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INTERNSHIP REPORT OF
HABIB METROPOLITAN BANK LIMITED



By
Your Name
Roll No

Submitted in Partial Fulfillment of Requirements for the Degree of
Master of Commerce

To
Department of Management Sciences

National University of Modern Languages
Faisalabad, Campus.

August, 2014

National University of Modern Languages
Faculty of Information Technology and Management Sciences




It is hereby certified that the report has been thoroughly and carefully read and
recommended to the faculty of management sciences. For acceptance of final
internship report by Name, roll#, Session (Sep 2012 to June 2014) morning, in
partial fulfillment of the requirements for the degree of (name of Degree of) National
University of Modern Languages Faisalabad.

Dated


Supervisor
Supervisor signature
Panel member name
Panel member signature




Head of department
i

TABLE OF CONTENT

Chapter Page
TABLE OF CONTENTS i
EXECUTIVE SUMMERY . v
ACKNOWLEDGEMENT... vi
DEDICATION.... vii

I Commercial Banking in Pakistan And Origin of Islamic Banking ................ 1
1.1 Background Of Pakistani Banking .................................................................. 1
1.1.1 Scheduled Banks and NBFIs ................................................................... 1
1.1.2 Studies Conducted ................................................................................... 2
1.2 Regulations Of Commercial Banking In Pakistan .......................................... 2
1.3 Technology Used By Commercial Banks In Pakistan .................................... 3
1.4 Structure Of Commercial Banks In Pakistan .................................................. 3
1.5 Challenges Faced By Commercial Banks In Pakistan .................................... 4
1.6 Commercial Banks Operating In Pakistan ...................................................... 5
1.7 Introduction Of Islamic Banking..................................................................... 7
1.7.1 Re-launching of Islamic banking ............................................................. 8
1.7.2 Departments and divisions ....................................................................... 8
1.8 Vision Statement Of Islamic Banking ............................................................. 9
1.9 Mission Statement Of Islamic Banking .......................................................... 9
1.10 Objectives Of Islamic Banking ..................................................................... 10
1.11 Islamic Modes Of Financing ......................................................................... 11
1.11.1 Musharakah ............................................................................................ 11
1.11.2 Mudarabah ............................................................................................. 11
1.11.3 Murabaha ............................................................................................... 11
1.11.4 Salam...................................................................................................... 12
1.11.5 Istisna ..................................................................................................... 12
1.11.6 Ijaraha .................................................................................................... 12

II Introduction of Habib Metropolitan Bank Limited ........................................ 13
2.1 Introduction ................................................................................................... 13
2.1.1 HBZ Group ............................................................................................ 13
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2.2 Company Profile ........................................................................................... 14
2.2.1 Vision Statement .................................................................................... 14
2.2.2 Company Registration Number ............................................................. 14
2.2.3 Company National Tax Number ............................................................ 14
2.2.4 Registered Office ................................................................................... 14
2.2.5 Website .................................................................................................. 14
2.3 Habibmetro Organization Chart .................................................................... 15
2.3.1 Habibmetro Code of Conduct for Directors of the Bank ....................... 15
2.4 Habibmetro Memberships ............................................................................. 17
2.5 Product .......................................................................................................... 17
2.5.1 Current Account ..................................................................................... 17
2.5.2 Saving .................................................................................................... 18
2.5.3 Term Deposit ......................................................................................... 23
2.6 Services ......................................................................................................... 25
2.6.1 Habibmetro Home Remittance .............................................................. 25
2.6.2 Habibmetro Money Gram International................................................. 25
2.6.3 Habibmetro Cash Management Services ............................................... 26
2.6.4 Habibmetro E-Salary ............................................................................. 26
2.6.5 Habibmetro Rent Free Lockers .............................................................. 26
2.6.6 Habibmetro Short Term and Long Term Finance.................................. 26
2.6.7 Habibmetro Shares Subscription Desk (Services) ................................. 26
2.6.8 Habibmetro 24 Hours Call Center ......................................................... 27
2.6.9 Habibmetro Web Banking ..................................................................... 27
2.6.10 Habibmetro SMS Banking ..................................................................... 28
2.6.11 Habibmetro POS (Point of Sale) Services ............................................. 28
2.6.12 Habibmetro E-Statement ........................................................................ 29
2.6.13 Habibmetro Visa (ATM / Debit Card) ................................................... 29
2.7 Habibmetro Islamic Banking ........................................................................ 30
2.7.1 Mission ................................................................................................... 30
2.7.2 Introduction ............................................................................................ 30
2.8 Islamic Product .............................................................................................. 31
2.8.1 Habibmetro Islamic Current Account .................................................... 31
2.8.2 Habibmetro Islamic Saving Account ..................................................... 31
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2.8.3 Habibmetro Islamic Investment Certificates (HIIC) .............................. 32
2.8.4 Habibmetro Murabaha ........................................................................... 33
2.8.5 Habibmetro Ijarah .................................................................................. 33
2.8.6 Habibmetro Diminishing Musharakah ................................................... 33
2.8.7 Habibmetro Trade Services .................................................................... 34

III Structure and Departments of Habibmerto ..................................................... 36
3.1 Hierarchy Chart ............................................................................................. 36
3.2 Brief Introduction Of All The Departments .................................................. 37
3.2.1 Business development department ......................................................... 37
3.2.2 Cash management department ............................................................... 37
3.2.3 Account opening department ................................................................. 37
3.2.4 Credit department................................................................................... 37
3.2.5 Dispatch department .............................................................................. 38
3.2.6 Clearing department ............................................................................... 38
3.2.7 Account department ............................................................................... 38
3.2.8 Finance department ................................................................................ 38
3.3 Comment On The Organizational Structure.................................................. 39
3.4 Future Prospects Of The Organization .......................................................... 39

IV Learning in Six Week Internship ...................................................................... 41
4.1 A Brief Introduction Of The Branch ............................................................. 41
4.1.1 Starting and the ending dates of my internship ...................................... 41
4.1.2 Names of the departments in which I got training ................................. 41
4.2 Training Program .......................................................................................... 42
4.2.1 Account opening department ................................................................. 42
4.2.2 Cash department..................................................................................... 43
4.2.3 Credit department................................................................................... 44
4.2.4 Cleaning department .............................................................................. 45
4.2.5 Inward clearing ...................................................................................... 46
4.2.6 Outward Clearing ................................................................................... 46
4.2.7 Remittances Department ........................................................................ 47
4.2.8 Western Union ....................................................................................... 48
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4.2.9 Telegraphic transfer (TT) ....................................................................... 49
4.2.10 Demand draft (DD) ................................................................................ 49
4.3 Ratio Analysis ............................................................................................... 50
4.3.1 Gross spread ratio .................................................................................. 50
4.3.2 Noninterest income to total income ratio ............................................... 51
4.3.3 Spread ratio ............................................................................................ 52
4.3.4 Return on Asset ROA Formula .............................................................. 53
4.3.5 Return on Total Equity(ROE) ................................................................ 54
4.3.6 Debt Ratio .............................................................................................. 55
4.3.7 Debt / Equity Ratio ................................................................................ 56
4.3.8 Times Interest Earned ............................................................................ 57
4.3.9 Advance /deposit ratio ........................................................................... 58
4.3.10 Operating cash flow ratio ....................................................................... 59
4.3.11 Dividend Per share ................................................................................. 60
4.3.12 Earning per share ................................................................................... 61

V Analytical Analysis ............................................................................................. 62
5.1 Swot Analysis ................................................................................................ 62
5.1.1 Strengths ................................................................................................ 62
5.1.2 Weaknesses ............................................................................................ 63
5.1.3 Opportunities.......................................................................................... 63
5.1.4 Threats.................................................................................................... 64

VI Conclusion and Recommendation ..................................................................... 65
6.1 Conclusions ................................................................................................... 65
6.2 Recommendations For Improvement ............................................................ 66
6.2.1 Security cameras .................................................................................... 66
6.2.2 Proper reception ..................................................................................... 67
6.2.3 Token system ......................................................................................... 67
6.2.4 Behavioral and professional training ..................................................... 67
References ................................................................................................................... 68


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EXECUTIVE SUMMARY

This report is about HabibMetro. In October 1992, HabibMetro was established under
HabibMetro Ordinance 1949. National bank is owned by the government and act as
an agent of the State bank of Pakistan. Its headquarter is situated in Karachi. It has its
national and international level branches i.e. 51 national. HabibMetro maintains its
positions as a pakistans premier bank for higher achievements. Its subsidiaries
include HMB Capital, HMB Modaraba Management Company, HMB Exchange
Company, Taurus Securities, HMB Almaty and others. It offers its unique products
that are affordable for all classes.
During my internship, I learn a lot about working in different departments that are
account opening, clearing and remittance. The main department of any bank is finance
department and the main function of any bank is to deal with finance. Any bank
secures the resources of general public and offers them a good profit. HMB also
provides services for government employees. One portion of bank is reserve for
government employees dealings only.
After complete analysis of HabibMetro, I come to this conclusion that the
HabibMetro plays an important part in financial sector and it can gain highest success.










