Internship: Part 1: Profile

PART 1: PROFILE
[Type text] Page 1

H B L

Internship
Report

Submitted by: Ali Raza
(Internee in HBL Kashmir Road Commercial
Institute Of Business Administration Page 2

INTERNSHIP REPORT
ON
HABIB BANK LIMITED

SUBMITTED TO:

MANAGER HBL CORPORATE BRANCH
MS. SAIMA SAJID QURESHI

SUBMITTED BY: Ali Raza

ROLL NO: 18-A
BBA (HONS.)
SESSION: 2010-2014

INSTITUTE OF BUSINESS ADMINISTRATION
UNIVERSITY OF THE PUNJAB
LAHORE


DEDICATION

This report is dedicated to my parents and teachers who
took initiative and did grim struggle for my education and
always stress on me to utilize my time.


PREFACE

The essential requirement for the completion of BBA degree is to take six weeks
internship training with an organization of National/international repute and to
write a report on it. The purpose of this training is to acquaint the student with
practical knowledge of working in the organization.

The department directed me to HABIB BANK LIMITED I tried my best to
present all of my findings in this Report, while visiting various departments of
NPL and gained practically too much knowledge about organization. It was
realized that, there is great difference between theory and practice. At the end I
expect that this report will help the reader to understand the various
problems/suggestions, methods and procedures that are in Practice in HABIB
BANK LIMITED.


ACKNOWLEDGMENT

First of all, I want to express all my humble thanks to ALLAH who is very
sensitive about each and every activity Of all his man and without whose help, I
am unable to accomplish any objective in my life.
Secondly, I feel the pleasure of expressing my deep gratitude and whole hearted
thanks to all of my respected supervisors, , who has given me the opportunity to
explore and gain a deep understanding of the wide field of Finance. The whole
staff of the HBL Corporate Branch was very cooperative, encouraging and
accommodating, I don't find any appropriate words to express my gratitude to all
the staff of finance department for the support and encouragement they gave me
which will surely help me to tackle my forth coming carrier issues and
developments.
I especially pay homage to admin of HBL for their great concern and cooperation
with the internees. The farsighted policies and decisions have always aimed at
upraising the quality of students education. Amongst one such decisions is to
provide internship training to the students in the practical field with the objective
of providing awareness of practical expertise and to acquaint them with the real
management process.
And most importantly I would avail this opportunity to thank all my instructors
at IBA for teaching me, being my mentors and preparing me for the challenging
corporate world.
ALI RAZA
18
th
September, 2014


EXECUTIVE SUMMARY

The report has been divided into eight sections, which are in the following order;
First section includes a brief history of HBL, its mission, strategic vision, core
values and objectives and at the end success factors of HBL
Second section describes organization structure and company management
system.
Third section describes administrative styles and different departments in HBL
but a special concentration is made on finance department. Shows that how
finance department is further divided into various departments and what are its
functions.
Forth section describes the detail discussion about services provided by HBL
and its production facility
Fifth section deals with the Marketing Mix of HBL.
Sixth section deals with the financial analysis of the company i.e. vertical,
horizontal analysis, ratio analysis and contains SWOT analysis of HBL.
Seven section deals with the details of work performed as intern at HBL.
Eighth section contains conclusion and recommendations.


TABLE OF CONTENTS
DEDICATION ........................................................................................................................ 3
PREFACE ............................................................................................................................... 4
ACKNOWLEDGMENT ......................................................................................................... 5
EXECUTIVE SUMMARY ..................................................................................................... 6
History: .................................................................................................................................. 11
Post Nationalization Era: ................................................................................................... 14
Status and Nature of Business: .......................................................................................... 18
Time Line and Growth of HBL: ........................................................................................ 20
Pioneers in Innovative Scheme: ......................................................................................... 21
Profile of HBL: ...................................................................................................................... 23
Vision: ................................................................................................................................ 24
Mission: .............................................................................................................................. 24
Objectives: ......................................................................................................................... 25
HBL Strategic Overview: .................................................................................................. 25
HBL Values: ...................................................................................................................... 26
Strengths of HBL: .............................................................................................................. 27
Current Scenario of HBL: .................................................................................................. 32
Credit Rating ...................................................................................................................... 32
Branch Network ................................................................................................................. 33
Islamic Banking: ................................................................................................................ 33
Management in HBL: ............................................................................................................ 35
Hierarchy Structure of HBL: ............................................................................................. 36
Board of Directors: ............................................................................................................ 37
Members in Management: ................................................................................................. 38
Chain Of Command: ....................................................................................................... 40
Different Groups in HBL Banking: ............................................................................ 41
Commercial Banking Group (CBG): ................................................................................. 41
Corporate & Intuitional Banking Group: ........................................................................... 43
International and Overseas Banking: ................................................................................. 43

Retail Banking Group (RBG): ........................................................................................... 46
Policy Making Styles of HBL: ....................................................................................... 49
Departments in HBL: ..................................................................................................... 53
Deposit Department: .......................................................................................................... 53
Credit Department .............................................................................................................. 57
Remittance Department ..................................................................................................... 61
Clearing Department .......................................................................................................... 65
Cash Department ................................................................................................................ 67
Foreign Exchange Department .......................................................................................... 71
Account department ........................................................................................................... 74
HBL Marketing Mix: ........................................................................................................ 77
Product and Services: ......................................................................................................... 77
Deposits: ...................................................................................................................... 77
Advances: .................................................................................................................... 82
Debit Cards: ................................................................................................................ 84
Credit Cards: .............................................................................................................. 86
Phone Banking: ......................................................................................................... 89
Trade Finance: ........................................................................................................... 93
Corporate Product and Services: ......................................................................... 94
Price ................................................................................................................................... 97
International Banking: ............................................................................................ 97
Domestic Banking .................................................................................................... 98
Consumer Financing: ............................................................................................ 100
Place ................................................................................................................................. 103
Head Office: .............................................................................................................. 103
Promotion ......................................................................................................................... 104
Social Responsibility: ............................................................................................ 104
Health Services: ....................................................................................................... 105
Sports Division: ....................................................................................................... 106
HBL Swot Analysis: ....................................................................................................... 108
Strengths: ......................................................................................................................... 109

Weakness: ........................................................................................................................ 110
Opportunities: .................................................................................................................. 110
Positioning: ...................................................................................................................... 118
HBL Marketing Strategies ........................................................................................... 120
Financial Analysis: ........................................................................................................ 123
Horizontal Analysis: ........................................................................................................ 128
Vertical Analysis: ............................................................................................................. 129
Ratio Analysis: ................................................................................................................ 131
Internship Activities: .................................................................................................... 150
First Week (General Banking): ........................................................................................ 150
Second Half of First Week (Accounts Department): ....................................................... 152
Second Week (Clearing Department): ............................................................................. 157
Third and Fourth Week (Trade Department): .................................................................. 159
Leading Problems in HBL: .......................................................................................... 169
Recommendations ............................................................................................................... 169
Conclusion ........................................................................................................................... 172
Glossary ............................................................................................................................... 173
Reference & Sources used ................................................................................................... 174
Annexes ............................................................................................................................... 175

PART 1: PROFILE


H B L

Introduction

PART1: PROFILE

History:

At the time of independence, the areas which now constitute
Pakistan were producing only food grains and agricultural raw
material for Indo-Pakistan subcontinent. There were practically no
industries, and whatever raw material was produced was being
exported from these areas. However commercial banking facilities
were provided fairly well here there were 487 offices of scheduled
bank in the territories now constituting Pakistan.

Habib Bank is the only Pakistani Bank, which existed in the pre
partition era. The bank was established by the Muslim community
in India. At that time all local banks were owned by Hindus, so
need for a bank for the Muslim community was realized and upon
the instruction of Quaid- e-Azam Muhammad Ali Jinnah , a
businessman named Ismail Habib established the bank in 1941
with a network of three branches, established in Bombay, Calcutta
and Karachi.

As a new country without resources it was very difficult for
Pakistan to run its own banking system immediately. Therefore, in
accordance with the provision of Indian Independence Act of 1947,
an Expert Committee recommended that the Reserve Bank of India
should continue to function in Pakistan until 30
th
September 1948,
so that the problems of time and demand liability, coinage,
currencies exchange etc. be settled between India and Pakistan.

1941 Mohammed Ali Jinnah, Pakistan's founding father, realized
the importance of financial intermediation while he was
campaigning for the creation of a separate homeland for the
PART1: PROFILE

Muslims of India. He persuaded the Habib family to establish a
commercial bank that could serve the Indian Muslim community.
His initiative resulted in the creation of Habib Bank, with HO in
Bombay and fixed capital of 25,000 rupees. The bank played an
important role in mobilizing funds from the Muslim community to
finance the All-India Muslim League's campaign for the

establishment of Pakistan. Habib Bank also played an important
role in channeling relief funds to the people hurt in the communal
riots and violence that preceded the departure of the British from
India. Habib Bank Limited established itself in Bombay (Mumbai)
in 1941.

After the announcement of Independence Plan in June 1947, the
Hindus residing in the territories now comprising Pakistan started
transferring their assets to India. Moreover, the banks including
those having their registered offices in Pakistan transferred them to
India in order to bring a collapse of the new state.

After Pakistan was born in 1947, Habib Bank, at the urging of
Governor-General Jinnah, moved its headquarters to Karachi,
Pakistan's first capital. After the partition of the subcontinent when
Pakistan came into existence, Habib Bank used to perform the
treasury functions of the State, till the time, the Central Bank was
instituted. The Habib family owned and managed the bank until
the Pakistan government nationalized it on 01 January 1974.

With a domestic market share of over 40%, HBL was nationalized
in 1974 and it continued to dominate the commercial banking
sector with a major market share in inward foreign remittances
PART1: PROFILE

(55%) and loans to small industries, traders and farmers.
International operations were expanded to include the USA,
Singapore, Oman, Belgium, Seychelles and Maldives and the
Netherlands.

On June 13, 2002 Pakistan's Privatization Commission announced
that the Government of Pakistan had formally granted the Aga
Khan Fund for Economic Development (AKFED) rights to 51% of
the shareholding in HBL, against an investment of PKR 22.409
billion (USD 389 million). On February 26, 2004, management
control was handed over to AKFED. The Board of Directors was
reconstituted to have four AKFED nominees, including the
Chairman and the President/CEO and three Government of
Pakistan nominees.

The network however kept growing day after day and soon this
institution became the backbone of the countrys economy. The
contributions of the pioneers of this bank in promoting the Banking
Industry in Pakistan are innumerable. It was through their efforts
that event the people living in far-flung, remote areas of the country
became aware of banking. Even in the big cities, the network
spread at an immense rate and in a short span of almost thirty
years, Habib Bank, the leader in banking operations in Pakistan,
established almost 1800 branches within Pakistan and abroad.

PART1: PROFILE

Post Nationalization Era:

In 1974, as a part of national restructuring, the bank was
nationalized and the top management was taken over by officials
appointed by the government from within the bank. This policy

continued till Feb 1996. During this era, the banks contribution
towards social responsibility remained persistent. The network kept
growing and the social obligations remained beihg discharged up to
the ethical standards. In its endeavors Habib Banks initiated a
number of schemes for the uplift of the society. The initiatives
launched during this period, of significant importance were:

School Banking, through which school going children were
educated to build concepts of savings.

Opening of Schools in mosques at primary level. The
number of such schools went up to 61 with average
attendance of over 68 students per school in Punjab province.

Industrial Homes to upgrade the vocational skills of women
in rural areas were established. This was a part of the plan
for expansion of female education. The areas where such
institutions were established included Wazirabad,
Bahawalpur, D.G Khan, Shujabad, and Shamsabad, Multan.
A committee of local notables ran these units.

Participation in sports by employing sportsmen from the
country. Not only did the bank provided job opportunities for
players but also conducted /sponsored a number of sports
events in the country.

PART1: PROFILE

Apart from this, technology advancements were also made giving
new dimension to the Banking sector in Pakistan. Habib Bank
was a pioneer of computerization in Pakistan. This was the first
local bank, which started computerized operations. Later on,
other banks and organizations were also encouraged to improve
their performances by adopting the modern techniques and
switching from manual work to automation.

Certain schemes introduces by Habib Bank were lauded by the
International Banking Community and received the following
international awards.

American Gold Coin Award 1975

The Bank Marketing Association, Chicago
USA gave this award to Habib Bank for its Prize Savings
Account Scheme in 1975. The Scheme helped increase the rat
of domestic savings and curbed wasteful expenditure on the
part of the savings account holders.

Gold Mercury Award, USA 1982

This was conferred on the bank for its
pioneering role and outstanding services in banking

Chamber of Commercial Istanbul, Gold Medal, 1984

Habib Bank was awarded a Gold Medal and
Certificate in recognition of its outstanding performance and
valuable contribution owards the economic development in
Turkey.

The upward trends prevailed till late 80s and phenomenal
growths were witnessed in the performance of the Banking
Industry. HBLs share was at the top among nationalized
commercial Banks. A glance at the post nationalization
PART1: PROFILE

developments of the NCBs up to 1989, given at the next page
would explain the position of HBL and its competitors.

Table 2.5 is indicative of the fact that HBL share in the total profit
of all the banks has always been over 50%.

Another important event in the history of the bank was merging of

Standard Bank Limited at the time of nationalization. Later in
1992, three branches of the former BCCI in Pakistan were taken
over by the Bank under the Scheme of Amalgamation approved by
the Federal Government and State Bank of Pakistan. The Bank
managed these branches from March 14 1992 to December 31
1992. However the assets and liabilities of the former BCCI
branches were transferred to wholly owned subsidiary of the Bank
Habib Credit and Exchange Bank which commenced operations
from November 1, 1992.

It can also be observed that although the overall positions of
deposits, finances, investments equity and profits had shown
significant improvement, it is pertinent to note that the percentage
increase in profits did not commensurate with these figures. The
key factors responsible for this downward trend were:

Overall decline in economic conditions

Inadequate and inequitable distribution of credit

Irrational investment with low returns

Lack of competitive spirit amongst NCBs

Ineffective monitoring and supervisory controls

Increasing percentages of unserviceable loans

Deteriorating services standards

PART1: PROFILE

In the early 90s one of major objectives of the bank remained at
providing job opportunities. On the occasion of Golden Jubilee of
Bank in 1991, services of more than 5500 temporary employees
who had been working on daily wages were confirmed. The total
staff strength, as a result of this policy, increased to 32,770 in 1991
as against to 27,254 in 1990. This act put the bank in further
constraints as regards the overall operation cost in concerned.
Remedial measures to redress the situation were not taken as a result
of which the condition kept on deteriorating till mid 90s when in
1996-1997 for the first time in

Habib Banks History, the management of the bank was handed
over to professional bankers hired from foreign banks.

Restructuring Results:

HBL, with its professional new management is in the process of
turning around the Bank. In a short time frame, the results
indicate a strong potential for turn around and value creation. The
new management has taken the following bold steps in
restructuring the Bank and its operations;

Successfully negotiated with SBP to inject PKR. 9.7 billion in
tier 1 capital (capital injection is reflected in the 1998 balance
sheet).

Reduced Staff by over 25% and closed 219 branches in 1997.

Re-engineered the credit approval process.

Implemented an aggressive remedial management program.

Instituted international financial reporting standards.

Focused on rebuilding the customer franchise.

Closed 3 million non- remunerative accounts

PART1: PROFILE

Continues to plow bank profits into the institution to enhance
capital base.

Developed a customer franchise by creating customer focused
business groups and launching customized
products/marketing techniques.

Adopted international risk management methods, which
require rigorous credit administration

Introduced pay for performance measures and structured
training programs for all employees

Developed a plan to upgrade the information and
communication technology
Developed country specific programs to build the Banks
international brand equity.

Introduced new products like Crore Pati Deposit Scheme and
Muhafiz Traveler Cheques.

Status and Nature of Business:

HBL is a Banking Company, which is engaged in Commercial &
Retail Banking and related services domestically and overseas. It is
Pakistans second largest commercial bank, having a country wide
and international branch network. HBL has full service license
covering commercial, retail banking, consumer an investment
banking activities in Pakistan and most of the other countries
where it is present.

