INTERNSHIP REPORT Name of Organization Specialization: MBA (Banking and Finance
Chairman, Dept. of Business Administration
Name: Sheikh Abdullah Atif Roll No: T518737 Registration No: 06-PLR_0459 Mailing Address: 61/A Sheikh Colony Jhang Road near Karmawala Jeneral Store Faisalabad Contact No: 03339780752 Date of Submission:
DEPARTMENT OF BUSINESS ADMINISTRATION ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
By virtue of whose prayers, I have been able to reach at this position, who always caring, loving for me, who always encouraged me to go up in my life. Who worked very hard in their life to give us every facility in life. They are source of inspiration for me. Ami and Abu! I love you both so much. You are best Father and Mother in this world.
I am thankful to all who help me completing this Internship Report. And it is not difficult to identify them. First of all I like to express our thanks and gratitude to ALLAH Almighty. He gives me strength to accept and complete this task, he provides me with all the resources that I required in successful completion of this report and after that, my deep love and humble thanks is there for Holy Prophet Muhammad (PBUH) who advises me to enlighten the way of life by seeking knowledge. I feel pleasure to acknowledge the opportunity that Allama Iqbal Open University is providing to the students all over the Pakistan and noble guidance, encouragement, tremendous co-operation and valuable discussion of all my Instructors during my MBA (Banking & Finance) from AIOU. I am highly thankful to all my respectful instructors. I have no appropriate words that fully convey the sense of immense indebtedness and deep gratitude that I owe to my Internship Supervisor, Mr. Ghulam Yasin Khan, Branch Manager, Habib Bank Limited who co-operated with me fully and guided me for successful completion of this Internship. Last but not least, I would also like to pay my heartiest gratitude to my affectionate Parents, my brothers, who always praying for my success. You all will live alive in my mind, in my heart, throughout the whole span of my life. May Allah! Give easiness to all of you in your life and give you strength to spread easiness to others.
Sheikh Abdullah Atif iii
Allah bestowed his blessing upon me and I availed this opportunity to prepare this internship report under the supervision of AIOU & Habib Bank Ltd. I would like to thank all the officers who helped me a lot in the preparation of this internship report. Sheikh Abdullah Atif
. Regards. production and distribution of public finance. Banking is one of the most sensitive businesses and plays a significant role in a contemporary world of money and economy. During my study with AIOU (during MBA ). poverty elimination. Also I would like to thank AIOU for providing such challenging and grooming opportunities to students. Despite of all limitations this excellent activity groomed me much and I learned much knowledge from this activity. It influences and facilitates many different but integrated economic activities like resources mobilization. I availed many such opportunities to prepare many such projects & reports and all these opportunities gave me much more confidence to understand the practical world. HBL staff helped me much during my internship.
4 10 10.2 9. 1 2 3 4 5 6 7 8 8.6-TABLE OF CONTENTS
Sr.3 8. No.2 8.
Scanned Copy of Internship Certificate Table of Contents Brief Introduction of the Organization’s business sector Overview of the Organization Brief History Nature of Organization Product Lines Competitors Business Volume Organizational Structure Organizational Hierarchy Chart Number of Employee Main Offices Comments on the Organizational Structure Plan of Internship Program Brief Introduction of the Branch
i ii iii iv v vi 1 3
.3 9.1 8.5 9 9.1 9.4 8. 1
Title Page Dedication Acknowledgement Executive summary
1 12. 4 13. 1 11.11
10. 2 12. 3 11. 2 10. 2 13. 6 13. 1 13. 2 12. 3 13. 3 13. 8
Starting & ending dates of the Internship Department wise training Training Program Introduction to all departments Detailed Description of work assigned in each department Structure of the Finance Department Departmental Hierarchy Number of Employees in Finance Department Finance & Accounting Operations Functions of the Finance Department Accounting System of the Organization Finance System of the Organization Role of Financial Manager Use of Electronic Data in Decision Making Information Technology Mobilization of funds Generation of Funds Sources of Funds
. 5 13. 7 13.
3 14. 4 14. 6 14. 2 14. 5 14. 1 14. 7
Allocation of Funds Critical Analysis Financial Analysis Balance Sheet in a Single Table Form Profit & Loss Statement in a Single Table Form Ratios Analysis Horizontal analysis Vertical Analysis Comparison With Other Banks SWOT Analysis Conclusions & Recommendations for improvement Reference & Sources used Annexes
15 16 17 18
72 75 78 79
. 9 14.14
collects. savings and loan associations. with the passage of time the commercial banking operations are under going remarkable qualitative change. security brokers and dealers. and real estate investment trusts. which can be used like money to make payments and purchase goods and services. However. investment companies. banking facilities are being extended to the un-banked places. insurance companies.7-Brief Introduction of the Organization’s Business Sector
Banking is the business of providing financial services to consumers and businesses. as it has become a second habit with the people. investment banks. Planned efforts are being made to enhance the supply of
. and basic cash management services such as check cashing and foreign currency exchange. mortgage companies. and credit unions. The commercial banks are financing the short and long-term capital needs of the business. In the developed societies. In Pakistan for instance. exchanges. or safeguards money for its customers. The loans and discounts of commercial banks include real state mortgages and long term loans. provide brokerage services and implement domestic as well as foreign economic polices of the government. the banks do not have to make many efforts in mobilizing savings. invests. lends. transfers. which extend to as long a period as ten years. loans that consumers and businesses can use to purchase goods and services. pays. A broader definition of a bank is any financial institution that receives. savings banks. savings accounts and time deposits that can be used to save money for future use. These banks also administer estates. The basic services a bank provides are checking accounts. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies. Four types of banks specialize in offering these basic banking services: commercial banks. acts as insurance agents and underwriters. Commercial banks in developing countries have to make vigorous efforts of resource mobilization at all levels. pension funds.
unorganized banking system. In advanced countries of the world like America. Corporate banking is also being reorganized and reactivated on more viable fines. There is acute shortage of capital in Pakistan. Whereas in Pakistan the rate of saving has varied from 13% to 20% only. which is still in the initial stages of economic development. lower per capital income. Banks also increase the mobility of capital. in controlling speculation in maintaining a balance between requirements and availability and in direction physical resources in to desired channels. the rate of capital formation ranges from 17% to 30% of their Gross National Product. One reason of this capital deficiency is the non-adoption of modern marketing tools. In order to accelerate the rate of economic development the Government has been acquiring foreign capital. Mandatory targets for small loan credit to the agriculture sector and for housing have been prescribed and are being enforced. and well –organized banking system is the need of the day. Japan. In a country like Pakistan. This deficiency of capital accumulation is due to so many reasons like. which in fact has let us down on almost all the crucial happenings in the country. They also create new demand deposits in the process of granting loans and purchasing investment securities. Banks play a vital role in the economic development of country. disparity of wealth. The “Credit Guarantee Scheme” is covering the large risk to the commercial banks in the sphere of agricultural finance and small loans to a reasonable extent. A special scheme to induct commercial banks in the field of agricultural credit was introduced in December 1972. They facilitate trade both inside and outside the country by accepting and discounting of bills of exchange.bank advances to the new priority sectors in consonance with the present day socio-economic needs. such as market
. State Bank’s measures aimed at increasing the flow of credit to the small man in business and industry as well as to housing and non-traditional exports have also yielded positive results. They provide a variety of facilities for remitting a large amount of money from one place to another by the transfer of a small slip of paper. The country thus becomes independent of foreign capital. The scheme provides for short and medium term loans to farmers under a much-simplified procedure. Germany. ineffective fiscal measures etc. They accumulate the idle savings of the people and make them available for investment. The banks have to play an important role in promoting capital formation. The banks by launching a vigorous campaign both in the villages and cities can mobilize the idle savings and can increase the rate of investment.
. sales organization. advertising etc. sales training. for attracting deposits. sales management.
in terms of the service we offer. We always strive to put the satisfaction of our customers first. Integrity: We are the leading bank in Pakistan and our success depends upon trust. giving our customers an abundance of choice. The markets in which we operate are becoming increasingly competitive.and society in general . our staff excel and create value for shareholders” Objectives Our values or objectives are the fundamental principles that define our culture and are brought to life in our attitudes and behavior. Meritocracy:
. Our customers .expect us to possess and steadfastly adhere to high moral principles and professional standards. Customer Focus: We understand fully the needs of our customers and adapt our products and services to meet these.8-Overview of the Organization
Vision “Enabling people to advance with confidence and success” Mission “To make our customers prosper.can we hope to be successful and grow. our products and premises . It is our values that make us unique and unmistakable. Our values or objectives are defined below: Excellence: This is at the core of everything we do. Only through being the very best .
Over the years.We believe in giving opportunities and advantages to our employees on the basis of their ability. Malaysia. HBL is expanding its presence in principal international markets including the UK. At an early stage. 2 representative offices and 2 subsidiaries. France. 2 affiliates. In 1973. We believe in rewarding achievement and in providing first-class career opportunities for all. Africa and the Far East. Now Habib Bank Limited is the largest commercial bank of Pakistan comprising 9 Regional Head Quarters. 2. Kuwait. 42 Zones. Bahrain. These branches are in U. U. Habib Bank Limited was established by Mr.5 million. and a spirit of enterprise. Turkey. the bank has grown its branch network and become the largest private sector bank with over 1. Y. our business concentration has remained consistent for Retail. Consumer Banking as well. Consumer. Egypt. It was established with a paid up capital of Rs. the number of its branches was only 12.S. SME and Agriculture lending programs and banking services are offered in both urban and rural centers.400 branches across the country and a customer base exceeding five million.R.K. HBL has the largest Corporate Banking portfolio in the country with an active Investment Banking arm. It was the first Muslim Bank of the sub-continent. Bangla Desh. Oman. 1942 at Bombay. innovative new products and processes.. Ismail Habib (Late) on August 25. UAE. Nigeria. Iran. Using our branch network as a key competitive advantage.. HBL also has a presence in 25 countries with subsidiaries in Hong Kong and the UK and affiliates in Nepal and Nigeria.A.A. and Corporate and SME clients. all the commercial banks were nationalized under the Bank Nationalization Act 1974. 1198 branches in the country on 31st December 1999.A. Overseas operations of Habib Bank Limited comprise 65 branches. U. Lebanon. Sudan. Progressiveness: We believe in the advancement of society through the adoption of enlightened working practices.
.1Brief History HBL was the first commercial bank to be established in Pakistan in 1947. Netherlands. Belgium. in recent years.E. South and Central Asia. 8. HBL’s key area of operations encompasses product offerings and services in Retail Banking and. Hong Kong.
Our brand identity is the outward expression of what we stand for as an organization.2Nature of Organization: Scope of the HBL’ businesses are very large from retail products to corporate loan.hblebank. The oldest Bank of Pakistan. Number of staff of Habib Bank Ltd as on 31-12-99 was 23.hblgtr. Habib Bank Tower Jinnah Avenue Islamabad.3Product Lines: For Individual Customers Credit Cards Car Loans (Car to Car) Debit Cards Bancassurance
Corporate Website Treasury Website Ebank (Internet Banking)
.com www. I.Sri Lanka. Mauritius and Australia. Indonesia. Pakistan Phone: 051-2872203-2821183 Fax: 051-2872205 Head Office Habib Bank Plaza I. 8.com.com 8. mission and is supported by our values. Habib Bank Ltd has its registered office at Karachi.pk www.hbl. Seychelles. Pakistan Phone: 021-2418000 [50 lines] Fax: 021-9217511 Websites www.Azam’s Account with HBL having largest Branches network all over the Pakistan 1456 with in and out side the Pakistan. Chundrigar Road Karachi – 75650. This is summarized in our vision. Honor of Having Quaid-e. Registered Office 4th Floor. Singapore. Kenya. Maldives. Market Leader in Banking with 12 Billion profits of last 6 months till June.033 and no of branches as on 31-1299 was 1760.
