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Purpose of studying this organization is that, I have my own interest in this bank, because of my friend and good repute of this bank. My friend is doing job in this bank and I think this bank provide better jobs opportunity as compare to other organizations, that’s why I choose this organization for internship. Another reason for studying this organization is that, the bank manager was my father friend, therefore my father recommend this bank for internship program and here I gained practical experience related with my course and I come to know how bank use the policies and strategies and how evaluate its performance. I feel pleasure and honor that I got the opportunity to work in such a privileged and reputable bank of the country. During my internship program I tried my every best to equip myself with all important knowledge. In this report, I have tried to humble endeavor to cover various aspects of bank like, introduction, its history, main departments, culture, objectives and working financial analysis.
BRIEF HISTORY OF HABIB BANK LTD : The Habib Bank Group is a leader in Pakistan's services industry. An extensive network of 1425 domestic branches – the largest in Pakistan and 55 international branches has enabled HBL to provide comprehensive services that meet customer needs. This has ensured thriving client relationships that form the backbone of the Bank's operation. Today, HBL plays a central role in Pakistan's financial and economic development. It has come a long way from its modest beginnings in Mumby on August 25,1941 when it commenced operations with a fixed capital of 25,000 rupees. Impressed by its initial performance, Quaid-e-Azam Mohammed Ali Jinnah asked the Bank to move its operations to Karachi after the creation of Pakistan. HBL established itself in the Quaid's city on August 7,1948 and became a symbol of pride and progress for the people of Pakistan. Habib Bank has been a pioneer in providing innovative banking services. These have included the installation of the first mainframe computer in Pakistan followed by the first ATM and more recently, internet banking facilities in all our 1425 domestic branches. The Bank's towering presence in Pakistan's financial and commercial life has remained unchanged over the decades. The strength of its brand and image is symbolized by its prominent Head Office building that has dominated Karachi's skyline for35Years. We continue to build on our track record and in our quest for excellence we strive to meet the needs of both our customers and our employees. At Habib Bank we aim to ensure customer satisfaction by providing high quality banking services. This is made possible by the professionalism of our employees all of whom are provided with the requisite training and opportunities to enable them to realize their full potential.
NATURE OF THE ORGANIZATION. The word “bank” has been derived from the French word “banque” or bancus which means bench, office or institution for the keeping, lending and exchanging of money. Some authorities have the opinion that “Bank” is derived from the “Germen” word back which to the meaning of “joint stock fund”. The bank is a financial institution that borrows money from one party and lends to the other party (Government, individual, business) and the difference between borrowing and lending make profit for the bank. Bank borrows and lends money on interest basis. Banks are classified according to their sphere of activity; the main types of banks are as under. Commercial banks Industrial banks. Agricultural banks. Saving banks. Exchange banks. Central banks. Cooperative banks COMMERCIAL BANK: Commercial is engaged in performing the routine duties of banking business. Such bank collects the money from the people (as borrowing) and extends the same money as a loan for development purposes. Commercial bank plays a vital role in the economic development of a country by performing the variety of function as given below: Accepting of deposits (Current, saving and fixed account).
They used to keep strong safe. for storing the money and other valuable of the people. Agency services to customers (Collection of cheques. cash credit. General utility services (Foreign business. Later on goldsmiths began to issue receipts for the money deposited with them to settle transactions. dividends. The first stage in the development of banking was the acceptance of deposits from people. 4 . the history of bank is traced to as early as 2000 B. Making loans and advances (overdraft. HISTORICAL DEVELOPMENT OF BANK: History of bank is very old. providing trade information). They also planned to allow the customers to withdraw in excess of the amount deposited to meet the customer’s needs. Issue traveler cheques. These receipts were used in payment of debt and acceptable to all. water and gas bills. This was the second stage towards the development of banking.C. People with surplus money deposited with them. electricity. When goldsmiths realized that they had surplus money therefore they intended to lend some portion of money to he nearly traders and merchants who constantly requested for loans This business was quiet profitable and they instead of charging interest from depositors began to give interest on the money deposited with them to attract more people this was the third stage towards the development of banking. and sale of securities. Its origin is also traced to early goldsmiths. discounting bill). and acts as a trustee. This facility is called overdraft and they used to keep some portion of money for this purpose. The priest in Greece used to keep money and valuable of the people in temples.
As a result of conference held in 1548 at Nuremberg. 5 . To overcome this problem people felt that their must be a bank which control the banking activities of different lending organization.After some time there was then started too much confusion in the banking system and they were not able to meet the demands of customers. Later on many other banks were established will the same objective. Now a days the banking activities has greatly increased commercial banks are now multi serviced organizations and play an important role in financial markets and in the economic development of the country. We can conclude that commercial banking system actually developed in nineteenth century. The first bank was found in Geneva in 1587. This failure on the part of money lender to return money caused distress among the people. The decision was taken in favour of establishing a bank that regulates the banking activities.
e. In 5763 Million 2008 9647 2009 12700 2010 10084 2011 15614 18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2007 2008 2009 2010 2011 profit 6 .Business Volume of the Bank Profit Bank has contained successfully to maintain consistent and sustained growth during the year 2011. However after tax profit grew by 54. NPLs increased by 20% against last year.8% against the last period. The Bank posted 45% increase in operating profit (i. Analysis of Profits: Profit 2007 Rs. profit before provisions and taxation) against last year.
9388 million as against Rs. Advances are written off when there is no realistic prospect of recovery. The provisions against non-performing advances are charged to the profit and loss account. 2008 316882 2009 349433 2010 2011 382173 456356 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 2007 2008 2009 2010 2011 advances 7 .Advances Advances are stated net of provisions for non-performing advances. 7823 million last year. Advances 2007 Rs. Analysis of Advances. During the year the NPLs increased by 20% to Rs. In 259089 Million Advances. This increase is a result of further down grade of few large exposures besides some new classifications.
In Million 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 deposits 2007 404629 2008 432545 2009 459140 2010 2011 531298 597091 8 . Analysis of deposits show that current and saving deposits increased by 17.6% and 1.4% recorded in fixed deposits.3% to Rs. 2011 as against Rs. For this purpose a team of young and energetic Business Development Officers established last year is functioning very effectively.Deposits Deposits increased by 12. In order to improve the deposits base of the bank a Sustainable Long Term Deposits Mobilization Strategy has been devised. Deposits are generally regarded as the life – blood of the banking industry. Analysis of Deposits. 531298 million last year.60% respectively and growth of 30. 597091 million as at December 31. Deposit s Rs.