HBL is one of the largest commercial banks of Pakistan. It accounts
for a substantial share of the total commercial banking market in
Pakistan with a network of 1705 domestic branches; 55overseas
branches in 26 countries spread over Europe, the Middle East, Far
East, Asia, Africa and the United States; 3 HBL wholly owned
PART1: PROFILE

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 Himaliyan Bank Ltd. (20%) and 2
representative offices in Iran and Egypt.

HBL has developed a strong brand name during its 60 years of
operation, both in the domestic and the international market place.

It now has an established customer base of more than five million
accounts in Pakistan. And the international operations span 26
countries in four continents.

With a domestic market share of over 40%, HBL was nationalized
in 1974 and it continued to dominate the commercial banking
sector with a major market share in inward foreign remittances and
loans to small industries, traders and farmers. International
operations were expanded to include the USA, Singapore, Oman,
Belgium, Seychelles and Maldives and Netherlands.

On June 13, 2002 Pakistans Privatization Commission
announced that the

Government of Pakistan had formally granted the Aga khan Fund
for Economic Development (AKFED) rights to 51% of the
shareholdings in HBL, against an investment of PKR 22.409 billion
(USD 389 million). On February 26, 2004, management control was
handed over to AKFED nominees, including the Chairman and the
President/CEO and three Government of Pakistan nominees.

HBL has the largest Corporate Banking Portfolio in the country
with an active Investment Banking arm. SME and Agriculture
lending programs and banking services are offered in both urban
PART1: PROFILE

and rural centers. Using its branch network as a key competitive
advantage, its business concentration has remained consistent for
Retail, Consumer, and Corporate and SME clients.

Time Line and Growth of HBL:

1. 1941__Commenced operation with 25000 rupees in Bombay

2. 1942__deposits had reached 20 million rupees

3. 1943__Moved operations from Bombay to Karachi on the
Quaids request.

4. 1946__First Banking training scheme started for the Muslim
Youth.

5. 1947__HBL Head office transferred to Pakistan

6. 1966__Silver Jubilee of HBL

7. 1974__Banks Nationalized

8. 1991__Golden Jubilee of HBL

9. 1997__HBL Reorganized

10. 2004__HBL privatized

11. 2006__Largest Private Commercial Bank in Pakistan
with 1477

branches nationwide and 65 international branches.

12. 2008__Declared Best Bank.

13. 2010__ Among top 500 global Financial Brands.

14. 2012__ 'AAA' credit rating and 1500+ branches.

PART1: PROFILE

HBL pioneered installing the first mainframe computer in
Pakistan, followed by the first ATM, and more recently, internet
banking facilities in all 1425 domestic branches.

Pioneers in Innovative Scheme:

1. 1951__Tele-printer service b/w branches

2. 1957__Rupee Travelers Cheques

3. 1959__Evening Banking Service

4. 1962__School Banking

5. 1964__Drive in Banking

6. 1966__Computer Service

7. 1966__Credit Card Scheme

8. 1968__Rural Mobile Banking

9. 1973__Foreign Currency Account

10. 1974__Prize saving Account Scheme

11. 1975__Deposit Growth certificate

12. 1988__Auto Cash Teller Machine

13. 1991__Gold Card Scheme

PART1: PROFILE

H B L

Profile

PART1: PROFILE

Profile of HBL:

PART1: PROFILE

Vision:
Enabling people to advance with confidence and success

This is the recently launched vision of the bank. The HBL vision
focuses on the

people living on the globe; it has power to operate in all societies
internationally, as the bank itself is an international bank. The
vision has very broad scope without any limit of boundaries; and
thus a very broad target market to serve. Advance, confidence
and success are its other features with great power. If we enable
our customers and people in the societies to grow and succeed in
the real sense, they will be attracted to do business with the bank
and we will become their first choice. The bank does not help them
in an ordinary manner rather with

Confidence and Trust. And if we could develop a relationship
with them based on trust we will have great competitive advantage.
Trust has great speed and power. It is indeed a right vision in the
right time.

Mission:

To make our customers prosper, our staff excel and create
value for

shareholders

Habib Banks Mission is to be recognized as the leading financial
institution of

Pakistan and a dynamic international bank in the emerging
markets, providing our customers with a premium se of innovative
products and services, and granting superior value to our
stakeholders, shareholders, customers and employees.

PART1: PROFILE

Objectives:

1. To achieve sustained growth and profitability in all areas of
business.

2. To develop a customer-service oriented culture with special
emphasis on customer care and convenience

3. To effectively manage and mitigate all kinds of risks inherent
in the banking business.

4. To maximize use of technology to ensure cost-effective
operations, efficient MIS, enhanced delivery capability and
high service standards.

5. To mange the Banks portfolio of businesses to achieve strong
and sustainable shareholder returns and to continuously
build shareholder value.

6. To explore new avenues for growth and profitability.

HBL Strategic Overview:

1. Managing Growth

2. Managing Risk

3. Managing Quality

4. Portfolio Management & Growth

5. Risk Optimization

6. Proactive &Customer Focused

7. Attrition Management

8. Effective Internal control

9. Cost Management

PART1: PROFILE

HBL Values:

HBL values are based upon the fundamental principles that define
its culture and are brought to life in its attitude and behavior. It is
its values that makes us unique and stem from five basic
principles.

Excellence:

The markets in which HBL operate are becoming increasingly
competitive and its investors now have an abundance of choice.
Only through being the very best in terms of the service it offers,
its products and premises can it hopes to be successful and grow.

Integrity:

HBL is an asset management company in Pakistan and its success
depends upon the performance of the Fund(s) which are under
management and its investors and society in general expect it to
possess and steadfastly adhere to high moral principles and
professional standards.

Customer Focus:

HBL needs to understand fully the need of its investors and to
adopt its products and services to meet these. It must strive
always to put the satisfaction of its investors first.

Meritocracy:

HBL believes in giving opportunities and advantages to its
employees on the basis of their ability. It believes in rewarding
achievement and in providing first class career opportunities for all.

PART1: PROFILE

Progressiveness:

HBL believes in the advancement of society through the adoption of
enlightened working practice, innovative new products and
processes and a spirit of enterprise.

Strengths of HBL:

Following are the strengths of the Habib Bank Limited

1. Good will

2. Professional Management

3. Large Network

4. Overseas network, presence across the world

5. Large customer base/ Large deposit base

6. Skilled Human Resource

Dominant Market position:

1. HBL has the biggest advances portfolio in Pakistan, catering
to all sectors of the economy and all the market segments
i.e. corporate, consumer, SME, agriculture and retail

2. Aggressively focusing on product penetration across all
segments in particular infrastructure and project finance,
consumer, agriculture and SME.

3. HBL won Best Emerging Market Banks Award in Pakistan
2010.

4. HBL has 1500 branches.

5. HBL credit rating is "AAA".

PART1: PROFILE

MARKET STANDING

Key Banking Statistics

1993-1998

Table2.1
[Deposits]
Rs. In
Millions

1996 1997 1998 1999 2000 2001
HBL 8,211 16,423 27,958 54,966 75,011 105,243
UBL 6,392 14,305 21,075 41,503 53,937 63,517
NBP 7,071 14,209 21,384 40,611 57,462 79,823
MCB 2,505 5,417 9,887 15,705 21,590 25,325
ABL 1,460 2,665 4,365 6,875 10,058 16,637
Total 25,639 53,019 84,669 159,660 218,058 290,545

Table2.2 [Advances]

1996 1997 1998 1999 2000 2001
HBL 5,864 10,115 16,216 31,636 48,003 41,767
UBL 4,463 8,522 13,952 24,991 35,061 37,967
NBP 5,231 8,481 11,803 18,990 31,264 40,534
MCB 2,102 3,811 6,448 10,898 13,803 15,548
ABL 1,079 1,922 3,187 5,108 5,572 8,088
Total 18,739 32,851 51,606 91,623 133,703 143,904
PART1: PROFILE

Table2.3 [Investments]

1996 1997 1998 1999 2000 2001
HBL 1,814 5,218 8,959 18,121 20,334 28,393
UBL 1,365 2,797 1,855 7,063 12,334 19,290
NBP 1,414 2,937 2,281 9,063 12,971 28,553
MCB 634 1,382 2,322 3,825 6,151 10,991
ABL 262 739 1,374 1,851 3,102 6,425
Total 5,489 13,073 16,791 39,923 54,892 93,652

Table2.4 [Equity]

1996 1997 1998 1999 2000 2001
HBL 250 382 576 1,898 3,155 6,121
UBL 119 184 288 961 1,691 3,061
NBP 130 222 279 954 1,530 2,987
MCB 056 071 116 462 788 1,521
ABL 019 33 054 183 212 397
Total 574 892 1,313 4,458 7,376 14,087

Table2.5 [Profit]

1996 1997 1998 1999 2000 2001
HBL 211 318 362 750 843 956
UBL 065 125 093 184 239 260
NBP 073 118 109 183 282 346
MCB 028 033 080 130 143 249
ABL 010 021 023 027 037 053
Total 387 615 667 1,274 1,544 1,864

PART1: PROFILE

Performance

PART1: PROFILE

PART1: PROFILE

Current Scenario of HBL:

HBL is listed on the Karachi, Lahore and Islamabad Stock
Exchanges. HBL is committed to high standards of corporate
governance and comply with requirements of the Listing
Regulations and Prudential Regulations.

Risk Management Framework:

Since the issuance of guidelines on risk management and the
subsequent Intuitional Risk Assessment Framework (IRAF)
questionnaire by the State Bank of Pakistan (SBP), the Bank has
adopted a holistic approach and has been engaged in extensive and
detailed evaluation and assessment of its risk management
framework in all areas of banking activity.

Statement of Internal Controls:

The management of the Bank endeavors to attain a professional
and efficient working environment within the Bank by establishing
and maintaining adequate and effective internal control system.

Credit Rating

During the year, the Pakistan Credit Rating Agency PVT Limited
(PACRA) rated HBL as AAA (Long Term) and A1+ (Short Term). HBL
is the first Pakistani bank to raise Tier II capital from external
sources. These ratings reflect sustained ability of revenue growth
from core operations while maintaining a low risk profile and also
dynamic as well as efficient fund deployment strategy.

PART1: PROFILE

Branch Network

The total nation-wide branch network of HBL is now 1500 branches
while 55 branches internationally in four subcontinents. This wide
branch network is competitive advantage of HBL.

Technological Advancements:

HBL implemented a new database across all its online branches.
This database called MISYS enhanced the bank processing by
providing a single data base for processing of all domestic
branches. MISYS provides centralized and improves automated
interest accruals, charges etc. also it provides automated inter-
branch settlement at day end and automated delinquency tracking
& NPL maintenance.

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 and long term requirements of business and trade. HBLs
Islamic Banking products are fully Shariah compliant and duly
certified by independent shariah Advisors.

HBL Asset Management

HBL Asset Management Limited A wholly own subsidiary of Habib
Bank Ltd was incorporated on 17 February, 2006 as a public
limited company under the Companies Ordinance 1984 and was
licensed for investment Advisory and Asset Management Services
by Securities and Exchange Commission of Pakistan on 3
rd

April, 2006.
PART2: MANAGEMENT

H B L

Management

PART2: MANAGEMENT

Management in HBL:

As in most organizations, the total employees of the Bank are
categorized as:

Top Management

Middle Management

Front-Line Management

Operatives

Top Management at the top is responsible for making organization
wide decisions and establishing the politics and strategies that
effect the entire organization.

Middle Management is the level between the supervisory level and
the top level of the organization.

Front Line Management is the lowest level of management

Operatives describe those organizational members who work
directly on a job or a task and have no subordinates.

Key Areas of Responsibility:

The area of responsibility of all the executives in Figure 2.1 is as
different from their job description. The nature of very briefly
described below

PART2: MANAGEMENT

Hierarchy Structure of HBL:

The present hierarchy arrangement of the Top Management of
Habib Bank Limited is described through the following chart.

Figure 3.1

Board of Directors

President (CEO)

Group Executive
(Retail Banking Group)
Group Executive
Corporate and Intuitional Banking Group

Group Executive
Assets Remedial Management

Group Executive
International and Overseas Banking

Group Executive
Corporate Planning and Organizational
Development

Group Executive
Global Operations

Group Executive
Credit Policy

Group Executive
Audit and General Administration

Divisional Head
Informational Technology

Divisional Head
Human Resources

Divisional Head
Finance

Chief Financial officer

PART2: MANAGEMENT

Board of Directors:

Sultan Ali Allana Chairman

R. Zakir Mehmood President & CEO

Iain Donald Cheyne Director

Sajid Zahid Director

Mushtaq Malik Director

Ahmad Jawad Director

Yasin Malik Director

PART2: MANAGEMENT

Members in Management:

Mr. R Zakir Mehmood President and CEO

Mrs. Sima Kamil Group Executive, Corporate

Banking

Mr. Ayaz Ahmed Group Executive, Chief
Financial

Officer

Mr. Zafar Aziz Osmani Group Executive, HR&OD

Mr. Jamil Iqbal Group Executive, Chief

Compliance Officer

Mr. Salim Amlani Group Executive, Audit,
BRR&

investigation

Mr. Tulu Islam Group Executive, IT &
Systems

Mr. Kashif Shah Group Executive, investment

banking

Mrs. Nausheen Ahmad Company Secretary& Head
of

Law Division

Mr. Sohail Malik Group Executive, Risk

Management

Mr, Nauman K, Dar Group Executive,

PART2: MANAGEMENT

International Banking

Mr. Abid Sattar Group Executive, Retail&

Consumer Banking

Mr Mudassir H. Khan Group Executive, Global

Operations

Mr. Faizan Mitha Group Executive, Global

Treasurer

Mr. Aslam Gadit Group Executive, Asset
Remedial

Mgmt

Mr. Mirza Saleem Baig Group Executive,
Commercial

Banking

Mr. Jamil A. Khan Group Executive,

Administration& Services

Mr.Aly Mustansir Head of Marketing& Brand

Management

PART2: MANAGEMENT

Chain Of Command:

Chairman

President

Board Of Directors

Member Executive Board

Regional Chief

Zonal Chief

Branch Manager

Operations Manager

Bank Staff

PART2: MANAGEMENT

Different Groups in HBL Banking:
Commercial Banking Group (CBG):

Commercial Banking Group comprises of 6 commercial centers and
11 sub centers being controlled by 6 regional offices located in 6
cities of Pakistan. The functioning of this group is illustrated in
figure given below:

Figure 3.2

ORGANOGRAM OF COMMERCIAL BANKING
GROUP

Group Executive
Commercial Banking Group

Divisional Head
Commercial Banking

Divisional Head
Product Development

Divisional Head
Credit Division

Divisional Head
Financial Control

Commercial Banking
6-Commercial & 11-Sub
Cntr.

Divisional Head
ARM Division

Divisional Head
Operations and support

Regional chief
Executives
6- regions

General Manager General Manger
Credit
Operations and
support

Branch Manager
1500 branches
PART2: MANAGEMENT

Commercial Banking Division:

HBL Commercial Banking Group Targets medium sized companies
with a turnover of at least PKR 50 million. The Commercial Banking
Businesses Units are located in Karachi, Lahore, Faisalabad,
Sialkot, Gujranwala and Peshawar. HBL has the ability and the
resources to meet the needs of the business with pro-active,
responsive and experienced Relationship Managers who are
committed to understand customers Business.

HBL follows Financing for the following:

Working Capital

Procurement of Inventory

Receivables

Procurement of machinery

Expansion of production facility

Import of raw materials

Exports

Pre Shipment Export Finance

Post Shipment Export Finance

Guarantees

Open Ended Guarantee

Close Ended Guarantee

PART2: MANAGEMENT

Corporate & Intuitional Banking Group:

The Step includes:

11 corporate centers

10 Corporate Sub-centers

Portfolio includes handling accounts of Public Sector Corporations
and Corporate Customers with an exposure of Rs.75 million and
about.

For a view of the composition of this group, refer figure 2.3

Assets Remedial Management:

Recovery of infected portion of the finances parked either at the
Retail Banking Group or the Corporate and Institutional Banking
Group is the responsibility of ARM group. For the convenience of
having a proper follow up of the defaulters, ARM has been divided
into few units.