HBL Credit Card welcomes its cutomer to a world of convenience. Check the amount in your monthly card statement and make the payment with your regular card payment.
Bill Payments We'll pay your bills on your behalf and charge the amount to your HBL CreditCard. call us at HBL PhoneBanking and your card will be blocked immediately. Make the most out of your shopping experience with your very own HBL CreditCard. You can give one-time standing instructions to pay your monthly bills. The HBL CreditCard will add simplicity and excitement to your life. HBL CreditCard makes shopping fun and paying simple. Security Your HBL CreditCard ensures your money stays completely secure. simply present your HBL CreditCard to the shopkeeper and pay for anything you want. In the unlikely event that your card is stolen. Accepted at over 24 million merchants worldwide.
Convenience Instead of paying with cash. flexibility and opportunity. You cannot lose cash if you don’t carry it.
you only have to pay the difference between the car price and the pre-agreed residual value to the bank. Therefore. HBL CarToCar offers matchless features and unique options at the end of the lease. Instead. The car’s residual value* (forecasted for the end of the specific lease term) is agreed with you at the start of the lease term. You won’t have to wait for your paper statement any more or have to worry about storing it. This amount is deducted from the car price thus lowering the finance amount. you can upgrade to a new car as frequently as two years* without any complication and hassle. an SMS alert will be sent to you on your mobile phone to confirm that the transactions have been conducted by you. It makes the car of your choice affordable and practical with a buy back guarantee. Hence. As a result. the monthly installment may even be 40% to 50% less than that of conventional financing. Now you can drive a new car at the end of every two years.For all transactions. we will directly settle this outstanding liability for you under the buy back guarantee. E-Statements You can enroll for an e-statement with a simple call. This finance amount is based only on a part of the car’s value and not the full value of the car. HBL gives you the guarantee that if you wish to return the car to us at the end of the lease term. Car Loans (Car to Car)
HBL CarToCar is a revolutionary car financing offer. you will not have to pay off the car’s residual value. An e-statement with details of all your transactions will be sent to your specified email address every month. HBL CarToCar offers very low installments as compared to any conventional financing. you only pay for that part of the car’s value that you use during the lease term. A nominal fee will be charged for this service. With HBL CarToCar. When you lease a car under HBL CarToCar. Eligibility Criteria is:
Self-Employed Business persons/ Professionals Pakistani
Salaried Individuals Citizenship Pakistani
Documentation required is as under: Salaried Individuals Copy of CNIC 2 recent passport size photographs Latest original salary slip and personal bank statement for last 3 months Copy of CNIC 2 recent passport size photographs Bank statement for last 6 months and bank letter confirming details of account Proof of business
Self-Employed Business persons/Professionals
Debit Cards 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.Age Minimum monthly income
22-60 years Rs. 25.
Features: No Interest Ease & Security No Liability International Recognition& Acceptability
22-65 years Rs.
Eligible age Minimum payment Benefit on accidental death 18 – 60 years Rs. 500.000 per month In addition to other benefits. Rs. 3. Funds are paid back as per policyholder's designated time period
Amaan Plan A pension plan that offers attractive investment returns.000 will be paid for the marriage of the nominated female child. Plans are available for both under and over 45 years of age. The plan covers life insurance and gives attractive returns on investment to its customers. These products have been designed keeping HBL’s customer base as the focus and will provide life insurance along with an investment option.
Spending Limits Free Account Statement 24 hour Customer Service Global Customer Assistance Service
HBL and New Jubilee Life Insurance Company Limited (NJLI) introduce Amaan (Retirement Plan ) and Tabeer (Child Education & Marriage). 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. Policy can be cashed in total 2. Tabeer Plan An insurance plan that enables parents to cover education and marriage costs. Amaan is a pension plan that provides an opportunity for growth through investment in a balanced portfolio with post-retirement income benefits. given that female child is at least 18 years of age Allowed
Partial withdrawals Maturity benefits Two options available: 1.
Eligible age Minimum payment Minimum age to exercise pension option Benefit on accidental death Benefit on death Partial withdrawals Maturity benefits
18 – 60 years Rs. 2. For details on features and benefits please see below. Pension can be recieved for life
Phone Banking Your bank is just a phone call away. Your query will be resolved in a single telephone call from anywhere and at anytime. 200. 800. Policy can be cashed in total 2.000 will be paid along with other benefits Allowed Two options available: 1.000 will be paid along with other benefits Rs.
HBL PhoneBanking services for Deposit Account customers You can use the Interactive Voice Response (IVR) system or talk to our PhoneBanking 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)
. You can now call HBL PhoneBanking and save a trip to the branch.000 per month 55 years Rs.
Last 5-10 Transactions Get details regarding the last 5-10 transactions carried out on your Loan and Repayment Account. either through Fax or Email.
. Account Maintenance You can request for the following facilities related to your Loan account including: Change/modification in your Contact Details Partial Payment Early Settlement
Car Theft/Damage In case of car theft/damage. Statement Generation (Email and Fax) Request for the statement of your Loan and Repayment Account. please inform any of our Phone Banking Officers and your notification will be forwarded to the Car Loan department.
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. You will be provided complete assistance in resolving the issue promptly and efficiently. including: o Pay Order o Demand Draft o Statement o Balance Certificate o Cheque Book
HBL PhoneBanking services for HBL CarToCar and CarLoan customers HBL CarToCar and HBL CarLoan customers can enjoy the following services through HBL PhoneBanking: Balance Inquiry Get information regarding the balance of your Loan and Repayment Account.
T-PIN Generation/Change 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 System and additional services through our Phone Banking Officers.Detailed Transaction History Our Phone Banking Officers can give you the details of transactions made in the past 6 months on your Loan and Repayment Account. The amount will automatically be charged to your HBL CreditCard or HBL deposit account and your prepaid voucher PIN will be sent via SMS to your mobile number registered with HBL PhoneBanking. Mobile phone prepaid vouchers All you have to do is dial 111-111-425 and choose your desired denomination.
For Business Customers Corporate Banking Commercial Banking Investment Banking Islamic Banking Zarai Banking Cash Management Global Treasury Assets Management
. You can even change your TPIN any time after its initial generation. Product Facilitation You can speak to any of our Phone Banking Officers and inquire about our product offerings and request facilitation through registering your interest in the product(s) and forwarding the same to our country-wide sales team for follow-up with you.
with a turnover of at least PKR 300 million. Commercial Banking
. A long history of financing and nurturing relationships in Pakistan has given HBL a unique insight. etc.Corporate Banking
HBL Corporate Banking Group comprises a seasoned team of Relationship Managers (RMs) to meet the demanding service standards of large corporations. We provide the following services to meet your funding requirements: Working Capital Finance. our team understands your banking needs and works closely with you to realize your goals. we have a range of solutions designed to help you with your banking needs. enabling us to provide timely and effective financial solutions for our customers to meet the growing challenges of a global economy. Letter of Guarantee and Standby Letter of Credit. including Overdraft. Our RMs have the expertise you need to create tailored financial solutions catering to the specific requirements of your business. FE Loans. 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. If you are a corporate customer. Whether establishing a new venture or expanding an existing business. etc.
Gujranwala and Peshawar. Services available are: Working Capital Procurement of Inventory Receivables Procurement of Machinery Expansion of production facilities Import of raw materials Exports Guarantees
. HBL has the ability and the resources to meet the needs of your business with our pro-active. Lahore.HBL’s Commercial Banking Group targets medium sized companies with a turnover of at least PKR 50 million. Faisalabad. Sialkot. responsive and experienced Relationship Managers who are committed to understanding your business. Our business units are located in Karachi. Each unit is dedicated to service business clusters located within these cities.
. Islamic Banking
. Depending on the requirements of its customers. commercial papers. HBL offers a variety of products. The bulk of HBL’s project finance practice revolves around the power sector. securitizations. restructurings. 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 kind transaction in Pakistan. Recently. agriculture. etc. consumer products. for raising various forms of equity and quasi-equity. worth PKR 23 billion. the first bond offering for any microfinance institution in all of Asia. Prior to the power policy of 2002. privately placed and listed TFCs. This is a testament to the out-of-box thinking and the innovative products we bring to our customers. HBL actively pioneered Project Finance in Pakistan through the funding of a gas-fired co-generation plant (94 Megawatts of power and desalination of 3 million gallons per day). In the fertilizer sector. including PKR 15. etc. public and private equity placements and mergers & acquisitions. Debt Capital Markets & Syndications and Equity Capital Markets & Advisory. credit enhancement for a rapidly growing company in the consumer durables sector and numerous tier-2 capital transactions for commercial banks. Subsequent to the 2002 power policy. The Investment Banking Group functions in three specialist business areas: Project Finance. HBL has closed over thirty transactions with a cumulative worth of over USD 2 billion. including energy. HBL financed the largest local currency financing in Pakistan. as well as a green field venture in the telecom sector worth PKR 12 billion. fertilizers. HBL offers a breadth of equity and advisory products including innovative capital raising techniques.HBL offers full-service Investment Banking capabilities to its clientele. The HBL team played a pivotal role across several sectors. HBL played the lead role in a number of significant debt transactions. including syndications.14 billion TFC issue (the largest privately placed issue in Pakistan). term finance facilities. HBL also provides valuation for a company in the food and beverages sector. This year alone. 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.
Islamic Banking offers Shariah compliant products and services to meet the short and long term requirements of business and trade. HBL’s Islamic Banking products are fully Shariah compliant and duly certified by independent Shariah Advisors. plants and machinery to meet long-term customer resource requirements.Islamic Banking is a growing market segment that offers attractive opportunities to potential and existing customers. Islamic Banking provides Ijarah (leasing) for vehicles. Murabaha (local & import) facilities are provided to meet the short-term financial needs of mid-market and corporate customers. Semi-Finished/Finished goods or Store or Spares through Murabaha Foreign/Inland Remittances Utility Bills Collection E-banking/Internet Banking services
. Services available are: Opening of Current Account and Basic Banking Account (BBA) Collection of Foreign/Inland Bills Acquisition of Assets on Ijarah Purchase of Raw Materials. At HBL.
economic output of the country. raising charges and other related activities Poultry
. enhancing agricultural harvest and. raw material. ploughs. fertilizer. tube wells and other crop-related tools/implements Tractors/Agricultural Vehicles Finance available to individual farmers. fertilizers. pesticides. pesticide and other related inputs Farm Implements Finance available for purchase of farm implements & machinery like combined harvester. HBL ZaraiBanking provides loans to small-scale land owning farmers as well as large institutionalized and alliance based finance.HBL ZaraiBanking facilities are spread across the country and provide financing through more than 800 of our branches. sprayers. providing the option to select vehicles from a range of different manufacturers Livestock Finance available for feed. HBL ZaraiBanking enables farmers to invest in premier quality seeds. in turn. agricultural implements and non-farm setups through its various product programs.
Crop Inputs Crop specific finance for purchase of Agri inputs such as seed. medicines. self-employed tractor operators. HBL’s presence in all agriculture belts of the country ensures easy access to farmers in rural areas.
nets & ropes. ice maker. Advantages of cash management are: Centralized Collections / Funds Transfer Centralized Payments / Disbursements Customized MIS Reporting Centralized Customer Support through IT/Operations Easy Collect Standing Instruction via Debit Authority (SIDA) Outward Bills for Collection (OBC)
Products and Services Collections
. hatchery plant & machinery. Our Cash Management Services reduce the cash turn around of your company. fish locating equipment. fish farm water solution. This includes procurement of boat. poultry feed. poultry processing and other related activities Fish Farming Finance available for inland fish farms as well as deep-sea fishing. poultry medicines. composite feed production. hatchery construction/equipment.Finance available for all poultry related activities including poultry farm construction/equipment. thereby making it cost efficient. purchase of medicines / feed and other related activities Group Lending Joint finance facility for a group of farmers with small land holdings for working capital requirement Cash Management
HBL offers a comprehensive platform for customers to avail Cash Management Services throughout Pakistan.
