You are on page 1of 63



The purpose of the study is to experience real life banking practices in order to bridge the gap

between the theoretical and the actual for better comprehension and knowledge of the different

aspects of this vast field of profession. The main purpose of this report is to critically analyze and

comprehend banking operations and suggest measures in the form of concrete and weighted

recommendations. Besides, the report also aims to inculcate amongst the students the method of

collecting relevant material and shaping it in the form of formal report writing.

HBL established operations in Pakistan in 1947 and moved its head office to Karachi. HBL first
international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was
built in 1972 to commemorate the bank’s 25th Anniversary.

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
(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.

2.1 Brief History of HBL

The decade of 40s was not very opportune for the establishment of a banking bank. History is
witness to the failure of 150 banking companies established during the period and some carried
the big names of Ram Krishan Dalmia and their likes. In such a period the successful
establishment of a bank by Muslim sponsors was nothing less than a miracle.

The inception of Habib Bank, in Bombay on August 25, 1941, heralded the dawn of a glorious
era, for the Muslims of the sub-continent. The bank began with a paid-up capital of Rs.2.5
million. At the end of 1942, deposits stood at 24.0 million and doubled to Rs.57.3 million in
1945. In 1947, deposits increased to Rs.260 million.
The bank’s steady growth not only signified the implicit confidence and trust placed in the
integrity and dedication of the Habib family but was a victory and confirmation of their vision,
foresight, acumen and expertise in the field of banking.

The four Habib Brothers, Mr. Ahmad Habib, Dawood Habib, Mohammad Ali Habib and Ghulam
Ali Habib formed Habib Bank in 1941. It was first headed by Mr. Dost Muhammad who was the
first General Manager of the bank. On his untimely demise in 1948, he was succeeded by his
younger brother Mr. Razzaq H. Mohammad, who remained President until the bank was
nationalized in 1974 while Mr. Rashid D. Habib, son of Late Mr. Dawood Habib was its
Managing Director.

About sixty years back, it was indeed considered a daring venture on the part of a Muslim
business family to think of setting up a bank. Muslims were then considered unsuited to the
banking profession. Leaving aside the non-Muslims, even Muslims were reluctant to trust their
own banks.

2.2 Tribute of Quaid-e-Azam

Quaid reposed confidence in the bank by not only opening his personal account but also by
entrusting the collection of relief fund for Muslims in 1947.
“I have opened an account with Habib Bank Limited, Chandni Chowk in the name of Muslim
League Bihar Relief Fund for the sufferers and distressed Muslims of communal riots of Bihar
and Delhi. I appeal to Muslims all over the country to contribute generously and send
contributions to Habib Bank”.
It was with this implicit trust and support that Habib Bank achieved its privileged position of
becoming the first Muslim bank of sub-continent. The consequent appointment of Mr.
Muhammad Ali Habib, one of the bank’s pioneers, as his advisor on financial affairs of the new
state, is also an important milestone in the history of Habib Bank.

2.3 Bank and Honesty

An incident sticks out. A British bank on behalf of one of its clients once placed an order for a
given quantity of gold tablets on Habib's. The order was fairly big. An official of Habib's went to
deliver the goods in person. The chief cashier of the bank received and checked the quantity.
Time after time, the indicated quantity (through counting the tablets which were supposed of
known and standard denominations) differed with the one obtained through weighing on the
scales. It was all very puzzling. The tablets bore the Habibs’ seal. They were in the right number
and yet the total weight as measured by the best scales available did not agree with that declared.

And the discrepancy was on the unexpected side. Actual weight showed excess equal to one
additional tola per thousand (tolas). The Briton, who was the General Manager of the bank, after
making sure of the fact, rang up one of the Habib's and astonishingly inquired as to what were
they doing. He was assured that is how they chose to do business.

So many people who faced difficulties have had reason to remember the Habibs’ name with
gratitude. This is the kind of success of which anyone can justly feel satisfied. That is also the
kind of success, which compulsively calls for a word of praise from others.

2.4 Habib Bank and Pakistan

Again, due to certain differences between the Governments of India and Pakistan, when the
transfer of funds was withheld in 1948 by India, Habib Bank readily came forward and
subscribed heavily to the Government of Pakistan, to tide over the crisis. In fact payment was
made to the Government by the bank at a nominal rate of interest, even before the actual issue of

In the chaos and turmoil of partition, the Muslims of India were helped by Habib Bank to
transfer their funds to Pakistan free of any charges. In this way, when other Indian Banks had
adopted a non-cooperative attitude, it was Habib Bank, which was solely responsible for the
transfer of hundreds of crores of rupees from India to Pakistan.

2.5 Silver Jubilee and Golden Jubilee

Habib Bank celebrated its Silver Jubilee in 1966 on completion of 25 successful years of its
operations. The Government of Pakistan officially acknowledged the unique role of the bank in
the financial history of Pakistan. The President, the Central and Provincial Ministers, Governors
of East and West Pakistan commended its services to the nation and the state.

The Government of Pakistan issued Special Commemorative Postage Stamps as a tribute to the
fact the Habib Bank and Pakistan’s freedom movement were born together and that one helped
the other to its destiny.
Newspapers and prominent Economic and Trade journals brought out comprehensive
supplements on the occasion and while paying rich tributes in their editorial, stressed that no

Muslim of the Sub-Continent could forget Habib Bank’s services to the cause of emancipation of
the people.

Silver Jubilee celebrations were memorable indeed. The slogan “Habib Bank key pachis saal
behter khidmat ki behtreen misaal” was on everybody’s lips. In fact the impact was so great that
the entire nation shared the jubilations and paid glowing tributes for the bank’s selfless service to
the nation and the country. The president of Pakistan in his message termed the bank as “a
shining example for all other to emulate”.

Golden jubilee of ban on completion of 50 years was celebrated in 1991 with full enthusiasm and
commitment to provide better service to its customers.

2.6 Contribution for Social Welfare

Apart from playing a historical and pivotal role in banking, Habib Bank has reflected its interest
in humanitarian goals by actively contributing to the social welfare of the people.
The aims and objectives of the Trust are to eradicate illiteracy, poverty and disease. Religious
and secular institutions have been established throughout the country and grants, stipends and
scholarships are regularly bestowed on students with high academic merits.

Another sphere of interest has been the setting up of industrial homes and vocational institutes
where existing skills are promoted and channelised. Traditional arts and crafts are preserved
while generating a steady means of income, thereby instilling a sense of pride and dignity of
labour in the people.

Special support has also been extended to health awareness programs for the illiterate, as how to
safeguard health through preventive measures and control or cure common diseases. Greater
emphasis is given to preventive measures; hygienic habits and child care to combat the high
infant mortality rate. Dispensaries have been opened in “Kutchi Abadis”.

In times of natural disasters such as floods, earthquakes and other such phenomena it is in
keeping with the spirit and tradition of the banks pioneers to come to the forefront in helping to
alleviate the resulting misery of the affected victims by providing money and kind.

Commitment and dedication to a nation is at the core of its success and development. The bank
takes pride in playing its role towards the betterment of society and further serving the nation.

Habib Bank not only played an important role in establishing an economy in Pakistan, but has
also played a major role in promoting national sports. It has thereby inspired a sporting spirit
which is reflected by several of its players earning international fame in the filed of cricket and

2.7 Pioneers in Innovative

Many of our schemes have gained national and international recognition as valuable contributors
to field of banking.

a) Rupee Travellers Cheques

b) Evening Banking Service
c) School Banking
d) Mobile Banking
e) Computer Service
f) Credit Card Scheme
g) Computer Accounts
h) Life Insurance Savings
i) Prize Savings Account Scheme
j) Deposit Growth Certificates
k) Deposit Growth Insurance
l) Scholarship Awards
m) Autocash Teller Machines
n) Owner-Driver-Taxi Finance
o) Gold Card Scheme
p) Monthly Investment Scheme
q) Muhafiz Travellers Cheques
r) Crore Pati Prize Saving Scheme
s) Flexi Loan
t) Express Inward Foreign Remittance

2.8 Habib Bank Was Nationalized
The nationalization of Pakistani system has crossed many milestones in terms of branch network,
deposits and advances etc. No doubt, banks in a developing country have to fulfil their social
obligations. Our banks have done a commendable job in this respect by offering banking
facilities to the weaker sections of the society.

2.9 Human Resource Development

Human resource being the pulse of any organization is its most precious asset. And training plays
a vital role in tapping and developing its potential to the utmost. With this key factor in mind
Habib Bank pioneered its first training programme in 1946, in which Muslim youth were
recruited after an extensive tour of leading academic institutions.

The bank’s Training Division has gained renown for its excellence and efficiency and was called
upon to assist in training personnel for other upcoming baking institutions. With the passage of
time this assistance became a testimonial of the bank’s valuable contribution towards
establishing and developing of other commercial banks within the country where several trained
Habibians went to work with senior, middle and junior levels. Word of its skills spread far wide
which led to many international banks sending their personnel to Habib Bank for training.