ARM finance Information and Monitoring Divison (stationed at
Head office, Karachi )

Credit Administration Division (stationed at Lahore)

ARM Risk Manager(stationed at Head office Karachi)

ARM Specialized Remedial Division( stationed at Head office
Karachi)

ARM Centers at major cities

International and Overseas Banking:

Habib Bank has a very large network. Besides domestic branches,
it has 69 branches across the world. With the exception of South
America, these branches are located in different parts of the other 5
continents.
PART2: MANAGEMENT

Figure 3.3
ORGANOGRAM OF CIBG

Group executive
Corporate and Institutional
Banking Group

Director

Operations

Head Head

HR/Administratio
n Financial Control

Head

Operations

Director

Credit Administration
Department

Head
Specialized Finance Unit

Director
Credit

Director
11 Corporate Centers & 10 sub-
Centers

Team
Leaders
Marketing
Managers
Human
Resource

Mangers
FinCon

Department
Department

Managers
Operations

Manager Manager
Trade
Cash &
Remittances

PART2: MANAGEMENT

The other groups namely:

Corporate Planning and Organizational Development

Global Operations

Credit Policy

Audit and General Administration

Information Technology

Human Resources

Finance

Financial Control

Have a small network with limited spheres of operations.

Corporate Banking and Financial Institutional Group:

This group is responsible for serving the needs of large corporate
clients and private sector, managing correspondent banking
relationships and undertaking money market transactions.

The group is organized in three divisions:

1. Corporate and Merchant Banking Division

2. International Division

3. The Treasury Division

Corporate and Merchant Banking Division:

Principal activities include syndicated loans, guarantees and working
capital finance, underwriting and advisory services. Three units have been
setup at Karachi, Lahore, Rawalpindi and Faisalabad. For sales and
operations, which are supported by centralized marketing from the Head
Office Karachi.

PART2: MANAGEMENT

International Division:

Mainly responsible for managing correspondent banking relationships and
planning overseas operations, the division plays a vital role in extending
foreign trade transaction support to the branches. The bank became a
member of SWIFT and also a contributor to the equity of the Pakistan
Export Finance Guarantee Agency Ltd.

Treasury:

Treasury is responsible for managing banks liquidity and foreign
exchange transaction. Through reported transactions, purchase of
Government paper and foreign exchange trading, the Division adds
substantially to the Banks sustained earning.

Retail Banking Group (RBG):

Retail Banking Group comprises of a total 1500 domestic branches being
controlled by 23 regional offices located in 21 cities of Pakistan and Azad
Kashmir. The functioning of this group is illustrated in figure given below:

Retail Banking Group is responsible for serving the needs of the retail
market. Focusing on individual customers and medium size enterprises,
for purpose of product differentiation, the group is managed in three
business arms i.e.

Investment Products Units

Assets Product Units

The Credit Cards Divisions

PART2: MANAGEMENT

Operations and Credit Group:

Support function group mainly responsible for development of systems and
procedures, process re-engineering, automation and credit management.
The group is organized in three divisions i.e.

1. System And Operation Division

2. Electronic Technology Division

3. The Credit Division

System and Operations Division

This group has been instrumental in development of procedures and
manuals for various operation requirements of the bank. The division is
active in providing equipment procurement support and development of
new branches. The protection of fixed assets of bank is also managed by
this division, as directs function.

Electronic Technology Division:

This Division operated as the backbone for all operational functions in the
bank. Responsible primarily for the development of banking software and
provision of computer hardware to all business units, the division also
engaged in the development of technology based value added customer
service products.

Credit Division:

Providing extensive support to branches for credit administration, control
and monitoring, the division has played a crucial role in helping the bank
PART2: MANAGEMENT

achieve a remarkable loan Growth of 31%, with well diversified risk
exposures. Most of the loans are of short- term trade financing on a source
and self-liquidating basis.

Human Resource Division:

This division is responsible for human resource management, including
recruitment staff training and evaluation. The division also handles
matters relating to administration. This division operates on future
oriented strategy focusing on employees personal and professional growth.

AT HBL hiring philosophy is based upon meritocracy and selecting the
right person for the right job. Habib Bank laid greater emphases on
employees honesty and integrity besides technical competence.
Candidates are selected through well defined and systematic selection
procedure.

Finance Division:

Responsible for bookkeeping and A/Cs, this division at head office, prepare
all financial return and MIS through its management-reporting wing. The
division is actively involved in preparing market comparative analysis,
consolidation of banks budgets, its monitoring and constant review of
various financial indicators.

Audit Division:

The audit Division reports directly to the board through the executive
committee, which is also the audit committee. The division is responsible
for evaluating every aspect of the banks operation with the goal of
improving the effectiveness of risk management and internal control.
PART2: MANAGEMENT

The system of regional and area offices has been introduced for effective
supervision and control of branches. The scope of the system also spans
the development and management of banks business and activities, on a
regional basis.
Policy Making Styles of HBL:

Policy formulation process:

At Habib Bank policies are formulated at the top level. Board of Directors
and Executive committee of the bank formulate policies keeping in view the
mission and the objectives of the bank. So far the policies formulated by
the top level been very successful as indicated by the success pattern of
the bank.

These policies are then implemented according to the guideline of top level
of hierarchy. Top management and middle management are given powers
to carry out the operations for the achievement of long-term objectives.

Training:

Habib Bank also gives training to officers at the Officers Training Institute.
Bank training academy is equipped with the latest audio- visual training
aids, which facilitate in the dissemination of knowledge and skills. Purpose
of this training program is to upgrade the knowledge base of the officers
and to polish their abilities as good bankers.

PART2: MANAGEMENT

Promotion:

Each year, the superior officer prepares a review of each employee and
then, instead of sending it directly to the Head Office, it is first discussed
with the employee. This is done to incorporate a sense of confidence
between the senior and junior employees. It is also done to give the
employee a chance to know his weakness so that he may work hard to
improve his abilities and skills the next year. On the basis of this report,
the promotions are made and bonuses are given. Sometimes other factors
are considered such as length of services, education, training courses
completed, previous work history and the like.

Motivation level:

Job design for motivation is another personnel approach that has been
increasingly emphasized in recent years. Job contents, methods and
relationships are structured not only to satisfy technological and
organizational requirements but also to accommodate human needs for
meaningful and self-fulfilling work. Jobs are being designed to fit the
people who hold them in the hope that greater employee motivation (which
is essential to higher productivity) will result.

Growth opportunities:

Habib Bank provides growth opportunities to its employees and officers.
The bank has a huge number of clients of business class and allows
certain relief and incentives to its employees thus making job more efficient
and effective.

PART2: MANAGEMENT

Job Satisfaction:

During my internship program, I worked with different employees in
different departments. I observed their working and also their level of
satisfaction regarding their jobs and reward system.

Almost all the employees were satisfied with their jobs, as far as the quality
of work and rewards were concerned. All the employees were highly
motivated and sincere with their jobs. However, one common complaint
was the quantity of work. Much were uploaded with the huge work and
even had to work till 7 or 9 pm.

PART3: DEPARTMENTS

PART3: DEPARTMENTS

Departments in HBL:

Bank performs different functions in several departments.
Departments and their functions are given below:

Deposit Department

Credit Department

Clearing Department

Cash Department

Bills and remittance Department

Foreign Exchange Department

Accounts department

Deposit Department:

This is the main department of the bank, because deposits are the
lifeblood of any bank. The function of deposit department is to
collect deposits or money from depositors. A commercial bank
receives money on three types of accounts mainly:

Current Deposit Account

Saving Deposit Account

Fixed Deposit Account

Current Deposit Account:

Current deposit account is usually for businessman, because
in this type of deposits depositor can draw and deposit money
within a short period even on daily bases. No interest is
allowed on this type of deposits.
PART3: DEPARTMENTS

Features of current account:

1. No interest is on this type of accounts

2. Normally this account is operated by cheques

3. Withdrawal can be made at any time during the
business hours

4. No fixed period

5. A deposit is payable on demand

6. No Zakat is deducted on this type of accounts

7. Can be opened in the name of

a. Individuals (single/joint)

b. Firms

c. Private limited companies

d. Public limited companies

e. Trusts

f. Clubs, Associations

g. Societies

h. Institutions

Saving deposit account:

Saving deposit account as its name shows is for those
persons who want to make small saving. In this type of
account deposit can be made up to a certain amount and
withdrawals are allowed only twice or thrice a week not
exceeding a certain amount. This type of account is opened by
small retailers or by the salaried persons. Rate of interest
depends on the bank policy.

PART3: DEPARTMENTS

Features of saving deposit account:

PLS rates declared by bank half yearly

Withdrawals can be made once or twice a week

Low rate of interest

No fixed period

Deduction of Zakat as per rules

Can be opened by:


b. Charitable institutions

c. Zakat/ Usher committee

d. Local bodies, Autonomous Corporations, Firms,
Companies, Associates, Institutions etc

Fixed deposit accounts:

In this type of account the depositors deposits a certain
amount for a fixed period of time. Fixed deposit of account is
usually for 1 year, 5years, 10 years. Withdrawal of this
possible only on maturity

Feature of deposit account

Open for a fixed period of time

Withdrawal can only made after the expiry of fixed period

High rate of interest

Can be opened by


b. Charitable institutions

c. Zakat/ Usher committee

d. Local bodies, Autonomous Corporations, Firms,
Companies, Associates, Institutions etc
PART3: DEPARTMENTS

Bank also offers following types of deposits other than above
deposits to its customers:
Call Deposit

Foreign Currency Deposit

Short notice term Deposit

Call Deposits:

Call deposits are sort of deposits, which are offered to the
customer against some tangible security. These deposits are
issued to contractors for participation in the tender bid. A
certain % of tender amount is fixed for these kinds of deposit

Foreign currency deposit:

Foreign currency deposit is concerned with foreign currency
deposit.

US Dollar

Pound Sterling

Japanese Yen

Euro

Deutsche Mark etc

Short Notice Term Deposit:

Short notice term deposit is operated on short term basis.
Depositors may withdraw the amount at any time by giving 7
days notice to the bank. This time of deposit facilitates traders
to withdraw his money with interest of deposited period

PART3: DEPARTMENTS

Credit Department

Credit Department also plays an important role in the functioning of
the bank. In this department bank lends money to its customers in
the form of clean credit, secured overdraft, against promissory notes,
as well as secured credit against tangible and marketable securities.

Establishment of bank and its subsequent growth are the result of
credit and deposit. Every credit creates a deposit and every deposit
creates credit. Bank credits however, a not only conclusive to their
very existence but also impart beneficially on the economy as a whole.
The difference of interest charged and paid by the bank is constitute
major portion of banks income. Bank charges high rate of interest on
credit and pays a lower rate of interest on deposits.

Categories of credit:

The commercial banks lend money in any one or more of the
following ways

Overdraft

Export Finance

Demand Finance

Cash credit

Credit against purchase of bills

In this case the customer is authorized to borrow (overdue) up to
an agreed amount excess of the customers bank balance. The
bank charges the interest at an agreed rate on an amount
actually overdrawn by the borrower.

Over Draft can be:

Clean over draft

PART3: DEPARTMENTS

Secured over draft

Temporary over draft

Clean Overdraft: Clean overdrafts are those advances which the bank
has no security except the personal security. Tangible assets are
considered secured because we can easily sell them e.g. land, building
and machinery.

Secured Overdraft: Secured overdraft is those advances which the
bank has a security other than this personal security. It can be

Against lieu on third party account

Against immovable property, equitable mortgage and
collateral

Before it, secured overdrafts also granted against the postal saving
certificates and NDC hares but now it is not allowed.

Temporary overdraft:

Today TOD facility is not allowed by Habib Bank Ltd and
now this name is given to cash finance or cash credit which is mainly
granted to ginning factories and seasonal factories. Before this, TOD
was allowed within discretionary powers of the branch mangers, to
first class parties, keeping in view their credit worthiness, overall
business, their past record and the average balance maintained in
their account.

PART3: DEPARTMENTS

Loans:

A loan is made when a bank advances a fixed sum for a definite period
of time. The amount is placed to the credit of borrower who can draw
cheques against the sum of any amount. Whether he makes use of full
amount, or par amount he has to pay interest on total amount of the
Loan. Loans are further divided in to following categories.

Small Loans:

These loans are granted to contractors, clearing and forwarding
agents. Small loans can be clean or can be secured. All loans allowed
in small loan scheme announced by State Bank of Pakistan.

Clean Loan:

A clean loan is one, which is granted to borrowers without
demanding any security from him, except on his personal
guarantee.

Secured Loans:

Secured Loans are those which are granted to customers against
securities, hypothecation, and pledge and against cash collateral
basis. Here bank also demands a security from the customers
other than the personal guaranty.

Cash Credit:

Seasonal Advances are allowed generally under cash credit. These
types of loans are given against following.

PART3: DEPARTMENTS

Against locally manufactured goods

Cash finance against rice and paddy

Against pledge

Hypothecation:

In case of hypothecation the goods are in the custody of customers but
their ownership is with bank. This type of security is moved for
moveable assets. Usually this type of security is considered a weak
security because under hypothecation the possession of goods
remains in hand of customer, only ownership is transferred to bank.

Pledge:

This terminology also used for moveable assets like raw material,
finished goods, work in process goods. In case of pledge the goods and
their ownership both are in the custody of bank. This type of security
is considered to be a strong security because here ownership and
possession both are with bank.

Therefore, pledge is bailment of goods as a security for payment of
debt or performance of promise. Bailment is defined as delivery of
goods from one person to another for some purpose upon a contract
that they shall be returned according to direction of the person
delivering the goods, when the purpose is accomplished. The person
who delivered the goods is called the bailer and the person to whom
the goods are delivered are called bailee.

PART3: DEPARTMENTS

Advance against purchase of Bill (IBP and FBP):

This is generally called as Inland Bill Purchase and Foreign Bill
Purchase. The bills are of two kinds.

Clean bills

Documentary Bills

Clean Bills:

Clean bills are defined as negotiable instruments drawn on out
station branches or banks sent for collection on behalf of the
customer, i.e. cheques, dividends, warrants, Treasury bill, drafts
etc.

Documentary Bills:

These are bills accompanied by documents such as R.R, T.R, Bill
of lading etc. having title to goods collected by banker on behalf
of customer.

Remittance Department

The main function of this department is to transfer the money from
one branch to another branch. This department deals in the following
terms.

Demand Draft (DD) Issue

Demand Draft (DD) Pay

Pay order

Pay slip

Telegraphic Transfer (TT)
PART3: DEPARTMENTS

Mail Transfer (MT)

Inward bills for collection (IBC)

Outward bills for collection (OBC)

Demand Draft (DD):

Demand Draft is a negotiable instrument, which is drawn
by one branch of the bank on another branch of the same bank.
So when any person wants to make payment form one city to
another city then he can make payment through demand draft.
Demand draft can by issued to customers as well as to non-
customers against cash receipt, cheque and against letter of
instruction. Bank charges a commission for performing this kind
of service according to prudential regulation given by State Bank
of Pakistan.

Pay Order:

Pay order is just like cash. If someone wants to make
payment to other person he can pay through pay order. The
main advantage of pay order is that it can not be dishonored by
any bank. When payment is required to make within city then
take this bank service and when we want to make payment
outside the city

then we used demand draft. In case of cheque there is possibility
that it can be dishonor by the bank but In case of pay order we
have security that it can never be dishonored.

PART3: DEPARTMENTS

Pay slip:

The bank uses it for the payment of its on expenses e.g. tax
payment by the bank, repair and maintenance expenses, etc. so
for the payment of internal expenses of the bank, issue a pay
slip.

Telegraphic transfer (T.T):

T.T may be issued in three possible ways. The instrument is
used by the customer. The issuing branch makes the payment
order. So it is a bank to bank transaction and the beneficiary
(3
rd
party) is not directly involved in it. Two other ways of this
transaction are 1. Telephonic transfer 2) Fax. It is a code
message by one bank to other bank. Each bank has its own
coded number. First they write the message in code form and
after this they apply its test number on it. The bank can issue
two types of instructions for T.T

Advice in pay

Advice in credit

Advice in pay:

In this case, the third party on which the T.T is drawn, are not
having its account in this bank means they are not the account
holder of this bank. Bank informs this party to come to bank and
receive their payments against TT. Bank charges a commission
for rendering this service according to schedule of state Bank of
Pakistan. Bank makes payment to party after proper
introduction by the introducer. The introducer is that person
who has its account in this bank.