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DEDICATION

To My Loving Teachers, Friends, and family members who have been steadfast
supporters throughout myM.com with their invaluable love and understanding


T H A N K S T O A L L !


















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ACKNOWLEDGEMENT



First of all I am thankful to ALLAH who always helped me in all of the ways in my
life and always gave me courage and patience to do all of my internship in a good
manner and secondly I am thankful to my teacher and all of the staff of the bank that
also helped me to do my internship.


YOUR NAME












1

1 CHAPTER NO 1
COMMERCIAL BANKING IN PAKISTAN AND
ORIGIN OF ISLAMIC BANKING

1.1 BACKGROUND OF PAKISTANI BANKING

Banking in Pakistan first formally started in Pakistan during the period of British
colonialism in the South Asia. After independence from British Raj in 1947, and the
emergence of Pakistan as a country in the globe, the scope of banking in Pakistan has
been increasing and expanding continuously. Pakistan's oldest bank is the State Bank
of Pakistan, which is also the central bank of the nation. Before independence on
August 14, 1947, the Reserve Bank of India was the central bank of what is now
Pakistan. After independence, Muhammad Ali Jinnah took actions to establish a
central bank in Pakistan, which resulted in the new founding of the State bank of
Pakistan, with its headquarters to be based in Karachi. Only 7% of the population uses
the banks, has tremendous potential but this needs to be pushed a little further.
Pakistans financial sector consists of Scheduled Commercial Banks which include
nationalized, foreign, and private banks; and Non-banking Financial Institutions
(NBFIs) which include Development Finance Institutions (DFIs), Investment Banks,
leasing companies, modarabas, and housing finance companies tan under structure,
conduct and performance paradigm of industrial organization.

1.1.1 Scheduled Banks and NBFIs
Scheduled Banks and NBFIs (excluding Moradabad and leasing companies) are both
regulated by the State Bank of Pakistans Prudential Regulations, albeit through
different wings, and are subject to different SBP regulatory requirements such as
CapitaLand liquidity reserve requirements. Modaraba and leasing companies are
being regulated by the Securities and Exchange Commission of Pakistan (formerly
Corporate Law Authority), which is a body corporate. Compared to commercial banks
which cater mostly to short-term working capital requirements, NBFIs cater to
medium and long term financing needs and, thus, are barred from engaging in any
commercial banking activities including trade business and issuing cheques.

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However, the SBP allowed commercial banks to undertake long term project lending.
Among the scheduled banks, only Pakistani commercial banks are listed.

1.1.2 Studies Conducted
Although there are number of studies on market structure, conduct and performance
in the banking sector conducted since 1960s for a number of countries (for a survey
see Swank 1996, Berger 1995, & Gilbert 1984), there is hardly such a study in the
context of Pakistan. However, there exist some studies with limited scope like
Qureshi, et al (1998) on cost structure of five commercial banks and one specialized
bank1, Malik, et al (1989 & 1991), Qureshi et al (1984) and Qureshi & Shah (1992)
on the rural finance and Siddique & Siddiqui (1998) on overall profitability of the
banking sector in Pakistan. Recently SBP (2002) evaluated commercial banks
performance under traditional framework of financial analysis, but it also excluded an
analysis of the market structure and conduct of the banking sector. Thus, one is still
unable to find a study on the NBP, HBL, UBL, and ABL, MCB & ADBP commercial
banks of Pakistan.

1.2 REGULATIONS OF COMMERCIAL BANKING IN
PAKISTAN

Regulations of Pakistans commercial Banks
Limit on Exposure to a Single Person/Group
Limit on Exposure against Contingent Liabilities
Minimum Conditions for Taking Exposure
Limit on Exposure against Unsecured Financing Facilities
Linkage between Financial Indicators of the Borrower and Total Exposure From
Financial Institutions
Exposure against Shares/TFCS and Acquisition of Shares
Guarantees
Classification and Provisioning For Assets
Assuming Obligations On Behalf Of NBFCS
Facilities to Private Limited Company

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Payment of Dividend
Monitoring
Margin Requirements

1.3 TECHNOLOGY USED BY COMMERCIAL BANKS IN
PAKISTAN

Technological advances are quickly changing the face of the Pakistani banking
industry. Alternative channels are growing quickly and represent a sizable portion of
banks revenue streams as all banks as well as mobile network operators are jumping
on the branchless banking bandwagon.
As I discussed in the previous piece about shrinking spreads, published on November
4, the business model utilized by commercial banks of collecting deposits and
investing in treasury bills is not sustainable. No single additional revenue stream can
completely compensate for the declining interest income, so banks will have to
aggressively pursue revenue expansion from several diversified streams.
Competition is also expected to intensify in smaller cities as there are many
underserved affluent customers in Hyderabad, Multan, Sukkur, etc. Aggressively
growing mid-sized banks such as Bank Alfalah and Meezan Bank are looking to
expand their branch network to these cities.
Given the intense competition and increasingly price-sensitive customers, price
increase for standard banking services, such as cheque book issuance, is unlikely. To
generate additional income, banks will have to develop new and innovative products
and cross-sell to increase products per customer.

1.4 STRUCTURE OF COMMERCIAL BANKS IN PAKISTAN

We will discuss structure of banks in Pakistan, first in terms of number of banks and
size of banks (as measured by assets, deposits, etc), then in terms of concentration
ratios(Lorenz curve, Gini co-efficient, Herfindahl index and Concentration Ratio).In
1990, seven domestic banks and seventeen foreign banks were doing business in
Pakistan. All the domestic banks were owned by the government. Entry of domestic

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private sector in the banking business had been banned since the promulgation of
Banks.
Nationalization Act 1974 However, as a part of financial liberalization strategy of
1990s, Private sector was allowed to open commercial banks in 1991. At that time
fifteen banks were opened. During the next ten years the process of entering of new
banks and exiting of inefficient banks continued. Moreover, in order to go some step
further to make the banking sector competitive, the government also denationalized a
couple of commercial banks. In 1999, there were 19 domestic banks and seventeen
foreign banks in Pakistan (see Annex for list). Of the domestic banks, four were
owned by the federal government, two were privatized, two were owned by the
provincial governments and the rest were in the private sector. The government has
also minimized its interventions in the business of its own banks in order to ensure
that a competitive environment prevails in the industry. Along with the growth of
banks in numbers, their business also shows a reasonable growth during 1990s. Total
assets of commercial banks grew at a compound annual growth rate of 15 percent,
from Rs 419 billion at the beginning of decade to Rs 1,469 billion by the end of 1999.
Amongst different groups, assets of private banks showed fastest growth during
1990s, followed by foreign banks. A similar trend is witnessed in the advances and
deposits of the banks.

1.5 CHALLENGES FACED BY COMMERCIAL BANKS IN
PAKISTAN

The banking sector in Pakistan has been going through a comprehensive but complex
and painful process of restructuring since 1997. It is aimed at making these
institutions financially sound and forging their links firmly with the real sector for
promotion of savings, investment, and growth. Although a complete turnaround in
banking sector performance is not expected until the completion of reforms, signs of
improvement are visible. The almost simultaneous nature of various factors makes it
difficult to disentangle signs of improvement and deterioration.
Commercial banks have been exposed and withstood several types of pressure since
1997. Some of these are

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Multipronged reforms introduced by the central bank,
Freezing of foreign currency accounts,
Continued stagnation in economic activities and low growth and
Drive for accountability and loan recovery. All these have brought a behavioral
change both among the borrowers as well as among the lenders. The risk aversion
has been more pronounced than warranted.

1.6 COMMERCIAL BANKS OPERATING IN PAKISTAN

According to (SBP, 2014) followings are the commercial banks currently operating in
Pakistan classified into seven different types.