In today's fast paced. identify opportunities that can be capitalized upon. Habib Bank in its capacity as the largest commercial bank in Pakistan also has the largest Treasury in terms of volumes transacted. and from this analysis. and increasingly global world. collection of superior data is not an aim in itself. These increased volumes have been brought about by the professionalism and expertise brought in by the senior management of the bank. Our access to information is supplanted by our overseas branch network. and local treasury expertise provide our clients with an informed overview of current events as they pertain to our clients' business. However. dynamic Treasury department is the hallmark of the changing culture of Habib Bank with its focus towards improved customer services. with the consequent ability to take proactive decisions to evolving market conditions. Our global alliances. A vibrant. from Sydney to New York. The ability to manage risk effectively allows us to offer the most competitive rates to our clients on all facilities ranging from deposits to encashment of export proceeds. and processes re-engineered to increase efficiency. and increased profitability for both customers and shareholders. and our real addition of value is in our ability to analyze the wide spectrum of data that is available. Assets Management
. Treasury services are even more important than before as interconnected economies are rapidly blurring physical boundaries in international trade. whereby operations have been streamlined. with branches located across all time zones.
Ferguson and Company Daily 1.000 million Brokerage fee. Credit Rating fee etc. Company formation cost.7 million or 0.10% of NAV exceeding Rs. 1 billion which ever is higher.2% p. 1000
Seed / Core Investor Trustee Auditor NAV Calculation Management Fee Sales Load Trustee Fee
Initial Offer Price / Par Value Minimum Investment Size Subsequent investment Types of Units Class A Units (Restricted) Class A Units
Core Units to be issued to HBL (at Par Value) as core investors with a 2 year restriction for redemption Issued to pre-IPO / IPO investors at par value
. The salient features of HBLIncome Fund are: Name Fund Type Objective HBL Income Fund Open End Income Fund To provide a stable stream of income with a moderate level of risk by investing in fixed income securities / instruments. Annual fee to SECP. 1 billion. Habib Bank Limited Central Depository Company A.The objective of the HBL-Income Fund is to provide stable stream of income with a moderate level of risk by investing in fixed income securities/instruments. Legal Costs.a. Exceeding Rs. Auditors fee. F.5% 0% Rs. 1. 5000 Rs. Rs. 0. 2 million plus 0. 100 Rs. of NAV up to Rs. Rs. Listing fee.
IPO Dates 8. 16 th & 17 March 2007.5Competitors National Bank Of Pakistan Bank of Punjab MCB Bank Ltd.
8.5 Business Volume of HBL REVENUE
.Class B Units Tax Benefit
Issued to all types of investors after expiry of IPO Capital Gains: Exempt till June 2007 Cash Dividend tax rate: Individual 10% Corporate 5% Tax Credit for investments of up to Rs. 200. United Bank Limited Allied Bank Limited Bank Alfalah Limited Emirates Global Islamic Bank NIB Bank Limited Standard Chartered Bank Royal Bank of Scotland Meezan Bank Limited Bank Al-Habib Limited
15 th .
YEAR 2005 2006 2007 2008 2009
VOLUME (IN ‘000) 32343206 43685740 50481021 63305033 76076347
DEPOSIT YEAR 2005 2006 2007 2008 2009 VOLUME (IN ‘000)
432545165 459140198 531298127 597090545 682750079
ADVANCES YEAR 2005 2006 2007 2008 2009 VOLUME (IN ‘000) 316881635 349432685 382172734 456355507 454662499
YEAR 2005 2006 2007
VOLUME (IN ‘000) 107384470 119587476 177942251
GROUP Executive Corporate Banking
GROUP Executive Chief Financial Officer
GROUP Executive Human Resource & Org. Development
GROUP Executive Audit
GROUP Executive Chief Compliance Officer
GROUP Executive Retail & Consumer Banking
GROUP Executive IT
GROUP Executive Investment Banking
GROUP Executive Global Operations
EXECUTIVE INCHARGE LEGAL AFFAIRS DIVISION
EXECUTIVE INCHARGE AUDIT & INSPECTION DIV.1Organizational Hierarchy Chart Regional Chief Regional Manager (Operations.
EXECUTIVE INCHARGE FINANCE DIVISION
9. Marketing) Senior Managers Managers (Operations. Credit) Assistant Managers Officer/Cashiers
. Credit. HR. Compliance. Audit.
Sultan Ali Allana Chairman Zakir Mahmood President & CEO
. Directors of Habib Bank Limited. It comprises of a Chairman. President or CEO. Board of Directors elects a president who then heads the executive board of directors.Board of Directors The board of directors is the supreme governing body of Habib Bank Limited.
Chief Compliance Officer Salim Amlani Group Executive.Iain Donald Cheyne Director Mushtaq Malik Director Sajid Zahid Director Ahmed Jawad Director Management Committee Zakir Mahmood President & CEO Sima Kamil Group Executive. Investment Banking Nausheen Ahmad Company Secretary &
. Chief Financial Officer Dr. Audit. Corporate Banking Ayaz Ahmed Group Executive. BRR & Investigation Tulu Islam Group Executive. IT & Systems Kashif Shah Group Executive. Human Resources & Organisational Development Jamil Iqbal Group Executive. Razi Azmat Group Executive.
Administration & Services Group Aly Mustansir Head of Marketing & Brand Management Audit Committee Iain Donald Cheyne Chairman Sajid Zahid Member
. Commercial Banking
Jamil A. Khan Group Executive. Dar Group Executive. Global Operations Faizan Mitha Group Executive.. Asset Remedial Management Mirza Saleem Baig Group Executive. Khan Group Executive. International Banking & CEO. UK Abid Sattar Group Executive. Habib Allied International Bank Plc. Risk Management Nauman K. Retail & Consumer Banking Mudassir H. Global Treasurer Aslam Gadit Group Executive.Head of Law Division Sohail Malik Group Executive.
Ahmed Jawad Member Risk Management Committee Sultan Ali Allana Chairman Zakir Mahmood Member Mushtaq Malik Member Human Resource Committee Sultan Ali Allana Chairman Zakir Mahmood Member Sajid Zahid Member Group Chief Financial Officer Mr. Chartered Accountants 9. Ayaz Ahmed Company Secretary Ms.2Number of Employees
. Nausheen Ahmed Legal Advisor Mahmood Yousaf Mandviwalla Bar-at-Law Auditors KPMG Taseer Hadi & Co.
In offline branches. there are 14. One of the most common weaknesses of this structure is that decision making is slow. In one city there is only one main branch. When more power will be in
. On the whole.552 staff members of HBL serving in 1.4Comments on Organizational Structure The structure of Habib Bank Limited is given above. 9. Habib Bank is divided into various regions across all the provinces of Pakistan. The board of directors elects a president who then heads the executive board of directors. there are 10-20 employees on average depending upon the departments in the branch and number of services available. which comprises of Regional Chiefs and Division Heads etc. Top governing body of National Bank of Pakistan is the board of directors.489 branches all over the world. 9. it is directly under the regional office. There was the commanding style of management exists in that organization and it is also not good thing.3Main Offices HBL has its main offices in every city. The Composition of the Region is as under: Regional Chief Executive Regional Manager Operations & Support Services Regional Manager Credit Regional Manager Human Resources Regional Manager Compliance Regional Manager Audit Regional Manager Marketing Area Managers/Senior Manager/Chief Manager/Branch Manager Manager Operations Manager Credit Assistant Managers/Officers Cash Officers/Cashiers
The structure is typical bureaucratic structure which hierarchical based. there are 4 to 6 employees on average where as in online branches.
Rurala Road Branch is an excellent branch business wise.1Brief Introduction of branch: Habib Bank Limited. there will be excessive demotivation of lower level of staff and there inefficiencies can be occurred.
.the hands of the upper management then there must be political game play. It is situated on the main road. Another disadvantage of this structure is that more responsibilities are in hands of upper level management.
10-Plan of Internship Program
10. So in the case of loss upper management will be responsible and it is again bad thing. Moreover. So flatter structure is better then this because in this structure more power is distributed among various members rather in the single hand.
07.06.07.2010 31.10 15.10 11.07. 1 2 3 4 5 6 7 Department Liabilities & Deposits Operations & Accounts Finances/Credit Financial Analysis Remittances Bills Consumer Banking Duration From To 01.10 12.2010 8 weeks
10.06.10 21.06.07.06. Faisalabad Region of Habib Bank is further divided in to small areas consisting of 8-15 branches each.Rurala Road Branch is one of the progressing branches of HBL in the region (Faisalabad).07.10 28.10 15.10
.07.10 14.07.10 16.10 30.07.10 10. 10 20.3Departments Attended: Sr.10 13.06.10 29.07. It deals in all type of Banking Operations like: Remittances General Banking Retail Banking Consumer Banking Agriculture Financing Commercial Financing Auto Financing Bancassurance Credit Cards/Dbit Cards Guarantees
10.2Internship Span (Duration): Starting Date: Ending Date: Total Duration: 01. No.06.07.
individuals. charitable institutions.10
29. HBL offers various accounts for depositors e.07.07.10
31.g.1Introduction of Departments:
Liabilities & Deposits: Mobilization of deposits is one of the core banking businesses. provident and benevolent funds of business
7. 100.000 & Above The profit is payable on quarterly basis and calculated on daily product basis. The Profit will be credited to respective account at quarter end.00 4. The Profit will be credited to respective account on 30th of June and 31st of December. HBL – Value Accounts (VA) For minimum balance during the month upto Rs. The Profit will be credited to respective account at quarter end.25 5.06
5.00 Annualized Rate of Return (%) 5.000 On daily actual deposits less than Rs. For business purposes Current Account is the most preferred as no financing is allowed on Saving Accounts.000. HBL PLS Savings Account HBL Enhanced Savings Account – ESA HBL Value Account HBL Super Value Account HBL Basic Banking Account – BBA HBL Advantage Account Foreign Currency Account – FC Munafa Plus Deposit Certificates .00
5.000 For minimum balance during the month above Rs.09
7. Indicative Rate of Profit P.45 5. 2.09
0.000 On daily actual deposits less than Rs.00 5. No. HBL – Super Value Accounts (SVA) For minimum balance during the month upto Rs.19 5.500.000. The Profit will be credited to respective account at quarter end. RMPSA (Remittance Manafa Plus Saving Accounts) The profit is calculated on minimum balance during the month.25 5. Category of Deposit PLS Saving Chequing Account For Balance from Rs. 1.000 For minimum balance during the month above Rs.000 The profit is payable on quarterly basis and calculated on minimum balance between first day and last day of the month.A (%) 5.MPDC
Product Line & Annualized and Indicative Rates of Profit (%)
Sr. The Profit will be credited to respective account on the last working day of each month.25
0. HBL – BusinessValue Accounts (BVA) On daily actual deposits less than Rs. 100.00
7. 1.00 4.organizations with attractive returns. 500.000 but less than Rs. 1 & above The profit is payable on six monthly basis and calculated on minimum balance during the month.000 The profit is payable on quarterly basis and calculated on minimum balance between first day and last day of the month.32 5. 500.35
250m On daily actual deposits less than Rs. 100m but less than Rs. 5m On daily actual deposits of Rs.50
8. 1B & Above The Profit will be credited to respective account on the last working day of each month.50 8. 5m but less than Rs.47 11.10 1.10 0.13 12. 50m but less than Rs.15 0.23 7.82 12.83 12.68
8. 50m On daily actual deposits less than Rs.75 11.00 7. 50m but less than Rs. 100m but less than Rs.00 12.84 9. 500k but less than Rs. 25m but less than Rs.10 1.02 11.30
F.89 11.000 FC SB US $ 50.01 12.25 11.12 7. 100m On daily actual deposits of Rs.20 1.00 11.84
5.00 8.76 8.50 11.37 13.81 0.25 11.00 12.17 6. 250m On daily actual deposits of Rs. 500m but less than Rs. 1m but less than Rs.00 0.23 8. 100m On daily actual deposits less than Rs.00 12.57 12.00 11.68 12.00 6. 1m On daily actual deposits of Rs.00 6.25 12.6
DMA Daily Munafa Account On daily actual deposits less than Rs.50 10.80 0.57 11. 500m On daily actual deposits less than Rs. DPA Daily Progressive Account On daily actual deposits less than Rs.00 8.75 13.00 8.84 0.50 15.00 11.00 18.00 11.85 12.50 11.40 12.15 0.20 1.10 12.20 0.10 0.70 7. 250m but less than Rs.000 & Above FC SB Less than EURO 1000 FC SB EURO 1000 & Above FC SB Less than UK £ 1000 FC SB UK £ 1000& Above
.42 10.30 11.50 12. 50m On daily actual deposits of Rs. 500m but less than Rs.50 10. HBL Advantage Account 3 Months Quarterly 6 Months Six Monthly One Year Monthly Quarterly Six Monthly On Maturity Monthly Quarterly Six Monthly On Maturity Monthly Quarterly Six Monthly On Maturity Monthly Quarterly Six Monthly On Maturity
5. 1B On daily actual deposits of of Rs.73 11.C Saving Deposits FC SB Less than US $ 1000 FC SB US $ 1000 to Less than US $ 50. 1 Billion & Above The Profit will be credited to respective account on the last working day of each month.50 9.50 7.00 7.00 10.20 0.84 13.00
5.92 10. 500k On daily actual deposits of Rs.50 12.12 6.50 11.24 13. 25m On daily actual deposits of Rs. 500m On daily actual deposits of Rs. 250m but less than Rs. 1 Billion On daily actual deposits less than Rs.50 12.75 14.