R. Lain Donald Cheyne Mr. Zakir Mahmood LainDonald Sajid Zahid Ahmed Jawad Mushtaq Malik Mr.Number of Employees. Sajid Zahid Mr. Number of Employees Year 2007 2008 2009 2010 2011 18625 16314 14572 14552 14123 Corporate Information.Yasin Malik Mr. Sultan Ali Allana Mr. Ayaz Ahmed Ms Nausheen Ahmed Audit Committee Mr. Ahmed Jawad KPMG Taseer Hadi & Co Chartered Accountants Legal Advisors Chairman President & Chief Executive Director Director Director Director Director CFO Company secretery Chairman Member Member Auditors Mahmood Yousuf mandiwalla 9 .
committed to meeting all financial needs of the customers not only help the customers in their investment plans but also save them from the hassle of waiting in queues. musharaka. letter of credit.e. structured finance. Visa Debit card.Product lines offered by the bank. green card. Gold card. gurantees. And insurance products like amaan and tabeer. personal finance etc. Other products are mutual funds. trade and industry. The elegantly designed product centers at its branches offer to the customers the ease and convenience of conducting banking transactions in full confidentiality and privacy in a first class way. the personalized and professional services of dedicated relationship managers. working capital financing. Islamic business. Habib bank offers a full range of banking products and services to its customers across the country. Corporate banking products includes loans. Advances and credit quality products includes term loans. Islamic products are Ijarah. foreign currency financing etc. short term facilities for local trading. Banking offers Shariah compliant products and services to meet the short and long term requirements of Islamic Banking is a growing market segment that offers attractive opportunities to potential and existing customers. Consumer banking products includes credit cards i. running finance. Bank Also gives mortgage finance. cheque purchase facilitry. murabaha. Advances & Credit quality Products. phone banking facility. Corporate Banking Products. Consumer Banking Products. 10 . corporate advisory services etc. At HBL. Islamic Banking Products.
Branch Network Name of Region Bahawalpur Faisalabad Gujranwala Gujrat Hyderabad Islamabad Jhelum Khi North Khi South Lahore Mardan Mirpur Multan Muzaffarabad Peshawar Quetta Sahiwal Sargodha 53 95 64 65 54 112 76 77 66 92 92 51 97 34 100 36 77 78 Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches Branches 11 . Karachi Pakistan.I chundrigar Road.Organization Structure Main offices ( Head Office and branches) Head Office Habib Bank Plaza I.
Sialkot Sukkur Sub Total Business Centers Commercial Banking Corporate Banking Islamic Total Banking 17 13 1 69 49 1437 Branches Branches Branches Branches Branch 1468 Branches 12 .
The Departments working in HBL are as: 1. Account opening Depatment Remittance Department Clearing Department Accounts Department Cash Department Credit Department Information Tecnology Department 13 .Departments of the Bank Banking procedures are divided between various departments. Different departments do their jobs in occurrence with the bank policies. 2. 7. In Habib Bank. Each department is managing by head of department & procedures are followed by officials of the branch. 5. 6. each branch is divided into various departments. 3. 4.
V. SPECIMEN SIGNATURE When the Banker is satisfied about the integrity of the customer. FORMAL APPLICATION: The customer is to fill "Account Opening Form. OBTAINING INTRODUCTION:- The bank before opening. iii. ACCOUNT OPENING DEPARTMENT. ii. 500/. 14 . It is a formal request by a customer to the bank to allow him to have and operate the current or saving account. he agrees to open the account. IV. and account obtains introduction of the customer from old customer. These formalities in brief are as under i. HOW TO OPEN AN ACCOUNT There are certain formalities which are to be observed for opening of a current or saving account with a Bank. The Banker obtains the specimen signatures of the customer on the signature book or on card. OPERATING THE ACCOUNT. responsible person etc. A. MINIMUM INITIAL DEPOSIT:In Pakistan the current account can be opened with a minimum of Rs.These amounts are also the minimum balances to be maintained by the account holders with the Bank.and PLS Saving Account with a minimum of Rs 100/.1.
the customer himself should. WITH-DRAWL. ii. He should also see that the entries are initialed by the accountant. Cheque book is issued on discretion of the branch manager. The customer should verify the entries with own books of account. the Banker gives to the customer. B. i. iii. 15 . In order to safe guard the secrecy of the account. Pay in slip book. Send the pass book for making entries and also periodically check up them. PRECAUTIONS IN PREPARING THE PASS BOOK:- The Banker should be careful in preparing the pass book However. A new cheque book is issued only on receipts of the requisition slip attached to the cheque book issued previously and this presented along with the depositor pass book for entire against cheque book challan. IV.When an account is opened in a Bank. the customer should receive the pass book in closed cover. iv. Cheque Book and pass book with a view to operate it. i. Withdrawal is made on cheques supplied by the Bank. ii.
16 . This balance is then paid to the depositor and his receipt is taken. the pass book is canceled. TRANSFER OF AN ACCOUNT.C. and the interest calculated as above is added to the balance of each account as on these dates. Account can be transferred to any other branches of N. The current rate of interest allowed on deposit in saving Bank account is ascertained at the Bank. unused cheque forms on hand are also surrendered at the same time. CLOSING OF AN ACCOUNT: A depositor willing to do.P. E. The amount of interest is calculated for each calendar month on the lowest balance at credit of an account between the close of the sixth day of a month and the end of the month and only on every complete sum of ten rupees. D. his account must present his pass book in order that with drawls and the amount of interest due on the account is entered therein and final balance stuck.B. free of charge. INTEREST. he presents his pass book personally or sends it to Bank and writes an application for the transfer of an account. Every account is made up half yearly to 30th June 31st December. If a depositor wants to transfer his account. This rate is subject to change.
Small percentage of interest is allowed on the balance of this account. The account can be operated by depositing a minimum cash of Rs. 5/-. Responsibility of every official engaged in the Bank service. SAVING ACCOUNT: Saving Account is that account in which customer puts his surplus money which he saves from his daily expenditure. MONEY DEPOSITED OR DRAWN BY POST: When money is sent by post for deposit. the pass book and a letter starting the amount of the deposit and the number of the account accompany it.F. the amount to be drawn and either the money is to be remitted by money-order or in currency notes registered. 17 . i. TYPES OF BANK ACCOUNT. G. When a depositor wishes to withdraw money by post he must forwards his pass book with a letter starting the number of his account. SECRECY: The secrecy of depositor’s account is the.
100/. in case of higher withdrawal. 18 . PROFIT AND LOSS SHARING ACCOUNT.or above. firm or organization by depositing Rs. CURRENT ACCOUNT: The current account is that one which the customer draws his daily cheques and is normally operated by the Business-men. or he will bear the loss as the case may be. iv.000/. The holder of this account will get profit of his amount.Any number of cheque amounting undue minimum balance limit can be issued by the account holder for withdrawal or for payment. So an individual is equally participant in profit and loss. 500/.per month is eight withdrawals. The holder of account can withdraw up to Rs. No interest is allowed on this account. It can be operated by minimum amount of Rs. The parties to a joint account are considered in law as they are one person. iii JOIN ACCOUNT A joint account occurs when two or more than two customers have one account. 15.ii. seven day prior notice is necessary. This can be operated by a person. This account is operated under interest free system.
The fixed period may be three months. Bank is liable to give interest on this account on maturity date. two years. six months. one year. five years and more.v. 19 . The account holder can not withdraw his amount before the specified period. FIXED DEPOSIT ACCOUNT. In this account an amount is deposited into the Bank for a fixed period of time. but the same Bank will allow loan against that certificate. The Bank allows a higher rate of interest for larger period. At the time of operating on account the Bank issues deposit certificates for the period and amount.