Presently Habib Bank mans full-fledged teaching facilities and support staff at Karachi, Lahore
and Islamabad. The training programmes are conducted with the latest aids and equipment and
involve extensive training to new recruits, and existing staff with specialized courses that cater to
the different cadre of personnel on topics of Management, Marketing, Selling, Accounting and
Finance, Banking Law and Practice and Internal Procedure. Speakers from other prestigious
institutes are also invited to deliver lectures.

2.10 Go Ahead
The journey of transformation of HBL towards a modern, service oriented and profitable
financial institution is well underway. We have to face the challenges of optimising the use of
technology, re-engineering and centralization of our process to achieve competitive advantage,
managing large expenses base and above all enhancing the skills, moral and satisfaction level of
our great resources as employees.


3.1 Origin of Banking

Many of today’s banking services were first practiced in ancient Lydia, Phoenicia, China, and
Greece, where trade and commerce flourished. The temples in Babylonia made loans from their
treasuries as early as 2000 BC. The temples of ancient Greece served as safe-deposit vaults for
the valuables of worshipers. The Greeks also coined money and developed a system of credit.
The Roman Empire had a highly developed banking system, and its bankers accepted deposits of
money, made loans, and purchased mortgages. The first bank to offer most of the basic banking
functions known today was the Bank of Barcelona in Spain. Founded by merchants in 1401, this
bank held deposits, exchanged currency, and carried out lending operations. It also is believed to
have introduced the bank check. Three other early banks, each managed by a committee of city
officials, were the Bank of Amsterdam (1609), the Bank of Venice (1587), and the Bank of
Hamburg (1619). These institutions laid the foundation for modern banks of deposit and

3.2 Definition and purpose of Banks

Banking is the business of providing financial services to consumers and businesses. The basic
services a bank provides are checking accounts, which can be used like money to make payments
and purchase goods and services; savings accounts and time deposits that can be used to save
money for future use; loans that consumers and businesses can use to purchase goods and
services; and basic cash management services such as check cashing and foreign currency
exchange. A broader definition of a bank is

“Any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or
safeguards money for its customers.”

Banking services serve two primary purposes. First, by supplying customers with the basic
mediums-of-exchange (cash, checking accounts, and credit cards), banks play a key role in the
way goods and services are purchased. Without these familiar methods of payment, goods could
only be exchanged by barter, which is extremely time-consuming and inefficient. Second, by

accepting money deposits from savers and then lending the money to borrowers, banks
encourage the flow of money to productive use and investments. This in turn allows the economy
to grow by letting people to purchase cars or houses, and businesses to expand and build the new
factories that the economy needs in order to produce more goods and services. Enabling the flow
of money from savers to investors is called financial intermediation and this is what banks are
established for.

3.3 Business Volume in Term of Revenue, Deposit, and Advances:

3.3.1 Deposits
The total deposit of Habib Bank for the year of 2007 was Rs. 506,563,870 (in “000).

3.3.2 Advances
The total advances of Habib Bank for the year of 2007 was Rs. 327,454,611 (in “000).

3.3.3 Revenue
The total advances of Habib Bank for the year of 2007 was Rs. 335,772,341 (in “000).

3.4 Number of Employees by Designation

Total number of employees: (18536)

During the year the bank offered Voluntary Staff Separation Scheme (VSSC) to some its
employee. Under this scheme 2,202 employees opted for the separation. The HBL has incurred
the additional cost of Rs. 1, 602 million in this respect. In addition, the consequential impact on
retirement benefit scheme has been determined through actuarial valuation, the results of which
are summarized in note 30 to those financial statements.

Subsequent to the year end 2,343 employees in the non-clerical staff cadre have been retrenched
with effect from March 10, 2007. The bank has committed to pay in addition to payments under
the staff retirement funds, an amount of Rs. 1, 597 million under the retrench scheme. The
impact, if any, on staff retirement benefit scheme will be finalized in due course through
actuarial valuations.


Board Of Directors

President & CEO

Company Secretary & Chief

Chief Operating Officer
Financial Officer









President & CEO


Director Director






Our brand identity is the outward expression of what we stand for as an organization. This is
summarized in our vision, mission and is supported by our values.

Habib Bank Limited provides the following services & product line for their customers.

i. Term Accounts
ii. Current Accounts
iii. Saving Accounts
iv. Foreign Currency Accounts

I Term Accounts:
HBL offers a wide range of accounts suited to meet individual customer needs. HBL’s
Term Accounts are offered in a variety of tenure with deposits as low as Rs.10, 000.

a) Special Notice Time Deposit

7 days or 30 days (and over) notice
Minimum deposit of Rs. 10,000
Balance less than Rs. 1 million
Balance equal to and greater than Rs. 1 million
Returns range from 0.75% to 4% depending on notice period and amount

b) F.I. – Term Deposit Receipts

• Three months term deposit
• Minimum balance of Rs. 1 million
• Return range from 0.75% to 2.25%

c) Munafa Plus Deposit (Certificates)

• Available in 3 months, 6 months, 1 year, 3 years, 5 year and 10 year terms
• Profit disbursement (except for 3 & 6 month terms) is monthly, quarterly,
bi-annually and on maturity
• Returns range from 6.15% to 14%

• Minimum investment of Rs 20 million except in the case of 1 month
where minimum investment is Rs. 100 million
• Available in 1 month, 3 month, 6 month, 12 month and 3 year terms
• Profit paid on maturity
• Rates on IPD are conveyed on a daily basis by the Treasury Division

e) Remittance Munafa Plus Deposit (Certificates)

• Available in 1 year, 3 years and 5 years certificates
• Profit disbursement is monthly, quarterly, bi-annually, annually and on
• Returns range from 7.8% to 11%

II Current Accounts:
Our Current Accounts offer features that meet your daily banking needs. There are two
types of current accounts which are used by HBL.

a) Current account
• No Profit Bearing
• No Transaction Limit
• Minimum balance of Rs. 10,000, if the average balance falls below this amount,
then service charges will be deducted.
• No restriction on anyone opening a Current Account (as long as regulatory
guidelines are met).
b) Basic Banking Account
• No Minimum Balance
• No Service Charges

III Saving Accounts:

HBL’s Saving Accounts cater to individual saving habits.

a) Remittance Munafa Plus Saving Account
• Profit paid bi-annually
• Minimum average balance of Rs. 10,000
• Less than Rs. 20,000 earns 0.10% profit
• Greater than Rs. 20,000 earns 1% profit

b) 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

c) HBL Supper Value Account

• 7.25% profit per annum*
• Profit credited every 3 months
• Deposit ranges from Rs. 100,000 to Rs. 500,00

d) 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 0.10% profit
• Rs. 1 million and above earns 5% profit

e) Special Saving Deposit Scheme

• Daily Basis Product
• Tiered
• Monthly Profit

• Minimum balance of Rs. 20,000/-
• Return up to 8%
f) PLS – Daily Munafa Plus Deposit Account
• Daily Basis Product
• Tiered
• Monthly profit
• Minimum balance of Rs. 50,000
• Returns up to 8%

IV Foreign Currency Accounts:

HBL offers Foreign Currency Accounts in multiple currencies as savings and term

a) FC - SB
• Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and
GBP (UK pound)Tiered
• Tiered product, with rates depending on choice of currency Minimum balance
of Rs. 50,000
• To earn profit, minimum balance in USD, EUR and GBP is 1,000
• Interest is payable on a quarterly basis

b) HYFFD (High Foreign Currency Fixed Deposit)

• Available in 1 month, 2 month, 3 month, 6 month and 12 Month in USD,
• Tiered product, with rates depending on choice of currency and term
• Profit paid on maturity only. No interim interest is payable.

4.2 DEBIT CARD: HBL Visa Debit Card allows
you to pay for your purchases directly from your bank
account. You don’t 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.

Features of Debit Card

 No Interest
 Ease & Security
 No Liability
 International Recognition& Acceptability
 Spending Limits
 Free Account Statement
 24 hour Customer Service
 Global Customer Assistance Service

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

Ease & Security

HBL Visa Debit Card offers ease and convenience because you don’t have to visit an 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
International Recognition & Acceptability
Your HBL Visa Debit Card is accepted at over 20 million Visa merchants worldwide,
including over 10,000 merchants in Pakistan. As an ATM card it is accepted at more than
1,000 1-Link & M-Net ATMs in Pakistan and 864,000 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 that 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.

24 Hour Customer Service

Contact our 24 hour HBL Phone Banking Service at 111-111-425 if you need assistance
related to your HBL Visa Debit Card.
International callers can call +92-21-111-111-425 for 24 hour service.