It is considered as back bone of bank.
Operations & Accounts: Operations Department is one of the most important departments in the banking institution. The interest will be credited to respective account at quarter end. main office entries and daily activity reports. Finances/Credit: HBL provides loan facility for the following purposes: Agricultural Loans Commercial Loans Dairy Farming Loans Poultry Farming Loans Crop Inputs Fish Farming Livestock Tractors/Agricultural Vehicles
After marketing a customer. It involves various tasks like: Account Opening Compliance of Anti Money Laundering (AML) Know Your Customer KYC Cheque Book Issuance Information Verification Management of all other departments etc. Documentation. Recording and checking of all manual vouchers. To coordinate with managers in key accounting tasks.Credit Applications
. Credit Administration is done to ensure securities perfection and risk review of the exposure. Credit Application is prepared by Relationship Manager for approval of Credit Committee/Board Credit Committee according to exposure of the customer.The interest is payable on quarterly basis and calculated on monthly minimum balance between first day and last day of the month. Daily reconciliation of HBL accounts with SBP.
Insurance Securities and Facility Documentation Legal Counselling Issuance of . where customers account is opened and amount is credited (limit feed). All operations in customer account are routed through this department. The CA is forwarded to Credit Operation Head.Credit Applications Proposal Form Agriculture Pass Book Sanction Advice Top Sheet IB7 Stamp Paper Spot Verification CIB Report Crop Plan Khasra Gardawary Fard Jamabandi List of Legal hears of Grower/Borrower Undertaking regarding utilization of funds for Agri purpose only
Management Information System: To Seek Search Report Bank Checking CIB Report Market Checking/ Local credit Report Adjustment of Mark-Ups in timely manner
. Processing.Disbursement Authorization Certificate
Credit Operations From CAD after issuance of DAC.
Service. Bills & Cash Management: Utility Bills (Electricity. AGA KHAN Research Laboratories. transfer delivery. managed and arranged. Shell. (a sister-concern company of HBL). ATMs. IBL. Tahir Umer Industries.) House Building Finance Corporation University Fees (Punjab University. Telephone Gas) Cash Management (National Companies like BATA.Both Inter/Intra city) Collection of cheques is another important function. PSO. NTS. Warid. clearing through NIFT or through mail arrangements. Daily balancing of cash is compulsory task. It actual attracts existing HBL customers and
.Remittances: Remittances Includes the following operations: Inward Clearing Outward Clearing Within City & Inter city Funds Transfers Banker’s Cheques (Demand Drafts) Inter-Branch Transaction System – IBTS (Real Time Online . Consumer Banking: Debit/ATM Cards Credit Catds Auto Loans Personal Loans (Flexi Loans)
Bancassurance: Bancassurance Department is launched as a joint venture of HBL and New Jublee Life Insurance Company Ltd. Nadra Kiosk etc. ATCO. bonds or other inter branch debit/credit vouchers is supervised. internal transfer. When a cheque received from a customer it is settled through. FAST) Daily demand (withdraw) and supply (deposit) of cash through bank counters.
Specially in the banking institution. I visited the customers with Manager Credit who availed the loans from the Habib Bank. giving knowledge to the customers about all the products of the Habib Bank. So. banks work like an intermediaries or channel to distribute the funds from depositors to the lenders.new customers as well to invest in Bancassurance and offers handsome profits with extra free of cost insurance benefits like death cover. I also opened the accounts myself of the customers whom I convinced during my training in liabilities and deposit departments. I was given only the knowledge about the documentation involved and requirements for availing an agricultural or commercial loan. Information Systems play an important role for the successful running of some business or an institution.2Details of tasks Assigned In all Departments:
Liabilities and Deposits During my training in the Liabilities department. I was trained about the account opening and all the operations involved in account opening like address and CNIC verification. Financing is difficult task as well as it involved many critical techniques. importance of information
. Finances & Credit Finances or Credit facilities are the major sources of income for a banking institution. monthly income benefits and marriage grant for nominated daughter having age less than 18 years.
11. in this way. I refer accounts of about 2 million to the Habib Bank. During my visits in the market. I was trained about the techniques of how the deposit is collected and how the liabilities are recovered from the market. Operations and Accounts In the Operations in accounts department. they lent it to the customers looking for funds. With my efforts. During my training. Management Information System In the present global era. I convince about 20 customers from the market who promised me for opening their accounts in HBL. Whatever banks collect from deposit.
system has increased because banks are now connected with each other with the help of latest technologies. Customer of one bank can access to his account from any place any time. Management Information System of the Habib Bank is placed at the Head Office of the Habib Bank in Karachi. Working of all the branches is controlled from there. I was given opportunity to operate sub-systems placed in the branches and I was given knowledge about the working of the system. I was assigned task for the receiving of all the mails coming fom head office whole duration of my internship there. After my training, I fulfill my task successfully and received the mails from head office and distributed to concern person after taking prints. Remittances A remittance is another important source of income for the banking institution. Working in the remittance department is quite responsible because little mistake can create big problem especially when working is perform on the real time system. I enjoyed much during my training in this department because remittance is considered to be matured and attention demanding task. During my training in this department, I learned about Inward and outward clearing, funds transfers, demand drafts, pay orders etc. After my training I helped the branch much by making many demand drafts and by helping people came for funds transfer.
Bills and Cash Management Companies operating nationwide, operating their funds through banks are placed in cash management. Accounts of such companies are opened as general account at bank’s head office as a general account. In this way, funds can be deposited in any branch nationwide through their general account. Bank credits company’s account directly. During my training in the bills and cash management department, I was trained about the feeding of all such cash management accounts in the system of HBL. After my training, I successfully completed my task and input the data in the system many times with out any mistake. Similarly, I input all the utility bills in the system
Consumer Banking During my training in the consumer department, I was trained about the debit cards, auto loans, and personal loans. I was assigned the task to convince the customers about the Debit/ATM card, fill the application of debit card and complete all its processing before sending that application to the head office. I was also responsible to train the customer about the operation of Debit/ATM card in the ATM machine. I completed my assigned task successfully. With my efforts, many customers applied for the debit card. Due to my cooperation with the customers, Branch Manager appreciated my efforts in front of whole staff. Bancassurance HBL launched this product first time during my internship. But no staff person was posted in the branch yet. In this situation, I get information from some other branch about this product and started its operation with the manager’s approval. With my efforts, HBL gained many new account holders. In appreciation of my efforts, Manager promised me for the job in HBL in case if no staff person posted there.
12-Structure of Finance Department
12.2No. of Employees working in Finance department: There are 2 employees working in ofline (batch) branches whereas 3 employees working in online (misys) branches. 12.3Finance & Accounting Operations: Accepting of deposits of money on current account, saving, term deposit and other profit and loss sharing accounts. Borrowing money and arranging finance from other banks. Advancing and lending money to its clients. Financing of projects including technical assistance, project appraisal through long term/short term loans. Financing of seasonal crops like cotton, wheat, rice, Receiving of bonds, scripts, valuable etc. for safe custody. Carrying on agency business of any description other than managing agent on behalf of clients, including government and local authorities. Generating, undertaking, promoting etc. of issue of shares, bonds. Transacting guarantees and indemnity business. Undertaking and executing trusts. Making investments in other banking companies.
Fulfilling the documenting formalities of each consumer finance product for customers by respective heads of consumer products. Each file contains hundreds and sometimes thousands of pages. Risk management by critically analyzing of each loan applicant. Much of the approval of loan depends on it.1-
Participating World Bank and Asian Development bank's lines of credit. Fulfilling the documenting formalities of large corporate loan. Complete and comprehensive analysis of loan applicant of each consumer finance product by their respective heads of consumer product. Record keeping of each loan applicant (companies) in electronic system of bank.
13-Functions of the Finance Department
13. In cash finance. In Consumer Finance. Record keeping of each loan applicant of every consumer product. acquiring the customer (loanees) by business manager for business growth. It is very important component of corporate finance.
VOUCHER SYSTEM: Voucher is a written authorization used in approving a transaction for recording and payment. Voucher is system.e. which is generally designed to provide strong internal control over the transaction. So I am going to discuss these functions in three steps: General Ledger Voucher System Types of voucher used
GENERAL LEDGER: It is the prime record of the branch reflecting its assets and liabilities and serves as the master control accounting system of the branch. which are authorized by the head office. At the end of the day. Account No. DEBIT VOUCHERS ARE USED IN TWO CASES: 1. The format of the debit voucher includes: Name of branch Data Branch No. It consists of only those accounts.Accounting System: There are many other important functions performed by accounts department of HBL. 2. One debit and credit voucher is prepared. The account of the customer is debited with the amount and debit voucher is prepared. Whenever any expense is incurred. When a depositor withdraws some amount from his account. Whenever a transaction takes place in any department of the bank. these vouchers are collected i. which takes place during the business hours. Transaction Code Amount and other details (Narration)
These expenses include: a) Salaries given to all employees of the bank b) Wages c) Rent d) Lease installments e) Insurance – vehicle f) Insurance-cash g) Utility Bills h) Medical allowances (reimbursed) i) Cash carrying charges etc
ACCOUNTING PROCEDURE IN HBL: a) Various departments use debit and credit voucher for recording the transaction.CREDIT VOUCHER: There are two types of transaction in which credit vouchers are used. 2. Preparation daily activity report at the end of each day. When a depositor deposits any amount in his account because the liability of bank. Now in second set these three important functions of Account department of HBL are described briefly. 3. All expenses vouchers are routed ask through Accounts Department.Different types credit voucher are used. 1.g. d) Sort vouchers into general ledger a/c order debit separately from debit for each account. EXPENSE VOUCHER: All the expense voucher passed by each department are routed through accounts department. b) Accounting department receives the departmental journal from the departments together with all the vouchers. Any income received by the bank e. bank draft . Preparation of various statements. 2. 1.