Khan. REMITTANCE DEPARTMENT. D. D. II. b. It is of two kinds. Within locality. I.I. Main Branch.Khan sends any draft to HBL. Rakh Mandar branch. Inland remittances can be classified as under:a.2.Khan is required to send drafts to any other branch situated in the same city the process is know as within locality. a.I. For example HBL. 20 . An inland remittance means a transfer of money payable at a certain place within the country. WITHIN LOCALITY When a branch situated in D. Out side locality. 1. Inland remittance.I. INLAND REMITTANCE. Remittance means transfer of money from one place to another place. Home remittance.
or may be direct y creditable to relevant account. Main Branch D. T. can be sent open.T) Demand Draft (D. Outside locality is an important type of inland remittances.Khan sends any draft to a Branch situated at LAHORE. OUTSIDE LOCALITY.T) Mail Transfer (M. the Bank takes commission and telegram charges from the sender. The Bank itself transfer the funds to the drawee branch though a coded message in telegram. confirmatory of which is also sent through routine date mentioning all details. 21 . HBL. For example. All bank Branches have been provided with their code books name Bank Keys Code Book where from the coded message is agreed by the drawee branch. It is commonly done through the following three means:i.I. TELEGRAPHIC TRANSFER In telegraphic transfer.T.b. which may be paid in cash in drawee branch. which means the transfer of money payable outside the city. D) i. A receipt is issued to the sender for the value received. ii iii Telegraphic transfer (T.
while T. Bank also deals in money and more over since the money belong to the depositors therefore.D. 22 .T. ACCOUNT SECTION.T. Difference is only of postage and. to the purchaser. the Banks do not recover postal charges as it is payable by the purchaser. which in its self is an advice also is sent by registered post. Other procedure is same as T. In D. it is of utmost importance to keep systematic and correct record. to the purchaser also sends its own advice called IBCO (Inter Branch Credit Order) to the drawee branch mentioning therein all details of issued draft.D. is sent through telegram. Demand drafts are purchased by the clients and after receipt of money Bank issues and delivers the D.ii MAIL TRANSFER (M.D. after deliver of D. The Bank. Every Business organization deals in money matters.) The Money can be remitted through this means also.D) Demand draft is a written order by a branch of a specified Bank. 5. amount can not be paid in cash. In this case the payable amount at the drawee branch can only be transferred to an account. drawn on another branch of the same Bank to pay a certain sum of money only to or to the order of the Payee.T. The M. telegram charges. deposit of money at sending branch. who himself sends it to the payee. iii DEMAND DRAFT (D.
because it keeps all the accounting records properly.L.Further-more.B. In H. the responsibility for maintaining necessary accounting data and to keep up to date records In a systematic manner has been assigned to the Accounts Department. 23 . Here account department hold great importance in banking. the Banks are commercial institutions and its main objective is to earn profit. then record of all incomes and expenditures are kept correct and systematically. therefore. The Branches of Bank perform their daily routine work and deal in money that belongs to depositors.
3. Similarly the cheques drawn on different Banks and deposited by Banks own customers for collection within the city is know as clearing The functions of receiving and paying is mostly done through the clearing house. Cheques are collected which are drawn up to Banks for customers. i ii Outward clearing Inward clearing. There are two main types of clearing. i. Every Bank performs the paying and receiving functions. Cheques are sent to clearing house thorough local main branch A delivery message from the local main branch comes to every branch at a fixed time to pick its outward clearing or outward returns as the case maybe. CLEARING DEPARTMENT. A clearing house can be defined as "AA place where that representatives of all Bank get together to settle the receipts and payment of cheques drawn on each other" Clearing House provides the facility which can hardly be dispensed with especially. 24 . in case of crossed cheques. OUTWARD CLEARING: It includes those cheques and other instruments which are sent by the Bank to the Banks for payment on behalf of its own clients.
Amount of the cheques in written in the "Delivered" and to pay column. f.D. d. schedule. INWARD CLEARING. The instrument and the paying in slips are separated.Outward Clearing At Branch a. g. are delivered to the messenger from the main branch. The cheques drawn are called inward clearing drawn on Habib Bank through its representatives. c. The instrument. The instruments are sorted I Bank-wise and branch wise. Numbers of instruments noted in the schedules are verified 25 . ii. Schedules are prepared. a transfer debit voucher is prepared. department. on the Bank presented by other Banks for payment It includes those cheques and other instruments of Pakistan branches which other Banks present at the clearing house. Jotting of all the schedules are taken in the clearing House statement. e. After balancing the outward clearing. the pay in slips are released to C. Inward Clearing At The Drawn Branch a. etc. After balancing. b. Account number of payee/endorsee is written on the back side of the cheques. h.
TRANSFER DELIVERY CHEQUES. Rakh Mandra branch. TYPES OF CHEQUES COLLECTED BY CLEARING SECTION. D. The amounts are debarred to the relevant accounts if otherwise in order. For example a person draws a cheque on N.B.P. The amount's of all the instruments are jotted down and totaled.Khan in favor of another person who maintains an account with N. The IBCO is prepared crediting the amount of the main branch. D.immediately on receipt. the collection Bank in any one of the following methods:26 . 3.I.Khan. The cheques which are collected and paid by two different branches of a Bank situated in the same city. Ali is a customer of HBL of CITY branch and draws a cheque in favor of Mr. that is deducted from the total and IBCO prepared for the remaining amount. Hussain who is also the customer of the same branch.P. main branch.B. When the payee/endorse and the drawer of cheque maintains account with different Banks. 2. These are the cheques which are collected and paid by same branch of HBL For example Mr. TRANSFER CHEQUES. CLEARING CHEQUES. b. If there is any return. c. If should be equal to the amount mentioned in schedule from the local main branch. e.I. d. 1.
FUNCTIONS OF CLEARING SECTION IN A BRANCH. The Bank maintains an account with the paying Bank. 27 .P. This is the most efficient method of collection and paying cheques. c.L. or any other member or such member of local clearing house.B. he fills in the pay in slip himself and hands it over the counter along with the instrument.B. To collect amounts of cheques drawn on members of the local clearing house sent for collection by N.a. To arrange payment of cheques drawn on the branch and gives for collection to any other branch of H. The customers are provided with the copes of pay In-slip. It is not so much appropriate. The cheques can be exchanged by representative of the various Banks who meet at a fixed time and at a fixed place. b. c. To accept transfer. transfer delivery and clearing cheques from the customer of the branch and to arrange for their collection. b. branches not represented at the local clearing house. PROCEDURE FOR CLEARANCE OF CHEQUE. a. whenever the customer wants to deposit any cheque. It can collect cash by sending its representative with the cheques to each of the paying Banks.
