree of indebtedness and the more financial leverage it has. Debt-Equity Ratio: Debt-equity ratio = total liabilities / total share holder equity. 2010 Rs. In 000 797,527,672/81811716 9.7483308 2009 Rs. In 000 742,031,972/71235347 10.416626 2008 Rs. In 000 683,498,128/63179222 10.818401
0.915 0.91 0.905 0.9 HABIB BANK LIMITED
0.895 0.8 9
2010 2009 2008
Comments:
It is a ratio of amount invested by outsiders to the amount invested by the owners of the business. This ratio indicates the low margin of safety to the creditors.2009 and 2008 has high ratio as compare to 2010. The firm would not be able to meet the creditors claim because of low assets or shareholder equity. Debt to Tangible Net worth Ratio:
Tangible Net worth Ratio: Tangible net worth ratio =total assets- intangible asset-total liabilities.
Debt to tangible net worth ratio= Total Debt / Tangible Net worth Ratio. 2010 Rs. In 000 9.7483308 /80689413 1.2081 2009 Rs. In 000 10.416626/70922957 1.4687 2008 Rs. In 000 10.818401 /51557334 2.0983
2.5 2 1.5 1 HABIB BANK LIMITED
0.5 0 2010 2009 2008
Total Capitalization Ratio: Debt to total capital ratio =long term debt/ (long term debt-shareholder equity). 2010 Rs. In 000 750322590/(750322590-8 1,811,716) 750322590/668510874 1.122379
1.2 1 0.8 0.6 0.4 0.2 0 2010 2009 2008 habib bank limited
2009 Rs. In 000 683869120/(68386912071,235,347) 683869120/612633773 1.1162772
2008 Rs. In 000 856678881/(856678881-6 3,179,222) 856678881/793499659 1.079621
Comments: This ratio is relating the long-term debt to the permanent capital of the bank. It shows that the fixed assets decrease than previous years which show a good sign. This ratio is considered to be satisfactory. Profitability Ratios
Profitability measures enable the analyst to evaluate the bank or firms profits with respect to a given level of sales, a certain level of assets or the owners investment . Without profits, a bank or firm could not attract outside capital Net Profit Margin: Net profit margin = (Net income/ Net sale) * 100 2010 Rs. In 000 (15,613,054/79,999,852)*100 19.52% 2009 Rs. In 000 (12,298,643/74,751,375)*100 16.45 % 2008 Rs. In 000 (10,864,112/63,376,047)*100 17.14%
20 19 18 17 16 15 14 2010 2009 2008 HABIB BANK LIMITED
Return on Assets: Return on Asset = Profit before Tax / Total Assets *100 2010 2009 Rs. In 000 (23,922,081/887,052,411)*100 2.69681 Rs. In 000 (22,507,572/821,127,519)*100 2.74106
2008 Rs. In 000 (22,013,850/749,806,715)*100 2.93594
2.95 2.9 2.85 2.8 2.75 2.7 2.65 2.6 2.55 2010 2009 2008
Comments: This ratio shows that the returns on assets are decreasing as compare to previous years but overall profit with its available assets is increasing. DuPont Return on Assets: DuPont return on assets = (Net income/sale)*(sale/total asset) *100 2010 Rs. In 000 (15,613,054/79,999,852)*( 79,999,852/887,052,411)*100 1.7604 2009 Rs. In 000 (12,298,643/74,751,375)* (74,751,375/821,127,519)*100 1.4975 2008 Rs. In 000 (10,864,112/63,376,047)* (63,376,047/749,806,715)*100 1.4487
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2010 2009 2008
HABIB BANK LIMITED
Operating Income Margin: Operating income margin = (EBIT/ Net sale) *100
1.8 1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 2010 2009 2008
HABIB BANK LIMITED
Return on Operating Assets: Return on operating assets = (EBIT/operating asset)*100 2010 Rs. In 000 ( 2 3,922,081 /887,052,411)*100 2.69681 2009 Rs. In 000 (22,507,572/821,127,519)*100 2.74106 2008 Rs. In 000 (22,013,850/749,806,715)*100 2.93594
2.95 2.9 2.85 2.8 2.75 2.7 2.65 2.6 2.55 2010 2009 2008 HABIB BANK LIMITED
Comments:
This ratio indicates that banks growth is not good. It can not cover all assets or expenses through net profit before tax easily. Its not able because its ratio is decreasing than previous years.
Return on Total Equity: Return on total equity = (Net income/ total equity)*100 2010 Rs. In 000 (15,613,054/81,811,716)*100 19.08% 2009 Rs. In 000 (12,298,643/71,235,347)*100 17.26% 2008 Rs. In 000 (10,864,112/63,179,222)*100 17.19%
19.5 19 18.5 18 17.5 17 16.5 16 2010 2009 2008 LIMITED
Comments: Return on equity indicates the net income by the total equity of the owners. In the year of 2010, the total equity is increasing than previous years and net income is also increasing. In the year of 2010, the total equity is grater than net income. It means that generally, the bank has high return, the better off are the owners. Gross Profit Margin: Gross profit margin = (Gross Profit/ Net sales)*100
2010 Rs. In 000 2009 Rs. In 000 2008 Rs. In 000
(45,909,484/79,999,852)*100 57.39%
(41,662,839/74,751,375)*100 55.73%
(36,850,491/63,376,047)*10 58.14%
58.5 58 57.5 57 56.5 56 55.5 55 54.5 2010 2009 2008 HABIB BANK LIMITED
Activity Ratios
Activity ratios measure the speed with which various accounts are converted into sales or cash such as inflows or outflows.
These include:
Total Assets Turnover Total assets turnover = Net sales/ total asset 2010 Rs. In 000 7 9,999,852 /887,052,411 0.0902 2009 Rs. In 000 74,751,375/821,127,519 0.0910 2008 Rs. In 000 63,376,047/749,806,715 0.0845
58.5 58 57.5 57 56.5 56 55.5 55 54.5 2010 2009 2008 HABIB BANK LIMITED
Fixed Assets Turnover:

Fixed assets2t0u1r0nover = ales/ fixed ass2e0t 09 Net s Rs. In 000 Rs. In 000 7 9,999,852 /739,205,903 74,751,375/706,687,146 0.1082 0.1057 2008 Rs. In 000 63,376,047/647,715,497 0.0978
0.11 0.108 0.106 0.104 0.102 0.1 0.098 0.096 0.094 0.092 2010 2009 2008
Market ratio relates a firms market value, as measured by its current shares price to certain accounting values.
Market Ratios
These include:
Dividend per share Dividend per share =Total dividend/ no of share outstanding
2010 Rs. In 000 5,450,436/10,018,80 0.5440 2009 Rs. In 000 4,173,059/9,108,000 0.4582 2008 Rs. In 000 2,730,251/7 ,590,000 0.3597
0.6 0.5 0.4 0.3 0.2 0.1 0 2010 2009 2008 HABIB BANK LIMITED
Earning per Share:

Earning per share = Net income/ no of share outstanding. 2010 Rs. In 000 15,613,054/10,018,80 1.56 2009 Rs. In 000 12,298,643/9,108,000 1.35 2008 Rs. In 000 10,864,112/7 ,590,000 1.43
1. 6 1.5 5 1. 5 1.4 5 1. 4 1.3 5 1. 3 1.2 5 1. 2 2010 2009 2008 HABIB BANK LIMITED
Comments: This ratio is decreasing as compare to previous years. In these ratios, net income is greater than no of shares outstanding. Thats why, the earning per share is decreasing and growth rate as well as. It shows low profitability between the shareholders.
AWARDS: 2010 2009 2008 'HBL wins Best Emerging Market Banks award in Pakistan 2010' 'The Best Emerging Market Bank in Pakistan' HBL among Top 500 Global Financial Brands 'Best Bank In Pakistan' 'Most Innovative Global Trade Finance' 'Buzziest Brands'
15. Conclusion/Recommendation: RAFIQ has become a creditable name in the textile industry of Faisalabad. In a bid to prepare itself for the challenges / opportunities of the barrier free trade Textile Vision 2005, their planned spinning unit will help them reap the benefits with competitive edge of cost effective, quality products. The company has already started exporting quality yarn to various buyers in the region. We may improve net return on funded facilities from the relationship by rationalizing the credit portfolio in accordance with their financial requirements as proposed. In view of the above, we recommend the proposal for approval.
Recommendations:
During my internship, I have realized that habib bank is vast system and spread its networking all over the world and performing very well. It is difficult to give suggestion about improving condition of habib bank. So, I will few suggestions to habib bank which are given below: Bank must introduce online system all over the world. Bank has different schemes which should express to the required customer so that They are introduced reasonable shares in the market. Bank should provide interest free loan to the scholar students for their encouragement. Habib bank should introduced computerize system in all branches. Through it, bank can increase more efficiency in the work than without it. Habib bank should create plan for opening a customer account with bank where he could easily know about the procedure of filling forms or cheque of new accounts. It saves a lot of times of banks and staff who perform it. Habib bank should increase communication with customer so that they could more establish public relation and expand its growth. Habib bank must introduce marketing programs for the clients so that they could easily know about the market development of bank because it is problem for clients that he has no idea for usage of new marketing term. Bank should have same behavior with the customer. Bank should not adopt such a behavior which creates problems between the customer and banker. For example, bank show good behavior with very close person and bad behavior show with other person. It is not good position for the banking growth.
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FINI619 VUsolutions Spring 2011 Habib Bank Limited