. c) Variety correction of total of all into departmental entries in departmental journals.
2Finance System of Organization: There two basic heads in finance department a. There are lots of subordinates which help in risk management. Business Section b. This situation occurs when loan amount significantly large and there is lots of risk involved in making the loan. There are significant amount of interest in case of corporate loan.
. Write total obtained from machines list for each contingent accident in general ledger and up data balances. Risk Management Section Business Section: Business head includes manager of the bank which is responsible for business growth. It ensures the minimum probability of risk for making the loan the customers. head takes the final decision.
Risk Management Section: It is responsible for managing the risk. f) Prove debit and credit totals to department journal total. This head deals with sophisticated analysis of loan applicant. g) Date and sign general ledger includes leaf binder in chronological order. At that time. It is task of lower level managers. Finance system does not end at these two heads rather the final decision of sanctioning out or not sanctioning out is in the hands of “Regional Office.e) From departmental journals add all debits and all credits for each general ledger accounts and write total for each account in relative accounts and extended new balances. Business growth is achieved by it because depositors invest the money into the bank which bank uses for making the loan and then earn the interest on the loan amount.” But if the regional officer does not have the authority of sanctioning the loan then matter goes to head officer.
13. It is the task of higher level managers. This manager acquires customer who invest the money into the bank and customers who take loan from bank.
13. He plays the role of budget and budgetary control. Financial manager role is to make sure that sufficient funds are available for the branch at the best rates. Financial manager is the person to arrange funds in time.5INFORMATION TECHNOLOGY The way people do their banking is changing. and he can take decision to increase sources. In short he has to ensure that maximum profit is being paid on their deposits and least period funds are available to the bank in case of need. Finalacial manager takes decision on the basis of Financial Ratios that what step next. cash management and credit management ets. HBL need to keep up with these changes if they are to stay competitive with this in mind they accelerated their plans to update their technology. 13. like sales of securities. Etc. Financial manager plays the role to access the bank books and take decisions with respect to banks funds and finances. Financial manager has the authority of issuing of bonds. He also visits the corporate clients periodically to further negotiate business terms with them. short terms borrowing.3Role of Financial Manager The role of financial manager in establishing and maintaining relationship with other financial institutions and customers in terms of accounts.13. He has to develop the relationship with various corpoprate clients in order to ensure that they should give maximum deposits at cheaper rates. He has to ensure that bank’s debt to equity remains the required SBP parameters. ICIL (International Credit Information Limited) report. At HBL the Branch Manager plays all the said roles. and he is also tried to increase funds. In HBL every branch manager plays the role of financial manager. This thing will help them in controlling their financial costs.4Use of Electronic Data in Decision Making: NBP uses lots of electronic data in making the decisions specially finance related decisions like NADRA verification Report. sub ordinated loans.
all 1437 branches will be able to offer a wider range of modern banking facilities. • SECURITY: Customer decides who has access to his account through carefully controlled set of passwords.s HBL fully recognize the need for an efficient IT. • CONFIDENTIALITY: Data transmission to and from the customers to the bank is encrypted which ensures full data integrity giving the customer complete peace of mind. With the completion of its deployment. system and believe in deploying capital and human resources to achieve the highest standards. however remote their location maybe. Implementation of the state-of-the art technology banking software MISYS is well underway throughout the branch network. • FRIENDLY: System is self-explanatory and extensive on-screen help is available besides formal documentation and training is also provided by the bank at the time of instillation. overrides the time zones and geographical distance for our clients who have 24/7 access to their accounts. audit and financial reporting much faster and easier. hblEbank services hblEbank will provide the following facilities to the customers of offline MOBS and batch branches: • CONVENIENCE access to their CA/SB accounts both in rupees and FCY from their desktop in office or home which will save them both time and money required for travelling and waiting at branches.Consolidating their customer database will enable different departments to share information more freely. Cutting-edge technology enables HBL to provide a full array of services to their corporate clients. debit cards and interbank transfers via ATM. • 24 HOURS ACCESS: Customers can access their accounts at any time throughout the day or night. It will also mean HBL will actively pursue exciting products like internet banking.
. This will help them make processing compliance. Their products HBL e-Bank which incorporates safe. No more going to bank for checking your account. sound PC and Internet Banking facilities and real time online branch links. transactions or balances. • ECONOMICAL: All it takes to dial-up to the bank.
Through their PC modem it will provide quicker access and although the services being offered at present will be similar to the internet version. Here they will be able to access the bank database internet service provider (ISP) by dialing into the bank's website. When customers deposit their money into the bank.6Mobilization of Funds: In banking. i-e https:/www.hblebank.com or by clicking on an icon the bank's main website i-e www. this is very simple explanation of mobilization funds. salaries and lots of other expenses to run the business effectively and for making profit.g. Bank use this money for various purposes e. funds are always moving from savers to borrowers. MOBS and BATCH braches as corporate clients generally don’t maintain accounts with them. However.habibbankltd.com. Unlocking of customers. investments. INTERNET Ebank: This will be all customer both companies and individuals. It has been decided that option will not be made available to customers of offline. ELECTRONIC BALANCING UNIT (EBU): EBU has been set up on the 6th floor.TWO VERSIONS OF hblEbank: • PC Ebank • Internet Ebank • PC Ebank: This service is mainly for large corporate and commercial customers where they will be able to dial directly into the bank data base using specific telephone numbers.
. EBU'S RESPONSIBILITIES: These mainly are: Registering customers identified by branches on hblEbank. for making loan. Providing training to PC module clients and give user guide.Habib Bank Plaza. Allocate password to clients. Head Office Karachi to manage the services that will provided under hblEbank. For internal banking clients provide passwords and user guide 13. Going forward more services can be added. Install software for the clients and PC customers. SERVICES: Balance/statements for up to 180days starting from the date of sign up for hblEbank for all rupee /FCY current and saving accounts.
8Sources of Funds: Deposits (Debt) Government (Equity) Private Sector (Equity) Different Fees Interest earned Sub-Ordinate loans Income from Other Sources. corporate loans. Banks do not only make profit or generate fund only through interest rather they make investment and then earn return on investment. advances and salaries. On the other hand. bank also pay interest to savers (depositors) but the rate of interest is smaller than that of interest on loans and this makes profit for the bank. ATM charges. Thirdly.9 Allocation of Funds: Making loans. interest on deposit is moved from bank to depositors. (E. interest on loan move to the bank of the borrowers. Banks use deposits to make loans and then earn interest on that loan. funds are also move from the bank in the form of investments in securities. There are lots of fee and charges that banks earn.g. funds are move to the bank in the form of different types of fee or bank charges.
13. Secondly. 13. Advances
.First funds move to the HBL in form of deposits then it uses these funds for making different categories of loan like consumer loans.7Generation of Funds: Banks generate funds by earning interest on loans and by making short-term as well as long-term investments. processing charges)
13. house building loans. DD charges. Moreover. and income from other sources. agriculture loans. However. working capital loans.
Investments Salaries Interest paid
and 2002 by the renowned journal “The Banker UK”. Comparative Analysis of Domestic Banking Industry of Pakistan There were 17 listed banks in Pakistan 2004. It has lowest rates on exports and other borrowings. The National Bank of Pakistan is also the first bank which has started a “Foreign Exchange Company” in order to facilitate the general masses. both in terms of deposits and advances.Under the above said heading I critically analyzer the financial strengths and weakness of HBL by using different financial analysis tools like: ratios analysis. horizontal analysis and vertical analysis of the financial statements of the bank for last five years. It also undertakes Government Treasury operations. It acts as an agent of the Central Bank wherever the State Bank does not have its own branch. These four banks continue to enjoy a significant share in the market. United Bank. Standard Chartered Bank. It is the largest commercial bank in the country and an agent of GOP. It is also the only domestic bank of the country which had has been compared and included by prestigious Journal “The Asia Week” with other banks in the region. It is the only domestic bank of the country. National Bank of Pakistan is providing every possible facility to nation’s socio-economic development. which clearly show the actual picture of the bank operations about his financial strength. Four banks are still not listed. Allied Bank of Pakistan. including collection of taxes and deliveries of salaries. NBP provides a wide range of services. which are Habib Bank. It is the largest contributory agent of Government and Semi-Government requirements. Dawood Bank. 14. All the foreign banks have been busy to
. which has been awarded “The Best Domestic Bank” consecutively in 2001. All the foreign banks of the country are busy to invest heavily in the field technology and ecommerce in order to overcome branch limitation.1Financial Analysis: In the domestic banking industry of Pakistan National Bank of Pakistan possesses a unique position. National Bank of Pakistan was established under the National Bank of Pakistan Ordinance 1949 in Pakistan. regularize the inflows of foreign money and control the undesirable blackmailing of private foreign exchange companies in the country. Citibank. NBP occupies a unique position in the financial sector of Pakistan. Deutsche Bank and ABN AMRO Bank are main foreign banks in the country. pensions to public sector employees.
Scheduled Banks and their branches in Pakistan
. consumer finances and housing finance. The commercial banks comprise of 3 nationalized banks.introduce new products and idea to grab larger proportion of the local markets. 3 privatized banks. 14 foreign banks. Foreign banks are carrying major proportion of local business in credit cards. and 2 MFBs operating in Pakistan whose activities are regulated and supervised by State Bank of Pakistan. and 4 specialized banks. 15 private sector banks. At present there are 41 scheduled banks. 2 provincial scheduled banks. 6 DFIs.
ordinated loans Liabilities against assets subject to financial lease Other liabilities Deferred tax liabilities net
5776325 34904352 432545165 15180213 -
5737457 56392270 459140198 15578177 -
15418230 58994609 531298127 3100000 19943126 -
9944257 46844990 597090545 3954925 24913236 -
10041542 52542978 682750079 4212080 29862144 -
.14.2 HABIB BANK LIMITED CONSOLIDATED BALANCE SHEET ASSETS
Cash & balance with Treasury Bank Balance with other banks Lending to financial institution Investments Advances Other assets Operating fixed assets Deferred tax asset
33051049 31813513 12272248 107384470 316881635 14481818 11166195 1842977 528893905
46310478 35965048 6550128 119587476 349432685 17765291 11954876 2725486 590291468
55487664 27020704 1628130 177942251 382172734 27346111 13780555 6613372 691991521
56533134 39307321 6193787 138145692 456355507 35419252 14751252 11222444 757928389
79839836 40366687 5352873 216467532 454662499 41116582 16766668 9205944 863778621
Bills payable Borrowings from financial institutions Deposits of other accounts Sub.