1.6.1 Public Sector Banks
First Women Bank Limited
National Bank of Pakistan
Sindh Bank Limited
The Bank of Khyber
The Bank of Punjab

1.6.2 Specialized Banks
Industrial Development Bank Limited
SME Bank Limited
The Punjab Provincial Cooperative Bank Ltd
Zarai Taraqiati Bank Limited

1.6.3 Private Banks
Allied Bank Limited
Askari Bank Limited
Bank Alfalah Limited
Bank Al Habib Limited
Faysal Bank Limited
Habib Bank Limited

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Habib Metropolitan Bank Limited
JS Bank Limited
KASB Bank Limited
MCB Bank Limited
NIB Bank Limited
SAMBA Bank Limited
SILKBANK Limited
Soneri Bank Limited
Standard Chartered Bank (Pakistan) Limited
Summit Bank Limited
United Bank Limited

1.6.4 Islamic Banks
AlBaraka Bank (Pakistan) Limited
BankIslami Pakistan Limited
Burj Bank Limited
Dubai Islamic Bank Pakistan Limited]
Meezan Bank Limited

1.6.5 Foreign Banks
Barclays Bank PLC
Citibank N.A. - Pakistan Operations
Deutsche Bank AG - Pakistan Operations
HSBC Bank Middle East Limited - Pakistan Operations
Industrial and Commercial Bank of China Limited Pakistan Branches
HSBC Bank Oman S.A.O.G - Pakistan Operations
The Bank of Tokyo-Mitsubishi UFJ Limited - Pakistan Operations

1.6.6 Micro Finance Banks / Institutions
FINCA Microfinance Bank Limited
Khushhali Bank Limited
APNA Microfinance Bank Limited

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NRSP Microfinance Bank Limited
Pak Oman Microfinance Bank Limited
U Microfinance Bank Limited
Tameer Micro Finance Bank Limited
The First Micro Finance Bank Limited
Waseela Microfinance Bank Limited
ADVANS Pakistan Microfinance Bank Limited

1.6.7 Development Finance Institutions
House Building Finance Company Limited
Pak Brunei investment Company Limited
Pak-China Investment Company Limited
PAIR Investment Company Limited
Pakistan Kuwait Investment Company Limited
Pak Libya Holding Company Limited
Pak Oman Investment Company Limited
Saudi Pak Industrial & Agricultural Investment Company Limited

1.7 INTRODUCTION OF ISLAMIC BANKING

Islamic Banking has been defined as banking in consonance with the ethos and value
system of Islam and governed under the principles, laid down by Islamic Shariah, in
addition to the conventional good governance and risk management rules.
The steps for Islamization of banking and financial system of Pakistan were initiated
in 1977. Pakistan was among the first three countries of the world that had been trying
to implement interest-free banking at national level. In early 1980s numerous
measures were taken to introduce interest-free banking in Pakistan. Banking and other
relevant laws viz. SBP Act 1956, BCO 1962, Companies Ordinance 1984, Recovery
Laws, Negotiable Instruments Act 1881, etc. were amended to facilitate interest free
banking system in Pakistan whereas the industry was given a specific timeline to
convert to the Islamic banking system. However, these efforts could not produce
desired results due to absence of Shariah compliance mechanism in place, lacking

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proper homework at the level of central bank as well as that of the financial
institutions to enable such a sudden shift.

1.7.1 Re-launching of Islamic banking
Considering the lessons learnt from the earlier efforts, Islamic Banking in Pakistan
was re-launched in 2001 when the Government decided to promote Islamic Banking
in a gradual manner and as a parallel and compatible system in line with the best
international practices. Accordingly, Islamic Banking Department was established at
SBP on 15th September 2003 with the mandate of developing and strengthening
regulatory and Shariah compliance framework for Islamic banking industry and
taking initiatives for the promotion of Islamic Banking as a parallel and compatible
banking system in line with the best international practices.
Since its re-launch in 2001, the progress of Islamic Banking industry in Pakistan has
been tremendous yielding the growth of more than 30% on yearly basis in terms of
assets. Currently there are five licensed full-fledged Islamic banks and fourteen
conventional banks with standalone Islamic Banking Branches operating in the
country. Various steps have been taken to make Islamic banking industry in Pakistan
a viable alternative to conventional banking.

1.7.2 Departments and divisions
The department has been working hard to develop a progressive, sound, and stable
Shariah-complaint banking system in line with the best international practices. In
order to strengthen the regulatory and Shariah compliance framework for Islamic
banking industry, the department is interalia working on the adoption of prudential
standards issued by IFSB, and Shariah and Accounting standards issued by AAOIFI.
The department comprises of four divisions
Policy Division
Promotion and Development Division
Sharia Division
Market Analysis and Research Division
The department has a Business Support Unit to carry out support function for the
department.

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Islamic Banking brings economic empowerment to Muslims in the areas of operation.
It helps Muslim businesspersons, through financial aid, to remain competitive. It also
leads towards the creation of job opportunities for Muslims as well as Non-Muslims. It is a basis
for expansion into the Islamic Economic System since the establishment of each
Islamic Bank is also the creation of another bank to co-operate with others in the
International web of Islamic Banks. Thus also creating a link for international
interests. It provides investors with flexibility in the types of accounts within which
they could channel their investment. It thus links capital to labour and reduces
expenditure, to levels, related with the type of investment, the value thereof and its
period. Islamic Banks enable the saving of monetary resources for the future as shown
by the Yusuf(A.S.) and in a methodology approved by Allah. This thus leads to the
protection of wealth. Sponsoring Islamic activity & the mobilization of resources for
International Islamic Support not only investment, but moral as well, i.e. relief
towards Muslim refugees and victims of war, etc. Islamic Banks facilitate
international and local trade, provide foreign exchange services and profitably invest
the Muslim fraternity's surplus wealth in conformity to Islamic principles through
economically acceptable development and social projects indispensable for the Muslim
Ummah.

1.8 VISION STATEMENT OF ISLAMIC BANKING

To evolve a stable and distinct Islamic banking system based on Sharia principles that
create value for all stakeholders particularly the users and providers of Islamic
financial services.

1.9 MISSION STATEMENT OF ISLAMIC BANKING

To facilitate and catalyze development of Islamic banking industry in the country
through a) enabling legal, regulatory and Sharia compliance framework, b) promotion
of Islamic finance as a distinct and competitive system to serve to the financial
services needs of the masses, c) targeted research initiatives to better explore market
dynamics and d) collaboration with the local and international stakeholders for

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development of competitive and innovative solutions for the diverse financing needs
of the real economy.

1.10 OBJECTIVES OF ISLAMIC BANKING

To strengthen the regulatory and Shariah compliance framework for Islamic
banking industry
To adopt/adapt prudential standards issued by IFSB
To adopt/adapt Shariah standards issued by AAOIFI to harmonize the Shariah
practices in Pakistan.
To steer/facilitate the SBP Shariah Board meetings, and Shariah Advisors Forum
To facilitate Shariah compliance inspection conducted by BID
To review products offered by Islamic banking institutions and develop products
for liquidity management of Islamic banking industry.
To coordinate with BPRD on the matters related to licensing, and FPT of the
Heads of Islamic banking institutions.
To collaborate with ICAP for the adoption of accounting standards issued by
AAOIFI
To leverage support from international infrastructure institutions dealing with
Islamic finance i.e. IFSB, IDB/IRTI, AAOIFI and IIFM for promotion of Islamic
banking in Pakistan.
To facilitate research studies conducted by various international institutions
dealing with Islamic finance like IFS, IDB/IRTI, IIFM, AAOIFI etc.
To develop/implement capacity building programs for the promotion of Islamic
banking
To conduct awareness programs
To undertake focused research initiatives by conducting empirical and theoretical
studies
To prepare issue based policy notes on Islamic banking
To create and maintain repository of domestic and international developments
regarding IBIs.
To prepare Islamic Banking Bulletin and provide feedback related to Islamic
Banking on various in house publications.

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To manage/analyze data related to Islamic banking industry in Pakistan
To develop Guidelines for broadening the access of Islamic financial services to
underserved areas
To prepare annual departmental business plan and budget by incorporating the
developmental initiatives undertaken by the department
To enhance the intellect level of the department by providing the staff various
training opportunities.

1.11 ISLAMIC MODES OF FINANCING

1.11.1 Musharakah
Musharakah means a relationship established under a contract by the mutual consent
of the parties for sharing of profits and losses in the joint business. It is an agreement
under which the Islamic bank provides funds, which are mixed with the funds of the
business enterprise and others. All providers of capital are entitled to participate in
management, but not necessarily required to do so. The profit is distributed among the
partners in pre-agreed ratios, while the loss is borne by each partner strictly in
proportion to respective capital contributions.
A form of partnership where one party provides the funds while the other provides
expertise and management. The latter is referred to as the Mudarib. Any profits
accrued are shared between the two parties on a pre-agreed basis, while loss is borne
by the provider of the capital.

1.11.2 Mudarabah
Qirad meaning 'surrender' is used to refer to the surrender of capital, hence the
alternative name for mudarabah which is muqaradah. The term mudarib, a user of the
capital of an investor (the investor being the rabb al-mal), gives rise to the alternative
description of this form of finance, hence mudarabah. The mudarib, regarded as an
entrepreneur, contributes management input, itself viewed as a form of capital

1.11.3 Murabaha
Literally it means a sale on mutually agreed profit. Technically, it is a contract of sale
in which the seller declares his cost and profit. Islamic banks have adopted this as a

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mode of financing. As a financing technique, it involves a request by the client to the
bank to purchase a certain item for him. The bank does that for a definite profit over
the cost, which is settled in advance.