Global Customer Assistance Service (GCAS)
When traveling overseas, HBL Visa Debit cardholders receive global assistance 24 hour a
day, 7 days a week from the local Visa Global Customer Assistance Service.


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.


Benefits of Credit Card

 Convenience

 Security

 Affordability

 Cash Advance

 Balance Transfer Facility

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

• Bill Payment
We'll 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 transactions have been conducted by you. A nominal fee will be charged for this

• 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 won’t
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


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


• Buy Now, Pay Later

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 payment 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.

Pay As Much As You Want

You have the freedom to pay the entire outstanding amount on your card statement or as
little as 5% of the outstanding balance in your statement. The remaining amount will be
transferred to next month’s statement. A nominal service charge will be applied to the
unpaid amount each month.

• Lower Rate Every Year

Just make sure all your HBL Credit Card payments are made before the due date and you
will benefit from a reduction in the rate of service charges at the end of each year.

Cash Advance

If you 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 service
charges will be applied from 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.


HBL’s Commercial Banking Group targets medium sized companies with a turnover of at least
PKR 50 million. Our business units are located in Karachi, Lahore, Faisalabad, Sialkot,
Gujranwala and Peshawar. Each unit is dedicated to service business clusters located within
these cities.
We have the ability and the resources to meet the needs of your business with our pro-active,
responsive and experienced Relationship Managers who are committed to understand your
We offer financing for the following:
• Working Capital

• Procurement of Inventory

• Receivables

• Procurement of Machinery

• Expansion of Production Facilities

• Improve of Raw Material

• Exports

• Guarantees


HBL Corporate Banking Group comprises a seasoned team of Relationship Managers (RMs) to
meet the demanding service standards of large corporations. A long history of financing and
nurturing relationships in Pakistan has given HBL a unique insight, enabling us to provide timely
and effective financial solutions for our customers to meet the growing challenges of a global
If you are a corporate customer, with a turnover of at least PKR 300 million, we have a range of
solutions designed to help you with your banking needs. Our RMs has the expertise you need to
create tailored financial solutions catering to the specific requirements of your business.
Whether establishing a new venture or expanding an existing business, our team understands
your banking needs and works closely with you to realize your goals.

We provide the following services to meet your funding requirements:
• Working Capital Finance, including Overdraft, FE Loans, etc.

• Pre and Post Shipment Export Financing (PKR and USD based)

• Import Financing (PKR and USD based)

• LMM Funding

• Receivable Discounting

• Islamic Banking facilities

• Cash Management Services

• Trade Services including Letter of Credit, Letter of Guarantee and Standby Letter of
Credit, etc.


HBL‘s Agriculture loan are spread across the country and provide financing through over 800
branches. We have the largest private bank portfolio in the country with over PKR 18 billion in
various agriculture sectors. HBL’s presence in all agriculture belts of the country ensures easy
access to farmers in rural areas.
We provide loans to small-scale land owning farmers as well as large institutionalized and
alliance based financing to boost the country’s economy and yield better harvests. HBL enables
farmers to buy good quality seeds, fertilizers, pesticides, agricultural implements and non-farm
setups through its various products programs.
The following products ensure that customer needs are fully met with respect to their farming
• Revolving Agri Scheme

• Haryali Farm Transport Scheme

• Agri Development Loan

• Agri Development Loan (Fish Farming)

• Agri Development Loan (Drip Irrigation)

• Agri Production Loan

• Haryali Livestock Loans


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.
Ijarah: Vehicles, plants and machinery leasing
Murabaha: Local & import facilities
Islamic Banking provides Ijarah (leasing) for vehicles, plants and machinery to meet long-term
customer resource requirements. Murabaha (local & import) facilities are provided to meet the
short-term financial needs of mid-market and corporate customers. HBL’s Islamic Banking
products are fully Shariah compliant and duly certified by independent Shariah Advisors.

Visit our Islamic Banking branch for the following services:
• Opening of Current Account and Basic Banking Account (BBA)

• Collection of Foreign/Inland Bills

• Acquisition of Assets on Ijarah

• Purchase of Raw Materials, Semi-Finished/Finished goods or Store or Spares through


• Foreign/Inland Remittances

• Utility Bills Collection

• E-banking/Internet Banking services

Address Call
Ground Floor 921-752529 & 31
Finlay House
I.I Chundrigar Road Fax
Karachi 921-7530
Tabeer is a plan that provides parents with a means to accumulate a fund over a period of time
which can then be used to pay for a child’s education or marriage. Plans are available for both
under and over 45 years of age.
Eligible age 18 – 60 years
Minimum payment Rs. 3,000 per month
Benefit on accidental In addition to other benefits, Rs. 500,000 will be paid for the
death 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. Funds are paid back as per policyholder's designated time period

Amaan is a pension plan that provides an opportunity for growth through investment in a
balanced portfolio with post-retirement income benefits. The plan covers life insurance and gives
attractive returns on investment to its customers.
Eligible age 18 – 60 years
Minimum payment Rs. 2,000 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 be paid along with other benefits
Partial withdrawals Allowed
Maturity benefits Two options available:
1. Policy can be cashed in total
2. Pension can be recieved for life



HBL has the largest domestic branch network with 1,400 branches and is present in 25 countries
across five continents.

Habib Bank Plaza 4th Floor, Habib Bank Tower
I.I.Chundrigar Road Jinnah Avenue
Karachi-75650, Pakistan. Islamabad, Pakistan.

Phone: 021-2418000 (50 lines) Phone: 051-2872203 & 051-2821183

Fax: 021-9217511 Fax: 051-2872205


Followings are the main departments of HBL:

S.No. Name of the Department

A Recovery Operation Department
B Credit Department
C Finance Department
D Human Resource Department
E Internal Audit
F Administration Department
G Information Technology Department

5.2.1 Recovery Operations Department

The main function of this department is to recover the debts of the bank. In the previous political
government huge amount of loans were granted on political grounds which are mostly bad debts.
This department is trying to recover those old and new debts.

5.2.2. Credit Department

The Credit Department is responsible for advancing loans to the customers. The loans are mainly
categorized in two types as given below:
i. Lending Products: To advance loans to labour intensive enterprises
ii. Banking Products: Advances to general account holders.
5.2.3. Finance Department

The Finance Department is further divided into two departments:

i. Treasury: It is Karachi based and deals in money market
ii. Accounts: It deals in accounting functions and preparations of different

5.2.4. Human Resource Department

HR Department has prepared HR Manual. It contains all HR related rules and regulations
like leave, pension, performance etc. Every person in the bank has given targets and
evaluation is based on these targets by HR Department.

5.2.5. Internal Audit

This Div. works under the Board of Directors. It has a President who is CIA qualified. Its
function is to observe the internal control. The audit is conducted quarterly. The audit
teams inspect every branch of the bank. Surprise visits are also conducted by the auditors.

5.2.6. Administration Department

All the matters of administrative nature are being dealt in this department. This includes:
transfers, posting, promotion orders, leave orders, approvals etc.

5.2.7. Information Technology Department

All the information can be shared mutually by the virtue of software called MYSIS. This
information system connects all branches in Pakistan with each other through intranet.
The banking and treasury transactions are also made through this system and could be
accessed any where in all over the Pakistan.




The objectives of financial reporting are to provide information that is:

1. Useful to those making investment and credit decisions who have a reasonable
understanding of business and economic activities.
2. Helpful to present and potential investors, creditors and other users in assessing the
amounts, timing and uncertainty of future cash flows.
3. Pertinent to economic resources, the claims to those resources and the changes in them.


Before the introduction of the new IT system, the manual codes were used. Now after the
beginning of MYSIS software new computerized accounts were generated. The copy of this
chart of accounts is given at Annexure A & B.


In SME bank, the accounts operations come under the Finance Department. Following
operations are being performed by the subject department:
i. Preparation of accounts
ii. Daily basis statement of affairs
iii. Payments and receipts statement
iv. Weekly cash flow statement
v. SME general
vi. Accrued expenses statement
vii. Weekly Profit and Loss account


In SME bank the Finance Manager has to perform following two functions:

6.4.1. Accounts functions

6.4.2. Finance related issues
These two issues are now discussed in detail as under:
6.4.1. Accounting roles:
While performing the accounting functions the finance manager has to do the following jobs:

a. Compilation:

This is the duly of finance manager to ensure the compilation of accounts. All the accounts are
compiled in his supervision.

b. Difference in accounts:
The finance manager makes sure that there is no difference in the accounts. It there is any
difference, he reconciles the figures and is responsible to remove the same.

c. Window Dressing:
The finance manager confirms that the accounts are free of window dressing. The practice of
window dressing is adopted to conceal the factual position. Thus he is responsible to show the
true position of accounts.

d. Liaison with IT Department:

There is very close link between IT and Accounts departments because all the accounts are being
maintained in the software maintained by the IT department. Now it is the Finance Manager’s
duty to resolve the issues and the problems arise in this regard.

e. Timely preparation:
This is very important role of the FM. The delay in preparation of accounts makes the accounts
useless. Because its disables the bank and other stakeholders to get the timely information.

f. BOD approval:
The accounts prepared but not approved are meaning less. The Finance Manager has to satisfy
the Board of Directors that the accounts give true and fair view of the bank activities.

g. Publication:
The bank’s BOD or staff is not only concerned with the financial statements. All the stakeholders
including borrowers, depositors, State Bank, government general public are also interested in the
financial position of the bank. They can get this information only if the accounts are published.
And this role is to be performed by the FM.