PART3: DEPARTMENTS

Advice in credit:

In this case, the party having its own account in the same bank
in which the TT come on their name. Here, when TT come to
bank, bank simply credits the account of its customer (party).

Mail Transfer (M.T)

Banks to bank also remittance send through mail its charges are
same as to DD plus additional 60 rupees. Mail Transfer advice is
issued against cash receipt, cheque and letter of instruction.
Firstly MT. advice is prepared by the bank and then test number
is written on this M.T advice is given to dispatch department for
onward transmission.

Outward Bills for Collection (OBC):

Clean Bills (Cheque, pay order, pay slip): These are
negotiable instrument drawn on outstanding branches of the
bank, and issuing bank sent it for collection on behalf of the
customer i.e. cheques, draft, dividends warrants, treasure bill
etc. It involves two types of Transaction, one is between
branch to branch and other is between one bank and other
bank.

Documentary Bills: If payment is made other than cheques
then this mode is used. These are the bills accompanied by
documents such as R.R (Railway receipt), T.R (truck receipt),
and bill of lending etc, collected by the bankers on behalf of
their customers. It is an agreement between two parties. Bank
plays role as an agent. Documentation must be clearly drawn
between two parties. But in 99 % cases the lean bills are used
by the banks.
PART3: DEPARTMENTS

Inward Bills for Collection (IBC)

Clean Bills: These are negotiable instrument which is
collected locally. These bills are received from outstation
branches and banks

a. Against Cash

b. Against Cheques

Documentary Bills: These are bills received from outstation
branches, bank or partners and collected locally.

Clearing Department

Clearing is the process whereby bankers settle their mutual accounts
for claims arising on account of various instruments presented by one
bank drawn on the other. The customers and the banks outstation
branches lodge such instruments.

A mutual time and place is selected where the representatives of
banks perform the clearing function. All drawn instruments are sorted
for each bank and exchanged so that each representative collects all
instruments drawn on his bank for settling claims. Where the SBP has
its offices, the clearing system is controlled and managed by SBP. At
other places, this function is performed by NBP. The state Bank is also
a member of the clearing process with all banks having their accounts
maintained with the guardian bank for clearing purposes. The
representative of the state does the accounting work.

The assembly of the representatives of the member banks is the
clearing house. Clearing house in every city has it on timing for
exchange of cheques instruments and for return of unpaid cheques.
NIFT is one such clearing house.
PART3: DEPARTMENTS

Categories of cheques / instruments:

In every branch a number of cheques are received from
customers for clearance and credit to their accounts.

The cheques received may belong to any of the following
categories:

Drawn on the branch itself

Drawn on some other branch of the bank in city

Drawn on some outstation branch

Drawn on some outstation branch of other bank

Drawn on some branch of other of the same town

Cheques drawn on the branch itself are handed over to CD
department. Cheques drawn on outstation branches are handled
by Bills Department.

Acceptance of Cheque:

The authorized person receiving cheques instruments
makes scrutiny of the instrument, paying in slip and the
counterfoil. The following point should be considered while
scrutinizing the instrument.

Scrutiny of cheques:

Cheque is crossed but not specially crossed to any other bank

Cheque is drawn on a branch of a bank functioning within the
city

Cheque is not post dated or stale

Amount in words and figures is the same

Nothing on the cheque indicates that the depositor is not
entitled to receive amount
PART3: DEPARTMENTS

Cheque payable to a firm should not be accepted for credit to
a partners personal account.

Cheques marked not transferable should not be collected for
a person other than the payee.

If the cheque is drawn in favor of a Trust Account, it should
not be credited to the account of Trustee

All alteration / addition amendment on cheque must bear
drawers full signature.

Where the cheque is crossed Payees Account only the payee
and the depositor is the same

Third party cheque should not be accepted for credit in staff
account without managers consent.

A crossed cheque in favor of joint names cannot be collected
for the credit of individual account. Whereas it may be
deposited in the joint account. If it is in favor of individual
name.

Whether the cheque requires revenue stamp.

Cash Department

All physical movement of cash in the bank is made through the cash
department. This department of bank is mainly responsible for the
handling of cash deposits and encashment of cheques issued by the
account holders. Cash management involves various risks and costs
as well as significant amount of time and concentration from
employees. The following are the sections for the C.D department.

Receipts of Cash

Encashment of cheques

PART3: DEPARTMENTS

Receipt of cash Section:

The depositor uses deposit or pay in slip for depositing the
amount. Client fills the voucher with all requirements. He must
enter correct title of account and account number and with
correct figure in words and amount.

There two parts of pay in slip

Counter foil

Adjacent credit voucher

The clients gives all the details are required regarding date,
account number and title of account, amount being deposited
both in words and figures, and the signature of the depositor.
The cashier first verifies all requirements of the pay in slip that
whether these are fulfilled or not and verifies the amount written
in words and figures. After that he enters the details of the
receipt in the inward cash register of the computer.

The pay in slip is stamped, cash is received, and counter
foil is given to the depositor

The adjacent credit voucher is used for recording and
posting purposes.

Encashment of cheques

Cheques encashment is made in four steps

1. Receiving of cheques

2. Verification of signature

3. Computer terminal process

4. Payment of cash
PART3: DEPARTMENTS

Cash Receipt Section:

In this section cash is received by the cashier in following
manner

1. Process of Deposits:

2. Fill up deposit slip

3. Deposited on Receipt customer

4. Cashier counts the amount and fulfills other requirements

Receipts of cheques:

The cash is paid against the cheque of client. The following
points are kept in mind while receiving the cheque from the
clients

Cheque should be drawn on HBL

Cheque should not be post dated

Amount in words and figures are same

It should be a bearer cheques so the word bearer should no
crossed

The receiver of the cash will make at least one signature on
the back side of the cheque

Drawer does not stop payment

Alteration in date/figure require drawers full signature for
authenticity

Verification of Signature:

After receiving the check the officer verifies the signature of the
account holder with the signature on the cheque. The customer
must have two signatures on the back of the cheque. If the
signatures are not the same then it is returned back otherwise
forwarded to computer terminal. The cheque is also verified by
PART3: DEPARTMENTS

cashier, Operation manager, and Branch manager if its amount
exceeds as
If amount is up to Rs.50000 cheque is verified by the cashier. If
amount exceeds from 50,000 to 300,000, the cheque is verified
by the operation manager. The branch manger verifies if amount
exceeds from 300,000 to onward then the cheque

Computer terminal process:

After receiving the cheques by the cashier and after
verification of signatures, cashier also verified the customers
account balance either the account has the significant balance to
withdraw this particular amount. The cashier checks the balance
through the computer. He also checks whether the stop payment
instructions are received from account holder or not. After
considering these two points, cashier posts the cheque in
account holder ledger in computer and returns the cheque back
to the officer.

PART3: DEPARTMENTS

Lockers

Habib Bank offers facility of lockers to its customers. There are three
sizes of lockers available

Large

Medium

Small

Size of Locker Rent of Locker (per annum) In Rupees
Large 3000
Medium 1500
Small 1000

Foreign Exchange Department

The main function of foreign exchange department is to open the letter
of credit to facilitate import and export and also to deal with foreign
currency account. Or the services performed by bank relating to
foreign business can be classified as under

Financing the import of goods and services

Financing the export of goods and services

Miscellaneous Services

Financing the import (Import L/C)

Facility to open documentary credit

Collection of bills and repatriation of funds

Effecting remittances abroad

Lending money against import and merchandise

PART3: DEPARTMENTS

Importance of letter of credit

The bulk of imports trade, now a day is mostly financed through
letter of credits. The method of making payment through letter of
credit has greatly facilitated commercial relation between the
importer and exporter. They can safely rely on the safety of the
bank rather then on the credit standing of the importer. The
importer too will pay for the goods, only when they are shipped
and the documents are received by the buyers bank.

Financing of Export (Export L/C)

Advising Export Credit

Collection or negotiation of foreign bills

Receiving payment from abroad by means of remittance

Allowing packing credit facility to exporters

Letter of credit can by two types:

1. Sight L/C

2. D/A Letter of credit

Letter of credit at sight:

Sight means you see something and then you perform it. First
see then accept and then perform it. In case of sight L/C,
importers sends a L/C to that country from which he wants to
export something. He can draw it on the name of exporter when
the bank of exporter country receives the letter of credit, he first
check it and then after that makes the payment to exporter.

PART3: DEPARTMENTS

Document against Acceptance (D/A):

In this type of letter of credit, payment will take place at some
agreed period, which varies, from 30 days to 36 days. Here the
document acceptance period called usance i.e. How long is the
period here bank see the document but not make the payment
on sight.

Two types of facilities granted by the banks

1. Fund- based facility

2. Non-fund based facility

Fund based:

Fund based facility is that facility in which gives cash
to customer. In case of funded facility bank charge a mark
up, Outflow of cash by bank in case of fund-based facility.

Non fund based:

Non fund based facility is that facility in which bank make
no out of cash, here only guarantee is provided by the bank
i.e. if a party fails to perform his obligation then bank will
perform it so, letter of credit is a non fund based facility.
Commission and service charges by the bank rendering
this type of services are not fixed for all of the parties.

Miscellaneous Services:

Sale and purchase of foreign exchange

Providing credit information to foreign correspondent

PART3: DEPARTMENTS

Implementation of foreign exchange regulations

Advise on matter of exchange control to trade authorities

Issue of travelers cheque

Maintenance of non-resident accounts of foreign
nationals

Account department

Generally there are two ways to maintaining an account

1. Journal system

2. Voucher System

Journal System:

In journal system entries are journalized in the journal
book and then posted to main ledger in the computer. The word
journal means daily. In journal, transactions are recorded daily
and hence it has been named so. It is the book of original entry
to record chronological and in details. It is also known as day
book because it contains the accounts of every day transaction.

Voucher System:

Any written evidence in support of a business transaction is
called a voucher. For example, when you purchase a shirt form a
seller, he gives you a cash memo. Cash memo is used as a
voucher for payment. During banking transactions voucher is
used for payments. For every transaction there has to be a
voucher either in cash or in transfer, or in clearing. All vouchers
are summarized in the voucher book, so that posting in cum-
cash book is facilitated.
PART3: DEPARTMENTS

Following books and register are maintained in accounts
department

General ledger

Cash-cum day book

Subsidiary ledger

Voucher register

Transfer books

Credit deposit summary book

Saving deposit summary book

Balance books

Ledger book

Journal register

PART 4: MARKETING MIX


HBL Marketing Mix:

Product and Services:

HBL provides its customers a complete range of banking products
and services including retail banking, corporate and institutional
banking, trade finance, consumer finance and credit cards. These
Products and services of are developed keeping in view the customers
need and desires and the expectations they attached with their
financial institutions.

HBL offers following financial services and products to its customer.

Deposits

Advances

Products

Deposits:

One of the basic functions of commercial banking is to
receive deposits. HBL accepts deposit in both local and
foreign currency.

Currency A/C (CD)

PLS Saving Account

Terms Accounts

Current Account:

A current account is a running and active account, which may
be operated upon any number of transactions during a working
day. The banker undertakes to repay these on demand and
therefore this account is called Demand Deposit.

HBL Current Accounts offer features that meet customers daily
banking needs.

Current Account

Basic Banking Account (BBA)

Current Account:

Current Account is a Non-profit bearing account and there is no
transaction limits in a day. The bank charges no transaction fee if
the minimum balance requirements is met. Minimum balance
requirement is of Rs.20, 000. If the average balance falls below
this amount, then service charges will be deducted. Also no
restriction on anyone opens a Current Account (as long as
regulatory guidelines are met).

Basic Banking Account (BBA):

In basic banking account there is no minimum balance
requirement as lies with current accounts. Also there are no
service charges.

Saving Accounts:

The saving account is usually opened by people so that they can
meet their future requirements and contingencies. As the
objective of such accounts is to promote the habit of thrift
among people; the bank imposes certain restrictions on
withdrawal from saving accounts.

HBLs Saving Accounts cater to individual saving habits.

PLS_ Saving Account:

Profit paid bi-annually

Minimum average balance of Rs.10,000

Less than Rs.20,000 earns 1%profit

Greater than Rs.20,000 earns 5% profit

HBL value Account:

7% profit per annum

Profit credited every 3 months

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

Flexibility of withdrawals

HBL Super Value Account:

7.25% profit per annum

Profit credited every 3 months

Deposit ranges from Rs.100,000 to Rs500,000

Flexibility of withdrawal

Remittance Munafa Plus Saving Account

Remittance Based (no credit allowed except
remittance)

Daily basis Product

Tiered

Monthly Profit

Minimum average balance of Rs.10,000

Less than Rs.20,000 earns .10% profit

Rs.1million and above earns 5% profit

PLS Special Saving Bank Deposit Scheme

Daily Basis Product

Tiered

Monthly Profit

Minimum balance of Rs.20, 000

Returns up to 8%

PLS Daily Munafa plus Deposit Account

Daily basis product

Tiered

Monthly profit

Minimum Balance of Rs.50, 000

Returns up to 8%

Term Accounts:

HBLs Term Accounts are offered in a variety of tenure with
deposits as low as Rs.10,000.

Special Notice Time Deposit

7day or 30 days and over notice

Minimum Deposit of Rs.10,000

Balance less than Rs.1million

Balances equal to and greater than Rs.1million

Returns range from .75% to 4% depending on notice
period and amount

F.1 Term Deposit Receipts

3 month term deposit

Minimum balance of Rs.10 million

Return range from 0.75% to 2.25%

Munafa plus Deposit (Certificates)

Available in 3 month, 6month,1year,3year,5 year

and 10year terms
Profit disbursement (except for 3&6 month terms) is
monthly, quarterly, I-annually, and on maturity

Return Ranges from 6.15% to 14%

IPDC

Minimum investment of Rs.20 million except in the
case of 1 month where minimum investment is
Rs.100 million

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

Profit paid on maturity

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

Remittance Munanfa Plus Deposit (Certificates)

Available in 1year, 3year and 5year certificates

Profit disbursement is monthly, quarterly, bi-
annually, annually and on maturity

Returns range from 7.8% to 11%

Foreign Currency Account:

HBL offers Foreign Currency Accounts in multiple currencies as
saving and term accounts.

FC-SB

Saving Account offered in 3 currencies, USD (US
dollar), EUR (Euros) and GBP (UK pound)

Tiered product, with rates depending on choice of
currency

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

Interest is payable on a quarterly basis

HYFFD (High Yield foreign Currency Fixed Deposit)

Available in 1 month, 2 month, 6 month and 12 month
in USD, EUR, GBP

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

Profit paid on maturity only. No interim interest is
payable

Advances:

Advances are major sources of earning of income for
commercial banks. Banks attract surplus balances from the
customers at low interest rates and makes advances at higher
interest rates to the individuals or business firms.

HBL offers these facilities in two forms:

Fund Based Financing

Non- Fund Based Financing

Fund Based Financing

In funded facilities the bank actually advances money against
further repayment. These facilities are known as Cash Credit.

Non Fund Based Financing

Non funded facilities are those in which bank substitutions its
own credit for its customers. HBL is committed to offering its
business customers the widest range of options in the area of
money transfer.

HBL offers to its customers are large number of non-funded
facilities. These facilities include:

Guarantee

Letter of credit

Habib Bank Auto Finance:

Habib Bank Auto Finance Lease offers the most flexible and
convenient option to the salaried as well as self employed
individuals to get a car of their choice. Now customers have the
flexibility of structuring their lease finance in terms of tenure,
down payment and deferred payment to suit their requirement.

Features:

Lease finance available for all new locally assembled cars
and light transport vehicle

Accommodating fixed lease tenure of 36, 48 and 60
months

Minimum down payment as low as 10%

Amount of leasing available up to Rs.1,500,000

Option of deferred payment up to 30% of their vehicles
invoice price to reduce your monthly rental

Lowest processing charges

Best Comprehensive insurance package at the most
competitive rates which includes third party liability and
security against theft and terrorism, accident cover for
Rs.200,000/- anywhere in the world for the lessee &
his/her family, speedy process of claims and many more

No hidden cost involved

Habib Bank Flexi Loans:

With the rising cost of livings, it is becoming increasingly
difficult to make expensive purchases or meet unexpected

expenses. A customer may avail a personal loan of up to six
times of his net take- home salary subject to a minimum of
Rs.300,000/- provided he work for an organization approved by
HBL.
Advantages:

Flexible tenure: 12, 24, 36 months

Low rates

No processing Fee

Credit Life & Disability Insurance

Repayment through easy and affordable monthly
installments

Credit Life & Disability Insurance

Repayment through easy and affordable monthly
installments

Products:

Debit Cards:

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

Salient Features:

The salient features of the HBL debit card are as following:


No Interest

HBL Visa Debit Card is the perfect way of paying for your
purchases as it gives you access to exact amount of money you
need, as when you need it. There is no interest or credit on
payments because you spend from the money available in your
personal HBL Account.