1.11.4 Salam
Salam means a contract in which advance payment is made for goods to be delivered
later on. The seller undertakes to supply some specific goods to the buyer at a future
date in exchange of an advance price fully paid at the time of contract. It is necessary
that the quality of the commodity intended to be purchased is fully specified leaving
no ambiguity leading to dispute. The objects of this sale are goods and cannot be gold,
silver or currencies. Barring this, Salam covers almost everything, which is capable
of being definitely described as to quantity, quality and workmanship.

1.11.5 Istisna
It is a contractual agreement for manufacturing goods and commodities, allowing cash
payment in advance and future delivery or a future payment and future delivery. Is
tisnacanbe used for providing the facility of financing the manufacture or construction
of houses ,plants, projects, building of bridges, roads and highways.

1.11.6 Ijaraha
A contract under which an Islamic bank finances equipment, building or other
facilities for the client against an agreed rental together with a unilateral undertaking
by the bank or the client that at the end of the lease period, the ownership in the asset
would be transferred to the lessee. The undertaking or the promise does not become
an integral part of the lease contract to make it conditional. The rentals as well as the
purchase price are fixed in such manner that the bank gets back its principal sum
along with profit, which is usually determined in advance.



13

1 CHAPTER NO 2
INTRODUCTION OF HABIB METROPOLITAN
BANK LIMITED

1.1 INTRODUCTION

HabibMetro was incorporated in Pakistan as a Public Listed Company in 1992 under
the name, Metropolitan Bank Limited. The Bank commenced, duly licensed, full
scheduled commercial-banking operations in October 1992.
Metropolitan Bank, from October 1992 to September 2006, remained a highly rated
bank and, vide its nationwide 51-branch on-line network, established as a
distinguished provider of trade finance services.On October 26, 2006 Habib Bank A
G Zurich`s Pakistan Operations merged into Metropolitan Bank Limited and the
merged entity was named Habib Metropolitan Bank Limited. Demonstrating a strong
commitment to Pakistan economy, HBZ is the principal shareholder of Habibmetro.
Habibmetro operates in all major cities of the country. The Bank ranks within Top 10
in Pakistan with a strong vision to be the most respected Financial Institution.
HABIBMETRO has its primary focus on retail banking and trade finance and also
offers highly innovative E-Banking solutions and Consumer Banking to its customers.
The Banks Islamic Banking Division is fully capable of catering to customers
seeking Shariah compliant products.

1.1.1 HBZ Group
The HBZ Group is heir to a rich tradition of banking and commerce dating back to
more than 160 years. The groups flagship and HABIBMETROs principal, HBZ
(incorporated 1967) enjoys International ranking of 687 in terms of capital. With
Headquarters in Switzerland, the HBZ Group also operates in Hong Kong, Singapore,
United Arab Emirates, Kenya, South Africa, United Kingdom and North America.
The Pakistan Credit Rating Agency (PACRA) has allotted both long-term and short-
term ratings of HabibMetro Limited at AA+ (Double A plus) and A1+ (A one
plus), respectively. These ratings, being the highest amongst the local sector Private

14

Banks, denote a very low expectation of credit risk emanating from a very strong
capacity for timely payment of financial commitments.

1.2 COMPANY PROFILE

1.2.1 Vision Statement
Based on a foundation of trust, to be the most respected financial institution,
delighting customers with excellence, enjoying the loyalty of a dedicated team,
meeting the expectations of regulators and participating in social causes while
providing superior returns to shareholders

1.2.2 Company Registration Number
K-03892
(CUIN 0028018)

1.2.3 Company National Tax Number
0711167-3

1.2.4 Registered Office
Ground Floor, Spencers Building, I.I.Chundrigar Road,
Karachi74200,Pakistan
Phone (92-21)111-14-14-14
Fax (92-21) 3263 0404 05

1.2.5 Website
Parent Company Habib Bank AG Zurich (www.habibbank.com)
Subsidiary Company HabibMetro Financial Services (www.hmfs.com.pk)





15

1.3 HABIBMETRO ORGANIZATION CHART



1.3.1 Habibmetro Code of Conduct for Directors of the Bank
The members of Board of Director of HabibMetro Ltd, hereinafter called
HabibMetro, are expected to uphold the core values of the Bank relating to lawful and
ethical conduct of business, Key aspects of the Banks Code of Conduct include the
following

16

Integrity and honesty
The directors shall discharge their responsibilities with the highest standards of ethics
and professional honesty and integrity in all dealings with the public, clients, investors
and employees. The directors are also required to comply with the regulations of the
Bank in letter and spirit in order to protect the interest of the Bank and to inform the
Board if he became aware of any irregularity that might affect the interest of the
Bank.

Professionalism
The directors shall serve the Bank honestly, faithfully, ethically and with utmost
competence, and shall use their best endeavor to promote and uphold the interest and
goodwill of the Bank.

Fidelity and secrecy
The directors shall not disclose to any person any information as to the practice,
dealings and affairs of the Bank, or to divulge any information relating to the affairs
of its customers, except in circumstances in which it is in accordance with law,
practice and usage customary among banks, necessary or appropriate to divulge such
information as director of the Bank.

Conflict of interest
The directors shall ensure that their personal interests do not conflict with the
responsibilities they owe to the bank. In particular, they shall not become personally
involved in any transaction, negotiation or contract on behalf the bank, with an entity
in which they or any of their relative/friend has an interest, without full written
disclosure and prior written consent of the Board of Directors.

Insider dealing
The directors shall abide by the terms and conditions contained in all applicable laws
and regulations on subscribing and/or acquiring the shares/securities of the Bank.



17

1.4 HABIBMETRO MEMBERSHIPS

International Chamber Of Commerce.
Karachi Bankers Club.
Management Association of Pakistan.
Overseas Investors Chamber of Commerce & Industry.
Pakistan Banks Association.
Swiss Business Council.
The Institute of Bankers Pakistan.

1.5 PRODUCT

1.5.1 Current Account
1.5.1.1 Habibmetro Basic Banking Account
Your basic banking requirements do not require multiple monthly cheque
transactions, then Basic Banking account may fulfill your day to day banking needs
with no minimum balance requirement or restrictions on ATM withdrawals.

Features & Benefits
No minimum amount requirement for opening the account.
No requirement for maintaining minimum balance.
Non-remunerative account.
No limit on number of ATM / Deposit transactions.
Two cheque transactions will be allowed free per calendar month. Charge of Rs.
25/- per cheque will be applied from the third cheque onwards.

Free Services
Free Payment Orders.
Free HABIBMETRO ATM/Debit Card.
Free Funds Transfer within HABIBMETRO.
Free Web banking services.
Yearly Statements.

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Rent Free lockers.

1.5.1.2 Habibmetro Current Account
Enjoy your everyday banking needs with absolute ease through our non-interest
bearing Current Account.

Features & Benefits
The minimum amount required to open the account is Rs 5,000/-
This is a checking account with no limit on the number of transactions.

Free Services
Cheque Book(s)
Free Payment Orders
Free HABIB METRO ATM/Debit Card
Free Funds Transfer within HABIBMETRO
Free Web banking services
Free Half-yearly Statements
Rent Free lockers

1.5.2 Saving
1.5.2.1 Habibmetro PLS Saving Account
Offers you the simplest way to save and manage your savings with high rate of return.

Eligibility
Individuals / Companies

Amount Requirements
No minimum amount requirement.

Profit Payment
Profit Calculated on Average Balance & paid on Half Yearly Basis.



19

Exclusive Free Life Insurance Cover
Min Qualifying Balance Rs 15,000/-
Maximum claim Rs 1,000,000/-
Basis Average credit balance of previous 6-months

Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.
Free Services
Cheque Book(s)
Free Payment Orders
Free HABIB METRO ATM/Debit Card
Free Funds Transfer within HABIBMETRO
Free Web banking services
Free Half-yearly Statements
Rent Free lockers

1.5.2.2 Habibmetro Saving Plus Account
Earn monthly profits and access your growing savings at all times

Eligibility
Individuals Only

Amount Requirements
Minimum Average Deposit Rs. 100, 000/-
Maximum Average Deposit Rs. 25, 000, 000/-
*If the amount falls behind the minimum requirement or exceeds the maximum
required deposit; profit will be paid on prescribed SBP rate.

Profit Payment
Monthly Profit Payment on Average Balance

Exclusive Free Life Insurance Cover
Min Qualifying Balance Rs 15,000/-

20

Maximum claim Rs 1,000,000/-
Basis Average credit balance of previous 6-months

Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.