6.4.2. Financial roles:

While performing the accounting functions the finance manager has to do the following jobs:

a. Utilization of funds:
The finance manager confirms the true utilization of available funds. He also ensures the
effective and efficient utilization of funds.

b. Advancing loans:
He has to see that to whom advance the loan. Who is the real needy person to use the loan.

c. Matching maturity responsibility:

This concept means that short term deposits should be utilized in short term loans and long term
deposits in long term loans. This is very important role as a finance manager.

d. Fund Provision:
Finance manager has to manage the funds for all departments like Human Resource,
Administration, Operation, etc. The funds are provided according to the budget requirements.

e. Budgeting:
Being a finance manager, he is responsible for the budgeting. This is an important role. The
budgets are based on previous history keeping in view the future requirements.

f. Profitability:
For the best utilization of funds, he has to think the best use of the deposit to make them
beneficial for the bank. The main source of income of the bank is the mark-up which comes from
the utilization of funds.


6.5.1 HBL Phone Banking:

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

6.5.2 Procedure, Features & Benefits of HBL Phone Banking

T – Pin Generation
Your TPIN (Telephone Personal Identification Number) is generated the
first time you call and you can use it as your password for verification
purposes, self-service banking through IVR and additional services
through our Phone Banking Officers. You can change your TPIN anytime
you like.

You can use the IVR system or to talk to our Phone Banking Officers to:

• Get your account balance

• Get information about the last 5-10 transactions carried out on your account
• Request your bank statement, either through fax or email (as supplied in your
subscription form)
• Get details of your transactions from the last 6 months on each of the accounts listed on
your subscription form
• Change and/or modify your contact details
• Transfer funds between your own accounts (as listed in the subscription form) or from
your account to a third party account (as listed in the Third Party Authorization Form)
• Transfer funds from your own account to an account in another bank under the 1-Link
network (Inter Bank Funds Transfer)
• Generate your own choice of ATM Pin without filling a request at your branch
• Inquire about our product offerings
• Lodge a complaint in case of any inconvenience
• Inquire about the daily accounts related profit rates and currency exchange rates

• Request a number of physical instruments and/or branch banking related services that you
might require, including:
o Pay Order
o Demand Draft
o Statement
o Balance Certificate
o Cheque Book


The deposits of the account holders in the bank are the major source of funds. The source
of funds consists of deposits and liabilities which are detailed below:

a. Deposits:
The deposits of the Habib Bank for the years 2003, 2004, 2005, 2006 and 2007 were
respectively, Rs.16,817,472, Rs.1,746,285, Rs.15,400,087, Rs.18,459,154 and

b. Liabilities:
The liabilities of Habib Bank for the years 2003, 2004, 2005, 2006 and 2007 were
respectively, Rs.509,804,203, Rs.433,666,466, Rs.466,336,895, Rs.536,848,102 and


The mark-up is the major source of generation of funds. The generation of funds consists
of the income which is detailed below:

The mark-up of the bank for the years 2003, 2004, 2005, 2006 and 2007 was respectively,
Rs.4,187,426 Rs.1,814,345 Rs.4,246,767 Rs.6,226,677 and
Rs.1, 768,802.


The Finance department analyzes the requirements of the organization and submits its
proposal to the high-ups for approval and allocation of budget/ funds the purpose. The
funds are usually allocated to acquire the assets and run the business.

6.8.1 Assets:
The amount of assets of Habib Bank for the years, 2004, 2005, 2006 and 2007 were
respectively, Rs. 560,150,004 Rs. 465,128,994 Rs. 506,067,762 Rs. 590,291,468 and Rs.

6.8.2 Expenses:
The amount of interest expenses of the bank for the years 2004, 2005 and 2006 are
respectively, Rs.14,412,579 Rs.13,288,058 Rs.13,686,669 Rs.14,766,222 and
The main source of utilization of funds is the loans which come under the head of assets.


Ratio analysis is a useful tool for analyzing financial statements. Calculating ratios will aid in
understanding the bank’s strategy and in understanding its strengths and weaknesses relative to
other companies and over time. They can sometimes be useful in identifying earnings management
and in understanding the effect of accounting choices on the firm’s reported profitability and

growth. Finally, the ratios help in obtaining a better understanding of a firm’s current profitability,
growth, and risk which can improve forecasts of future profitability and growth and estimates of the
cost of capital.
A review of the ratios follows.

7.1 Debt/Asset Ratio is total liabilities divided by total assets. The debt/asset ratio shows the
proportion of a bank's assets which are financed through debt. If the ratio is less than one, most
of the bank's assets are financed through equity. If the ratio is greater than one, most of the bank's
assets are financed through debt. Companies with high debt/asset ratios are said to be "highly
leveraged," and could be in danger if creditors start to demand repayment of debt.

Debt/Asset Ratio = Total Liabilities

Total Assets

For the year ended 2003 509,804,203 ÷ 560,150,004 = 0.91 or 91%

For the year ended 2004 433,666,466 ÷ 465,128,994 = 0.93 or 93%

For the year ended 2005 466,336,895 ÷ 506,067,762 = 0.92 or 92%

For the year ended 2006 536,848,102 ÷ 590,291,468 = 0.90 or 90%

For the year ended 2007 534,771,236 ÷ 587,540,354 = 0.91 or 91%

Debt / Asset Ratio
% 90.0
50.0 Ratio



2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
Ratio 91 93 92 90 91

Analysis: The debt/asset ratios show that the Habib Bank’s Assets are financed through
Equity. This also shows the strong position of the Habib Bank. On the other hand if assets are
financed through debt. There is always danger of creditor’s repayment demand of debt.

7.2 Return on Assets (ROA) is a measure of a bank's profitability, equal to a fiscal year's
earnings divided by its total assets, expressed as a percentage. Its percentage shows how
profitable a company's assets are in generating revenue.

This number tells "what the company can do with what it's got", i.e. how many rupees of
earnings they derive from each rupee of assets they control. It's a useful number for comparing
competing companies in the same industry. Return on assets gives an indication of the capital
intensity of the company, which will depend on the industry; companies that require large initial
investments will generally have lower return on assets. Return on assets is an indicator of how
profitable a company is before leverage, and is compared with companies in the same industry.
Since the figure for total assets of the company depends on the carrying value of the assets, some
caution is required for companies whose carrying value may not correspond to the actual market
value. Return on assets is a common figure used for comparing performance of financial
institutions (such as banks), because the majority of their assets will have a carrying value that is
close to their actual market value. Return on assets is not useful for comparisons between
industries because of factors of scale and peculiar capital requirements (such as reserve
requirements in the insurance and banking industries).

Return on Assets = Net income after taxes
Total Assets

For the year ended 2003 9,646,549 ÷ 560,150,004 = 0.017

For the year ended 2004 5,870,176 ÷ 405,128,994 = 0.015

For the year ended 2005 8,916,171 ÷ 506,067,762 = 0.018

For the year ended 2006 14,276,125 ÷ 590,291,468 = 0.024

For the year ended 2007 3,293,468 ÷ 587,540,354 = 0.016

Return on Asset (ROA)








2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
Ratio 1.7 1.5 1.8 2.4 1.6

Analysis: This trend of Return of Assets is similar to Return on Equity. Its basic reason is
that the numerator i.e., net income is the same. The ROA has almost decreasing trend. In the year
2006 the ROA should increase due to decrease in denominator, contrary to this the ratio was
decreased due to decrease in net income. At the end in 2007 this trend goes down due to minority
interest payment.

7.3 Return on Equity (ROE) measures the rate of return on the ownership interest
(shareholders' equity) of the common stock owners. ROE is viewed as one of the most important
financial ratios. It measures a firm's efficiency at generating profits from every rupee of net
assets (assets minus liabilities), and shows how well an organization uses investment rupees to

generate earnings growth. ROE is equal to a fiscal year's net income (after preferred stock
dividends but before common stock dividends) divided by total equity (excluding preferred
shares), expressed as a percentage.