Ease and Security:

HBL Visa Card offers ease and convenience because customer
dont have to visit

ATM to withdraw cash. Paying with the HBL Debit Card is safe
because it eliminates the need to carry cash. A single swipe
automatically debits the exact purchase amount from your
personal HBL account.

NO Liability:

In case of a lost or stolen card, you are protected against
fraudulent transactions made on your card after you report the
incident. Please report your card as lost or stolen immediately
by calling our 24 hour HBL Phone Banking service at 111-111-
425 within Pakistan or the Global Customer Assistance Service
Helpline for the relevant country if you are traveling abroad.

International Recognition & Acceptability:

Your HBL Visa Debit is accepted at over 20 million Visa
merchants worldwide, including 10,000 merchants in Pakistan.
As an ATM card it is accepted at more than 1000 1-links & M-
Net ATMs in Pakistan and 864000 Visa ATMs worldwide. No
matter where you are, with the HBL Visa Debit Card, we are
always with you.

Spending Limits:

The daily spending limit at shops and outlets on your HBL Visa
Debit card is Rs.50,000. On the HBL Visa Gold Card your daily
spending limit is Rs.100,000 with no restrictions on the number
of transactions.(Please Note these figures are subject to the
balance available in your account).

Free Account Statement:

Our cardholders receive a free monthly account statement for
their Debit Card and ATM transactions to help them keep track
of their spending.

Global Customer Assistance Service (GCAS)

When traveling overseas, HBL Visa Debit card holders receive
global assistance 24 hours a day, 7days a week form the local
Visa Global Customer Assistance Service.

Credit Cards:

Welcome to a world of convenience,
flexibility and opportunity. The HBL
Credit

Card will add simplicity and excitement to your life. Accepted at over
24 million merchants worldwide, HBL credit card makes shopping
fun and paying simple. Make the most out of your shopping
experience with your very own HBL credit card.

Gold Card

Green Card

Convenience:

Instead of paying with cash, simply present your HBL Credit
Card to the shopkeeper and pay for anything you want.

Bill payments:

Well pay your bills on your behalf and charge the amount to
your HBL Credit Card. You can give one-time standing
instructions to pay your monthly bills. Check the amount in
your monthly card statement and make the payment with your
regular card payment.

SMS Alerts:

For all transactions, an SMS alert will be sent to you on your
mobile phone to confirm that the transaction have been
conducted by you. A nominal fee will be charged for this service.

E-Statements

You can enroll for an e-statement with a simple call. An e-
statement with details of all your transactions will be sent to
your specified email address every month. You wont have to
wait for your paper statement any more or have to worry about
storing it.

Statement by Fax:

HBL credit card also offers the facility of receiving your card
statement by fax. Just give us a call and your last card
statement will be faxed to you at the fax number specified by
you.

Security:

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

Affordability:

HBL Credit Card gives you the flexibility to buy what you want,
when you want and pay for it later. A credit card statement will
be sent to you every month with details of all your purchases.
You will have 21 credit free days to make the payments from
the statement date. Please pay at least 3 days in advance if you
make your payment by cheques to allow enough time for
clearance.

Cash Advance

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

Balance Transfer Facility:

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

Muhafiz Rupee Travelers Cheques:

With the advantages of 100% free purchase and encashment,
MUHAFIZ remains foremost choice with travelers wishing to
carry cash in a safe and convenient way. MUHAFIZ is equally
suitable to both personal use and business transactions.
Regardless of whether you have an account with HBL or not,
you can be a MUHAFIZ customer and relish the benefits of

Pakistans leading Rupee Travelers Cheque, including:

Accessibility: Issuance from more than 700 branches
across the country

Convenience: Encashment at more than 1400 branches.

Choice: Available in denominations of Rs10,000 25,000
-50,000 and 100,000

Guarantee: Prompt refund in case of loss or theft.

Advantage: convenience of transferability

Facility: Safety of special security printing

Freedom: Flexibility of no expiry date

Phone Banking:

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


Investment Banking:

HBL offers full-service Investment Banking Capabilities to its
clientele. This year alone, HBL has closed over thirty
transactions with cumulative worth of over USD 2 billion. This
is a testament to the out-of-box thinking and the innovative we
bring to our customers.

Project Financing:

The bulk of HBLs project finance practice revolvers around the
power sector. Prior to the power policy of 2002, HBL actively
pioneered Project Finance in Pakistan through the funding of a
gas-fired co-generation plant (94Megawatts of power and
desalination of 3 million gallons per day). Subsequent to the
2002

power policy, HBL continues to play a fervent role in the sector
and is the only Investment Bank that was Lead Advisor to all
IPP transactions that achieved financial close.

In the fertilizer sector, HBL financed the largest local currency
financing in Pakistan, worth PKR 23 billion, as well as a greed
field venture in the telecom sector with PKR 12 billion.

Debt Capital Markets & Syndications:

Depending on the requirements of its customers, HBL offers a
variety of products, including syndications, securitizations,
privately placed and listed TFCs, term financial facilities,
commercial papers, etc. HBL played the lead role in a number


of significant debt transactions, including PKR 15.14 billion
TFC issue (the largest privately placed issue in Pakistan), the
first bond offering for any microfinance institution in Asia,
credit enhancement for a rapidly growing company in the
customer durables sector and numerous tier-2 capital
transactions for commercial banks.

Equity and Advisory:

HBL offers a breadth of equity and advisory products including
innovative capital raising techniques, restructuring, public and
private equity placements and mergers & acquisitions. The HBL
team played a pivotal role across several sectors including
energy, agriculture, consumer products fertilizer etc., for raising
various forms of equity and quasi- equity. Recently, HBL
structured a convertible debt note with a built in put feature for
a US- based provider of agriculture technology and dairy
solutions a first of its kina transaction in Pakistan. HBL also
provides valuation for a company in the food and beverages
sector.

Amman:

Amman 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 return on investment to its customers

Salient Features

Eligible age 18-60 years

Minimum payment Rs.2000 per month


Minimum age to exercise pension option 55 years

Benefit on accidental death RS.800,000 will be paid along
with other benefits

Benefit on Death Rs.200,000 will b paid along with other
benefits

Partial withdrawals allowed.

Maturity benefits two options available:

1. Policy can be cashed in total

2. Pension can be received for life.

Tabeer:

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 childs education or marriage. Plans are available for
both under and over 45 years of age.

Salient Features:

Eligible age 18-60 years

Minimum payment Rs.3,000 per month

Minimum age to exercise pension option 55 years

Benefit on accidental death in addition to other benefits,
Rs.500,000 will be paid for the marriage of the nominated
female child, given that female child is at least 18 years of
age

Partial withdrawals allowed.


Maturity benefits two options available:

1. Policy can be cashed in total

2. Pension can be received for life.

Trade Finance:

Trade Finance and related services are a long-standing
core business of HBL. To enable customers to capture global
opportunities, HBL is present over 26 countries, in addition to
the extensive network of overseas partners and correspondents.
This global reach positions HBL to facilitate & finance the
worlds primary trade flows.

Habib Bank handles a trade flow of over $ 3 billion, which is
around 18 % of the total trade flow of Pakistan. More than 100
domestic branches in all the major industrial, trade and
commercial centers are authorized /licensed to deal in trade
finance business.

Habib Bank Limited is the first Bank in Pakistan to acquire
SWIFT connectivity and now it is available in 67 domestic and
18 overseas branches.

Cash Management:

Cash management services cover local and cross border
payments, collections, information management, account
services and liquidity management for both corporate and
intuitional customers.


Corresponding Banking:

Having worldwide relationship with around 800 correspondents
including all major international banks, HBL maintains over
100 clearing accounts in Pakistan for foreign correspondents for
all continents. Significant presence in 26 countries through
provides Correspondent Banking Services providing full range of
inland banking services to all major international & local banks,
having presence in Pakistan.

Home Remittances:

Habib Bank has centralized processing of Home Remittances at
Karachi utilizing the extensive branch network, to ensure that
the beneficiary receives payment within 24 hours. Special
arrangements are in place with the major exchange housed in
the Middle East for facilitating home remittances to Pakistan.
Handled an annual volume of over $ 400 million, which is 40%
of the countrys volume.

Corporate Product and Services:

Lease Finance

Loan Syndication

Mergers & Acquisitions

Debt/Equity Underwritings

Term Finance Certificate

Corporate Advisory

Cash Management

Demand Finance

Working Capital Finance


Fixed Asset Financing
Import Financing
Pre & Post shipment Export Finance

LMM Funding

Documentary letter of Credit

Standby Letters of Credits and Guarantee

Documentary Collection

Treasury Products and Services:

FX Desk:

Habib Bank prides itself on being bank of first choice for
exporters wanting to encash their proceeds. HBL offers the best
rates in the markets, and cut down own spread in order to offer
competitive rates for imports also.

The Treasury Marketing Unit is ready to quote very competitive
rates for the following products:

Spot and Forward FX Cover for Import and Export

Forward Bill Discounting

Sale and Purchase of Government treasury Bills and
Pakistan Investment Bonds

Dealing Strength:

Experience dealers combined with the large FX flows
accumulated in 200 FX dealing branches give HBL an edge over
other banks.

The largest treasury in Pakistan in term of $/PKR volume

The lead Providers of foreign exchange in Pakistan

Money Market Desk:

Backed up by one of the largest Balance Sheets in the country,
our Money Market Desk transacts almost 20% of the daily
volume in the Inter-Bank Money Market on average.

Primary Dealership:

Habib Bank limited enjoys primary dealership status with six
other banks. Only primary dealers are authorized to participate
in Government papers Auction. These papers are subsequently
traded in inter-bank market and could be sold directly to
customers.

Plays a key role in market making of Pakistan Investment
Bonds, T-Bills & FIBs


Price

In the present era, every bank is trying to excel other through the
provision of cheaper, quick, innovative and productive services.
HBL should keep its services charges at the minimum level to
retain and facilitate customer and to have market penetration.

Schedule of charges effective from Jan 01 , 2013 to June 30, 2013 :

International Banking:

Table 5.1:
Letter of Credit Commission (Import)

Sr. Annual Volume 1 Quart or
Each sub
quart Minimum

No during a Calendar
part of
thereof or part of Amount per LC
Year thereof

1 Up to Rs.25 million 0.40% 0.25% Rs.1500/-per

Letter of
Credit

2 Up to Rs.50 million 0.35% 0.20%

3
Up to Rs.100
million 0.30% 0.20%

4 Above
Rs.10
0 Negotiable

millio
n

Amendments in letter of
credit Rs.1000/-per transaction (Flat)

Import Collection bills
Rs.1200/- per collection provided
no

charges are realized From the
correspondent


Table 5.2: Letter of Credit Commission (Export)

Sr.
Annual Volume
during 1 Quart or part of thereof
No a Calendar Year

1 Advising Rs.1500/-(Flat) plus local courier charges
Rs.50/-& inland courier charges Rs.100/-

2
Amendment
Advising Rs.800/-(Flat) plus local courier charges
Rs.50/-& inland courier charges Rs.100/-

3
Negotiation of
Rupee 0.25 % Minimum Rs.500/-

Bill under Export
LCs

4 Confirmation
Charges as approved on case to case
basis by
Financial Institutions Division (FID).

5
Transfer of Export
LCs Rs.1200/- (FLAT)

Domestic Banking

Table 5.3: Issuance of Banker's Cheque

Sr. No Description Charges

1 Issuance of charges for customers Through Account Rs.150/- Flat
Against cash Rs.300/-

2 Cancellation Rs.150/- (Flat) for customers.
Rs.300/- For Non Customers.

3 Issuance of Duplicate Pay Order Same as nominal charges


Table5.4:
Online Transactions Inter Branch /
Cross Branch

Sr.
Annual Volume during
a 1 Quart or part of thereof

No Calendar Year

1 Deposits (Cash)
I. Free within city.

II.
Rs. 300 flat charges. Inter
city.

(Depositor will Pay)

2 Withdrawals (cash) I. Free within city.

II.
city.

(Drawers will Pay)

3 Cheque Deposits I. Free within city.

(HBL Cheque - For
credit to II.
city.

HBL Account.) (Beneficiary will Pay)

4
Local Funds Transfers
(LFTs)
I. Free within city.

Online Funds Transfer /
Cross
II.
city.

Branch Transfers (Batch

Branches)
(Account Holder will Pay)


Consumer Financing:

Table
5.5: Auto Loan

Sr. Description Charges
No

1
Application processing
fee
Rs.6,000/- (This will include
charges

(Inclusi
ve
of
documentation
related to Data Check,
Verification
charges) and Stamp Duty)

Rs.3000/- (For individuals
applying

again after successful maturity
of one

facility or settlement after 12
months
of facility period)

2 Partial Payment
1. Partial Payment prior to
delivery of

(Not Allowed for
Residual vehicle, @
10% of amount
being
Value Based Auto Lease) settled.

2. Partial Payment delivery of
vehicle, @
5% of amount being settled.

3
Early Settlement
charges
1. Termination prior to delivery of
vehicle,

@ 10% of outstanding amount at
the time

of
settlement.

2. Termination after delivery of
vehicle, @

5% of outstanding amount at the
time of
Settlement


4 Valuation Charges Rs.3500/-

5
Late Repayment Charges
on Rs.600/- per late payment
overdue rental

6 Re-processing Charges
Actual or Rs.35, 000/- whichever
is
higher.

Note: Auto Lease charges may vary during business promotional
scheme or launching of new products.

Table 5.6: Housing Loan


1 Processing fee Rs.6000/-

2 Lawyer Fee Rs.3000/-

3
Early Termination/
Settlement 4% of principal outsourcing.
charges

4 Partial payment charges
4% of the amount adjusted
or
deposited.

5 Re-processing Charges Actual


Table 5.7
:
Personal Loan


1 Processing fee
1% of Loan
Amount

2
Early Termination/ Settlement
charges
5% of principal
outsourcing.

3 Late payment Charges
Rs.500
/- Flat per
presentation

Note: Partial Payment not
Allowed

Table
5.8:
Credit Card


1 Annual fee (Primary)-Green Card Rs.375/- Flat

2
Annual fee (Supplementary)Green
Card Rs.150/- Flat

3 Card Replacement fee Rs.250/- Flat.


Place

In Marketing Mix Place is an important P for any organization.
Habib bank is performing the role of market leader in this
competitive market. HBL with 1424 branches spread across the
country. At present, Habib Bank Limited is the biggest bank of
Pakistan with a network in Pakistan. HBL is also providing its
services to overseas Pakistanis. HBL has its overseas branches in
five continents and twenty-six countries of the world. Domestic
Branch network of the bank comprises of branches in twenty one
regions of the country.

Head Office:

Habib Bank Plaza

I.I Chundrigar Road

Karachi 75650

Pakistan

Phones: 2418000 (50 lines)

Fax: 9217511

One of the important branches of Habib bank in Sialkot is
Paris Road, Branch. The code of this branch is 0574. It is
the main branch called the hub of branches. Hub is mainly
supervisor branch of some other branches. All the
underlying branches report to hub branch. Some of the
branches that come under the supervision of Paris Road,
branch are:

o Kashmir Road Branch

o
Small Industrial Estate Branch


Promotion

Promotion plays an important role in the progress of any
business. Different companies use different tools for promotion.
HBL also use different tolls for promotion its business which are
following:

HBL provides much information on its website to facilitate
its customers at their homes, offices etc.

HBL uses print media as well as electronic media for its
publicity

HBL fixes bill boards and published broachers

They do marketing in sport functions, events of cricket and
hockey and in other national games.

Functions are held in honor of their corporate clients in
order to get their feed back to increase the efficiency of the
bank.