Generally this book is in bended form containing several sheets for several accounts. ACCOUNTS DEPARTMENT.4. GENERAL LEDGER. SUBSIDIARY LEDGER. 2. Main ledger is a book. where various accounts of different type are kept. VOUCHERS Written evidence recorded on a price of paper in respect of a money transaction is called voucher. These subsidiary ledgers are maintained from the main ledger. ACCOUNT A summary of all debit and credit transaction pertaining to a similar nature or to an individual or body of persons is called an account. 3. 4. 28 . The account department maintains all the accounting records properly there are certain accounting terms which are defined into the following 1. Where a main head has got different sub-head of it: subsidiary leader are maintained.
Paying cashier book. h. c. Income and expenditure ledger. a number of cheques are presented by customer for cash payment. i. f. d. 2. Supplementary sheets. e. The account department uses the following books and stationery a. g. Cash book cum-general ledger. 29 . Preparation of statement. b. Balancing and maintenance of books. Receiving cashier book. Abstract book. The main functions of the account section of a branch are as follows: 1. though transfer. During the course of daily business of the branch. FUNCTIONS OF THE ACCOUNT SECTION.BOOKS AND STATIONERY. Register of vouchers Transfer book. Different vouchers.
30 .delivery and clearing cheques at the counter. A number of new vouchers are passed by the branch by debiting. Also a number of new accounts are opened and cash is deposited by the customers. So in order to ensure that during the day all the transactions have properly been recorded and they are complete in all respects and are recorded in proper books by the branch this recording is done on daily basis and maintained by account section. one account and crediting another account.
Custodians are personally applying keys. Physical count of cash is carried out. 31 . Collection of fees like Multan Public School. “Cash paid” stamp is be affixed on the instruments in red ink. amount in figures and words is the same and it bears the signatures of the drawer and has been duly passed for payment by the authorized officer. count the cash. Cash position book. Place cash in the safe. Collection of utility bills like Electricity. Cash paid by the only after receipt of a duly passed Cheque / cash payment voucher etc. ATM is replenished with fresh pre-counted cash on daily basis. Gas. Match title of the account. Petty cash register is maintained. receiving & paying cashier books are countersigned by the manager. Telephone. Receipt of HBL Credit Card bills. write denominations of cash received. Ensured that the instrument is properly dated. Cash Department Receipt of cash from the customer.etc. Income vouchers are prepared & released. Sale & purchase of prize bonds. Cash position book & memo is prepared.5. on the back of the voucher/payin-slip. Payment of cash to the customer. Sign it at the prescribed place in token of having received the cash and affix the "Cash Received" Stamp.
Evaluation of customer. Two types of credit are Funded Credit and Non-Funded Credit. Non-Funded Credit is the loans in the form of guarantee. Experience and personal qualities of the borrower and nature and prospects of the business must be examined. 32 . Credit department issue short term and long term loans to its customers. Credit Department Credit department plays a vital role in the function of bank. Habib bank its sharing ratio in profit is very high. Preparation of reports for lenders. examining and scheduling the invoices of work done as per term and condition. Mark up calculation. Limit application procedure and basic fact sheets. Collection of insurance cover on hypothecated stock and mortgage property. Evaluation of business credibility for granting loan and financing. Funded Credit is in the form of physical cash. financial statement. The interest charged on the funded credit is called mark-up. Procedure of observing prudential regulation involved in loan application. Stock report collection. Checking. Responsible for budget preparation. local and foreign payments. and analysis of their variances. These are also called the contingent liability. cash flow.6. verifying. The main source of income is its mark up on different types of long term and short term loans. The rate of interest charged on non-funded loans is called commission. Implement effective budgetary controls. Repayment of the loan must primarily come from the productive use made of the money borrowed. Credit rating evaluation.
Internet. Network maintenance and troubleshooting are on daily basis. 33 . and System Back UP) is prepared for the month. Up gradation of hardware/ software. Statements of accounts and vouchers are printed on daily basis. Troubleshooting and Back ups. Month End Back Up. Anti-virus Installation and updating the system. Liaison between ETD and Branch. communication breakdowns. Funds Transfer. Customer complaints against ATM closure due to any reason. Daily Back. Information Technology Department Information technology department perform the following important functions: Maintenance of hardware. Day-End Reports. Statements of accounts and vouchers are printing on daily basis.7. Signature Software. Faultiness. Delivering services to internal customers. Monthly and Half Yearly. ATM Operations. Customer complaints against ATM clouser. Network Maintenance and Troubleshooting. Cash withdrawal. Maintenance. Online Circulars. Backing up of data (Signature. Day-End Processing. Voucher Printing. cash replenishment are on daily basis. Customer queries against ATM card usage. Handling customers complaints against ATM closure. Reports of weekly. ATM Balancing. ATM disputed transaction.
Structure and Functions of the Accounts/Finance/Audit Department Finance and Accounting Operations
Habib bank deals in finance and accounting operations. They check the daily voucher and posting. They note all the banks charges and expanses. The main focus on bank financial statement, they prepare the financial statement annually and semi annually of the bank. All accounting and financing activities are checked in this department. • Preparation of daily bank positions statement • Payment of salaries • Preparation of the statements • Depreciation calculation • Expanses, Income, Liabilities • Generation and Allocation of funds Manager Accounts look the following functions • Finalize the Accounts on monthly basis.. • Preparation of special reports as per instruction by Branch Manager. • Supervise all the working of other staff members. • Verify the party’s payment & all other expenses payments Deputy Manager Accounts responsible for the functions like: • Posting in the Accounting System. • Supporting to Manager Accounts to finalize the Accounts on monthly basis. • Supporting to make the monthly budget of the company.
• Preparation of Debtors and Creditors reconciliation reports and aging schedules. Preparation of Special reports for decision making of Management. Accounts Officer maintain the following • Prepare fund flow statement on daily basis. • Supporting to prepare weekly budget. • Posting of Funds Received from parties. Tax Officer ‘s role is to • Handle all sales tax and income tax matters. • Preparation of Refund case & Processing in department. • E-Filing of both (Sales tax & Parties tax payment) • E-Filing of both (Sales tax & Parties tax payment)
Role of Financial Manager
Financial manager (Branch manager) of a bank administers and manages all of the functions of a branch office. Job duties may include hiring personnel, approving loans and lines of credit, establishing a rapport with the community to attract business, and assisting customers with account problems. Branch mangers also are becoming more oriented toward sales and marketing. As a result, it is important that they have substantial knowledge about all types of products that the bank sells. The duties of financial managers vary with their specific titles, which include accounts manager, credit manager and cash manager. Accounts manager direct the organization’s budgets to meet its financial goals. He oversees the investment of funds, manage associated risks, supervise cash management activities, execute capital-raising strategies to support a firm’s expansion, and deal with mergers and acquisitions. Cash manager monitor and control the flow of cash receipts and disbursements to meet the business and investment needs of the firm. For example, cash flow projections are needed to determine whether loans must be obtained to meet cash requirements or whether surplus cash should be invested in interest-bearing instruments. Credit manager oversee the firm’s issuance of credit, establishing creditrating criteria, determining credit ceilings, and monitoring the collections of past-due accounts. A manager also performs the important functions which includes a manager makes organizational decisions and handles a variety of problems that arise
Manager is responsible to supervise and take charge of the activities and productivity of their workers. A manager has the capacity to evaluate and examine a process or procedure and decide on the best choice to produce an outcome. A manager is also responsible for the growth and increase in the organizations' finances and earnings. Managers who set high standards or goals and achieve them are great leaders by examples. career development. A manager satisfies customers by giving good quality of service or product and takes care of their needs. succession planning and working out compensation and rewards. A manager is the middle person in between the top management level and the team that reports to him.on a daily basis. A manager plays an important role in managing the performance of their staff and involved in employee selection. A manager establish goals and planning out the directions allow for effective time management and saves cost and resources. 37 . He has to ensure that communication is smooth and conveyed clearly to avoid misinterpretations and dissatisfaction. The ability to tolerate stress and remain poise under job pressures and still maintain a high activity and energy level are contagious.