Return on equity = Net income after taxes

Total equity capital

For the year ended 2003 9,646,549 ÷ 50,345,801 = 0.192 or 19.2%

For the year ended 2004 5,870,176 ÷ 31,462,528 = 0.187 or 18.7%

For the year ended 2005 8,916,171 ÷ 39,730,867 = 0.224 or 22.4%

For the year ended 2006 14,276,125 ÷ 55,769,118 = 0.256 or 25.6%

For the year ended 2007 3,293,468 ÷ 53,443,366 = 0.162 or 16.2%

Return on Equity (ROE)







2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
Ratio 19.2 18.7 22.4 25.6 16.2

Analysis: The ROE for the year 2003, 2004, 2005, and 2006 was 19.2, 18.7, 22.4, and 25.6
respectively. This shows the firm's efficiency at generating profits from every rupee of net assets
is decreasing. In the year 2007 factor of decreasing trend is that the denominator (Equity capital)
is increasing. The ratio between the increase in capital and income should be maintained which
could not be done so. The liabilities of the bank are increasing faster than its assets, which is not
a good symbol.

7.4 Net Interest Margin is a measure of the difference between interest income generated by
banks or other financial institutions by their lending and interest paid on borrowings (for
example, deposits). It is considered analogous to the gross margin of non-financial companies.
Net interest margin is expressed as net interest income (interest earned minus interest paid on
borrowed funds) as a percentage of earning assets (any asset, such as a loan, that generates
interest income).
Net interest margin is similar to net interest spread; net interest spread expresses the nominal
average difference between borrowing and lending rates, without compensating for the fact that
the amount of earning assets and borrowed funds may be different.
Net interest spread is generally higher than net interest margin, as banks may need to keep a
certain amount of assets in non-interest bearing assets (such as cash balances held at branches for
customers or liquid reserves as determined by banking regulators).

Net Interest Margin = Interest income from loans and security investments - Interest
Expense on deposits and on other debt issued
Total Assets

For the year ended 2003 32,343,206 ÷ 560,150,004 = 0.06 or 6 %

For the year ended 2004 17,292,455 ÷ 465,128,994 = 0.04 or 4 %

For the year ended 2005 31,041,863 ÷ 506,067,762 = 0.06 or 6 %

For the year ended 2006 42,152,520 ÷ 590,291,468 = 0.07 or 7 %

For the year ended 2007 11,903,763 ÷ 587,540,354 = 0.02 or 2 %

Net Interest Margin (NIM)
% 7.0








2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
6 4 6 7 5

Analysis: Over all Habib Bank has average trend in this ratio except last year 2007. During
the year 2006 despite the decrease of assets, the interest has increased which shows the good
performance for that year. But in the year 2007 there is a fall in the ratio due to increase in assets
and decrease in interest which is not good for Habib Bank’s performance.

7.5 Net Non-interest Margin is measures the amount of noninterest revenues stemming
from deposit service charges and other service fees the bank has been able to collect (called fee
income) relative to the amount of noninterest costs incurred (including salaries and wages, repair
and maintenance costs on bank facilities, and loan loss expenses).

Net noninterest margin = Non-interest Revenues – Non-interest Expenses

Total Assets

For the year ended 2003 7,858,300 – 14,412,479 ÷ 560,150,004

-6554179 ÷ 560,150,004 = -0.001 or -0.01 %

For the year ended 2004 10,149,954 – 13,288,058 ÷ 465,128,994

-3138104 ÷ 490,128,994 = -0.006 or -0.06 %

For the year ended 2005 7,173,942 – 13,686,669 ÷ 506,067,762
-6512727 ÷ 506,067,762 = -0.001 or -0.01 %

For the year ended 2006 10,146,469 – 14,766,222 ÷ 590,291,468

-4619753 ÷ 501,291,468 = -0.007 or -0.07 %

For the year ended 2007 2,161,130 – 3,950,578 ÷ 587,540,354

-1789448 ÷ 587,540,354 = -0.03 or -0.03 %

Net Non-interst Margin (NNM)




2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
Ratio -0.1 -0.6 -0.1 -0.7 -0.3

Analysis: Everyone knows better that “Interest Income” is the major source of Banking
Industry that’s why non-interest income is very nominal which result in negative trend. For most
banks the non-interest margin is negative. Non-interest costs generally outstrip fee income,
through bank fee income has been rising rapidly in recent years as a percentage of all bank

7.6 Net Bank Operating Margin is income from business after Operating Expenses have
been deducted, but before deducting income taxes and financing expenses (interest and Principal
Payments). It is equal to the gap between the total operating revenues and total operating
expenses, divided by the total assets.

Net bank operating margin = Total operating revenues – Total operating expenses
Total Assets

For the year ended 2003 13,833,975 ÷ 560,150,004 = 2%

For the year ended 2004 7,684,521 ÷ 465,128,994 = 1%

For the year ended 2005 13,162,938 ÷ 506,067,762 = 2%

For the year ended 2006 20,502,802 ÷ 590,291,468 = 3%

For the year ended 2007 15,062,270 ÷ 587,540,354 = 3%

Net Bank Operating Margin (NBOM)






2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
2 1 2 3 3

Analysis: The Habib Bank’s NBOM increasing trend shows increase in profit before tax.
One of the factor of increase in profit before tax is the decrease in non-markup expenses.
Increase in profit means that the bank is in a strong position and have a lot of resources for
earning more through more investment by more profit. Which cause of more return and alternate
the betterment of the bank in competitive market.

7.7 Earning Per Share of Stock (EPS) are the earnings returned on the initial investment
amount. The EPS formula does not include preferred dividends for categories outside of
continuing operations and net income. Earnings per share for continuing operations and net
income are more complicated in that any preferred dividends are removed from net income

before calculating EPS. Remember that preferred stock rights have precedence over common
stock. If preferred dividends total Rs.100,000, then that is money not available to distribute to
each share of common stock.

Earning per share of stock (EPS) = Net income after taxes

Common equity shares outstanding

For the year ended 2003 9,646,549 ÷ 696,000 = Rs. 13.86

For the year ended 2004 5,870,176 ÷ 696,000 = Rs. 8.43

For the year ended 2005 8,916,171 ÷ 696,000 = Rs. 12.81

For the year ended 2006 14,276,125 ÷ 696,000 = Rs. 20.51

For the year ended 2007 3,293,468 ÷ 696,000 = Rs. 14.73

Earning Per Share (EPS)




2003 2004 2005 2006 2007

2003 2004 2005 2006 2007
Ratio 13.86 8.43 12.81 20.51 14.73

Analysis: The Habib Bank has faced the decline trend in stockholders earning per share
during the year 2004. But in the years 2005 and 2006 Habib Bank faced increasing trend in
stockholders earning per share. At the last in 2007 again decline trend faces by Habib Bank.
Management needs to begin work immediately on expanding the bank’s revenues from assets
and services sold.
The decrease in EPS was due to two factors i.e.

o Decrease in net income (nominator) and on the other hand
o Increase in number of shares (denominator).
7.8 Earning Spread is a traditional measure of the earnings efficiency with which a bank is
managed is called the earning spread, or simply the spread. The spread measures the
effectiveness of the bank’s intermediation functions in borrowing and lending money and also
the intensity of the competition in the the bank’s market area.

Earning spread = Total interest income - Total interest expense

Total earning assets Total interest-bearing bank liabilities

For the year ended 2003 32,343,206 - 7,327,603

560,150,004 509,804,203

0.058 - 0.014 = 4.4 %

For the year ended 2004 17,292,455 - 4,152,707

465,128,994 433,666,466

0.037 - 0.010 = 2.7 %

For the year ended 2005 31,041,863 - 6,740,860

506,067,762 466,336,895

0.061 - 0.014 = 4.7 %

For the year ended 2006 42,152,520 - 12,504,236

590,291,468 536,848,102

0.071 - 0.023 = 4.8 %

For the year ended 2007 28,903,763 - 4,177,265

587,540,354 534,771,236

0.049 - 0.008 = 4.1 %

Earning Spread (ES)





2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Ratio 4.4 2.7 4.7 4.8 4.1

Analysis: Till the year 2006, this ratio shows the strong position of Habib Bank against its
competitors. But in the year 2007, this trend suddenly changes from increasing to decreasing in
ratio from 4.8% to 4.1% which means HBL faces huge competitors in the market. In recent
years, numbers of banks, both foreign and local, have established their branches all over in
Pakistan. This has increased the competition in banks and ultimately decline in spread.

7.9 Net Profit Margin (NPM) a measure of profitability. It is calculated using a formula and
written as a percentage or a number. Margin is mostly used for internal comparison. It is difficult
to compare accurately the net profit ratio for different entities. Individual business' operating and
financing arrangements vary so much that entities are bound to have different levels of
expenditure, that comparison of one with another can have little meaning.
For example, suppose a company produces a loaf of bread and sells it for 10 units of currency. It
costs the company 6 units of currency to produce the bread and it also had to pay an additional 2
units of currency in tax.
That makes the company's net income 2 units of currency (10 - 6, before tax, then minus 2 for
tax). Since its revenue is 10 units of currency, the profit margin would be (2 / 10) or 20%.