Attractive slogans

Giving best services to their customers

Make more accessibility of their products and services
through new technology

Feedback to customers.

Social Responsibility:

The public Relation Division of HBL maintains effective
rapport with the general public by communicating the
policies and schemes of the bank through press and
electronic media. Besides maintaining close relationship
with journalists and advertising agencies, the Division also
receives the visiting dignitaries and delegations from abroad.

HBL believe in serving the nation and building the country
strong. HBL is always at the forefront to support noble
causes and promoter the social and cultural activities in the
country. The public Relation Division of HBL sponsors
various social, cultural and sports events to generate
healthy activities in the society. It also organizes religious
programs to uphold the religious tradition of our people. The
Division represents the bank at important forums to
exchange views on national and international issues with
various organizations to boost the intellectual activities.

Sponsorship:

Following are some of the major events sponsored by
the banks in the recent past that demonstrates its
commitment to the society and its desire to remain at the
forefront to push forward the national cause.

Health Services:

Annual fund raising campaign of December 2000 of Marie
Adelaide Leprosy

Fund Raising Campaign of Shoukat Khanum Memorial
Hospital

Zakat Raising Campaign for JPMC, cardiovascular,
patients welfare

Pakistan Medical Association Conference

Promotion of Kidney Center Karachi


Social Events:

13
th
International Psychiatric conference held in Karachi
Calligraphy of Fine Art to MR. S .L Hussain

Hyderabad Bankers Club

Promotion of culture by Art Council of Pakistan, Karachi

Promotion of activities at press club and press
associations

Promotion of Ramadan Festival with Karachi Sheraton

Information Services:

100
th
anniversary of Quaid e- Azam s Sindh Madressa-
tul- Islam
Promotion of Horticulture Foundation of Pakistan

Various seminars at professional Institutions like
I.B.P,I.B.A

Chamber of Commerce and Industry Hyderabad

Promotion of Pak China relationship and tourism
through Silk Route Festival Gilgit 2000
Sports Division:

Sports division is also providing different kinds of
services for the promotion of sports in the country. The
coaches of Football and Basket Ball are working tirelessly
for improving the standard of our special children by
imparting training and coaching to them and through their
efforts during the last two special Olympics, Pakistan has
been able to won 4 Gold Medals. HBL is also extending our
coaching facilities to various schools in Karachi and Lahore
in Cricket and Football.


Cricket:

HBL has a history of providing great cricketers to Pakistan
Cricket. Our cricket players have brought laurels to our
bank as well as to the country. Players like Javed Miandad,
Mohsin Khan, Abdul Qadir, Salim Malik and Ijaz Ahmad
joined Habib Bank at very early stage of their career. The
exposure given by the bank helped them polish their skills
to become renowned cricketers of the world. These days
players like Shahid Khan Afridi, Younus Khan, Saleem
Elahi, Danish Kaneria, Hasan Raza, Kabir Khan and Imran
Farhat are representing HBL.

Hockey:

Habib bank has produced number of Olympians and
International Hockey players like late Munawar-uz-Zaman,
Hanif Khan, Waseem Feroze, Safdar Abbas, and Iftikhar
Syed who represented Pakistan in early seventys and
Eightys. Present players like Sohail Abbas, Waseem Ahmad,
Kashif Jawad, Sameer Hussain represented Pakistan in
Sydeny Olympics 2000.

PART 5: SWOT ANALYSIS

HBL Swot Analysis:

PART5: SWOT ANALYSIS

SWOT Analysis

Strengths:

Computerization: The biggest strength of Habib Bank Limited
is that they have fully computerized banking system. Due to
which they have an edge of the competitors. The computer
system not only helps them in providing the customer better
and efficient services, but also reduces the manual work
required by the staff. They provide the real time access.

Staff: Other strength is their staff. Their staff is fully trained.
They have their own staff training academy. Any new employee
who is given job in the bank has to first complete the training
period of four months and it is compulsory to pass it, otherwise
they are not given job. During this period they are given training
on every aspect of banking. Thus making them perfect as a
banker.

Fast Service: Another very important thing is their fast service.
Anything is done very quickly. If you are looking for a loan they
can give it you in only 4-5 days. If it has all the documents they
require and is approve by the head office.

Employee Policy: Habib bank is the only bank, which has its
own employee policy in the written form. Thus giving each
employee a chance to see what opportunities he has if he can
work in this bank. Every rule and regulation of the bank has
been briefly described.

Twenty-six foreign branches: HBL has 26 branches in five
continents of world where HBL is providing its services. Global
presence through affiliations and correspondent arrangement.

Merger: Habib Bank merger with Allied Bank of Pakistan to
create a new bank Habib Allied Bank in order to provide more

efficient services to overseas Pakistani people.

Increase ATMs Range: HBL, ABN Amro, and Askari
Commercial Bank have joined their hands in order to provide
largest ATM network to their customers.

Future Automation plan

Offer Project Financing

Offer Working Capital Facility

Large Network: Largest network of 1500 domestic and 55
overseas branches

Weakness:

Lack of quick decision making through giving financial
powers to line management i.e. too many administrative
layers are involved in decision making process (especially in
advances) as compared to new competitors.

Higher administration costs along with bad debts/ stuck up
advances portfolio.

Lower return on assets (ROA) in terms of international and
Pakistani financial market average

Dissatisfied customer ratio is 30%

Poor knowledge/training of staff in automation sector.

Opportunities:

With the coming of new government, the economic and
industrial reforms brought into the country seen promising.
The people within and outside the country are now much
more interested in investment. So now is the right time to
avail this opportunity and attract those investors


Threats:

The recent privatization of nationalized banks shows a serious threat to
the existing banks in private sector. These big banks pose threat to
Habib bank in two ways:

1. They improve their working efficiency and quality of services.
These banks are offering attractive schemes and high return on
the deposit schemes, but due to their inefficient services, the
customers are attracted towards private banks like Habib bank,
Askari Bank etc. So if these banks are not privatized, no
downsizing takes place and only the quality of their services are
improved, then they can be a huge success.

2. On the other hand, if they are privatized, then automatically the
quality of services will be improved and even after downsizing
they will end up in a much large network and a bigger setup.
Thus the competition in private sector will increase manifold
which will severely affect the existing banks in private sector.

Marketing Strategy:

According to the assistant vice president of Region B

We continue to build on our track record and in our quest
for excellence we strive to meet the needs of both our customers
and our employees. At Habib Bank we aim to ensure customer
satisfaction by providing high quality banking services. This is
made possible by the professionalism of our employees all of
whom are provided with the requisite training and opportunities
to enable them to realize their full potential.

Customers Needs, wants, and Demands

Various people have different demands. Some are the corporate

customers that need huge amount of money and some are
consumers who want to have current account or short term
loans. Habib bank limited is a large organization. It is serving
people from all walks of life. It has introduced different kinds of
schemes according to the demands of customers.

HBL Marketing Offerings:

Habib bank offers a number of services according to the different
needs and demands of several customers which consist of the
following:

Finance for working capital:

1. Running finance

2. Cash finance

Trade finance facilities:

1) Export finance

2) Finance against packing credit

3) Finance against foreign bills

4) Foreign Currency Export Finance

5) Foreign Bills Purchase

Import Finance:

1) Finance against Trust Receipt

2) Finance against Imported Merchandise

3) Foreign Currency Import Finance

4) Letter of Credit


Finance for Capital Investment:

1) Demand Finance

2) Leasing

General Products:

1) Letter of Guarantee (LG)

2) Bid and performance bond

3) Mobilization Advance Guarantees

Other Products and Services:

1) Commercial Day to day banking

2) Current Accounts

3) Cash Management Services

4) Habib Bank Easy Access

5) HBL E-Banking

6) ATM

7) Flexi loans

8) Lifestyles

9) Auto finance

10) House finance

11) Habib bank i card

12) HBL rescue (balance transfer facility)

Customer Value and Satisfaction:

According to the Assistant Vice president region B Lahore

Only three things are important to Habib Bank limited,
Service Quality, Service Quality, and the other is service quality.
Habib bank focuses on providing quality service to its

customers thus providing them more value and satisfaction.
Overseas Pakistanis -------------An important market place.

Inward remittances from overseas Pakistanis provide an
immeasurable support to the economy. Owing to Habib bank
limiteds unique

Combination of the largest domestic and international networks;
HBL processes the highest volume of overseas remittances into
Pakistan. HBL recognizes that speed and efficient processing is
the requirement of remitters and to meet these needs, HBL has
put in place its FAST Transfer service and its fully automated
processing center in Karachi ensures that all remittances are
delivered within 24 hours in urban areas and 48 hours in rural
areas. In HBLs Retail network, it has an unmatched
distribution network, which provides HBL many opportunities
for growth, and HBL plans to use this to soon provide additional
services, including wealth management services.

Habib bank has to decide two things while designing
customer-driven marketing strategy.

1. Selecting customers to serve

Market segmentation

Target marketing

2. Choosing a value proposition


Market segmentation:

Habib bank has divided the market on the basis of benefits
sought. Different customers seek different benefits from a bank.
Habib bank limited is serving its customers with respect to their
nature of demand.

Segmenting Consumer Market:

Major categories are as under

First are those household consumers that need profit on their
deposited money. Habib bank limited is offering Saving accounts
for these customers.

Second are those customers that need short term loans to
purchase their needed items like car or house, Habib bank has
offered Habib Bank Auto Finance, Habib Bank Flexi Loans, House
Finance for these customers. Habib Bank Auto Finance, offers the
customer, an expedient and economical way of fulfilling his
requirement of owning the car of his choice on his terms. This
lease product has been designed to provide the consumer
flexibility in terms of choice of car and tenure. Habib Bank
FlexiLoans is a personal loan product, which is available for
salaried individuals for a variety of reasons. Whether it is for a
childs education, a much needed vacation, a daughters wedding
or even just a shopping spree, Habib bank

FlexiLoans is a flexible financing scheme which can actually
provide the much needed cash to fulfill all such requirements.

Third segment consists of those customers that are concerned
about Islamic values and dont like interest. Habib bank is
offering Profit and Loss sharing account for these customers.

One segment of consumers only wants to deposit their money for
convenience and safety. Habib bank Limited satisfies this segment
of consumers by offering Current accounts and lockers to fulfill
customers daily banking needs.
Habib bank limited also offers, Hajj/Umra Services for those
customers who want to offer these Islamic duties.

Segmenting Business Market:

Habib bank limited segments business market on the basis of benefit
sought also.

Habib banks Corporate Banking Group targets large institutional
and corporate customers in Pakistan through 10 dedicated corporate
banking centers in all major

cities. The CIBG portfolio consists of most of the largest names in the
market and represents all major industry groups.

Corporate Banking offers tailor made products / solutions as
required by corporate customers which includes:

1. Funded facilities, ranging from short to medium and long
term lending.

2. Trade related financing.

3. Foreign currency financing.

4. All sorts of non-funded facilities / services which include
Cash receipts / payments, Remittances, Collections,
guarantees, letter of credit etc..

5. Customized products / solutions.


Commercial Banking:

Commercial banking at Habib Bank Limited focuses on small and
medium sized businesses. This segment is the traditional
stronghold of Habib bank limited with proven expertise and market
knowledge. Units dedicated to service small and medium sized
business are located at Karachi, Lahore, Faisalabad, Gujranwalla
and Sialkot. These relationship managers assist existing and
potential customers with their financial needs. Following services
are provided by Habib bank limited to the small and medium
enterprises.

1. Finance for Working Capital

2. Trade Finance Facilities

3. Finance for Capital Investment

Trade Finance and related services are a long-standing core
business of Habib bank limited. Through this Habib bank targets
those customers who have their import and export business all over
the country or in foreign countries. It enables traders to capture
global opportunities; Habib bank limited has presence
In 26 countries, in addition to its extensive network of overseas
banking partners and correspondents. Habib banks global
reach positions it to facilitate and finance the worlds major
trade flows.

Segmenting international Markets:

Habib bank has 55 international branches which has enabled HBL to
provide comprehensive services that meet customer needs. Habib
bank limited mainly targets overseas Pakistanis. Although its a small
segment but really profitable.


Targeting customers:

Habib bank limited uses differentiated marketing strategy to
target several market segments and design separated offers for
each. Habib bank has developed a stronger position with in
each market segment.

Positioning:

Habib bank limited has overall positioned itself as

The Power to lead

Habib bank limited is offering greater number of services with
better quality and convenience and serving the larger number of
customers than any other bank gives it the power to lead. Habib
bank limited has positioned itself differently for every service. Like

Value Visa Debit Card: its current. Its currency [Depicting it
as the true medium of exchange.]

Retail Banking: Better Solutions for a better life. [Creating a
picture in the minds of customers that Habib bank ltd has the
solutions to their financial problems.]

Money transfer (for overseas Pakistanis) : Apno ki Mehnat,
Apno ki imanat [It means that the income of overseas
Pakistanis is safe in Habib bank limited and will deliver to their
relatives as soon as possible.]

Habib bank Flexi Loans: Cash, when you need it [Depicting
this service as perfect personal financing scheme for salaried
individuals.]

Auto Finance: Your Car your term [Bringing a great
opportunity to satisfy customers drive for a luxury car.]

Communicating and Delivering the Chosen Positions:

Habib bank limited communicates and delivers its chosen positions
through TV commercials, magazines, trade shows, and internet. Due
to these promotional strategies, people are very well aware of the
services provided by Habib bank.

New Product development

Habib bank ltd does new product (service) development not just
because of the previous services failure but also to cope up with
the rapidly changing situation of financial markets. Habib bank
does this by adding more attributes in its original services, by
providing more conveniences, benefits and interest to its
customers.

Process of New Product Development:

Like other companies, the process of new product development
in Habib bank starts with the stage of idea generation. Habib
bank uses internal idea sources as well as external idea
sources.

The assistant manager says:

We believe that creativity and innovation comes from talent,
knowledge and experience and it is our endeavor to provide
and maintain an environment which not only nourishes these
strengths but also provides opportunities for the staff to have
a career which has multidimensional growth opportunities.

Product Development Strategy:

The executives, branch managers and operatives combine their
minds and generate valuable and innovative ideas. It regularly

consults its customers, stake holders and State bank of
Pakistan for its betterment. Rests of the idea reducing stages
are done by a committee specially made for this purpose. Like
other successful companies, as the ratio of its service failure is
not so high, introduces its services without proper testing.

HBL Marketing Strategies

Socially Responsible Marketing:

The Public Relation Division of HBL maintains effective rapport
with the general public by communicating the policies and
schemes of the bank through press and electronic media.
Besides maintaining close relationship with journalists &
advertising agencies, the Division also receives the visiting
dignitaries and delegations from abroad.

HBL believes in serving the nation and building the country
strong. They are always at the forefront to support noble causes
and promote the social & cultural activities in the country. The
Public Relation Division of HBL sponsors various social, cultural
and sports events to generate healthy activities in the society. It
also organizes religious programs to uphold the religious
tradition of our people. The Division represents the bank at
important forums to exchange views on national & international
issues with various organizations to boost the intellectual
activities.

Concept used by HBL:

HBL uses the market concept. it means that they first analyze
what are the needs and requirements of the customer and then
provide its services accordingly.

Partner relationship management:

HBL do the partnership inside the company to provide best
services to its

customers. But their style is little bit different. It has a
committee for this purpose. In this committee experts from all
departments participate but under the leadership of CEO who
after knowing the problems try to resolve them.
HBL has also partnership relationship outside the organization.
To provide convenience to its customer HBL is trying to
partnership with visa, master card. It has also signed a contract
with ABL in order to give more satisfaction to its consumers.

Competitors:

All the banks which are now coming are threat for HBL.
Although they are very small banks but the way they are
progressing is very threat full for HBL. These banks include
Faisal bank, Muslim commercial bank, Union bank, ABL etc

Advertisement:

HBL believes that if its services are good and no one can
provide these services like it then there is no need for
advertisement. Customers will ultimately shift to its
organization. but in case all the other banks have the same
facility to provide then HBL defiantly advertise its service. Many
of the workers think that advertisement is the source through
which you can retain your position in the minds of our
customers. Habib bank limited has spent 400 million Rs on
advertisement last year.