The network used by the Bank is LAN (Local area network) while other branches are also using WAN (wide area network). instructions. This financial data is up-dated by every transaction. which fulfill the entire accounting requirement according to international standard. staff and Zakat are available on bank website which is helpful for any kind of matter related to any query. Tax statements are prepared with help of financial statements of bank for the purpose of collection of taxes under the instructions of State Bank of Pakistan. information. Foreign currency transactions are done through the internet with the other banks of the world for making the financial transactions effectively.Use Electonic Data in Decision Making. Financial statements for the last five years are available on bank website. online report browser is there. Foreign currency rates are calculated by treasury division with the help of stock exchange s of the world. income and expense vouchers. 38 . Habib Bank uses MYSIS software. All the transactions occur through this system. In addition to this signature verification software is there. This financial data is helpful for making branch budget. exchange server software etc. Online transactions are done and maintained though Uni-Bank system. Following points explain how the electronic data is used for decision making: All circulars including forex.
deposits had reached Rs. Funds are remaining necessary for the business of the banking sector and also the main element for carrying out the operations business concern.Sources Of Funds. Without funds. In order to improve the deposit base of the bank a Sustainable Long Term 39 . Businesses can use a wide range of sources of funds to help finance their trading activities.3% during the year. an increase of 12. 597091 million from Rs. 531298 million at the end 2010. it is impossible to carry out any business. Deposits are generally regarded as the lifeblood of the banking industry. In million 2011 597091 46844 7590 700000 600000 500000 400000 300000 200000 100000 0 2007 2008 2009 2010 2011 Deposits Borrowing share capital Comments By the end of 2011. The following are the main sources of funds for Habib bank Year Deposits Borrowings Share capital 2007 404629 29346 6900 2008 432545 34904 6900 2009 459140 56392 6900 2010 531298 58994 6900 Rs.
40 . Aggregate cost of deposits has increased but borrowing has decreased in the current year. Bank borrowing situation is positive and effective which shows bank stands good position in the banking business. For this purpose a team of young and energetic Business Development Officers (BDOs) established last year is functioning very effectively.Deposits Mobilization Strategy has been devised. Borrowing is the second source of funds of Habib bank. Borrowing from other financial institutions meets the financial needs of the bank for the short period of time.
(that is the business makes profits. The benefit of this is that investors do not require interest payments. In million 2011 7590 3954 8000 7000 6000 5000 4000 3000 2000 1000 0 2007 2008 2009 2010 2011 Share capital Sub-ordinated loans 41 . grows. and dividend (the shareholders share of the companies profits). which is known as share capital.Generation Of Funds A bank can generate funds by selling part of itself in the form of shares to investors. Shareholders are of-course the owners of a bank. makes more profits. so as the business becomes bigger their investment will be worth). they invest money in the hope of capital growth. Habib bank generates the funds through the following sources: Year Share capital Subordinated loans 2007 6900 ------- 2008 6900 ---------- 2009 6900 ---------- 2010 6900 3100 Rs.
Comments Habib bank generates the funds through share capital from selling their shares to the shareholder and the general public. Share capital amount increases every year which shows that Habib bank’s overall position is better than other banks. Sub-ordinated loans represent Sub-ordinated Term Finance Certificates issued by the bank to the general public. In the current year 2011 the share capital increased by 10%. This is the best way to generate the funds for meeting their financial needs timely.5%. And sub-ordinated loans increased by 27. 42 . Sub-ordinated loans are helpful for meeting the financial needs of the bank.
Some allocation funds maintain a specific proportion classes over time. This strategy can help balance risk while seeking to provide competitive returns. bonds and cash equivalents in a variety of securities. In million 2011 456356 138146 6193 500000 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 2007 2008 2009 2010 2011 Advances Investments lending 43 . Habib bank allocates their funds in the following ways: Year Advances Investments Lending to financial institutions 2007 259089 134523 3755 2008 316882 107384 12272 2009 349433 119587 6550 2010 382173 177942 1628 Rs. Allocation of funds provide a portfolio of a fixed or variable mix of the three main asset classes . while others vary the proportional composition in response to changes in the economy and investment markets.stocks.Allocation of Funds.
consumer sector. The increase in advances. 2011 against Rs. agriculture sector. coupled with strengthening effective rate of return. commodity sector and staff loans. Advances include corporate sector. available for sale and held to maturity. The investment portfolio registered a negative growth of 22. resulted in 19. 177942 million at December 31. 44 . Provision for advances is determined in accordance with the requirements of the Prudential Regulations issued by the State Bank of Pakistan from time to time. SMEs sector. 2010.4% increase in mark-up revenues from advances compared to last year.3% over last year which stood at Rs.Comments Advances are stated net of provisions for non-performing advances. 138146 million as at December 31. Investments are classified as held for trading.
25 (7.65) (23.76 454662499 1. (000) 81640246 37413185 30339344 254909116 459750012 16155290 9572203 34920007 924699403 Rs.65 26.78 2010 Rs.65 (23.32 23.52 18.67) 3.23 %age 42.03 Rs.(000) 9775093 40459860 2010-11 2011 %age 26.12 16766668 9205944 41262754 (3.98 15.22 0.37 863924793 7.98) 28.FINANCIAL ANALYSIS BALANCE SHEET HORIZONTAL ANALYSIS Particulars Assets: Cash & balance with treasury bank balance with other banks Lending to financial institutions Investments Advances Operating fixed assets Deferred tax assets Other assets Total assets Liabilities: Bills payable Borrowings 2009 Rs.43) Rs.14 (2. (000) 103399623 47349505 41581029 418604147 457367656 19167654 7275888 44808703 1139554205 Rs.(000) 13894502 39473670 216467532 17.(000) 10041542 52542978 %age (2.32) 466.05 64.55 37.(000) 79839836 40366687 5352873 2009-10 %age 2.0) 45 .