Free Services
Cheque Book(s)
Free Payment Orders
Free HABIB METRO ATM/Debit Card
Free Funds Transfer within HABIBMETRO
Free Web banking services
Free Half-yearly Statements
Rent Free lockers

1.5.2.3 Habibmetro Privilege 55+ Savings Deposit
Considering the Need of HABIBMETROs privilege Customer HABIBMETRO Now
Offers Privilege 55+, a saving account with unique features. As HABIBMETROs
Privilege customers you now enjoy,

Eligibility
Individuals
Age Requirement 55 years & above

Amount requirement*
Minimum Average Deposit Rs. 25, 000/-
Maximum Average Deposit Rs. 25, 000, 000/-
*If the amount falls behind the minimum requirement or exceeds the
maximum required deposit; profit will be paid on prescribed SBP rate.

Profit Payment
Monthly Profit Payment on Average Balance
Anniversary Bonus

21

Upon maintaining a minimum balance of Rs. 1,000,000/- or more for the year, the
account holder will be eligible to receive an anniversary Bonus
Exclusive Free Life Insurance Cover
In case of joint account, primary account holder will be covered up to 65 years of
age.
Maximum Age 65 years. In case of joint account, 1st person will be covered if
under 65 years.
Min Qualifying Balance Rs 50,000/-
Maximum claim Rs 2,000,000/-
Basis Average credit balance of previous 6-months

Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.

Free Services
Cheque Book(s)
Free Payment Orders
Free HABIB METRO ATM/Debit Card
Free Funds Transfer within HABIBMETRO
Free Web banking services
Free Half-yearly Statements
Rent Free lockers

1.5.2.4 Habibmetro Multiplier Account
Enjoy the facility of making transactions while earning profit on daily basis

Eligibility
Individuals / Companies

Profit payment
Profit calculated on daily basis and paid on monthly basis
Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.

22

Free Features
Cheque Book(s)*
Free Payment Orders
Free HABIBMETRO ATM/Debit Card
Free Funds Transfer within HABIBMETRO
Free Web banking services
Free Half-yearly Statements
Rent Free lockers

1.5.2.5 Habibmetro Foreign Currency Saving Plus ($, , )
Considering the Need of HABIBMETROs Customer, HABIBMETRO Now Offers
Foreign Currency Saving Account with unique features

Eligibility
Individuals

Currency Type
US Dollar
Pound Sterling
Euro

Profit Payment
Monthly Profit Payment on Minimum Balance.

Anniversary Bonus
Upon maintaining a minimum balance of 100,000/- or more in respective currency
for the year, the account holder will be eligible to receive an anniversary Bonus

Withholding Tax & Other Levies
Taxes & other levies will be applicable as per law/rules from time to time.

Free Services
Issuance of FTTs*

23

Outward Remittances (2 per month)*
Cheque Books
Collection of Outward Foreign Cheques
SMS Alerts & Internet Banking

1.5.3 Term Deposit

1.5.3.1 Habibmetro Mahana Scheme
Habib Metro Mahana Scheme offers high rate of returns on your fixed deposits with
the benefit of monthly profits

Eligibility
This Scheme is open for Individuals

Amount Requirements
Minimum Investment Rs 25,000/-

Tenure & Investment Details
Funds may be deposited for 1, 3 & 5 years

Profit Payment
Profit will be paid on monthly basis.

Maturity
Upon maturity principal will be automatically rolled over at the rate applicable on
the date of maturity.

Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.

Premature Encashment
A premature encashment fee will be levied for premature withdrawal of funds
from the scheme.

24

The rate of the fee will be 2% of the deposit amount or the amount of profit
already paid until the date of premature withdrawal, whichever is lower.

1.5.3.2 Habibmetro Premium Deposit Scheme
You can now enjoy the facility of quarterly or half yearly profit payments at your
convenience

Eligibility The scheme is open for any
Individuals

Amount Requirement
Minimum deposit requirement is Rs. 25,000/-,

Tenure
Funds may be deposited for 1, 3 & 5 years

Profit Payment
Profit will be paid on Quarterly or Half Yearly basis as per customers preference
at the time of booking the deposit.

Maturity
Upon maturity principal will be automatically rolled over at the rate applicable on
on the date of maturity.

Zakat, Withholding Tax & Other Levies
All payments will be subject to Zakat (as per rules), withholding tax and other
government levies as applicable from time to time.

Premature Encashment
A premature encashment fee will be levied for premature withdrawal of funds
from the scheme.
The rate of the fee will be 2% of the deposit amount or the amount of profit
already paid until the date of premature withdrawal, whichever is lower.

25

1.5.3.3 Habibmetro Izafa Certificates
Earn higher returns by investing it in Certificate of Deposit for 07 Years.

Eligibility
Individuals

Amount Requirement
Minimum Rs. 10,000/-

Tenure
Certificates are offered for 7 years with Profit Paid on Maturity.

Early Encashment
Encashable anytime, no penalties

Zakat, Withholding Tax & Other Levies
Zakat / Taxes will be applicable as per law/rules from time to time.

1.6 SERVICES

1.6.1 Habibmetro Home Remittance
Habibmetro Home Remittance Division is facilitating overseas Pakistanis under the
guidance and patronage of Pakistan Remittance Initiative (PRI), a joint initiative of
State Bank of Pakistan, Ministry of Overseas Pakistanis and Ministry of Finance.
Through this service loved ones, families, friends & remitters can send money back to
Pakistan.

1.6.2 Habibmetro Money Gram International
Money Gram has a global reach through its network of over 334,000 local agents in
more than 200 countries and territories, providing customers with convenience and
flexibility. Money Gram is a fast, trusted and secure service to receive money all over
the world from your loved ones in a few minutes.


26

1.6.3 Habibmetro Cash Management Services
Cash Management department provides high quality solutions and services to its
Corporate Clients. The client can be benefited in the form of efficient liquidity
management to increase their profitability

1.6.4 Habibmetro E-Salary
Comprehensive system through which salary disbursement to the employees of our
valued corporate customers with ease & efficiency.

1.6.5 Habibmetro Rent Free Lockers
Secure
Rent Free Lockers
Refundable security deposit
Available in,
SIZE Security Deposits
SMALL Rs. 20,000
MEDIUM Rs. 35,000
LARGE Rs. 60,000
EXTRA LARGE Rs. 100,000

1.6.6 Habibmetro Short Term and Long Term Finance
The bank also offers short term working capital financing including under sharia
compliant modes, exports/import financing and long-term finances to
Corporate/Commercial customers as well as SMEs trade & industry. It also extends
Agricultural credit, specialized financing tailored to customers needs and is also a
regular member of Syndicated financing club.

1.6.7 Habibmetro Shares Subscription Desk (Services)
We provide following services to our valued customers.
Initial Public Offering IPO
Right Shares RS
Term Finance Certificate TFC
Dividend Warrant DW

27


1.6.8 Habibmetro 24 Hours Call Center
Now you can access your account without going to the bank, 24 hours a day, 7 days a
week absolutely free. Thismeans all you need is a touch-tone telephone at home, at
work or on the go to access all the information you needwithout making a trip to the
branch Dial 0800-42242 (Habib) and reach our Customer Services Representative
Get your account Balance
Short Statement
Cheques in Clearing
Lodge a complaint in case of any inconvenience
Cash dispense issue complaints
ATM/VISA Prepaid Card Blockage
Inquire about the daily accounts related profit rates and currency exchange rates
VISA Card internet activation
VISA Card Transaction details
Lead(s) Generation
Inquire about our product offerings
Habib Metro Network Information

1.6.9 Habibmetro Web Banking
Web Banking
Access your account from your home or office or anywhere in the world.
Login through web banking username and password.

Following services can be accessed 24/7
Up-to-date Account Balance.
Cheques in Clearing
Account statement
Beneficiary Management (Local Fund Transfer, Outside Fund Transfer)
Debit / Credit Advice

Fund Transfer
Internal Fund Transfer ( HabibMetro To HabibMetro)

28

Inter Bank Fund Transfer (HabibMetro To Other Bank)

Utility Bill Payment Services
Electricity
Sui Gas
PTCL
Internet Service Providers (ISP)
PTCL Evo Prepaid
PTCL Evo Postpaid
Wateen
WiTribe

Mobile Top Up/Airtime Purchase (Easy Load)
TELENOR
UFONE
WARID
ZONG
QUBEE DISTRIBUTOR
MOBILINK

1.6.10 Habibmetro SMS Banking
HabibMetro SMS Banking utilizes SMS channel to conduct various financial as well
as non financial transactions. The simple to use service facilitates HabibMetro
customers to conduct transactions from the location of their convenience. A simple
structured SMS will land the required information on your fingertips.