Net Profit Margin (NPM) = Net income after taxes

Total operating revenues

For the year ended 2003 9,646,549 ÷ 40,201,506 = 0.24 or 24%

For the year ended 2004 5,870,176 ÷ 27,442,409 = 0.21 or 21%

For the year ended 2005 8,916,171 ÷ 38,215,805 = 0.23 or 23%

For the year ended 2006 14,276,125 ÷ 52,298,989 = 0.27 or 27%

For the year ended 2007 3,293,468 ÷ 15,064,893 = 0.22 or 22%

Net Profit Margin (NPM)






2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Ratio 24 21 23 27 22

Analysis: The increasing trend other than year 2004 & 2007, shows increase in bank
revenue and decrease in expenses and vice versa. At the last decreasing trend shows that the
interest policy of the bank is weak which have no ability to control the costs.

7.10 Asset Utilization (AU) measures the value of the sales that a company generates for each
rupee invested in assets. If the assets are not worked hard, if inventory sits, if new books take
too long to reach market, or if accounts receivable remain unpaid, cash flow suffers as a result
asset utilization reduces.
It is a bank’s total operating revenues divided by its total assets as detailed below:

Asset utilization (AU) = Total operating revenues

Total assets

For the year ended 2003 40,201,506 ÷ 560,150,004 = 0.071 or 7.1 %

For the year ended 2004 27,442,409 ÷ 465,128,994 = 0.059 or 5.9 %

For the year ended 2005 38,215,805 ÷ 506,067,762 = 0.075 or 7.5 %

For the year ended 2006 52,298,989 ÷ 590,291,468 = 0.088 or 8.8 %

For the year ended 2007 15,064,893 ÷ 587,540,354 = 0.025 or 2.5 %

Asset Utilization (AU)



2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Ratio 7.1 5.9 7.5 8.8 7.6

Analysis: The increasing trend in Asset Utilization ratio shows the banks ability to collect
accounts receivable quickly, turn over inventory quickly and turn investments into new sales.
That is why the cash flow has improved. But in the last year 2007 this trend rapidly decrease
which shows the non-satisfactpory result of collection department of Habib Bank. So there is a
need to improve or act upon previous strategy for collection.

7.11 quity Multiplier (EM) Total assets divided by common stockholder's equity. This is a
measure of leverage. The higher the ratio is, the more the company is relying on debt to
finance its asset base.
Like all debt management ratios, the equity multiplier is a way of examining how a company
uses debt to finance its assets. Also known as the financial leverage ratio or leverage ratio. In
other words, this ratio shows a company's total assets per rupee of stockholders' equity.

Equity multiplier (EM) = Total Assets
Total equity capital account

For the year ended 2003 560,150,004 ÷ 50,345,801 = 11.1 or 111 %

For the year ended 2004 465,128,994 ÷ 31,462,528 = 14.7 or 147 %

For the year ended 2005 506,067,762 ÷ 39,730,867 = 12.7 or 127 %

For the year ended 2006 590,291,468 ÷ 55,769,118 = 10.6 or 106 %

For the year ended 2007 587,540,354 ÷ 53,443,366 = 10.9 or 109 %

Equity Multiplier (EM)

100.0 Ratio



2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Ratio 111 147 127 106 109

Analysis: In average, the assets are 3 to 4 times more than the capital till the year 2004. But
after this year till 2007, there is decreasing trend which continously decreasing. This decreasing
trend shows that the dependence of bank on deposits was decreasing during the period.

13.12 Operating Efficiency Ratio used to calculate a bank's efficiency. Not all banks calculate
the efficiency ratio the same way. We've seen the ratio calculated as all of the following:
1. Non-interest expense divided by total revenue less interest expense
2. Non-interest expense divided by net interest income before provision for loan losses

3. Non-interest expense divided into revenue
4. Operating expenses divided by fee income plus tax equivalent net interest income.
Its purpose is to evaluate the overhead structure of a financial institution. Banking is no different
from any mature industry - the surviving companies are those that keep costs down. The
efficiency ratio gives us a measure of how effectively a bank is operating. It is also referred to as
the "overhead burden" or "overhead efficiency ratio".
Operating efficiency ratio = Non-interest expenses
Net interest income

For the year ended 2003 7,858,300 ÷ 25,015,603 = 0.31 or 31 %

For the year ended 2004 6,149,954 ÷ 13,139,748 = 0.47 or 47 %

For the year ended 2005 7,173,942 ÷ 24,301,003 = 0.30 or 30 %

For the year ended 2006 10,146,469 ÷ 29,648,284 = 0.34 or 34 %

For the year ended 2007 2,161,130 ÷ 7,726,498 = 0.28 or 28 %

Operating Efficiency Ratio (OER)





2003 2004 2005 2006 2007

2003 2004 2005 2006 2007

Ratio 31 47 30 34 28

Analysis: If this ratio is getting lower, it is good for the bank and its shareholders. With the
increase in expenses, income is also increasing. But the increase in income is bit slower than the
expenses. There is an increasing trend in Operating Efficiency ratio. This trend is not a good
symbol and shows that the bank is losing a larger percentage of its income to expenses.

A – Balance Sheet
I Index / Horizontal Analysis:
Common Size (%)
2003 2004 2005 2006 2007
Cash and balances with treasury banks 100% 103% 140% 97% 98%
Balance with other banks 100% 97% 154% 88% 135%
Lending to financial institutions 100% 327% 53% 36% 36%
Investments 100% 79% 116% 109% 113%
Advances 100% 123% 114% 98% 102%
Other assets 100% 122% 125% 107% 109%
Operating fixed assets 100% 101% 108% 103% 104%
Deferred tax assets 100% 86% 173% 102% 101%
100% 109% 117% 100% 105%
Bills payables 100% 77% 101% 61% 63%
Borrowing from financial institutions 100% 113% 187% 78% 88%
Deposits and other accounts 100% 108% 110% 102% 106%
Sub-ordinated loans - - - - -
Liabilities against assets subject to finance lease - - - - -
Other liabilities 100% 104% 112% 104% 111%
Deferred tax liabilities - - - - -
100% 108% 115% 100% 105%
NET ASSETS 100% 126% 135% 104% 111%

Share capital 100% 100% 100% 100% 100%
Reserves 100% 882% 120% 96% 106%
Unappropriated Profit 100% 67% 224% 93% 106%
Total equity attributable to the equity holders of the
100% 137% 148% 95% 105%
Minority interest 3% 3%
Surplus on revaluation of assets – Net of tax 100% 94% 98% 99% 100%
100% 126% 140% 96% 106%


i. There is a rapid increase in cash and balances with treasury bank. In the year 2004 it was
103% of the cash of the year 2003, and in the year 2005, it reached to 140%. But after
that it was declining from 140% to 97% & 98% in the years of 2006 & 2007.
ii. On the other hand balance with other banks weaving every year. There is no same trend
among them.
iii. Advances have also decreased as compare to the base year.
iv. There is overall increase in assets.
v. Though the assets have increased but the increase in liabilities is more than the increase
in assets.
vi. The main reason of increase in assets is deposits and other accounts, and increase in loan
from State Bank of Pakistan.
vii. That is why there is a prominent increase in net assets.
viii. There is a continuous increase in investments. It has increased to 113% in the year 2007,
as compared to 100% in the year 2003.
ix. There is a not enough growth in deferred tax assets.
x. The bank has paid all the tax liabilities. Now there is no outstanding tax of bank in the
year 2006.