26 63.19 13.87 2011 98580423 42182220 46 .55 46994773 7602440 20.83 14782861 1913115 66.76 2010 81325028 34330255 201011 21.90 2.52 6085970 434604 1081358 9089659 33580875 16.71 3189333 17.70 36. commission Dividend income Share of profit in associates Gain on sale of securities Income from dealing in foreign currencies Total non markup income 44740487 (71.02 26.24 (30895) 47671 70.01 11.95 6925497 49472706 (51396) 346495 39.33 (9141) 237083 42670534 8794560 10.0 5432706 343252 713678 12.21 22.INCOME STATEMENT HORIZONTAL ANALYSIS Particulars Markup/interest earned Markup/interest expense Net markup income Provisions against non performing loans Reversal of provisons charge/Reversal for diminution in investment Total provisions Net interest income after provisions Non-markup income: Fee.93 3756094 3333000 90.11 542118 5316479 597018 1913115 2.47) 12762431 15.88 86.54 17.35 7585664 39409109 8.41 397.13 13.49 316823 71.90 56398203 6697555 2009 76076347 33405813 200910 6.61 51.
82 31.11 27040030 10005650 17034380 26. Financial ratio analysis is the calculation and comparison of ratios which are derived from the information in a company's financial statements. The level and historical trends of these ratios can be used to make inferences about a company's financial condition.11 77588 665047 29934169 210190 (15.46 25.63 24252960 21.37 27.Non markup expenses: Administrative expenses Other provisions/write offs Other charges Workers welfare fund Total non markup expense Profit before taxation Taxation Net profit after tax 21381636 7980887 13400749 26. its operations and attractiveness as an investment.22 178700 521702 25131510 56.10 34321398 11988376 22333022 3540 399166 23358851 49480 30.36 29433961 Ratio Analysis A ratio can be computed from any pair of numbers. 47 .24) 178148 36.47 19.69 17.93 19.58) 27.08 242427 22745955 6.
56 2010 1. Ratio tells that on what percentage earning assets contribute the total assets.56 1.57 2011 1.64 1.52 2007 2008 2009 2010 2011 Earning assets Earning assets ratio in 2007 is 1.57 and it is same in last year 2011 which is 1. in 2008 it is 1.57. While bank also has increased it’s earning assets ratio shows the more profitability of the bank as it can be shown by the profit and loss account of the different year that shows the net mark up income more for the year as compared to the previous years so bank is going gradually to the more profitability by giving more advances and loans.62 1. 48 .63 2008 1.• Earning to Assets:- Earning assets are the assets which are very important for any company for the bank. of Year Ratio 2007 1.58 1.54 1. Earning to assets calculated as: Earning to assets = Earning Assets Total Assets No. This ratio in 2009 is 1.62 which is little decrease as compare to previous year.56 a little decrease from previous year and in 2010 it is 1.63.57 1.62 2009 1.6 1.
07 0.06 Equity capital to total assets 2008 2009 2010 2011 Equity capital to total assets in 2007 is 0. • Net Profit Margin:- A ratio of profitability calculated as interest income divided by revenues.07 2009 0.03 0. Equity capital to total assets ratio is increases year to year.09 No of Year Ratio 0.07 which is increases as compare to previous year.08 0.05 0.06 0.06.08 2010 0. It measures how much out of every rupee of interest income a bank actually keeps in earnings.02 0.01 0 2007 2007 0. or net profits divided by interest income.09 2011 0.09 0.1 0.09. Bank’s total assets has increased and equity also increased. Profit margin is very useful when comparing bank in similar industries. bank has increased its capital adequacy ratio in the year.08 again increases from previous year and in 2010 it is 0.04 0. A higher profit 49 . In 2009 is 0. in 2008 it is 0.• Equity Capital To Total Assets:- Equity capital to assets is a common measure used to analyze capital adequacy of a bank.09 and in last year 2011 which is 0. It is calculated = Total Equity Total Assets 2008 0.
6 2008 29.6. Profit margin is displayed as a percentage. in 2008 it is 29.6. N.P margin is calculated as: = N.P after tax * 100 Sales No. of Year Ratio 2007 31.8 2009 29.9 and net profit margin is in last year 2011 which is 24.margin indicates a more profitable bank that has better control over its costs compared to its competitors.9 2011 24. It is calculated as: 50 . If creditors are not well protected. • Debt to Assets Ratio:- The debt to assets ratio indicates the percentage of assets financed by creditors.8 which is decrease as compare to previous year.0 is almost equal from previous year and in 2010 it is 19. the company is not in a position to issue additional long term debt.0 2010 19. and it helps to determine how well creditors are protected in case of insolvency. Net profit margin in 2009 is 29.6 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011 Net profit margin Net profit margin in 2007 is 31.
3 2009 91. This computation compares the total debt with the total shareholder’s equity.of year Ratio 2007 93. the lower this ratio is.= Total liabilities Total Assets *100 No.4 2008 92.5 2010 994. The debt to equity ratio also helps determine how well creditors are protected in case of insolvency.1 51 .of year Ratio 2007 1423. From the perspective of long term debt paying ability. It is calculated as: = Total liabilities *100 Shareholder equity No.2 2011 908.0 94 93 92 91 90 89 88 2007 2008 2009 2010 2011 debt to asset • Debt to equity Ratio:The debt to equity ratio is another computation that determines the entity’s long term debt paying ability. the better the company’s debt position.8 2011 90.0 2010 90.0 2008 1206.3 2009 1011.
of Year 20 Ratio 15 Return on equity 10 5 0 2007 2008 2009 2010 2011 52 2004 17.9 2008 20.1600 1400 1200 1000 800 600 400 200 0 2007 2008 2009 2010 2011 Debt to equity Debt to equity ratio in 2007 is 1423. ROE is expressed as a percentage and calculated as: = Net Income_ Shareholder’s Equity 25 No.7 .2. • Return on equity:- Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.0. Return on equity also known as "return on net worth" (RONW).5.1. and in 2008 it decrease as 1206. also in 2010 it decrease as 944. this shows that debt to equity ratio constantly decrease. In the last year 2011 it is 908.9 2005 23. in 2009 it is 1011.3.7 2007 15.8 2006 23.
13 2010 1.06 53 .45 2011 2.8 and minimum in 2007 which is 17.Return on equity ratio shows that bank earn good profit trough shareholder’s funds. In 2008 return is maximum which is 23. Sometimes this is referred to as "return on investment”. ROA is displayed as a percentage. The formula for return on assets is: = Net Income after tax *100 Total Assets No.9.of year Ratio 2007 1. • Return on Assets:- Return on average assets gives an idea as to how efficient management is at using its assets to generate earnings. Overall return on shareholder’s funds is positive.82 2009 2.18 2008 1. Calculated by dividing a company's annual earnings by its total assets.
13 2011 9.5 1 0.91 54 . It is calculated as: = Net worth *100 Total Assets No.2.99 2010 9. This ratio also shows that how much creditors protected because in it the assets ratio also use. • Net worth to Total assets ratio:- Net worth ratio determines the entity’s long term paying ability.06.5 2 1.65 2009 8.of year Ratio 2007 6. In 2009 the return is higher and lower in 2007. and last year 2011 the return is 2.5 0 2007 2008 2009 2010 2011 Return on assets Return on average assets ratio shows that management utilizes their assets in beneficial projects and made sound investment.56 2008 7.