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AN INTERNSHIP REPORT ON HABIB BANK

LETTER OF UNDERTAKING: LETTER OF INTERNSHIP:

Reason for closing customer account:

Payment of cash: A ft er po st ing t he c he q u e t he o p er at io n ma na g er c a nc e lle d t he c he q ue a nd r et ur ne d ba c k to ca s hie r . e in c a s h p a id T he c a s hie r e nt er s t he c he qu

Loans are offered to the staff in various categories

How to operate this scheme? SBP ERF scheme

FAPC & FAFB

Imports and exports department

Establishment of letter of credit

HUMAN RESOURCE DEPARTMENT

EXCESS FACILITY CREDIT BY RM:

9,774,749 37,430,333 721,069,137 4,281,835 24,971,618

10,018,800 27,671,813 4 4,121,103 8 1,811,716 7,713,023 8 9,524,739

9,108,000 25,801,889 36,325,458 71,235,347 7,860,200 79,095,547

7 ,590,000 23,656,044 3 1,933,178 6 3,179,222 8 90,099 6 6,308,587

2010 7 9,999,852 3 4,090,368 4 5,909,484 7 ,559,458 3 0,895 3 89,273 7 ,979,626 3 7,929,858

4 ,928,705 6 07,440 2 ,893,454 2 ,619,905 1 1,049,504 4 8,979,362

4,620,148 452,823 1,692,776 3,176,865 9,942,612 41,993,313

4,518,408 1 ,300,975 2 ,374,318 3 ,088,994 1 1,282,695 3 8,945,782

2009 (Rupees in '000)

(24,986,471) (10,274,430) 5,859,907 (29,400,994)

840,914 (4,851,108) (1,951,264) (5,961,458)

37,444,490 2 37,291 ( 2,662,833 1 08,033 3 ,037,018 38,163,999

(5,450,436) (5,450,436) 8,419,684 108,541,351 546,149 109,087,500 117,507,184

(58,868) ( 2,730,251 (2,789,119)

habib bank limited

Acid test ratio =

asset inventories prepaid expanses/current liabilities.

2010 Rs. In 000 843738619-434998560 /770745837 0.5303176

2009 Rs. In 000 772621047-432283588 /737819892 0.4612744

2008 Rs. In 000 666335481-45635507 /679543203 0.9134077

1 0.8 0.6 0.4 HABIB BANK LIMITED

0.2 0 2010 2009 2008

1.1 1.0 8 1.0 6 1.0 4 1.0 2 1 0.9 8 0.9 6 0.9 4 0.9 2

HABIB BANK LIMITED

2010 2009 2008

2010 Rs. In 000 2 3,922,081/34090368 0.7017255

2009 Rs. In 000 22,507,572/33088536 0.6802227

2008 Rs. In 000 22,013,850/26525556 0.829911

HABIB BANK LIMITED

0.915 0.91 0.905 0.9 HABIB BANK LIMITED

2010 2009 2008

2010 2009 2008

0.5 0 2010 2009 2008

2009 Rs. In 000 683869120/(68386912071,235,347) 683869120/612633773 1.1162772

2008 Rs. In 000 856678881/(856678881-6 3,179,222) 856678881/793499659 1.079621

20 19 18 17 16 15 14 2010 2009 2008 HABIB BANK LIMITED

2008 Rs. In 000 (22,013,850/749,806,715)*100 2.93594

HABIB BANK LIMITED

HABIB BANK LIMITED

19.5 19 18.5 18 17.5 17 16.5 16 2010 2009 2008 LIMITED

Fixed Assets Turnover:

Earning per Share:

Prepared & Consolidated by VUsolutions

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