1.6.11 Habibmetro POS (Point of Sale) Services
Now you can withdraw cash from all HMB branches cash counters easily and
without any delay.
Each HabibMetro branch is now equipped with a POS machine available on their
Cash Counters.
No need to issue cash cheques and no need to wait .
Cash can be withdrawn up to Rs. 400,000/- via HMB VISA (ATM / Debit card).

29

Cash can be withdrawn up to Rs. 250,000/- via HMB ACCESS (ATM / Debit
card).
(Subject to availability of funds in the account )

1.6.12 Habibmetro E-Statement
You can get your account statement electronically and avoid use of paper based
statements.
E-statement will be delivered at your designated email address and the same will
arrive in no time as compared to courier. In addition E-Statement is a more secure
mode of transmission.
Just fill up the attached subscription form and visit your branch to avail this free
service and make Pakistan a Green State.

1.6.13 Habibmetro Visa (ATM / Debit Card)
HABIBMETRO VISA Debit Cards are available to our valued clients at all
HABIBMETRO branches.
Make transactions up to the credit balance available in your account
Withdraw cash through convenient POS terminals at all HABIBMETRO
branches.
Daily ATM Withdrawal Limit Rs 100,000/-
Daily Branch cash counter POS Limit Rs 400,000/-
Local Purchase and Online Shopping Limit Rs 200,000/-

HABIBMETRO Access (ATM / Debit Card)
HABIBMETRO Debit Cards are FREE, and available to our valued clients at all
HABIBMETRO branches.
Make transactions up to the credit balance available in your account
Withdraw cash through convenient POS terminals at all HABIBMETRO branches
Daily ATM Withdrawal Limit Rs 30,000/-
Daily Branch cash counter POS Limit Rs 250,000/-



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1.7 HABIBMETRO ISLAMIC BANKING

1.7.1 Mission
Building on our legacy of trust, HABIBMETRO brings to you Shariah compliant
banking solutions. Driven by our promise of service with security and strong ethical
standards, we ensure that you remain close to your beliefs and stay ahead of the
competition.

1.7.2 Introduction
HABIBMETRO Islamic have been a constituent of the successful Islamic banking
model in Pakistan. Following its formal launch in March 2002, when the first Islamic
Banking license was granted, HabibMetro opened its first Islamic banking branch in
2004. At present, we provide Islamic banking services through 6 dedicated branches
in Karachi, Lahore and Islamabad, along with 198 desks located in the different
branches across the country.
We intend to increase our market penetration and access more customers by opening
new Islamic Banking branches in other cities of Pakistan in the near future and wish
to bring our core strength and expertise of Trade Finance to this cross section of
customers. Our Islamic Banking window lays emphasis upon trade product offerings,
and innovation therein, designed according to customer needs. Habibmetro Islamic is
also keen to structure suitable financing arrangements where risk and rewards are
aligned in a participation model.
The Bank has been a front leader in technological innovation and has witnessed
exceptional results in adopting IT as a strategy driver. Islamic banking in Pakistan in
particular and the world in general, has to embrace this paradigm of change and
strategically focus upon Information Technology, as it is the way forward. We at
Habibmetro, are fully cognizant of this fact and are working on further developing
and fine-tuning our IT platform. We expect this to streamline the Banks operations
and performance, while lending support to the Islamic banking industry development
efforts in Pakistan.




31

1.8 ISLAMIC PRODUCT

1.8.1 Habibmetro Islamic Current Account
Islamic Current Account is opened on the basis of Qard (i.e. debt) whereby the
customer is a lender and the Bank is the borrower.

Features
Initial deposit required to open the account is Rs 1,000/-.
The funds are payable to the customer on demand as and when required with
neither any addition nor penalty.
Joint account facility up to four joint account holders.
No restrictions or limits on transactions.
Habibmetro Islamic current account can also be opened in USD, Pound Sterling &
Euro.
No deduction of Zakat on the account.

Free Services
Cheque Book(s)
HABIBMETRO ATM / Debit Card
Pay Order
Statement of Account
Webinfo & Teleinfo Services

1.8.2 Habibmetro Islamic Saving Account
Savings account opened on the basis of Modarabah, where the bank acts as
Modarib(i.e Manager) and the Depositors are considered as Rab-ul-Maal (i.e.
Depositor)
Features
Initial deposit required to open the account is Rs 1,000/-.
All deposits in PLS saving account shall be invested by the bank strictly in
accordance with the Shariah compliant principles.
Profit is shared between the PLS depositors and the Bank on the basis of
predetermined profit sharing ratio.

32

Depositors and the Bank will bear the same ratio of their respective investment in
the event of loss.
Six Monthly profit/loss payment on daily product basis.
Profit rates are announced on monthly basis.
Habibmetro Islamic savings account can also be opened in USD.
Up to Rs. 1 million Free Takaful is also provided.

Free Services
Cheque Book(s)
HABIBMETRO ATM / Debit Card
Pay Order
Statement of Account
Webinfo & Teleinfo Services

1.8.3 Habibmetro Islamic Investment Certificates (HIIC)
The relation of the HIIC holder and the bank is Mudarib / Investor, the bank is
Modarib (i.e Manager) and the depositors are Rab-ul-Maal (i.e Depositor).

Features
Minimum amount of investment is Rs.25,000/-.
All the principles and rules pertaining to HIIC are based strictly on the Islamic
principle of
Modarabah, Therefore, profits and losses are shared by the partners according to
the rules of Islamic Shariah.
HIIC are available in tenures of 1, 3, 6 months & 1, 2, 3, & 5 years.
Monthly , Quarterly, Six Monthly profit payment is available for investment of 12
months and above.
Monthly profit credit to linked account automatically.
Profit is distributed as per predetermined weight ages after deducting management
fee.
Habibmetro Islamic Investment Certificates can also be obtained in USD.



33

Free Services
Cheque Book(s)
HABIBMETRO ATM / Debit Card
Pay Order
Statement of Account
Webinfo & Teleinfo Services

1.8.4 Habibmetro Murabaha
Murabaha is a financing arrangement which is based on sales transaction where
HABIBMETRO Islamic banking purchases the commodity and sells it after adding an
agreed profit. Murabaha involves the purchase of a commodity by HABIBMETRO
Islamic banking on behalf of a customer and subsequent sale to the customer on cost-
plus-profit basis. The cost and profit margin to the bank is expressly disclosed to the
customer. Simply put, HABIBMETRO Islamic banking buys the commodity from a
third party and sells it to the customer at an agreed price.
For more information please visit our nearest HABIBMETRO Islamic banking
branch.

1.8.5 Habibmetro Ijarah
IJARAH is to give something on rent. It is a Shariah compliant alternative to
Conventional leasing where Bank acts as a Lessor and you act as a Lessee.
HABIBMETRO Islamic banking requires customers to pay a monthly rent for the use
of the Vehicle. In this while, the ownership of the vehicle remains with the Bank, only
the rights of use is transferred to customer. At the end of the Ijarah Agreement,
customer will be given a choice whether to return the vehicle to the Bank and receive
back the security deposit paid at the beginning or to purchase it at a price as low as the
security deposit.
For more information please visit our nearest HABIBMETRO Islamic banking
branch.

1.8.6 Habibmetro Diminishing Musharakah
Diminishing Musharakah is commonly used for the purpose of financing of fixed
assets i.e. House Financing, Car Financing, Plant and Machinery Financing and all

34

other fixed assets. In Diminishing Musharakah the financer and the client participate
either in joint ownership of a property or equipment or a commercial enterprise.
Diminishing Musharakah is basically joint ownership of the Bank and customer
where customer as a lessee uses the share of the bank and pays the rentals, and as a
partner redeems the share of the Bank. As and when the repayments are made by the
customer the Bank share decreases to Zero gradually and customers share is
increased proportionately to 100%.
For more information please visit our nearest HABIBMETRO Islamic banking
branch.

1.8.7 Habibmetro Trade Services
HABIBMETRO Islamic banking offer a wide range of trade services designed to
meet a range of our corporate clients needs. HABIBMETRO Islamic banking have
Industry specialists who are professional and seasoned to make sure that all your trade
finance requirements are taken care of with precision and skill. Our team of specialists
goes the extra mile to ensure that our customers experience with below mentioned
services is nothing but extraordinary.

Imports
Letter of Credit
Import Financing (by way of Murabaha/Ijarah)
Registration of Import Contracts
Advance Payment against Imports
Shipping Guarantees

Export
Export Bills for Collection
L/C Advising & Confirmation services
Islamic Export Refinance facility
Financing against Export Sight and Usance Bills (Shariah-compliant alternative
for Bill Discounting)
Pre-Shipment and Post-Shipment financing on Islamic modes of financing


35

Letter of Guarantee
A guarantee is issued by HABIBMETRO Islamic banking (the guarantor) on
behalf of its customer (the applicant) in favor of a third party (the beneficiary), for
fulfillment of specifically defined contractual and/or financial obligations of the
applicant.