12 10 8 6 4 2 0 2007 2008 2009 2010 2011 Net worth to total assets Net worth to total asset ratio is higher in 2011 as 9. It is calculated as: = Loan Deposits 0.91 and lowest in 2007. • Loan to deposit ratio:- While there is a concept that bank’s loans are its assets while its deposits are liabilities.01 0.009 55 . But if a bank has low deposits then obviously it will give low loans because bank gives its loans by the deposits and earn on the loans then pay mark up on the deposits to the customers.025 0.005 0 2007 2008 2009 2010 2011 Loan to deposit No.of year Ratio 2007 0.02 0. the chart shows that is gradually increases from year to year.03 0.015 0.
• Average Yeild on Assets:- Annual or other periodic rate of return on investments because banks act as custodians of deposits for many years until money must be paid out the depositors. They invest it to achieve a yield adequate to meet these obligations.01 2011 0. in 2008 it is 0.009.Loan to deposits ratio in 2007 is 0.02 2008 0.01.06 2010 0. It is calculated as: = Total interest income Total Assets No.014 a little decrease from previous year and in 2010 it is 0.02 56 .of year Ratio 2007 0. Yield is also important to the depositors that include a specific investment element. Loan to deposits ratio in 2009 is 0.003 and loan to deposits ratio is highest in last year 2011 which is 0.028 which is little increase as compare to previous year.01 2009 0.
01 and average yield on assets is in last year 2011 is 0.02 0.05 0.04 2010 1.04 0.0.33 57 . in 2008 it is 0.80 2011 1. Average yield on assets in 2009 is 0.06 0.02.01 which is decrease as compare to previous year.01 0 2007 2008 2009 2010 2011 average yeild on assets Average yield on assets in 2007 is 0.83 2009 2.07 0.of year Ratio 2007 1. Average yield on assets in 2009 is highest and in 2008 and 2010 it is lowest.42 2008 1. • Interest Expense to Interest income:- Interest income and interest expense are calculated from the bank’s income statement.02. It is calculated as: = Interest expense Interest income No. This ratio shows the income and expenses of the bank.03 0.06 a little increase from previous year and in 2010 it is 0.
5 2 1.of year Ratio 2007 64.2.1 2010 71.2 2009 76.33.5 0 2007 2008 2009 2010 2011 Interest expense to interest income Interest expense to interest income ratio in 2007 is 1.5 1 0. It is calculated as: = Advances *100 Total deposits No.42.04 a little increase from previous year and in 2010 it is 1. This ratio in 2009 is 2.9 2011 76.0 2008 73. • Advances to deposits ratio:Advances to deposits ratio demonstrate the degree to which bank has already used up its available resources to accommodate the credit needs of its customers. in 2008 it is 1.9 58 .83 which is little increase as compare to previous year.80 and ratio is lowest in last year 2011 which is 1.
One reason for fewer advances is the selective approach on the part of the management while deciding upon credit proposals.72 2009 4. the bank has got a relatively small amount of advances as compared with its deposits raised. Cash ratio indicates that how much cash the company has to pay its current liabilities. Cash ratio is calculated as: = Cash Current Liabilities No. At present.of year Ratio 2007 4. Advances to deposits • Cash Ratio:Sometimes an analyst needs to view the liquidity of a firm from an extremely conservative poit of view.59 2011 5.80 75 70 65 60 55 2007 2008 2009 2010 2011 Advances to deposits ratio is a comparison of funds generation and its funds mobilization. The best indicator of the company’s short run liquidity may be cash ratio. For example the company may have pledged its receivables and its inventory.20 2008 5. Cash is the most liquid asset of the bank. indicates the total loans sanctioned by the bank in relation to total amount of money deposited with the bank. or the analyst suspects severe liquidity problems with inventory and receivables.68 59 .87 2010 3.
and in the last year 2011 the ratio is 5. but external conditions. may affect this ratio. variations in the price level.of year 2007 2008 2009 2010 2011 60 . This ratio is calculated as: = Total operating expenses Total operating revenues No. It measures cost and should kept low. • Operating Efficiency ratio:This ratio is computed by comparing operating expenses to operating revenues.68. Operating revenues vary from year to year because of differences in rates. the type of services performed and the effectiveness of operating and maintaining the properties.7 6 5 4 3 2 1 0 2007 2008 2009 2010 2011 Cash ratio Cash ratio is highest in 2008 and lowest in 2009. such as the level of business activity.
in 2007 the ratio is 1.5 1 0.83 2.83. in 2008 the ratio is 1. • Return on Earning assets:- Return on earning assets measures the firm’s ability to utilize its earning assets to create profits by comparing profits with the earning assets that generate the profits.42 1.Ratio 1.80. Compute the return on earning assets as follows: = Profit after tax Earning assets No. in 2010 the ratio is 1.42.80 1.04 1.of year 2007 2008 2009 2010 2011 61 . a little decrease from 2004.33 2.33.5 2 1.5 0 2007 2008 2009 2010 2011 Operating efficiency ratio Operating ratio in 2009 is highest as 2.04 and lowest in last year 2011 which is 1.
009 0.01 0.008 0.013 0.007 0.002 0 2007 2008 2009 2010 2011 return on earning assets Return on earning highest in 2011 and in 2009 which is 0.013 0.Ratio 0.011 0.007.006 0.014 0. 62 .012 0.013 and lowest in 2007 which is 0.004 0.
and executives. Financial statement information is used by both external and internal users.Common Size Analysis (Vertical and Horizontal) The term "trend analysis" refers to the concept of collecting information and attempting to spot a pattern. I will discuss two of these methods: horizontal analysis and vertical analysis. These users must analyze the information in order to make business decisions. in the information. managers. Although trend analysis is often used to predict future events. the term "trend analysis" has more formally-defined meanings. creditors. Several methods of performing financial statement analysis exist. so understanding financial statements is of great importance. it could be used to estimate uncertain events in the past. In some fields of study. or trend. including investors. 63 .
63 Numbers 14123 7.01 20.47 Numbers 1. 20.06 9.38 7.07 15.7 2.ORGANIZATIONAL ANALYSIS Key Figures For the Year 2011 Operational Results Total Income Operating Expenses Profit before Income Tax Profit after Taxation Balance Sheet Shareholder’s Equity Total Assets Advances Investments Deposits Business Transacted Imports Exports Ratios Loan to deposit ratio Return on equity ratio Return on assets ratio Debt to equity ratio Advances/Deposits Ratio Cash Dividends Share Information Earnings per Share Other Information No. In Thousand 298933 172518 % 0.0 Rs.63 64.08 76.01 9.17 0. In Millions Habib Bank In million Bank Al-Falah In thousand 53158 21936 22034 15614 36292 10623 1794 1301 17044 348990 192671 75973 300732 Rs.584 64 . 190289 93406 0.4 40. of Employees % 74290 757928 456356 138146 597091 Rs.0 Rs.