net of tax
6900000 2051371 23079826 32031197 846801 7609852 40487850
6900000 17802584 20475080 45177664 913317 7352385 53443366
6900000 19821455 28341670 55063125 965642 7208662 63237429
7590000 24243254 39447648 71280902 890099 3009435 75180436
9108000 27527380 38498335 75133715 1143241 8092842 84369798
NET ASSETS Shareholders’ Equity
Share capital Capital reserves Unappropriated profit Total equity attributed to the equityholders Minority interest Surplus on revaluation of assets.3 HABIB BANK LIMITED CONSOLIDATED PROFIT AND LOSS ACCOUNT
Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against non-performing loans and advances – net (Reversal) / provision against off-balance sheet obligations Reversal of provision against diminution in value of investments Bad debts written off directly Net mark-up / interest income after provisions 21994655 Non mark-up / interest income Fee. commission and brokerage income Income / gain on investments Income from dealing in foreign currencies Other income Total non-mark-up / interest income Non mark-up / interest expense Administrative expenses Other provisions / write offs – net Other charges Workers welfare fund Total non mark-up / interest expenses Staff retrenchment cost Profit before taxation 14095063 249033 68483 14412579 15436376 1602401 13833975 15425461 122510 54898 15602869 20564258 1723771 18840487 18297279 276111 85152 18106320 15144617 21348016 200163 64751 323575 323575 2193505 22034379 22745955 210190 3540 399166 23358851 21381636 2938000 1726336 1402521 1787443 7854300 29848955 3931710 1219623 1102358 2235805 8489496 36167127 3420051 2472663 1487374 2643076 10023164 33250937 4518408 2369233 2374318 311522 16378811 43970884 5316479 598018 19133115 3333000 11159612 44740487 27677631 23227773 27592073 33580875 2005 32343206 7327306 25015603 2974665 128851 82568 3020948 2006 43685740 13204037 30481703 2863207 45438 13697 2804072 2007 50481021 19153957 31327064 8238227 54626 84310 8099291 2008 63305033 26525556 36779477 6904919 372598 1909887 9187404 2009 76076347 33405813 42670534 8794560 51396 346495 9089659
Basic and diluted earnings per share
Processing and Analysis: We can use several tools to evaluate a company. With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health. they allow us get a better view of the firm’s financial health than just looking at the raw financial statements. and evaluating the performance of managers.e. I will use Microsoft Word and Microsoft Excel work sheets to compute the different ratios and analysis. setting goals. profitability and operational efficiency of the undertaking. Financial ratios are usually expressed as a percent or as times per period. to forecast financial performance.49
15525011 7900 15614020 20.current . Ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements.4
RATIO ANALYSIS: Financial ratios are useful indicators of a firm's performance and financial situation. For internal purposes: ratios can be useful in planning for the future. Ratios are useful both to internal and external analysts of the firm. External analysts use ratios to decide whether to grant credit. and to decide whether to invest in the company. It is defined as the systematic use of ratio to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial condition can be determined. Financial ratios can be used to analyze trends and to compare the firm's financials to those of other firms. The term ratio refers to the numerical or quantitative relationship between two variables. to monitor financial performance. Ratio points out the operating efficiency of the firm i. but I will use one of the most valuable tool that is “financial ratios“. to
. Ratios are an analyst’s microscope.prior years ..30
1000023 83806 10084037 14.
14. whether the management has utilized the firm’s assets correctly.deferred Profit after taxation Attributable to: Equity holders of the Bank Minority interest
4076848 39397 149975 4187426 9646549
7144846 39067 965607 6140172 12700315
7220717 1668562 3828699 5060580 10084037
8661150 233100 2471891 6420359 15614020
8095642 1095355 980600 7980887 13400749
9563303 83246 9563303 13.47
13389452 90230 13479682 14. Ratio analysis is a widely used tool of financial analysis.86
12630259 70056 12700315 18.
Leverage Ratios 4. These ratios examine the profit made by the firm and compare these figures with the size of the firm. Special Bank Ratio
Profitability is the net result of a number of policies and decisions. Liquidity Ratios 3. Profitability ratios show the combined effects of liquidity. the assets employed by the firm or its level of sales. If comparison shows a variance. 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. the possible reasons of variations may be identified and if results are negative. It is these ratios that can give insight into the all important "profit". It provides the relevant data for the comparison of the performance of different departments. Activity Ratios 5. asset management and debt on operating results. Ratio analysis helps in inter-firm comparison by providing necessary data. An inter firm comparison indicates relative position. Profitability Ratios 2.
. 1. give users a good understanding of how well the company utilized its resources in generating profit and shareholder value. The long-term profitability of a company is vital for both the survivability of the company as well as the benefit received by shareholders.increase the investor’s wealth. These ratios. It ensures a fair return to its owners and secures optimum utilization of firm’s assets. There are four important profitability ratios that I am going to analyze: Net Profit Margin: Net Profit margin = Net Profit / Sales x 100 Net Profit Margin gives us the net profit that the business is earning per dollar of sales. the action may be initiated immediately to bring them in line. much like the operational performance ratios. This section of the discusses the different measures of corporate profitability and financial performance. Yet another dimension of usefulness or ratio analysis.
42. the more efficient management is in utilizing its equity base and the better return is to investors.82
2008 22034379 63305033 34.97%
2008 15614020 63305033 24.
Return on Equity (ROE): Return on Total Equity = Profit after taxation x 100 Total Equity Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total common equity. It is the most important of the “Bottom line” ratio.80%
2009 21381636 76076347 28. The higher the ratio percentage.12%
2007 15144617 50481021 30.07%
2007 10084037 50481021 19. we can find out how much the shareholders are going to get for their shares. Year Net Profit Sales Net Profit Margin 2005
2006 12700315 43685740 29. By this. An increase in the ratios indicates that a firm is producing higher net profit of sales than before.66%
29.This margin indicates the profit after all the costs have been incurred it shows that what % of turnover is represented by the net profit.61%
Profit Before Tax Ratio (PBTR) Profit before tax x 100 Gross Markup Income Year Profit before Tax Gross Markup
2006 18840487 43685740 43. The return on equity ratio (ROE) measures how much the shareholders earned for their investment in the company. This ratio indicates how profitable a company is by comparing its net income to its average shareholders' equity.
Operating Expense Ratio Non-Markup Exp x 100 Gross Income Gross income = Net interest income + Non-markup income
2007 10084037 13780555 73.82%
2007 10084037 55063125 18.92%
2008 15614020 757928389 2.31%
2008 15614020 71280902 21.83%
Return on Total Assets Ratio Net profit after tax x 100 Total Assets Year Net profit Total Assets ROA 2005
2006 12700315 590291468 2.15%
2007 10084037 691991521 1.06%
2009 13400749 863778621 1.82%
Return on Fixed Assets Ratio Net profit after tax x 100 Fixed Assets Year Net profit Fixed Assets ROFA 2005
2006 12700315 11954876 106.84%
2009 13400749 16766668 79.55%
29.Year Net income Total Equity
2006 12700315 45177664 28.17%
2008 15614020 14751252 105.
515884733 452811703 1. accounts receivables.16
837806009 726865845 1. marketable securities. Also known as "net working capital".19
2008 731954693 631948038 1. accounts
receivable and inventory).152
2006 575611106 480455832 1. Current assets are important to businesses because they are the assets that are used to fund day-to-day operations and pay ongoing expenses. Positive working capital means that the company is able to pay off its short-term liabilities. current maturities of long-term debt. Year Current Assets Current Liabilities Current ratio Working Capital: Working Capital = Current Assets – Current Liabilities A measure of both a company's efficiency and its short-term financial health. Negative working capital means that a company currently is unable to meet its short-term liabilities with its current assets (cash. and other accrued expenses.26%
2009 23358851 53830146 43.Year Non Markup Exp Gross Income OEP
2007 18106320 41350228 43.39%
32869903 37. Current assets normally include cash.78%
2008 21936505 53158288 41.03%
Liquidity ratios measure a firm’s ability to meet its current obligations. short-term notes payable. or the "working capital ratio". Current liabilities consist of accounts payable. and inventories. These include: Current Ratio: Current Ratio = Current Assets / Current Liabilities This ratio indicates the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future.20
2007 671597594 566659483 1.
A low working capital indicates an unprofitable use of working capital.Year Current Assets Current Liabilities Working Capital
515884733 452811703 63073030
2006 575611106 480455832 95155274
2007 671597594 566659483 104938111
2008 731954693 631948038 100006655
837806009 726865845 110940164
It is very clear from the above calculations that the working capital of the bank is gradually increasing over the years. or cover. This ratio is simply the ratio of earnings before interest and taxes for a particular reporting period to the amount of interest charges for the period.5 times
2006 43685740 95155274 0.5 times
2007 43685740 104938111 0. which shows good short term liquidity efficiency Sales to Working Capital: Sales to Working Capital = Sales / Working Capital Sales to working capital give an indication of the turnover in working capital per year. the greater the likelihood that the company could cover its interest payments without difficulty
2008 63305033 100006655 0.
Year Sales Working Capital Sales to Working Capital
32343206 63073030 0. One of the most traditional of the coverage ratios is the Interest Coverage Ratio. It indicates a firm’s ability to cover interest charges. This ratio serves as one measure of the firm’s ability to meet its interest payments and thus avoid bankruptcy. them. times interest earned.68 times
Interest Coverage Ratio: Coverage Ratios are designed to relate the financial charges of a firm to its ability to serve. In general. Interest Coverage Ratio: Earning before interest and tax Interest Charges Earning before interest and taxes divided by Interest Charges. the higher the ratio.6 times
76076347 110940164 0. It is also called Times Interest Earned.
Assets and liabilities are found on a company's balance sheet. The financial leverage ratio is included in the financial statement ratio analysis spreadsheets highlighted in the left column.11
2008 95840455 757928389 0.12
2006 82275526 590291468 0. calculation. Upper acceptable limit of the financial leverage ratio is usually 2:1. The proportion of a firm's total assets that are being financed with borrowed funds. measures the percentage of funds provided by the creditors.12
2009 120206523 863778621
0. The debt ratio is calculated by dividing total long-term and short-term liabilities by total assets.64
Liquid Asset To Total Asset Ratio: Liquid Assets Total Assets Year Liquid Assets Total Assets LATAR 2005 64864562 528893905
2008 22034379 26525556 0. charts and explanations of each ratio Debt Ratio: Debt Ratio = Total Debt / Total Assets The ratio of total debt to total assets.83
2009 21381636 33405813
2006 18840487 13204037 1. A high financial leverage ratio indicates possible difficulty in paying interest and principal while obtaining more funding. definitions. which provide formulas.13
2007 82508368 691991521 0. with no more than one-third of debt in long term.13
Financial Leverage Ratio
The financial leverage ratio indicates the extent to which the business relies on debt financing. the more leverage the company is using and the more risk it is assuming. generally called the debt ratio.
.Year EBIT Interest / Markup Expense Interest coverage RSR
2005 13833975 7327603
2007 15144617 19153957 0. The higher the ratio.
2006 536848102 590291468 0.
2007 628754092 55063125 11.42
2008 682747953 71280902 9.91
2008 682747953 757928. we came to see that this company is highly leveraged one Calculating the debt ratio. the less leverage that a company is using. the lower the number. The debt to equity ratio gives the proportion of a company (or person's) assets that are financed by debt versus equity.Year Total debt Total Assets Debt Ratio
487716055 528893905 0. As you can see through the formula below. It is a common measure of the long-term viability of a company's business and.37
We can see from the above calculations that this ratios continuously decreasing in the last three years.9
779408823 863778621 0. Year Total debt Total Equity Debt To Equity Ratio 2005
487716055 32721197 14.90
2006 536848102 45177664 11. Debt to Equity Ratio: Debt to Equity Ratio = Total debt / Total Equity The debt to equity ratio is the most popular leverage ratio and it provides detail around the amount of leverage (liabilities assumed) that a company has in relation to the monies provided by shareholders. along with current ratio. we came to see that this company is highly leveraged one.91
2007 628754092 691991521 0. As a result. A high debt to equity ratio implies that the company has been aggressively financing its activities through debt and therefore must pay interest on this financing. debt to equity calculations often only includes longterm debt rather than a company's total liabilities.89 0.58
779408823 75133715 10. or its ability to cover its expenses. a measure of its liquidity.90
Calculating the debt ratio.
net of depreciation. Total Asset Turnover: Total Asset Turnover = Total Sales / Total Assets The amount of sales generated for every dollar's worth of assets.