PART6: FINANCIAL ANALYSIS


Financial Analysis:

Financial Summary

(2002-2013)






Financial Analysis

No company can remain in business if it cannot sustain and grow its
profits and banks are no exemption. If Habib Bank Limited wants to
sustain its position as a premier banking institution and to satisfy its
customers, it itself needs to become a profitable organization, that
not only has growth in profits, increase its assets but also provide its
shareholders with the maximum return so that they are also
satisfied.

Horizontal Analysis:

A percentage analysis of financial statements where all balance sheet or
income statements figures for a base year equal 100.0 % and subsequent
financial statement items are expressed as percentages of their values in
the base year.

HBLs Indexed Balance Sheet

Base Year : 2011

Indexed (%)

Assets 2011 2012 2013

Cash and balance with other
banks 100.0 126.6 192.58

Investments 100.0 164.21 312.6

Advances 100.0 99.48 108.71

Operating fixed assets 100.0 118.6 146.28

Total Assets 100.0 123.2 174.14


HBLs Indexed Income Statement
Base Year: 2011
Indexed (%)

2011 2012 2013

Net Income 100.0 123.2 128.3

Mark up Interest 100.0 120 122.9
Income
Non - Mark up
Interest 100.0 115.8 125
Income
Administration 100.0 121.1 128.07
Expenses
Profit Before Tax 100.0 126.9 129

Profit After Tax 100.0 131.1 131.23

Vertical Analysis:

An analysis of percentage financial statements where all balance sheet
items are divided by total assets and all income statements items are
divided by net sales or revenues.

HBLs Common Size Balance Sheet

Common size(%)

Assets 2011 2012 2013

Cash and balance with
other 8.82 9.07 9.76
banks

Investments 27.5 36.73 49.4

Advances 49.71 40.13 31.03

Operating fixed assets 1.74 1.68 1.46

Total Assets 100.0 100.0 100.0


Common size
(%)

Liabilities+Equity 2011 2012 2013

Bills payable 1.05 1.21 1.17

Borrowings from financial 4.37 3.46 12.2
institutions
Deposits and other
accounts 80.82 81.92 75.4

Share capital 1.08 0.96 0.75

Total Liabilities+Equity 100.0 100.0 100.0

HBLs Common Size Income Statement

Common size (%)

2011 2012 2013

Net Income 100.0 100.0 100.0

Mark up Interest Income 90.07 87.6 86.2

Non - Mark up Interest
Income 24.46 22.98 23.8

Administration Expenses 46.48 45.6 46.39

Profit Before Tax 51.8 53.35 52.11

Profit After Tax 32.65 34.7 33.3


Ratio Analysis:
Financial ratios are useful indicators of a firms performance and
financial situation. Financial ratios can be used to analyze trends and to
compare the firms financials to those of other firms. Ratio analysis is the
calculation and comparison of ratios which are derived from the
information in a companys financial statements. Financial ratios are
usually expressed as a percent or a time per period. Ratio analysis is a
widely used tool of financial analysis. It is defined as the systematic use
of ratio to interpret the financial statements so that the strength and
weakness of a firm as well as its historical performance and current
financial condition can be determined. The term ratio refers to the
numerical or quantitative relationship between two variables. With the
help of ratio analysis conclusion can be drawn regarding several aspects
such as financial, health, profitability and operational efficiency of the
undertaking. Ratio points out the operating efficiency of the firm i.e.
whether the management has utilized the firms assets correctly, to
increase the investors wealth. It ensures a fair return to its owners and
secures optimum utilization of firms assets. Ratio analysis helps in inter-
firm comparison by providing necessary data. An Inter firm comparison
indicates relative position. It provides the relevant data for the
comparison of the performance of different departments. If comparison
shows a variance, the possible reasons of variations may be identified
and if results are negative, the action may be initiated immediately to
bring them in line. Yet another dimension of usefulness or ratio analysis,
relevant from the view point of management is that it throws light on the
degree efficiency in the various activity ratios measures this kind of
operational efficiency.

1. Liquidity Ratios
2. Leverage Ratios
3. Activity Ratios
4. Market Ratios
5. Efficiency Ratios


Total Assets Turnover:

This ratio measures that how much turnover is generated
by the total assets of the organization. This is calculated
by the given formula:

Total Assets Turnover = Annual Sales or Total
Income/Average Total Assets

Year 2013 2012

TAT
4.5% 6.2 %

TAT %

Interpretation:

This ratio should be high which is better for the business but,
HBL total assets turnover showing decreasing trend as
compared to 2012 when it was 6.2 %.


Return on Investment:

This ratio is calculated by dividing Op profit by the average
of operating assets as shown by the formula:

Return on Investment = Operating Profit/Average
Operating Assets

Year 2013 2012
ROI 0.324% 0.623%

ROI %

Interpretation:

The answer of this ratio should be high or should be shown a
positive increasing trend for better and favorable results.
HBL's ROI is showing a decreasing trend over the past years
and now reached to 0.324 % which is not favorable for the
bank.


Return on Deposits:

This ratio measures the return on deposits by the total
deposits of the organization obtained by dividing net income
after taxes to total deposits as shown by the formula,

Return on Deposits = Net Income after Tax/Total
Deposits

Year 2012 2013
ROD 2.39% 1.8%

ROD%

Interpretation:
As this ratio shows the total return which business gains
from the total deposits, so it should be high which will be
better for the business but it is showing a continuous
decreasing trend from 2012 to 2013.


Fixed Assets Turnover:

This ratio measures the efficiency of using fixed assets in
generating income or sales. It is the ratio of annual sales to
total fixed assets as given by the formula,

Fixed Assets Turnover = Annual Sales or Total
Income/Total Fixed Assets

Year 2012 2013
FAT 85.32% 82.92 %

FAT %

Interpretation:

The result of this ratio should always be high for favorable
business environment because high ratio shows that business
is investing more efficiently and effectively in fixed assets for
generating sales. It is showing a negative trend as it is
decreasing which is not good for the bank.


Current Ratio:

Current ratio indicates the liquidity position of the business
that whether business can fulfill its obligation or not. It is
the ratio of current assets to current liabilities as:

Current Ratio = Current Assets/ Current
Liabilities

Year 2012 2013
CURRENT RATIO 3.35% 2.97%

CR %

Interpretation:

The current ratio should be in reasonable range. It should not
be too high or too low, both conditions are not favorable. In
this case of HBL, it is showing a decreasing trend which is not
favorable for the business because it may pose difficulty for
the bank to fulfill its current obligations.


Dividend Payout Ratio:

This ratio tells about the relationship between earnings and
dividend that whether earnings are supporting dividend
payments or not. It is calculated by dividing dividend per
share to earnings per share (EPS) as shown by the given
formula:

Dividend Payout Ratio = Dividend per share/EPS

Year 2012 2013
DPR 37.5% 40.85%

DPR %

Interpretation:

Usually higher dividend payout ratio is favorable and it is high
for HBL in 2012 which is favorable. HBL is a mature bank
that's why it is paying high dividends. Its high dividend payout
ratio keeps its shareholders happy.


Debt Equity Ratio:

This ratio tells about the financial leverage of the organization
that what proportion of debt and what proportion of equity is
being used by the organization for financing its available
assets. It is calculated by dividing long term debt to total
capitalization as shown by the given formula:

Debt Equity Ratio = Long Term Debt/ Total
Capitalization

Year 2012 2013

DER 14.03% 25.93%

Debt to Equity %

Interpretation:

A higher value of debt equity ratio is much favorable for the
business as its high value tells about the efficiency of the
business to using its available debt for financing. HBL debt
equity ratio is showing an increase in 2013 from 14.03 in
2012 to 25.93% in 2013.


Profitability Ratios:

These ratios tells about the profitability of the business and is
consists of the following ratios from which we can assess the
profitability of the business.

Net Profit Margin:

This ratio is mostly used for the internal comparison.
This ratio shows the percentage of net profit after tax to
the total income/revenue. A higher profit margin ratio
indicates a higher margin safety and lower risk for the
organization and vice versa.

NPM = net profit after tax / total income

Year 2012 2013

NPR 32% 30.33%

NPM %

Interpretation:

It is showing a decreasing trend which is not better for
the business. It is indicating a greater risk and low
margin safety for the business.


Operating Profit Margin:

This ratio tells us about the percentage of operating
profit to total income

Year 2012 2013

OPM 45.12% 47.33%

OPM %

Interpretation:

Its high value is favorable for the business. It is
overall showing an increasing trend as compare to
previous years. It is favorable for the business. It
means HBL operations are generating good profits.


Return on Total Assets (ROA):

This ratio tells about the percentage of net
profit/earnings which business is attaining by using its
total available assets. It is calculated by dividing net
profit to total assets as shown by the given formula:

Return on Total Assets = Net Profit/Total Assets

Year 2012 2013

ROA 2.16% 1.63%

ROA %

Interpretation:

Higher ROA is favorable for the business which shows
better use of assets by the business for generating
profits. HBL's ROA is showing a decreasing trend over
past years.


Return on Equity:

This ratio shows a relationship between net income after
taxes and shareholders equity, and measures the
efficiency of the organization of generating profits by
using shareholders equity. It is calculated by dividing
net income after taxes to shareholders equity:

ROE = Net Income after Tax / Shareholder's
Equity

Year 2012 2013

ROE 2.39% 1.8%

ROE %

Interpretation:

It should be high for favorable results. This ratio of
Habib Bank is showing a decreasing trend which is not a
good sign.


Efficiency Ratios:

These ratios tell about the efficient use of the assets and
liabilities of the business which is calculated by the
following ratios:

Investment to Total Assets Ratio (ITA):

This ratio tells about the percentage of investment to
assets calculated by dividing investment to assets as
shown by the following formula:

Investment to Total Assets Ratio =
Investment/Assets

Year 2012 2013
ITA 36.7% 49%

ITA %

Interpretation:

This ratio should be in high figures for favorable results
of the business. HBL ITA is showing an increasing trend.
Bank should try to keep it high by making better policies.


Deposits to Total Liabilities:

It is calculated by dividing total deposits to total
liabilities as shown by the given formula:

Deposits to Total Liabilities = Total Deposits/Total
Liabilities

Year 2012 2013

DTL 90.6% 82.2%

DTL %

Interpretation:

It is showing a decreasing trend. It means our liabilities
other than deposits are increasing. Bank is taking
burden of other liabilities more, rather than to focus on
deposits only.


Capital Adequacy Ratios:

Equity to deposits ratio:

This is the ratio of total shareholders equity to
total deposits and is calculated by the following
formula,

Equity to deposits ratio = Total Shareholders Equity/
Total Deposits

Year 2012 2013
EDR 11.6% 10.8%

EDR %

Interpretation:

It is showing an average decreasing trend over the past
three years which is favorable. It means deposits are
increasing and risk of shareholders increasing.


Equity to Assets Ratio:

This is the ratio of total shareholders equity to total
assets and is calculated by the following formula:

Equity to Assets Ratio = Total Shareholders
Equity/Total Assets

Year 2012 2013

ETA 9.5% 8.18%

EAR %

Interpretation:

It is showing a decreasing trend which is not favorable for
the business. It shows total assets financed by equity.
Now equity financing is decreasing by HBL. The reason
may be it is easily available with debt financing and
enjoys tax benefit also due to increased debt financing.


Regulatory Ratios:

Cash to Deposit Ratio:

This ratio tells about the percentage of cash available
as compare to the deposits. It is calculated by dividing
cash on hand and with other banks to total deposits
as shown by the given formula:

Cash to Deposit Ratio = Cash on hand and with
other Banks/ Total Deposits

Year 2011 2013
CDR 18.04% 17.97%

CDR %

Interpretation:

This ratio tells us about the liquidity status of the
bank. It has slightly decreased. And to meet the
current obligations for bank can be difficult.


Advances to Deposits Ratio:

This is the ratio of advances to deposits which shows the
percentage of advances as compare to deposits and is
calculated by the given formula:

Advances to Deposits Ratio = Advances/Deposits

Year 2012 2013

ADR 48.99 41.44%

ADR %

Interpretation:

This ratio tells about the status and measure of the
level for advancing loans. It is showing downward
trend which shows that bank is not advancing loans
as much as it was in previous years. The reason may
be decrease in liquidity as cash is not available to
bank. That's why there is downfall in advances of HBL
to avoid liquidity issues.

PART7: INTERNSHIP ACTIVITIES


Internship Activities:

First of all, orientation was attended at August 04, 2014 in RHQ
(regional headquarter) Multan which was given by Iyaz Hussain
Toor who is RM in RHQ and received the congratulation letter as an
Intern in HBL along with a copy of Terms and Conditions of
Internee. Formally, i commenced my internship in HBL, Old
Bahawalpur Road Corporate Branch Multan, at August 04, 2014
and completed my internship of six weeks on September 13, 2014.
First day I reached to bank on its official working time of bank and
reported to Mr. Faisal (Operational Manager), who introduced me
about the functioning of the branch and its staff. During six weeks
I worked in different departments of the bank to seek the maximum
knowledge about banking practices and also about management
skills.
First Week (General Banking):

I studied the general banking concepts in first week of my training.
The Manager of the bank Miss Saima introduced me the general
banking operations and gave a brief detail about the following:

Cheque

Kinds of Cheques

Bank Overdraft

Bank endorsement

Special crossing, General crossing

Cheque:

A Cheque is an unconditional order in writing, drawn by a
customer on his bank, requesting to pay on demand a certain
sum of money, to a person named in the Cheque, or the
bearer, or to the order of a state and person. So, it is a

negotiable instrument signed by drawer to pay a certain
amount drawn on a specified bank is called bank Cheque.

Here the parties that are involved

Drawer (who have an account in the bank)

Drawee (bank)

Payee (who receive the amount)

Different kind of Cheques:

Cheques are divided in two classes:

1. Bearer Cheques

2. Crossed Cheques

Bearer Cheques:

Bearer Cheque is one which the phrase bearer is written
after the name of the payee. It is payable to the bearer, holder
or possessor i.e. anyone who may present it at the bank. The
bank is under no liability to ascertain that the payment is
made to the right person.

Cross Cheques:

When two parallel lines are drawn across the face of a
Cheque, it is said to be a crossed Cheque. A crossed Cheque
can not be encashed may be general or special.

Bank Draft:

Commercial bank gives the facility of remittance or money
from one place to another. Bank draft is one of the means of
the transferring money from one place to another. It is an
order drawn by bank on one of its branches requesting the
later to pay a specified sum of money to the person named in
draft. So, it is a kind of bill of exchange. The main difference

between Cheque and bank draft is that, bank draft is issued
by authorized bank and not issued by the parties while
Cheque is drawn by the parties.

Bank Endorsement:

Sign on the back of any Cheque is called endorsement and
then give it to the cashier. Suppose I want to withdraw money
from bank, then for this purpose cashier asked me to sign on
the back of Cheque, it is called endorsement. Simply
endorsement mean transfer the right of any instrument o any
other person.

General Crossing:

General crossing means the two parallel lines across the face
of any instrument without the name of any organization or a
bank or a company. The effect of a general crossing is that
the holder cannot encash it himself at the counter of the bank
He must deposit it with some bank which would obtain cash
for it from the drawee bank. In this way chances of fraud are
minimized.

Second Half of First Week (Accounts
Department):

After getting a few information about general banking terminologies
then I spend three days in this department Here, I learned the
following areas of the bank. How many types of accounts opened by
bank:


Kinds of account:

Three types of accounts are opened by the bank:

1. Current account

2. Saving account (profit and loss sharing
account)

3. Fixed deposit account

Current Account:

Current Accounts can be opened for businessmen,
proprietorship, partnership, joint account holder and for
private and public limited companies. In this type of account
no interest is paid by the bank. Bank receives service charges
from their customers when ever their balance is less than
20,000. The current account can be opened in the name of
individual / joint account holder, firm company, trust,
association of person etc. But mainly this account is
maintained by business class.

Saving Account:

This account as its name suggests is for those persons who
want to make small savings. This type of account is opened
by the wage earners, small retailers and salary earners. The
rate of interest on this type of account depends on the
amount of profit earned by the bank. Here we can also open
saving account in the minors. Minor name is included in the
title of account is opened in the name of minor but its
operations is allowed by his guardian and parents until and
unless he become adult. This account can also be opened by
join account holder. But in case of saving account, it is

necessary that they must submit a written statement that
who will operate this account. Is it operated by with the
signature of both parties or not. Either or survivor.