Habib bank faces many competitors such as UBL. Meezan Bank. but the ROE ratio of Habib bank is greater. Ratio analysis shows that Habib bank’s loan to deposit ratio is equal with bank alfalah. assets. ABL. Advances/deposits and debt to equity ratio of Habib bank is much better than Bank Al-Falah. organizational analysis is prepared with the comparison of Habib Bank and bank Al-Falah.is comparatively good go side by side.Comments In banking industry. Bank Alfalah. 65 . Imports and exports items of Habib bank is better than bank Alfalah because of Habib bank’s foreign country branches play important role in this regard. advances. operational expenses. there are various banks which perform their functions under the State Bank of Pakistan. investment and deposits of Habib bank and Bank Al-Falah. Balance sheet items which include shareholders equity. profit before tax and after tax all these items of both banks are good but the financial position of Habib bank is better than Bank Al-Falah. Standard Chartered Bank etc. Askari bank. Operational results shows that total income.
Future Prospects of the Organization It is expected that there would be only a modest slowdown in the pace of growth of Pakistan’s GDP in fiscal 2007. service and ambitious strategic intentions not only in Pakistan but also in the whole region. Increased investment is targeted in developing resources. infrastructure and internal system support the aggressive consumer initiative and explorations of new avenue generation. both imports and exports. Habib Bank has passion for its customer.11. The main impact of such slowdown is expected to be felt in the area of foreign trade. Overall prospects for the banking sector suggest a continuation of the trends of the last three years. Future prospects of the bank are the following: Habin Bank will be the leading public sector bank in Pakistan with an international presence delivering quality service through innovative technology and effective human resource management. Furthermore Habib bank has plans to introduce a full suit of innovative consumer finance products designed to capture a significant share of the local consumer financing market and tap into the current growth in demand of such financing. There is a degree of uncertainty associated with the turbulence in international financial markets but its direct impact on Pakistan’s domestic economy is expected to be minimal. while the demand for private credit could slow further. 66 . Habib Bank expects its strong customer focus to drive the bank’s future business strategy.
Due to shortage of deposits and increasing number of advances. Bank’s loaning to corporate sector is at stake because of current textile industry sector crisis. Bank weak credit administration resulting into increasing number of non-performing loans. there is a threat of increase in non-performing loans. Due to this.falls / Weaknesses of Organization According to my analysis. therefore. 67 . Bank is offering low deposits rates. Bank faces the following weaknesses: Bank financial policies are not at the top. Bank has computerized accounting system but. the bank is currently facing liquidity problem. bank deposits are less as compared to other banks. The bank is currently at risk due to shortage of short term current assets and increasing number of short term liabilities. Bank has still some of the traditional ways of operations in this advanced technological environment. Bank is not introducing new products and saving schemes. The major focus of bank’s credit policy is towards textile sector. due to this deposit turn out of bank is low. due to this investor’s trust has reasonably declined on bank’s performance and hence the share price of the bank has remarkably decreased. Bank takes tremendous time to approve a loan proposal and other customer’s requests.Short. extended to textile sector. Bank recovery process is less active and hence not as vigilant loan. The major portion of bank’s earnings is disposed of in provisioning of these non-performing loans. still the bankers use to make their entries in the accounting register. Bank major weakness is the distribution of powers & authority among different levels of management.
68 .Conclusions I compare and analysis the financial statements of Habib Bank Limited and Bank Al Falah Limited. Working capital of Habib Bank is better than Bank AL. measures the percentage of funds provided by the creditors.Falah. but both companies must improve their liquidity position. The proportion of a firm’s total assets is being financed with high percentage of borrowed funds. It is the Indication of the net worth of the corporation. but it relates the stockholder's equity to the number of shares outstanding. Liquidity position of both companies is not up to standard. Earning per Share and Operating cash flow of Habib Bank Limited is also better than Bank AL Falah Limited. Book value per share of Habib Bank Limited is much higher than the Al Falah Bank. Profitability ratios of Habib Bank Limited are better than Bank AL Falah Limited. both are below industry average. giving the shares a raw value. Somewhat similar to the earnings per share. Generally leverage ratios. Net profit of Bank Al falah Limited is low due to heavy financial charges. but the liquidity position of Habib Bank is better from Bank ALFalah Limited. Habib Bank has a good market perception due to continuous declaration of dividends but on the other hand Bank AlFalah limited has not announced in dividend in the year 2006 and 2007. So the net worth of Habib Bank is better than Al Falah Bank. Leverage ratios indicate the high risk associated with both the companies.
evaluation of the employees. Bank should be adopting flexible policies. 69 . Bank should search new sectors for loaning in order to minimize the risk of default and also increase the strength of secured loaning. Bank should delegate more authorities to local centers in order ensure the speedy process of loan approval and disbursement. Bank should put stress on its product development and marketing department in order to introduce the new and unique products for maintaining its competitive edge in the market. so bank should try to adopt some other but more effective form of technology in order to provide comfort to the customers as well as the staff. Bank should provide the facility of foreign currency accounts to its customers at all branches. bank should adopt the following points to overcome the weaknesses: Bank should immediately reduced it further loaning and encourage the more depositors to invest its funds in bank in order to overcome the liquidity problem. Bank should increase its long term investment and must reduce its short term investments in order to its capital strength. promotions. especially in the areas of the recruitment. Bank should speed up recovery process of nonperforming loans and other loans as well as in order to improve its credit rating. Bank should impose proper loaning review and risk management department in order to improve its loaning strength and ensure the secured loans. Current unibank system used by the bank is very slow in processing.Recommendations According to my analysis.
2006. “A Cash Conversion Cycle Approach to Liquidity Analysis” James C.pk www.com.References Employs handbook of Habib Bank prepared by Human Resource Division of Habib Bank Annual reports of the Habib Bank for the year 2004. Taxes. 2008 Previous reports on Habib Bank Existing documents of Habib Bank Annual report of the State Bank of Pakistan Lawrence J. Depreciation and Cash Flow” The Professionals’ Academy of Commerce (PAC). Wachowicz. 2007. Gitman Principles of Managerial Finance 9th Edition. Verlyn D.pk 70 . and Eugene J. John M. 2005.pk www.com. “Introduction to Financial Accounting” Richards. Financial management 10th Edition.com.bankalfalah.habibbank. Financial management. Van Horne. “Chapter # 6 Financial Statement Analysis” Web Links: www. “Chapter # 3 Financial Statements. Jr.sbp. Laughlin.
Annexes Organizational Structure 71 .
M) Band (I & II) (SEVP & EVP) Deputy General Manager (D.G.Organizational Structure Group Executive (G. Manager Band (I & II) (OG3 & OG2) Officer Band (I & II) (OG3 & OG2) 72 .R Manager Band (I & II) (AVP) Manager Band (I & II) (OGI) Astt.E) General Manager (G.M) Band (I & II) (VP & SVP) S.
Branch Structure Branch Manager Credit manager Operation manager Credit Department Operations Accounts Section Account Opening Section Bills & Remittance Section Clearing Section Online Section Cash Section Information Technology Section FINANCE DEPT. STRUCTURE 73 .
E ACCOUNTANT EXECUTIVE AUDITOR EXECUTIVE 74 .CHIEF EXECUTIVE OFFICER (CEO) CHIEF FINANCIAL OFFICER (CFO) TREASURE FINANCE DIRECTOR INVESTMENT G.E BUDGETIG G.E CAPITAL STURCTURE G.