36

2 CHAPTER NO 3
STRUCTURE AND DEPARTMENTS OF
HABIBMERTO

2.1 HIERARCHY CHART






















General Manager
Regional Manager
Branch Manager
Customer Service
Department
Branch Credit
Committee
Internal Auditor
Account Opening
Department
General Banking Credit
Department
Foreign
Exchange
Department
Bills Remittances
Department
Clearing
Department
Cash Deposit
Department

37

2.2 BRIEF INTRODUCTION OF ALL THE DEPARTMENTS

There is brief introduction of all the departments of the HABIB METRO bank

2.2.1 Business development department
The business department promotes or selling the product to the customers, products
like ATM account opening forms etc .this department work as set the target strategies
according the current circumstances this department work with the three strategic
objectives.
customer satisfaction
employee satisfaction
Business results.

2.2.2 Cash management department
In this department the teller are the casher person receive the deposited and the give
the cash to the account holder on their demand and also maintained the online etc. in
cash department there is three type of sector .
Token issuance
Cash receipt
Cash payments
Bill receives or fees received etc.

2.2.3 Account opening department
The account opening department is the department which deals with the account
opening open of new account or the verifying the account this department is necessary
as par the order of the state bank of Pakistan in this department I come to know how
to open the account by filling the account opening form and also attached the NIC
card copy and it is verify by the NADRA

2.2.4 Credit department
In this department the bank granted the loan to the customer and there are the
different type of the credit which is provided to its customer during my internship I
learned that if some individual request for the loan then bank granted him a loan

38

according to limit and some requirement for different kind of loan for example if the
organization request for the loan then bank granted the loan according to some
requirement and limits which apply on the organization.

2.2.5 Dispatch department
Dispatch department is the very important sector in the bank because all inward and
outward mails in which ordinary and sensitive as well, routed or transfer to this
department as the mail in the branches consists of documents covering title to goods,
cheques, inter branch Dr. Cr. Advices, letter of credit in international banking apart
from other routine letters. So it is important to handle dispatch carefully and make
sure there is not wrong devilry

2.2.6 Clearing department
There are two type of clearing in the bank and during my internship me doing both
type of the clearing.
Inward clearing
Outward clearing

2.2.7 Account department
This is important department in which the account are maintained and also the
voucher and the books and the all the expenses or expenditure of the bank are
maintained so it is the most important department of the bank maintain all the account
of the bank is the duty of this department and this department is working well.

2.2.8 Finance department
Financing department is the important department because bank finance in various
ways like advancing the loan and make the profit as a excess amount in the way of
interest the HABIB METRO finance in such a way giving the loan to the customer
and also buy the share of the private organization also finance in the agriculture sector
and the private sector as well.




39

2.3 COMMENT ON THE ORGANIZATIONAL STRUCTURE

The success of the organization is based on organizational structure the HABIB
METRO organizational structure is very smooth and efficient .for the convenience of
work the work is divided to department according to the type of the work and no bank
or organization can be run if their employee not doing their assign work or duties the
during my internship in the bank I observed that at the department doing their assign
duties and there is no discrepancy between the bottom line employees and the top
level management .all the communication between the employees and the department
is efficient whither it is horizontal or vertical communication .there is a harmony
among the horizontal and vertical line of management .every employee know his duty
and authority for doing the retain job I like the structure of the bank due to it clear and
who reports whom transparency method.
In my opinion that HABIB METRO bank of Pakistan doing the clear ,transparent and
the exceptional work which make the HABIB METRO bank (Ltd) a leading bank in
the banking sector of the Pakistan.

2.4 FUTURE PROSPECTS OF THE ORGANIZATION

The future prospectus of HABIB METRO bank(Ltd) for the convenience of the
customer the bank install the ATMs machines all the big cities and make all the
branches online these steps takes more technology in the banking sectors and make
the business more profitable.
HABIB METRO team loyal to takes the Banking to the top level of success. Key
features for the future prospectus are given below.
In future the HABIB METRO bank work on the customer satisfaction and make the
new rules and launching new products to the valuable customer to attain the major
share in the market locally as well as globally like remittances , payroll and the trade
policy and making the cash management more effective. The HABIB METRO bank
makes the all branches online for the customer, the customer can make the transaction
with more ease at home and on his computer and make the payments of the all type of
utility bill by using online banking service and the other online facilities too. The
HABIB METRO management invests in his branches and franchise to make them

40

more business oriented and effective. HABIB METRO bank introduces the new
financial product and service to take the leading position as compare to its
competitors and positively traveling to achieve it goal.
HABIB METRO bank taken the steps to reduce the expenditure and invest in those
things and business to make sure to maximize its profitability. HABIB METRO bank
focuses on the expansion of its customer oriented franchises and especially in Islamic
and SME segments. The HABIB METRO bank is taking the steps and investment on
the employees and focus on their training because if there is no talented and
professional employees in the organization the organization not make effective
progress.
And the final thing is that control and command by the central management so the top
management develops the strong culture and invest on their franchises and also in
other business activities and HABIB METRO doing a great gob for the purpose of the
attainment of the goal.















41

3 CHAPTER NO 4
LEARNING IN SIX WEEK INTERNSHIP

3.1 A BRIEF INTRODUCTION OF THE BRANCH

Thank fully I did my internship from HABIB METRO bank (Ltd) Allied hospital
branch. This Branch is online branch so I leaned that the working of the management
is very smooth and the efficient.
In this branch I observed that this branch doing a great business and the management
and the staff of the branch is efficient and the professional and the manage handle all
the working of the branch and this branch have the very good contact and the relation
with the shops business entities and the other sound parties as well to increase the
deposit of the branch and maintain the efficiency of the work and enhance the
organization.
The manager guided to the different functions operating within the organization and
the sub manager makes sure and takes the responsibility that staff doing work
efficiently in the entire department.
And also the branch is well maintained and decorated and the entire department have
separate place within the organization to doing there assign duties and the
environment of the organization attract the customer as well which is good for the
organization.

3.1.1 Starting and the ending dates of my internship
Starting and the ending dates of my internship program in the HABIB METRO bank
(Ltd) Allied hospital branch

Starting Date 1
st
July 2014
Ending Date 20th August 2014

3.1.2 Names of the departments in which I got training
During my internship I work almost in the all department and my internship duration
is 6 week I learnt the working of the following department


42

Account opening department
Cash department
Credit department
Clearing department
Remittances department

3.2 TRAINING PROGRAM

Detailed description of the tasks assigned to me during the internship program
Duration of my internship six week in a HABIB METRO bank (Ltd) Allied hospital
branch I learned the detail work of the different department I work in the various
department but I explain those department in which I got full command during my
learning process . The detail of the function which I perform is mention as under

3.2.1 Account opening department
In my first two weeks Ill work in the account opening departments. It is important
department of the bank because all the working of the bank base on account and the
bank account shows the deposit of the bank if any person working with the bank or
the organization then first step is the account opening and my work is in the
department is to open the new account for a valuable customer and I learned that there
is few many document which is use in the opening of new account. There are many
type of accounts the HABIB METRO bank (Ltd) is offered to its customer in which
include Current account, Saving account, (PLS) Profit and loss account, these have
different specification of the customer which will gave benefit of him. For account
opening the minimum amount required is 1000 Rs.
The document which is used in the opening a new account is as under
Account opening form
The name of person who request for opening the new account
The type of the account
Computerized Copy of national identification card
Check the expiry date
Filled the opening form
Signature of the person

43

SS Card (Specimen Signature Card)
Mother name
Father name
Present address
Permanent address
KYC Foam (Know your Customer)
CNIC Required for KIN

The most important in account opening is SS Card signature because we grudge it
may which customer withdraw the money is original customer or not, and other step
is KYC Form in this form we collect all secret information like client Father and
mother name, income of the business, his email address, postal address, and content
number. The last one is CNIC required of KIN for those person who have a blood
relation of client like father, mother, brother, sister, in this there is no required for
friend or other person NIC only for those who have a blood relation of the client.