Fixed Asset To Total Asset ratio: Interest/markup
. It also indicates pricing strategy: companies with low profit margins tend to have high asset turnover. while those with high profit margins have low asset turnover. receivables.the higher the number the better. A higher fixed-asset turnover ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues.Activity ratio are sometimes are called efficiency ratios.specifically property.08
2009 76076347 863778621 0. plant and equipment (PP&E) . Turnover
2005 32343206 528893905 0. Asset turnover measures a firm's efficiency at using its assets in generating sales or revenue . fixed assets etc. It is calculated by dividing sales in dollars by assets in dollars. These ratios express relationship between level of sales and the investment in various assets inventories.08
Fixed Asset To Total Asset ratio: Financial ratio of markup/interest earned to fixed assets.07
2007 50481021 691991521 0.
Year Total Sales Total Assets Total Asset .07
2008 63305033 757928389 0. Activity ratios are concerned with how efficiency the assets of the firm are managed. The fixed-asset turnover ratio measures a company's ability to generate interest from fixed-asset investments .06
2006 43685740 590291468 0.
A high ratio.22%
2008 456355507 757928389 60.29
2009 76076347 16766668 4.63%
Fixed Assets To Total Asset ratio: A measure of the extent to which fixed assets are financed with owners equity (capital) (Fixed Assets / Total Assets).Fixed Assets Year
Interest Fixed Assets
2005 32343206 11166195 2.5 or higher. .91%
2006 349432685 590291468 59.89
2006 43685740 11954876 3. indicates an inefficient use of working capital which reduces the enterprise's ability to carry accounts receivable and maintain inventory and usually means a low cash reserve.66
2008 63305033 14751252 4.53
Special Bank Ratio
Fixed Advances To Total Asset ratio: Total advances x 100 Total Assets
Year Advance Total Assets TATAR
2005 316881635 528893905 59.65
2007 50481021 13780555 3.19%
2007 382172734 691991521 55.
Fixed Assets x 100 Total Assets
2009 454662499 863778621 52. This will often limit your ability to respond to increased demand for your products or services.
2. it could be used to estimate uncertain events in the past. I will discuss two of these methods: horizontal analysis and vertical analysis. in the information. the term "trend analysis" has more formally-defined meanings.5 a) Horizontal Analysis Methods of financial statement analysis generally involve comparing certain information. Common Size Analysis (Horizontal and Vertical): The term "trend analysis" refers to the concept of collecting information and attempting to spot a pattern. It is a procedure in fundamental analysis in which an analyst compares ratios or line items in a company's financial statements over a certain period of time.Year Fixed Assets Total Assets FATAR
2005 11166195 528893905 2. For example. The horizontal analysis compares specific items over a number of accounting periods. In some fields of study. the decision is often based on the investing time horizon under consideration.11%
2006 11954876 590291468 2. however.94%
2009 16766668 863778621 1. including investors. and executives. so understanding financial statements is of great importance. The analyst will use his or her discretion when choosing a particular timeline. or revenue may be compared over a period of several years.
. or trend.99%
2008 14751252 757928389 1. 14. Financial statement information is used by both external and internal users.02%
2007 13780555 691991521 1. These users must analyze the information in order to make business decisions. Although trend analysis is often used to predict future events. accounts payable may be compared over a period of months within a fiscal year. Several methods of performing financial statement analysis exist. creditors.
119.37 123.76 128.69 86.96
.42 156. 2007.27 122.4 153.8 75.13 24.04 53.6 117.3 242.07 109.86 148. 2009 HORIZONTAL ANALYSIS ASSETS
Cash & balance with Treasury Bank Balance with other banks Lending to financial institution Investments Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS
33051049 31813513 12272248 107384470 316881635 14481818 11166195 1842977 528893905
46310478 35965048 6550128 119587476 349432685 17765291 11954876 2725486 590291468
55487664 27020704 1628130 177942251 382172734 27346111 13780555 6613372 691991521
56533134 39307321 6193787 138145692 456355507 35419252 14751252 11222444 757928389
79839836 40366687 5352873 21646753 2 45466249 9 41116582 16766668 9205944 86377862 1
100 100 100 100 100 100 100 100 100
140.62 116.6 199.1 113.4
141.67 107.HORIZONTAL ANALYSIS HABIB BANK BALANCE SHEET AS ON DEC 31 2005.03 113.06 147.37 111.552 130. 2008.8 111.56 11.69 99.2
122.08 113.8 109.36 110.66 82.39 411.22 102.9 115. 2006.
89 120.56 126.03 7 30.66
125. 2008.931 140.85 96.net of tax TOTAL EQUITY 6900000 2051371 23079826 32031197 846801 7609852 40487850
6900000 1780258 4 2047508 0 4517766 4 913317 7352385 5344336 6
6900000 1982145 5 2834167 0 5506312 5 965642 7208662 6323742 9
7590000 2424325 4 3944764 8 7128090 2 890099 3009435 7518043 6
9108000 2752738 0 3849833 5 7513371 5 1143241 8092842 8436979 8
100 100 100 100 100 100 100
118.74 0 13.033
120.957 31.32 83.15
110 136.9 105.18
26.92 157.91 112.779.70
200.06 107.7 98.92 127.204.54 97.ordinated loans Liabilities against assets subject to financial lease Other liabilities Deferred tax liabilities net TOTAL LIBILITIES
5776325 34904352 43254516 5 15180213 48840605 5
5737457 56392270 45914019 8 15578177 53684810 2
15418230 58994609 53129812 7 3100000 19943126 62875409 2
9944257 46844990 59709054 5 3954925 24913236 68274795 3
10041542 52542978 68275007 9 4212080 29862144 77940882 3
100 100 100 0 100
99.34 106.525. 2009 HORIZONTAL ANALYSIS 2005 2006 2007 2008
HORIZONTAL ANALYSIS HABIB BANK CONSOLIDATED PROFIT & LOSS ACCOUNT AS ON DEC 31 2005.97 112.32 161.3
128 117.holders’ Equity 2005
Share capital Capital reserves Unappropriated profit Total equity attributed to the equityholders Minority interest Surplus on revaluation of assets.7 0
268.1 102.61 129.78
100 111.07 130.327.87 138.021
Bills payable Borrowings from financial institutions Deposits of other accounts Sub.67
120 113.05 0 159.305.78
S.59 105.6 115.67
100.95 0 107.7 104.458 40.06 115.93
.05 118. 2006 & 2007.16 114.556 36.87 206.18 159.07
Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / 3234320 6 7327306
43.481.3 128 121.40 128.43 268.685.
16. commission and brokerage income Income / gain on investments Income from dealing in foreign currencies Gain on investments in associate Other income 1787443 Total non-markup / interest income 2984895 5 Non mark-up / interest expense 7854300 1402521 1726336 2199465 5 2938000
91.interest income Provision against non-performing loans and advances .13
2.net Charge / (reversal) against off-balance sheet obligations Charge / (reversal) of provision against diminution in the value of investments Bad debts written off directly
2501560 3 2974665
3020948 Net mark-up / interest income after provisions Fee.39
8.000 11.12 7
9089659 33580875 125.
83.106.net Other charges 68483 Workers welfare fund Total non markup / interest expenses Profit before taxation Taxation 1441257 9 1383397 5 249033 1409506 3
64.100 (1.840.Prior years 39397 .359
7.31 5 12.Current 4076848 .2 39.00
117.067) 1.46 1
106.355) 100 99.36
4187426 Profit after taxation Attributable to: 9646549
12.473.600 100 643.425.6 138.6
123.034.562 233.84 396.220.420.095.4
50.381.67 7.Administrative expenses Other provisions / write offs .95
18.016 22.Deferred 149975 (965.717 8.505
Equity holders of the Bank Minority interest 83246 9563303
12.1 0 93.07
21.980.630.16 -4271 -596.084.03
80.43 118.31 5
105.642 100 175.037
6.661.47 469.936.084.955 100 109.86 9 18.25
235 25.01 2.259 8.4
122. This approach to financial statement analysis. VERTICAL ANALYSIS HABIB BANK BALANCE SHEET AS ON DEC 31 2005.24 6. The main advantages of analyzing a balance sheet in this manner are that the balance sheets of businesses of all sizes can easily be compared.70
132.16 25.1096 20.8454 6.037
15.67 6. 2008. Common-size balance sheets and income statements can be more easily compared. When using vertical analysis.94
12. whether across the years for a single company or across different companies.24 4. 2006.32 20.03
9. The total used by the analyst on the income statement is net sales revenue.06
.0928 1. the analyst calculates each item on a single financial statement as a percentage of a total.700. It also makes it easy to see relative annual changes in one business. produces common-size financial statements. also known as component percentages.65
Cash & balance with Treasury Bank Balance with other banks Lending to financial institution Investments
33051049 31813513 12272248 10738447 0
46310478 35965048 6550128 11958747 6
55487664 27020704 1628130 17794225 1
56533134 39307321 6193787 13814569 2
79839836 40366687 5352873 21646753 2
VERTICAL ANALYSIS 2005 2006 2007 2008
6.905 0.4589 5.30
13. liabilities and equities) in a balance sheet is represented as a proportion of the total account.1862 0. while on the balance sheet it is total assets.019 3.81
71.9563303 Basic and diluted earnings per share 13. The term vertical analysis applies because each year's figures are listed vertically on a financial statement.8172 1.71 7.6 b) Vertical Analysis It is a method of financial statement analysis in which each entry for each of the three major categories of accounts (assets.18
197 3.48 3.Advances Other assets Operating fixed assets Deferred tax asset TOTAL ASSETS
31688163 5 14481818 11166195 1842977 52889390 5
34943268 5 17765291 11954876 2725486 59029146 8
38217273 4 27346111 13780555 6613372 69199152 1
45635550 7 35419252 14751252 11222444 75792838 9
45466249 9 41116582 16766668 9205944 86377862 1
59.23 9.9463 1.04 0.525 76.65
2.5533 77.653 0.94 1.132 0.59 81.34 7. 2008.001 3.87 92.199 5.96 0.6732 1.169 3.211 4.1806 78.45 8.43 7.14
1 2.081 9.78 -
S.5218 3.04 9.016 3.14
55.246 9.4807 100
1.946 9.11 0.76 1.1 7.991 0.405 0.056 0.45 90.0096 2.6391 90.155 1.397 9.228 8.117 0.06 100
Bills payable Borrowings from financial institutions Deposits of other accounts Sub.30 0.ordinated loans Liabilities against assets subject to financial lease Other liabilities Deferred tax liabilities net TOTAL LIBILITIES
5776325 34904352 43254516 5 15180213 48840605 5 40487850
5737457 56392270 45914019 8 15578177 53684810 2 53443366
15418230 58994609 53129812 7 3100000 19943126 62875409 2 63237429
9944257 46844990 59709054 5 3954925 24913236 68274795 3 75180436
10041542 52542978 68275007 9 4212080 29862144 77940882 3 84369798
1.93 9.287 7.882 90. 2009
.287 90.69 0.76
2.91 2.86 4.16 6.160 1.448 2.779 0.65
VERTICAL ANALYSIS HABIB BANK CONSOLIDATED PROFIT & LOSS ACCOUNT AS ON DEC 31 2005.36 6.35 100
59.78 0.312 6.holders’ Equity 2005
Share capital Capital reserves Unappropriated profit Total equity attributed to the equityholders Minority interest Surplus on revaluation of assets.205 9.38 4.net of tax TOTAL EQUITY 6900000 2051371 23079826 32031197 846801 7609852 40487850
6900000 1780258 4 2047508 0 4517766 4 913317 7352385 5344336 6
6900000 1982145 5 2834167 0 5506312 5 965642 7208662 6323742 9
7590000 2424325 4 3944764 8 7128090 2 890099 3009435 7518043 6
9108000 2752738 0 3849833 5 7513371 5 1143241 8092842 8436979 8
1.05 3.63 4.14 1.86 9.972 9. 2006 & 2007.73 2.782 -
2.08 79.952 1.23 3.0252 0.86 4.956 100
2.94 ----------------------------------------0 0 0 0 0 82568 (13.01 43.017 0.477
42.207 8.09 9
56.356 46.108 0.90 7 11.78 6.626) 372.291 9.018
5.076.327.227.0 0 63.405.677.592.VERTICAL ANALYSIS 2005
Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision against nonperforming loans and advances .904.74 0
4.775 7.560 9.073 68.598 (51.525.316.63 1 33.064
63.863.58 6 44.670.225
37.19 6.580.931.099.909.3 4
77.98 2199465 5 27.051 4.310) 1.438) (54.495 0.663
22.659 9.518.167 3.104 -0.404 9.420.481.089.773 27.34 6.4187 188.8.131.529.957 26.898
.710 3.742 6 0.67 2501560 3 2974665 2.875 23.90 1
13.588 6 0.14 2.813 19.39 -0.70 3
31.08 9 6.347
50.804.net Charge / (reversal) against offbalance sheet obligations Charge / (reversal) of provision against diminution in the value of investments Bad debts written off directly 3020948 Net markup / interest income after provisions Fee.887 346.685.137 5 3.481.779.919 3234320 6 7327306
2.408 9.031 -0.187.396) 0.794.305.06
58.04 14.227 6.94
41. commission and brokerage income Income / gain on 1726336 2938000 5.072 8.91
8.455 128851 (45.697) (84.51 3 11.233 597.