II Common Size / Vertical Analysis:


Common Size (%)
2003 2004 2005 2006 2007
Cash and balances with treasury banks 92% 101% 83% 87% 81%
Balance with other banks 47% 76% 59% 67% 57%
Lending to financial institutions 13% 12% 31% 12% 4%
Investments 230% 414% 259% 224% 234%
Advances 667% 797% 774% 654% 616%
Other assets 90% 80% 145% 81% 93%
Operating fixed assets 27% 47% 34% 25% 27%
Deferred tax assets 5% 6% 4% 5% 5%
1113% 1478% 1274% 1105% 1054%
Bills payables 11% 23% 14% 11% 6%
Borrowing from financial institutions 99% 85% 76% 106% 79%
Deposits and other accounts 873% 1228% 1049% 859% 840%
Sub-ordinated loans 0% 0% 0% 0% 0%
Liabilities against assets subject to finance lease 0% 0% 0% 0% 0%
Other liabilities 29% 42% 35% 29% 29%
Deferred tax liabilities 0% 0% 0% 0% 0%
1013% 1378% 1174% 1005% 959%
NET ASSETS 100% 100% 100% 100% 100%

Share capital 94% 85% 91% 93% 94%
Reserves 229% 22% 202% 248% 242%
Unappropriated Profit 262% 182% 202% 248% 278%
Total equity attributable to the equity holders of the bank 585% 289% 422% 637% 614%
Minority interest 3% 3%
Surplus on revaluation of assets – Net of tax 100% 100% 100% 100% 100%


i. In the year 2007, out of total assets (1054% of net assets), the liabilities and equity are
954% and 100%, respectively, as detailed below:
o Assets = Liabilities + Equity
o 1054% = 954% + 100%
ii. In assets, the Investments form the largest part i.e. 234% out of 1054% of assets.
iii. The second largest portion is Lending to Financial Institutions.
iv. The liabilities of bank are more than its equity.
v. Lending to Financial Institutions is only 4% of net assets which is very meager as
compare to the Investments.
vi. The bank is not investing the money wisely. Means not going in the right direction.
Instead of lending to financial institution, it is spending its money in investments. It
means the bank is avoiding making efforts and finding easy ways to utilize the assets.
vii. In the year 2003 the cash and balances with treasury banks was 92%, whereas in the year
2007, it raised to 81% of net assets.
viii. In the year 2003, the balances with other banks was maximum i.e. 47% of net assets
whereas in the year 2007, it dropped down to 57% of net assets.
ix. The portion of operating fixed assets in net income was equal from start to end.

B – Profit & Loss Account

I Profit & Loss Account Common Size / Vertical Analysis:


Common Size (%)

2003 2004 2005 2006 2007
Mark-up/ return/ interest earned 129% 132% 128% 142% 154%
Mark-up/ return/ interest expensed 129% 32% 28% 42% 54%
Net mark-up / interest income 100% 100% 100% 100% 100%
Provision against non-performing loans & advances-Net 12% 14% 12% 10% 4%
(Reversal) Provision against off-balance sheet obligations 4% 30% 4% -2% 3%
Reversal Provision against diminution in value of
-64% -26% -64% 30% 0%
Bad debts written off directly - - - - -
12% 18% 12% 9% 4%
Net mark-up / interest income after provisions 728% 467% 704% 958% 234%
Non Mark-up / Interest Income
Fee, commission and brokerage income 12% 18% 11% 12% 9%
Income / gain on investments 59% 211% 51% 91% 51%
Income from dealing in foreign currencies 81% 21% 95% 34% 132%
Other incomes 127% 192% 132% 198% 154%
Total non-mark-up / interest income 40% 26% 12% 67% 11%
380% 207% 397% 365% 443%
Non-mark-up / Interest Expenses
Administrative Expenses 56% 99% 55% 49% 51%
Other provisions / write offs – Net 2% 2% 2% 1% 1%
Other charges 27% 3% 27% 45% 14%
Total non-mark-up / interest Expenses 210% 176% 199% 268% 743%
107% 58% 108% 151% 142%
Staff retrenchment cost 10% 11% 8% 10%
Profit before taxation 163% 9% 121% 118% 105%
Current 16% 3% 17% 24% 24%
Prior years -1% 4% -1% -1%
Deferred -381% 924% -519% 117% -1%
279% 128% 162% 158% 167%
Profit after tax 230% 324% 210% 229% 186%


i. In the year 2007, Markup earned is 154% more than net Markup income.
ii. Non-markup income is very low i.e. 11% of Net markup income.
iii. As compare to Non-markup income, Non-markup expenses are very high i.e. 743% of
Net-markup income
iv. Profit before taxation increase to 105% of Net-markup income due to low Administrative
v. The increase in profit available for appropriations is not due to high profits; rather it is
due to bringing forward the previous un-appropriated profits.
vi. In the year 2003, the markup expense was 129% of net markup income, whereas in the
year 2007 it has reduced to 54% of net markup income.
vii. Fee, commission and brokerage income remained very nominal the throughout the period
under observation i.e. 9% of net markup income.
viii. The taxation expense has reduced from 279% of net income to 186% in the year 2003 &
2007, respectively.

Profit & Loss Account Index / Horizontal Analysis:



Common Size (%)

2003 2004 2005 2006 2007
Mark-up/ return/ interest earned 100% 53% 180% 136% 28%
Mark-up/ return/ interest expensed 100% 57% 162% 185% 33%
Net mark-up / interest income 100% 53% 185% 122% 126%
Provision against non-performing loans & advances-Net 100% 64% 157% 96% 97%
(Reversal) Provision against off-balance sheet obligations 100% 443% 23% -35% 0%
Reversal Provision against diminution in value of
100% 183% 55% 17% 30%
Bad debts written off directly - - - - -
100% 77% 130% 93% 11%
Net mark-up / interest income after provisions 100% 49% 197% 126% 128%
Non Mark-up / Interest Income
Fee, commission and brokerage income 100% 79% 117% 133% 91%
Income / gain on investments 100% 283% 28% 235% 11%
Income from dealing in foreign currencies 100% 72% 131% 83% 41%
Other incomes 100% 108% 90% 125% 32%
Total non-mark-up / interest income 100% 129% 71% 141% 21%
100% 70% 136% 130% 96%
Non-mark-up / Interest Expenses
Administrative Expenses 100% 92% 103% 109% 27%
Other provisions / write offs – Net 100% 98% 102% 49% 30%
Other charges 100% 11% 910% 80% 10%
Total non-mark-up / interest Expenses 100% 92% 103% 108% 127%
100% 50% 192% 151% 25%
Staff retrenchment cost 100% 100% 108% 32%
Profit before taxation 100% 56% 171% 156% 25%
Current 100% 9% 1060% 174% 27%
Prior years 100% -39% -329% 122%
Deferred 100% 946% 18% -277% 15%
100% 43% 234% 147% 28%
Profit after tax 100% 61% 152% 160% 23%


i. There is a positive increase in net markup income.
ii. Due to high increasing trend of provisions, the net markup income after provision has lost
its increasing trend to a little bit.
iii. There is decrease in the dividend income which shows that the bank was unable to
maintain its portfolio of investments effectively. Same is the case with gain on sale of
government securities.
iv. Total non-markup income has a decreasing trend whereas non-markup expense has an
increasing trend.
v. That is why, the profit before taxation could not maintain its good standard
vi. Markup interest expenses have increased form 100% to 127% in the year 2003 to 2007.
vii. The provision against non performing loans and advances has decreased from 100% to
97% in the year 2007.
viii. In the fee, commission and brokerage income, there remained variation i.e. in the year
2005 & 2006 it increased, and then decreased in the next year 2007.

8. Competitors/ Industry Analysis:

Industry Analysis
For the year ended December 31, 2007 (Rupees in thousand)
Muslim Askari % of
Habib Bank
Commercial Commercial Allied Bank Industry HBL to
Particulars Bank Alfalah
Bank Bank Limited Average Industry
Limited Limited
Limited Limited Average

up/return/interest 31,786,595 12,596,921 21,201,422 21,191,470 21,694,102 233%
up/return/interest 7,865,533 6,977,313 10,019,004 15,232,886 10,023,684 191%
Net mark-up 31,327,06
23,921,062 5,619,608 11,182,418 5,958,584 11.670,418 268%
interest income 4

Provisions 8,099,291 3,065,051 1,128,513 2,714,842 1,699,227 8,607,633 95%

Net Mark-
up/interest 23,227,77
20,856,011 4,491,095 8,467,576 5,259,357 9,768,510 238%
income after 3
Total non mark-
up/interest 6,011,291 2,139,254 3,920,099 3,224,639 3,823,821 262%
BEFORE 21,308,035 3,346,855 5,953,076 2,565,945 8,293,478 247%
PROFIT AFTER 14,276,12
15,265,562 2,249,974 4,076,158 1,762,691 5,838,596 245%


• The markup earning of HBL bank is very high the industry average i.e., 233%.
• Even then the net markup interest income after provision is better (238%) due to
comparatively less interest expenses and provisions.
• High non-markup income (262%) shows the high income before taxation.
• There is a little bit difference between both profits (profit before taxation and profit after
taxation) which shows the better position of Habib Bank as compare to its competitors.