Fixed Deposit Account:

In this type of account a certain amount is deposited for a
fixed period such as six months, one year or longer. The
amount cannot be withdrawn till the expiration of fixed
period. A high rate of interest can be earned by the customer
on this type of account. In this department, several time, I
also opened a current account PLS account of different
clients.

Account opening process:

Before a banker opens a new account he should ascertain whether
or not the person desirous of opening the account would a
desirable customer. The banker should determine the prospective
customers integrity, respectability, occupation and the nature of
the business, by the introductory references and introduction given
at the time of account opening

Preliminary investigations are necessary because of the following
reasons:

Avoid fraud

Safeguard against unintended overdraft

Negligence

Inquiries about clients


Specimen Signatures:

When an account is opened with a bank the customer gives the
banker a specimen of the form of signature which would appear
on all his Cheques to express his authority for the payment of
Cheques drawn on his banker. This specimen is taken generally
on a card, specially designed for the purpose, and as general
rules for the customers, full name, and account number are also
entered on it.

KYC:

When to open an account, along with basic account opening
form another form is filled named KYC or know your customer
form. This form gives the necessary information about the
customer. The important things in KYC form are title of account,
national identity card number, and expiry date. of national
identity card, expected deposit per month etc. Banker fills this
form in order to verify that the information provided by customer
is true

Computer Entries:

Having filled the basic account opening form, KYC and
specimen signature card, information is fed in computer to
generate customer account number and to feed basic
customer information in computer. Computer Entries are
done in software called MISYS. It has four following steps

1. ANC

2. OCA

3. ACC

4. CIM

ANC:

ANC is a key to enter new customer in the database.
Having Written ANC we press enter and software ask for
following information

Customer Full name (Title of account)

Customer short name

Customers Telephone number

Type of Tax (usually withholding tax that bank deducts
from its customers account)

Currency (account can be opened in local currency as
well as in three foreign currencies)

Done with this, computer generates an initial customer
number.

OCA:

OCA is second step in account opening procedure. IN this
step we mention customer account number (already
generated by computer) and the type of account we want to
open. Account can be of several types but mostly current and
PLS accounts are opened.

CAA:

In the third step, we mention customer name, Father /
Husband name, complete address.


CIM:

In CIM, we input some basic information about the
customer i.e. customer name, marital status, gender, National
identity card number, Operational instructions (self or joint)
and Next of kin. While opening an account the name of a

person is required to mention on account form to whom the
bank may contact in case the person whose account is being
opened with the bank expired or not contacted. The other
person then is authorized to handle the account on behalf of
the customer.

Initially while opening an account the person cant be
introducer of him/herself. So, any account holder has to be
introduced again every time whenever she/ he going to pone
another account in the same bank But State bank changed
this rule now.

No Need of next of kin name in the case of joint account

Second Week (Clearing Department):

In the second week of internship I learned about clearing. The basic
function of clearing dept. 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. Clearing in HBL is done through NIFT (National
Institutional Facilitation Technologies).


Every day clearing bag is prepared by entering all the inward
clearing cheque and outward clearing cheques separately and
different cover sheet of different colour is used for each category.
On cover page total cheques and total amount is written. Usually a
cheque is sent through clearing is credited to the depositor account
day after tomorrow.

Types of Clearing:

In this regard there are three types of clearings

Inward Clearing
Outward Clearing

Same Day Clearing

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).

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 dept. sends these

cheques to respective banks and after realization of cheque,
funds are credited to the account of respective customer


Same Day Clearing

The cheques which are presened for the same day clearing
will be settled same day. The amount of cheque must be
equal or above Rs-100,000 and bank will charge flat
commission Rs-580 on each cheque irrespective of the
amount which is above 100,000.

Third and Fourth Week (Trade Department):

In the third and fourth week of internship I worked with Mr. Ali
Raza (Trade Manager) for learning about trade (imports and
exports). The basic function of trade dept. is to facilitate the
customers while importing and exporting goods by charging the
nominal commission.

Exports:
Documents that are required for exports are given below:
o Customer Invoices
o Dublicate and Triplicate copy of E-Form
o Airway Bill
o Bill of Lading
o GD (Goods Description) Form

Receiving of the documents is given to customer by signing on
the cover letter along with the date by the assistant trade
manager. Whole document is scanned and send to CTPU
(Central Trade Processing Unit). Approval is made from
Lahore CTP by Mr. Sajid Anwar. Discrepancies are
communicated through E-Mail and can be resolved easily. For
any further assistance you can call at 042-36281868.
After that enlargement of documents are done through FDBC
software. Afterwards scheduling is done in P.R.C register

either A1(Export against Advance Payment) or A2(Export
against E-Form).When the payment is received by the bank
this will be communicated to customer by issuing P.R.C
(Proceed Realization Certificate) against exports. EDS (Export
Development Surcharge) is charged on each export on a flat
rate of .025% of FOB. EDS is prepared and submitted to SBP
(State Bank of Pakistan) on daily basis.

Export Certificate:
Export certificates are issued to the parties which demand
this between particular dates e.g. from 01-06-2012 to 31-12-
2012.

Imports:
Documents that are required for imports are given below:
o Performa Invoices
o Copy of Original LC
o AT (Availment Ticket duly approved by CAD)
o Valid Insurance Cover
o IB-8 Form (Inland Imports)
o Form-I (Foriegn Imports)

Whole document is scanned and send to CTPU (Central Trade
Processing Unit) for approval. Approval is made from Lahore
CTP by Mr. Jamil Sabar. Discrepancies are communicated
through E-Mail and can be resolved easily. For any further
assistance you can call at 042-36281867.
Return is submitted to SBP (State Bank of Pakistan by the
end of each month) relating to all imports and exports
along with the necessary documents.

In the fifth week and sixth week of my internship, I worked with
Credit Manager who taught me everything regarding credit

issuance, preparation of credit memorandums with care and
graciousness.

Credit Issuance

Principles of lending:

Basically there are five principles which must be duly
observed while advancing to the borrowers.

They are:
Safety

Liquidity

Dispersal

Security

Remuneration or profitability

Safety:

The bankers funds comprise mainly of money borrowed from
numerous customers on various accounts, such as Current
Account, Saving Account, call deposit account, special notice
account and term deposit account etc. Therefore the bank has to
observe the safety first. The bank must be very careful and ensure
that his depositors money is advanced to safe hands where the
risk of loss does not exist.


Liquidity:

Liquidity means the possibilities of recovering the advances in
emergency, because all the money borrowed by the customer is
repayable in lump sum on demand. If the borrower asks for an
advance for the purchase of fixed assets, the bank should refuse
because it shall not be possible for him to repay when the bank

wants his customer to repay the amount. Hence, the banker must
adhere to the consideration of the principle of liquidity very
carefully.

Dispersal:

As a principle, the dispersal of the amount advances should be
broadly based so that a large number of borrowing customers may
benefit from the banks fund. The bank must ensure that his funds
are not invested in only specific sector.

Security:

As a matter of professional vigilance the bank must carefully
examine each lending proposal and approve it on its own merit.
However, the banker must carefully examine some cushion also to
fall back upon in case of changes in circumstances after
disbursement of funds to the borrower.

Remuneration:

The bank needs sufficient earnings to meet the following besides
others:


Return payable to the money deposited with it

To meet various statutory monitory requirements under the
banking law

Salaries and fringe benefits payable to the staff member

Overhead expenses and depreciation and maintenance of the
fixed assets of the bank

An adequate sum to meet possible losses

Lending Process:

Lending is the back bone of any bank. Without lending it cant
create profit not for its customers and not for itself. Lending
process in Habib Bank, like other bank, includes ten steps
1. Marketing

2. Processing (proposal)

3. Sanctioning

4. Preparation of offer letter

5. Documentation

6. Clearance for CAD

7. Disbursement of loan
8. Maintenance

9. Recovery of markup

10 NPL (non performing loan)

Marketing:

The first step of the process starts with the marketing. Either
the customer himself walks in to borrow from the bank in
order to meets its business and personal requirements or the
credit officers visit market to capture customer after proper
checking of business place, stock verification from at least
three parties.

Processing:

Customer is required to put an application, requesting the
loan from the bank. Along with the id card The present and
future(expected) financial statements of three years are
required in order to judge the party and for security purposes.
After completion of necessary documents branch prepares
proposal and submit to competent authority CAD for

approval. Proposal generally contains all information
regarding party. Such as name,

address, nature of business, CNIC, security (valuation from
approved evaluators that gives the both market value and
forced sale value which is always less than the market value),
credit report from other bank (Either this person has taken
any kind of loan from other banks) and checking of stock and
report submitted by party.

Credit Analysis:

Credit analysis is conducted through credit memorandum of
any party. It usually comprises of minimum 5-10 pages. It
includes different analysis of the firm/party.

Preparation of Credit Memorandum:

It includes the following detail of any party:
Company Overview
Client Business Strategy for Coming Year
Purpose of Getting Loan
o Transaction Rationale

o Rationale for Enhancement
o Cash Conversion Cycle
o Total Working Capital Requirement
o Existing Approval Lines
o Contribution From Own Source
Security\Collateral
Source of Payment
o Primary Source e.g. (Internal Cash flows)

o Secondary Source e.g. (Sale of Hypothecated
Stock)
Production Process
Key Suppliers
Terms of Selling
Key Customers/Buyers and Buying Terms
Management Assessment

Financial Analysis
Industry Analysis (With the Help of Chamber)
Recommendation
Financial Spread:

A credit officer at branch level then prepares financial spread.
Financial spread is basically a format standardized by Habib
Bank for all of its customers. When customer provides his
financial statements, they are then styled according to
standardized pattern. It is an excel sheet with linked cells that
just need to enter input or figures from customers financial
statements. It then just give a quick picture (as it has
different checks in it) that whether party is worth of
advancing a loan or not.

Sanctioning By competent authority:

Credit committee at Regional Head Quarter (R.H.Q) or at
Head office Karachi sanctions the loan as per credit policy
manual.
After proper scrutiny of proposal documents, the sanctioning
authority sanctions loan by placing name stamp and
signature. Separate serial number is allotted to every section
called sanctioning advice number e.g. 381/12.

Preparation of Offer letter:

Fard (Register haddarah from patvari or Revenue
Department

Mutation

Approved plan

Evaluation

Permission to mortgage from LDA society

Noting of bank charge with excise and taxation
department and revenue department

Legal mortgage

Equitable market (Memorandum of deposit title)

AICS SHAJRA from patvari

Clearance of document:

Clearance of document is being done by C.A.D (credit
administration department) at R.H.Q. After completion of all
control and property document, file is submitted to CAD for
clearance. CAD minutely checks and examines documents

and then issue AT (Availment Ticket).

Disbursement of loan:

After issuance of AT from CAD the bank disburse the loan to
party.

Opening of running finance

Feeding of loan limit

Issuance of cheque book

Recovery of Markup:

After advancing loan to the party the process of
recovering the markup from the party starts. It may be on
monthly basis or on quarterly basis. It might be on daily basis
too but it all depends on the conditions settled with the party.

NPL (Non performing loan):

In case the party defaults, the bank categorizes the loan. For
first 90 days
bank classifies the loan as a Substandard Loan. And gives
the reason to the head quarter why it has happened. IF the
party doesnt give the markup for 91 -180 days, bank
reclassifies the loan and this time the loan is settled under
the heading of Doubtful loans and in case of 365 days or
above bank recognizes a loan as complete Loss.

PART8: RECOMMENDATION & CONCLUSION


Part 8: Recommendation & Conclusion

Leading Problems in HBL:

Some of the major problems that I found during my
internship in overall HBL management are:

Huge dependency on Manual work still exists in HBL.

There is noticeable communication gap between upper level
management and operational staff.

There is also over staffing in HBL more than 13,000-
employees are working there.

There is noticeable difference in approaches of experienced
staff & young staff

Imported upper level management

There is no transport facility for the employees.

Experienced staff is cramped mainly due to three reasons

Salaries have not been revised from last 10 years

Recommendations

Golden Handshake should be given to ineffective and
inefficient old employees.

Repetitive involvement of CAD in every matter should be flying
down in a centralized manner.

There should be authority in every region which ensures
efficient flow of communication and its understanding.


Periodically, result oriented surveys must be conducted
regarding employees and customers satisfaction.

HBL should immediately take confident steps towards the
welfare of experienced Habitants like NBP. NBP is the best
example in this regard.

The management should try to cutback job insecurity among
the employees.

Training program should be introduced for internees and
freshly appointed employees.

HBL is charging high service charges as compared to the
other banks, so these should be lowered down.

HBL should focus on maintaining its quality services in order
to sustain its current leading position in market.

Managers Appraisal must be given to employees to improve
the satisfaction level of employees. And managers should get
feedback whenever possible from employees.

Addition of value added features in different services that offer
competitive advantage is also a mean of avoiding customer
dissatisfaction.

Rapid incentives and promotions should be given to
employees in order to develop more interest providing services
to customers.

The Bank should develop a comprehensive recruitment policy
to make only the competent ones to be on the job.

Better and comprehensive long-term and short-term planning
should be made to forecast the future needs.



Conclusion:

HBL is considered as the First Bank working in Pakistan. No one
can deny its role in economic and industrial revival of our country.
Definitely, HBL is 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. I am witness of this thing HBL has more loyal
customers as compare to other banks, if more attention is given to
commercial banking customers then in few years HBL will hold
more significant market share in inward foreign remittances which
is now 55%. HBL is the leading bank of the country (in terms of
branches and profits), It just need to focus on its quality and
services to hold its loyal customers for sustaining the current
position.


Glossary

D.D -------------------------------------Demand Draft
TT --------------------------------------Telegraphic Transfer
A/C --------------------------------------Account
OB -------------------------------------- Other Bank
OBD -------------------------------------Other Bank Draft
PLS -------------------------------------Profit and Loss Sharing
DR --------------------------------------Debit
CR --------------------------------------Credit
CA --------------------------------------Current Account
FL --------------------------------------Flexi Loan
LG --------------------------------------Letter of Grantee
DF ------------------------------------- Demand Finance
LC ------------------------------------- letter of credit
RF ------------------------------------- Running Finance
FAPC ------------------------------------- Finance against Packing Credit
KYC-----------------------------------------Know Your Customer
NPD-----------------------------------------Non Performing Loans.
PAD-----------------------------------------Payment Against documents
CTP-----------------------------------------Center Of Trade Processing
FBP-----------------------------------------Foreign Bill Purchased
LTFF---------------------------------------- Long Term Financing Facility
SWIFT-------------------------------------Society For Worldwide Inter
Financial Telecommunication


Reference & Sources used

I collected this information from,
1. Habib Bank Limited of Pakistan, Annual Reports
2. State Bank of Pakistan Prudential Regulation for Corporate
and Commercial Banking.
3. State Bank of Pakistan BPRD Circulars
4. Dawn Newspapers for updated information.
5. Instruction Circulars of National Bank Limited.
6. Economic Reviews for Banks and their activities.
7. State Bank of Pakistan, Website, http://www.sbp.gov.pk
8. Habib Bank's website, http://www.hbl.com
I also visited & completed 6 weeks internship in Habib bank
Limited Corporate Branch Multan for collecting data.


Annexes
List of Annexes
Annex 1
Overview of the organization
Brief history
Nature of the organization
Business volume
Product lines
Competitors
Annex 2
Organizational structure
Organizational Hierarchy chart1
Number of employees1.
Main offices
Comments on the organizational structure

Annex 3
Introduction of all the departments
Detailed description of the department you worked in OR
Detailed description of the project assigned.
Structure of the Finance Department
Department hierarchy
Annex 4
Accounting system of the organization
Finance system of the organization
Use of electronic data in decision making
Mobilization of funds
Generation of funds
Sources of funds


Annex 5
Marketing Mix
SWOT Analysis

Annex 6
Critical analysis
Ratio analysis
Horizontal & vertical Analysis
Organization analysis in comparison with its competitors)
Future prospects of the organization.

Annex 7
Plan of your internship program
A brief introduction of the branch where you did your
internship
Starting and ending dates of your internship
The departments in which you got training and the duration
of your training

Annex.8

Conclusion & recommendations for improvement
Reference & Sources used

Internship: Part 1: Profile

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