159.000.15 8.5 7 0.7 2 35.717 8.898 85.034.52
18.Current 4076848 7.10
0.575 399.505 47.381.31
21.496 10.789 65.510 276.884 44.379
21.investments Income from dealing in foreign currencies Gain on investments in associate Other income 1787443 Total nonmark-up / interest income 2984895 5 Non mark-up / interest expense Administrative expenses Other provisions / write offs .102 3 0.333.751 3.106.487.167.355
14.87 3 14.923
-----4.076 3.102.937 43.7 7
35.45 9 58.851 18.80 7
22.840.316 2 0.250.946 3.65 2 30.235.166 0 0 0 54.1179 -----------------4.643.740.936.111 200.236 1402521 1.374.190 1409506 3 36.5234 2.2804
0.745.12 7 33.511 1
29.318 4.970.522 3.72 2 0.319 1 4.66 2.164 16.095.811 24.70 ---323.48 7
12.913.32 21.86 9 23.330 -----0 0 5.2 8 82.86 25.612 8.358 1.220.80 7854300 11.716 0 34.169
42.374 2.805 2.433 19.378.21
0.2 8 19.net Other charges 68483 Workers welfare fund Total non mark-up / interest expenses Profit before taxation Taxation 1383397 5 1441257 9 15.25
0.52 5.297.750 6 2.127
0.33 2.540 249033 122.489.661.846 7.115 1.144.
10. The said technology will not only increase our distribution capabilities by many folds but will also simplify our internal procedures thereby reducing the transactional cost and lead time for service.700.Deferred 149975 (965.452
12.Prior years 39397 .86
12.067) 1.614.31 5
17. structure up-gradation.084.562 233.66 5
0.614. At HBL board of directors have elaborated plans for transformation of the entire I.30 13.009
10.. This year HBL completed his automation of the government’s tax collection services thereby
13.189 2.12 -0.18 20.806
(3.14 2 24.420.084.125
1.700.70 18.28 4.98
7. architecture of the bank by implementing core banking solutions.072
19.9 4 29.011
13. The bank is expanding its ATM network and connectivity to further expand our reach to the customers.T. HBL has started a number of projects in relation to I.47 4.8 2
4187426 Profit after taxation Attributable to: Equity holders of the Bank Minority interest 83246 9563303 9646549
14.100 (1.980.31 5 12.11
9563303 Basic and diluted earnings per share 13.8 2
Information Technology Today banking is becoming more and more mechanized and it is the I.584
19. support that can improve the customer service and reduce cost at the same time.668.66
banking for better services.621 Total Liabilities in 2009 731.297 2. evaluate and manage risk.572 779.823 Profit After Tax in 2009 4.542 13.749
. HBL is also looking into other I.994 418.345 7149 15.408. 14. During the year the bank established an Operational Risk Management Unit to supplement its already established Credit and Market risk units for comprehensive risk management.764.opening new opportunities for such services on behalf of other organizations.714 10.483.852 509.727 728.495. Risk management in terms of adoption of Basel II guidelines is on time and is advancing smoothly with completion of internal gap analysis.T.223.400. Credit and risk management HBL is continuously upgrading its risk management process to identify.205 863.7 Competitors Bank NBP ABL MCB UBL HBL Bank NBP ABL MCB UBL HBL Bank NBP ABL MCB UBL HBL Total Assets in 2009 841.421.568.340.214.393. products for salary and pension disbursements and E.501 388.058 439.778.
employees from other companies but they are maintaining their accounts with HBL. Respondents were bank employees. Flow of information is quite fast and efficient but staff is not well educated to handle the system. I want to mention some aspects that I assessed by using this questionnaire. HBL is providing more profit on its accounts as compared to any other bank in the market with extra benefits.
. Branch locations are good but branch environment is not up to the standards. Correspondence is done through ordinary mail (courier services) as well as through email using LAN and dialup. Employees are loyal with HBL. HBL is providing state of the art services but also charging much as compared to other banks in the market. compared to foreign banks operating in the same markets.15-SWOT Analysis
Based on the above designed questionnaire and responses from the respondents. They want to remain with HBL even for next 10 to 20 years till their retirement.
they are unable to understand the communication system fully.
Suggestions to overcome these problems Strengths: Overall relationship among the employees of HBL is friendly. Due to this flaw. Bank not takes aggressive steps for its promotion and advertisement of services. Some other banks offering credit card facility free of cost with relaxed policies and with attractive features. HBL is offering the credit card now when the credit card industry is on its decline stage. Other banks are providing online fund transfer facility free of cost to their customers.Problems
Weaknesses: Insufficient technical capacity to handle the customer load but improving now The individual efficiency of worthy employees. In the present era of latest technology. Loyalty of employees One-window operation based system. Branches have less decision making power and authority Mostly staff members are not highly educated. Nation-wide network. Working environment of branch is good. rewarded in the form of proper increments and promotion in grades is required. Customer will go to one slot only and get his/her payment from there within 1 to 2 minutes. Credit card access ability is not easy. Charges on online funds transfer are more than any other bank in the market.
Threats: All branches not beautify by providing appropriate furniture and interior decoration internally and externally. most of the staff members are computer illiterate.
Investment Banking Until recently the bank perceived as purely commercial banking entity so in order to expand its business the bank may start investment banking by investing in the portfolio of handsome return. Opportunities: Consumer Banking The basis need of the consumer such as housing. the bank can enjoy with more funds. No service down as compared to other banks in the market. They feel proud on having their accounts with HBL. Night Banking
. HBL can introduce a comprehensive range of bonds. Investing in the Foreign Capital Market HBL can enjoy handsome return its funding base by investing in capital markets in the foreign countries. Due to first bank in the Pakistan. Issuance of Bonds To enjoy with large amount. So by initiating these services. people have feeling of security for HBL.
Above mentioned are the strengths of HBL. HBL must adopt these strengths in the affective way to attract the maximum market share. transportation and other durable goods are not adequately financed by the banks. Extra services must be provided free of cost to the existing bank customers. New Branches HBL by establishing new branches in foreign countries can expand its business and can enjoy with the profit.
HBL ATM is available all the time.
ownership as they feel it secure therefore bank improve its deposit by giving facility of night banking and also can compete its competitors with positive steps. HBL fully recognizes its responsibility towards society in general and towards promotion of sports in the country in particular. It is major player in the foreign exchange and money markets and is a primary dealer of government securities. Its objective is to become an employer of choice and to maintain complete industrial harmony within the institution. I have observed the following results. utilizing HBL’s existing branch network of 1436 plus conventional branches and looking into strategic acquisitions for expansion in this field. given below: HBL’s plans for the year 2008 include opening of Faisalabad and Rawalpindi branches with the focus on growing organically by opening more standalone Islamic banking branches. HBL dedicated staff is a key strength.
16-Conclusion & Recommendations
Conclusions After analyzing the HBL during my internship there. HBL has the second largest treasury in terms of size. HBL has been investing in developing this valuable HR through need base training and career growth development. Its focus is towards the promotion of sporting activities in the country and giving our patronage for the promotion of
. Advisory Services It can establish advisory services in order to facilitate the customers in investing in the securities. people still come to HBL because of its Govt.Despite of poor customer service of HBL. The organization has always contributed towards worthy causes and has donated generously in case of natural calamities.
Banks are playing very important role in the economic growth of the countries. These points are as under: This is a computer era. Now a day there is a competition between the banks. HBL have built a state of the art sports complex at Karachi. The bank should finance its loans in those projects that are meeting the required standard and should avoid the political pressure. By the use of computer properly these branches can increase there working efficiency. To promote healthy sports activity in the country.
. Keeping in view the hard work by the staff members at all levels of management. With the use of computer we can increase our efficiency. HBL no doubt a positive contributor in this respect but I think there are certain points by adopting which can serve more effectively and efficiently. Being of the countries themselves and for the rest of the world.national game of hockey. which is being recognized as an essential ingredient for the economic well. The bank should bring forward the new talent as fresh knowledge and education is considered very important to increase the efficiency and production. Recommendations The global economic environment has changed. The environment of the offices should be comfortable so that the client and staff must feel comfort during business in bank. creating challenges and opportunities for the world’s policy makers. The interference of union in banking business should be minimized as it decreases the working efficiency of the employee as well as the bank. HBL should computerize all its branches. staff should be given bonus and increment every year. The privatization drive has emerged as a strong tool of transformation. HBL as public service oriented institution has to create business opportunities for themselves. Separate desk or counter should be established in every branch to provide the information as required by the clients. There is needed to make the outlook situations of branches in those manners that can compete the other modern banks in the banking market. Now there is a greater awareness that in an interdependent world all countries gain individually if these countries become positive contributor to world economic growth as whole.
it should be improved. There is too much dependence on handwork and they are not getting at with computer programmed. self-spoken and well-dressed staff should be rewarded and appreciated and lazy.
Unsecured loan are not to be provided in case of banks directions. Promotion should be given to competent persons on merit basis. All the employees should have their courses according to their requirement.
. There are some clients having sound and successful plan but without financially sound and providing securities bank should firms such policies that may solve this problem. Every year some of the employees should be sent for training to other countries and employees from other countries should be brought here. which are not good for reputation of bank. reward and punishment system should be introduced. All the employees should be well trained. There are some employees untrained which decreases the efficiency of the bank branch. Refreshes courses for staff are most important in my international organization. In my opinion each employee should have regular job change. their families. smart. Most of the bank employees are sticking to one seat only. with the result that they become master of one particular job and loose their grip on other banking operation. In commercial institutions like banks. companies or firms. People have to wait for re-cashing their cheques and for paying their utility bills. skilled. educated. Means achieve. lethargic staff should be warned and punished. All the branches of HBL should be computerized.
pk 8.17-References & Sources
1.ecnext. http://wrightreports.pk 6.com/ 7.ibp.nbp. http://www.com. www.com/ 3.com.org.com. http://www.pk/ 4.pk 5. http://wrightreports.corporateinformation. Annual Report of HBL
.com/ 2.kse.secp.ecnext. http://www. http://www.