The future of Habib bank is very bright and prospers as shown in the statements and analysis of
financial reports. During internship I found some factors which are needed more attention by the
top management for the more profit of the Habib Bank. These factors are:

• Transfer of work: Some times seniors transfer their own work to juniors. Juniors
can’t complete or not properly done this work which may base on errors and mistakes.
So, there is a need to do their own work by themselves otherwise bank will face heavy
• Political uncertainty: The political uncertainty is a major cause of gaining Profit or
Loss. Profit and Loss depends upon the countries political stability or instability. When
there are stable political situations then more investors invest/deposit their money in the
bank for making profit and vice versa.
• New entrants: Due to well repute HBL rapidly increased its employment level. This
shows the bank stability and future of the bank. People rely on HBL and join it with

Future Prospects: Keeping in view all the above factors, it is evident that the future of Habib
Bank is very bright. Either it works individually or by emerging with other bank.


i. To generate earning growth the bank is not utilizing investment rupees very well as its
return is not accordingly.
ii. Similar to equity, the assets are also not generating the revenue profitably.
iii. There is a big difference between the rate of markup on deposits and advances. Though
this difference increases revenue but gives bad impression on the customers.
iv. According to the “matching Concept” of accounting the expenses should be compared
with the similar nature of income to get the profit. On the basis of this concept when we
compare non-interest revenues with non-interest expenses, it gives us result in negative.
Means the expenses are more than revenues.
v. The gap between total operating income and total operating expenses is decreasing year
by year.
vi. On the increase of competition and decrease in earning spread the bank, comparatively,
has not found the new ways to generate income from other services.
vii. From the equity multiplier ratio it is evident that the bank is mainly relying on the loans.
viii. No appreciation from the seniors, which cause of low performance.
ix. No promotion chances. Employees are still working on the same post for which they hire.
x. Extra work burden from the seniors.
xi. Biasness in all matters of banks. Personal liking and disliking leave the bad effects on
other employees of the bank.


The operational efficiency of the bank is not stable. Some times it goes up and some times it goes
down. There is fluctuation in the performance trend. But in the year 2007, profit has increasing
trend. The main reason of rising trend is that Habib Bank starts various services for their
customers and improving its packages and other internet related services for the convenience of
its customers.


i. Bank should try increase profit after taxation to strengthen its return on equity ratio.
ii. The management should make the innovative plans and schemes to utilize the investment
iii. There is an increasing trend of assets, but just the increase does not benefit the bank until
and unless these are utilized effectively.
iv. The difference between markup rate of advances and deposits should be reduced to gain
confidence of customers and income should be increased by increasing the number of
customers, giving better facilities and offers to them.
v. The bank management should try to, at least, equalize the non-interest revenues &
expenses and reduce their gap.
vi. In order to improve the net bank operating margin, the gap between the operating
revenues and expenses should be increased.
vii. Efforts should be made to increase the earning per share to regain the confidence of the
viii. The increased amount of equity capital should be utilized by launching the new profitable
ix. The management should try to find other ways of generating income from new services
to reduce the earnings spread.
x. There should be strick monitoring over the expenses and should be incurred according to
the requirements. There should be a positive relationship between expenses and revenues
xi. Too much dependence on the outsiders (loans/ liabilities) goes against the bank. The bank
should strengthn its equity and decrease the portion of liability, and resultantly decrease
the equity multiplier ratio.
xii. The appriciation should be encouraged by management of Habib bank.
xiii. Promotions should also made for better output.
xiv. Work burden should be reduced because with fresh mind employees can perform their
duties easily and effectively.


For the completion of my internship report on Habib Bank Limited, I used the following sources:

1. Web site of HBL (

2. Last Five Year’s Annual Reports of HBL
3. Web sites of ABL, UBL, Alfalah Commercial Bank, MCB, and Askari Commercial Bank
Limited for industry analysis.
4. Visit of Management Development Institute of HBL for data gathering.
5. Pandora Branch of HBL, where I completed my internship.
6. Observation during internship &
7. Discussion with seniors and Manager of each Branch.

13 ANNEXES (Annexure – A)

13.1 Profit & Loss Account
Habib Bank Limited
Profit & Loss Account
For the year ended December 31 (Rupees in ‘000)
2003 2004 2005 2006 2007
32,343,20 17,292,45 31,041,86 42,152,52
Mark-up/ return/ interest earned 11,903,763
6 5 3 0
7,327,60 4,152,70 6,740,86 12,504,23
Mark-up/ return/ interest expensed
3 7 0 6 4,177,265
25,015,60 13,139,74 24,301,00 29,648,28
Net mark-up / interest income 7,726,498
3 8 3 4
Provision against non-performing loans & advances-Net 2,974,665 1,896,989 2,976,654 2,861,093 319,846
(Reversal) Provision against off-balance sheet obligations 128,851 571,352 128,851 (45,438) -
Reversal Provision against diminution in value of investments (82,568) (151,218) (82,568) (13,697) (4,166)
Bad debts written off directly - - - - -
3,020,94 2,317,12 3,022,93 2,801,95
8 3 7 8
21,994,65 10,822,62 21,278,06 26,846,32
Net mark-up / interest income after provisions 7,410,818
5 5 6 6
Non Mark-up / Interest Income
Fee, commission and brokerage income 2,938,000 2,321,135 2,721,738 3,608,127 669,433
Income / gain on investments 1,726,336 4,891,164 1,389,000 3,266,086 343,569
Income from dealing in foreign currencies 1,402,521 1,006,309 1,323,063 1,097,887 452,440
Other incomes 1,787,443 1,931,346 1,740,141 2,174,369 695,688
7,858,30 10,149,95 7,173,94 10,146,46
Total non-mark-up / interest income 2,161,130
0 4 2 9
29,848,95 20,972,57 28,452,00 36,992,79
5 9 8 5
Non-mark-up / Interest Expenses
14,095,06 13,035,58 13,369,15 14,588,81
Administrative Expenses 3,908,129
3 5 4 4
Other provisions / write offs – Net 249,033 244,950 249,033 122,510 37,136
Other charges 68,483 7,523 68,482 54,898 5,313
14,412,57 13,288,05 13,686,66 14,766,22
Total non-mark-up / interest Expenses 3,950,578
9 8 9 2
15,436,37 14,765,33 22,226,57
7,684,521 5,621,370
6 9 3
1,602,40 1,602,40 1,723,77
Staff retrenchment cost ____-____ 559,100
1 1 1
13,833,97 13,162,93 20,502,80
Profit before taxation 7,684,521 5,062,270
5 8 2
Current 4,076,848 380,805 4,035,139 7,014,251 1,874,135
Prior years (39,397) 15,341 (50,540) (61,738) -
Deferred 149,975 1,418,199 262,168 (725,836) (105,333)
4,187,42 1,814,34 4,246,76 6,226,67
6 5 7 7
Profit after tax 9,646,54 5,870,17 8,916,17 14,276,12 3,293,468

9 6 1 5
Basic and diluted earnings per share 13.86 18.51 12.92 20.69 18.94
(Annexure - B)
13.2 Balance Sheet
Habib Bank Limited
Balance Sheet
As at December 31 (Rupees in ‘000)
2003 2004 2005 2006 2007
Cash and balances with treasury banks 46,244,803 31,934,375 33,014,694 46,310,478 45,121,689
Balance with other banks 23,532,165 24,005,342 23,304,315 35,965,048 31,683,390
Lending to financial institutions 6,550,128 3,755,039 12,272,248 6,550,128 2,373,533
115,822,51 130,327,61 102,984,48 119,587,47
Investments 130,698,791
1 1 2 6
335,985,45 250,612,46 307,602,74 349,432,68
Advances 343,642,560
8 0 8 5
Other assets 17,447,808 11,719,874 14,265,234 17,765,291 18,977,689
Operating fixed assets 11,802,870 10,949,060 11,046,166 11,954,876 12,260,172
2,764,26 1,825,23 1,577,87 2,725,48
Deferred tax assets 2,782,530
1 3 5 6
560,150,00 465,128,99 506,067,76 590,291,46
4 4 2 8
Bills payables 5,577,429 7,359,133 5,694,018 5,737,457 3,514,734
Borrowing from financial institutions 49,980,794 26,624,558 30,160,501 56,392,270 43,844,160
439,724,33 386,332,57 416,603,03 459,140,19
Deposits and other accounts 468,286,988
5 0 0 8
Sub-ordinated loans - - - - -
Liabilities against assets subject to finance lease - - - - -
Other liabilities 14,521,645 13,350,205 13,879,346 15,578,177 16,125,354
Deferred tax liabilities - - - - -
509,804,20 433,666,46 466,336,89 536,848,10
3 6 5 2
50,345,80 31,462,52 39,730,86 53,443,36
NET ASSETS 55,769,118
1 8 7 6

Share capital 6,900,000 6,900,000 6,900,000 6,900,000 6,900,000
Reserves 16,817,472 1,746,285 15,400,087 18,459,154 17,802,584
Unappropriated Profit 19,281,940 14,718,856 9,822,330 22,030,775 20,475,080
Total equity attributable to the equity holders
42,999,412 23,365,141 32,122,417 47,389,929 45,177,664
of the bank
Minority interest - - - 940,607 913,317
7,346,38 8,097,38 7,608,45 7,438,58
Surplus on revaluation of assets – Net of tax 7,352,385
9 7 0 2
50,345,80 31,462,52 39,730,86 55,769,11
1 8 7 8