3.2.2 Cash department
During my internship I spent my 3
rd
week in the cash department and cash department
is totally deals with the cash whether the cash comes in the bank or out from the bank
during the learning in the cash department I learn the all the activities which is
perform in the cash department .in the cash department there is various sub
department according to the categories which are performing by the different persons
in the department in the cash department there are four to five counters in which
include
The issuance the token
Receipt counter or the cash deposit counter
Payment of cash and checks
Verification and clearance the check and account counter
Bill and fee receive counter

During my learning process I learned that first of all issue the token to the customer
and then in the receipt counter receive the cash and maintained the account and then if
a customer have a check then the cheque is verifies by the verification person and

44

then the casher makes the payment against the cheque and also transfer the money
online and maintained the all activities which is casher duties i.e. give the cash to the
valuable customer and the bill and the fees receive counter receive the bill payment
and the fees and maintain all the activities related to bill and fees collection.
The activities of the cash department of HABIB METRO bank (Ltd) is as under
Source of cash
Management of cash
Deposits
Demand draft and the online maintains
Treatment of surplus cash
Treatment of the cash deficit
Cash transit
Issuance of cash
Security arrangements
Verification of cheque
Receive the bill and the fees collection

This is the most important department of the bank I leaned while working in this
department that there is all about maintains of the cash in this department in the staff
work very carefully make sure there is no mistake and in the closing at evening both
the sides of the cash account is balanced or equal then the banks makes the profit.

3.2.3 Credit department
My 4
th
week during my internship in the credit department the credit department is the
one of the most important department of the bank. The credit department is works
with maintain the loan and credit and also issue the credit after necessary verification
and the security and the guarantee to the desire limit and there is the rule and the
regulation to issue the credit and loan to the customers.
Credit department of HABIB METRO bank (Ltd) deals with different type of running
finance and the type of loan is as under
Cash finance
Demand finance
Term finance

45

Short term and loan term loan Etc.

I learned in this department that the basic information that I entered for the issuance
of credit or loan is as under
Name of the customer
Copy of CINC
Expiry date of the CNIC
Date of birth
Complete address
Income of the customer

If the individual wants to take the loan from the bank then there is the limits of the
loan which provided by the bank to any person or the organization. I leaned that for
the purpose of loan giving by the bank there is few many document and the guarantee
required by the bank according to the loan type the requirements is as under

Account number of the borrower and the account type
Nature of the business and the main products
Name of the borrower
Purpose of the loan whether it is for partnership or proprietor business
Type of the business
Details in case of firm and companies associated with the loan
And the current financial position of the business
And the accurate financial statement of the business last two years or more
And the detail of the borrowers bank account with other banks

The purpose of the credit is for the starting the new business or the expansion of the
existing business or the purchase of the stock

3.2.4 Cleaning department
My 5
th
week is all about the clearing department. I learned the work and the function
which is performed in the clearing department. This department the important
department of the bank I learn that clearing is the process in which bankers settle their

46

mutual accounts by the claming the arising account of various instruments presented
by one bank drawn on the other banks in a same city or the outside the city through
NIFT (National Institutional Facilitation Technologies). NIFT is the department of
collection of clearing cheques of each branch, these plays middlemen of the bank and
client. There are two types of clearing going in the bank Inward clearing and the
Outward clearing .we can say that the clearing is clear those cheque which cannot be
cash at the cash counter of the bank . the representative of the respective bank collect
all the cheque and the instrument which drawn on there and settle the account and
doing the clearing function this assembly of the representative of the bank is called
Clearing house NIFT perform the clearing on the behalf of the commercial banks in
all the cities throughout the country.
The type of the clearing is as under
Inward clearing/ Local clearing
Outward clearing/ Intercity clearing

3.2.5 Inward clearing
The instrument and the settlement or the claim by the other banks or the other
branches of HABIB METRO on our branch of HABIB METRO bank in which
include the cheque draft and etc, are drawn by the other bank customer or by the
HABIB METRO bank branches in clearing in the inward clearing process there is few
thing include which is mentioned as under
Cross stamp on the face
Clearing stamp on the front and the back
The clearing stamp bearing the date of the next working day
Payees account is credited and the stamp on the cheque and signature of the
operational manager
And before entering the cheque into the computer the stamp and the signature is to
be verified and the cheque is posted and drafted.

3.2.6 Outward Clearing
I leant about outward clearing in HABIB METRO bank clearing department. out ward
clearing is that the settle of claims of our branch of HABIB METRO bank or the other
branches of HABIB METRO bank drawn of other banks or other branches of HABIB

47

METRO bank deposited by our customer in our branches of the bank , presented by
our branch of HABIB METRO bank in out ward clearing .
When the cheques of outward clearing is received then it is entered into the clearing
registered

Following detail are entered is in the both registered is as follow
Serial No.
Account no. of the depositor
Depositor name
Drawer
Drawee
Cheque No.
Amount of the cheque
Cross stamp on the face of the cheque
And the clearing stamp
And the stamp on the back of the check payee account will be credited

The local clearing, a bundle cover is arranged manner the branch code stamp, total
amount and number of instruments. This amount should match the one that is kept in
the Clearing Register. The cheques or the instrument with bundle cover and outline
are packed in NIFT bag. Before putting these items in the bag, a plastic seal number is
required and should be written on the bundle cover and the same seal should be used
to close the NIFT bag. This is to ensure additional safety as when the seal is opened, it
is non-replaceable. If the seal number on the bag and on the bundle cover does not
match, it is a suggestion that the bag has been tamper with. Strict action can be taken
by NIFT and the Bank consequently.
In clearing process there s also include intercity clearness

3.2.7 Remittances Department
My last week is about working in the remittances department. It is very important
department in the current scenario in this department the bank deals with transfer
money and different type of fund and also receive fund from abroad form the
Pakistani community and others as well which is called remittances

48

The HABIB METRO bank transfer different type of fund through the different
services in which the some is mentioned below

I learnt that the money transfer and remittances have following features
Quick and hassle free transfer
There is little charges of transfer
And same day devilry to HABIB METRO account holder
SMS alert facility
And for non account holders the funds transfers online or via bank draft.

And also when the nonresident person sends the fund to their family the bank is takes
the following steps;
Alert with a phone call or SMS to customer
No charges or no deduction to the recipient.
Received the 8 digit PIN from receiver and then check it whether the remittance is
received and fill the form
Then check the copy original national ID card
And then received the CNIC copy from the person
Then the verification Seal or stamp placed on the form
And the last step is that the person received the cash from the casher

3.2.8 Western Union
During my work in this department I deals with the customer which transfer their
money through the western union. Through the use of the western union one can get
money from all cities in the Pakistan from western union branches or any bank or post
office or the money changer. When person sent the money, the concerned company or
bank give the PIN number to the person against the name of the person and the cell
number who received the money through western union. When the receiver go to
bank for receiving of money the bank takes the PIN number and the original CNIC
copy from the receive and give him money




49

3.2.9 Telegraphic transfer (TT)
Telegraphic transfer is that after filling the application form the concerned officer fills
the telegraphic transfer form after that it is sent to the required bank and then the
concerned bank makes the payment immediately to the customer and after that the
voucher sent to the bank by the mail.

3.2.10 Demand draft (DD)
Demand draft is like an instrument as issue on the will of the customer because avoid
the extra burden of the currency and it is payable on the demand when the customer
want it its issue by the one branch of the bank a payable by another branch of the
same bank.



50

3.3 RATIO ANALYSIS

3.3.1 Gross spread ratio
Formula
Net interest margin / mark-up earned
Year 2011 Year 2012 Year 2013
7,727,231/ 27,263,385
=0.27 times
8,912,537/ 28,566,583
=0.31 times
9,071,907/ 24,641,671
=0.37 times

Working
2011 Net income margin = mark-up earned mark-up expanses
= 27263385-19536154=7727231
(Page#117 2012 profit and loss account consolidated)
2012L Net income margin = mark-up earned mark-up expanses
= 28566583-19654046=8912537
(Page#122 2013 profit and loss account consolidated)
2013 Net income margin = mark-up earned mark-up expanses
= 24641671-15569764=9071907
(Page#122 2013 profit and loss account consolidated)

Graphical presentation of Gross Spread Ratio








Interpretation
Gross spread ratio is increased in every year in its value.
0
0.1
0.2
0.3
0.4
2011 2012 2013
Gross Spread Ratio
Gross Spread Ratio

51

3.3.2 Noninterest income to total income ratio
Formula
Noninterest income / total income
Year 2011 Year 2012 Year 2013
10,172,092 / 37,435,477
=0.27times
11097039 / 39,663,622
=0.28 times
11,782,402 / 36,424,073
=0.32 times

Working
2011 Total income=interest earned + non mark-up income
=27,263,385+10,172,092=37,435,477
(Page # 117 of 2012 profit and loss account consolidated)

2012 Total income=interest earned + non mark-up income
=28566583+ 11097039= 39,663,622
(Page # 122 of 2013 profit and loss account consolidated)

2013 Total income=interest earned + non mark-up income
=24,641,671 + 11,782,402 = 36,424,073
(Page # 122 of 2013 profit and loss account consolidated)
Graphical presentation of Non Interest Income to Total Income Ratio











Interpretation
Non interest income to total Income ratio is increased gradually.
0.24
0.25
0.26
0.27
0.28
0.29
0.3
0.31
0.32
0.33
2011 2012 2013
Noninterest income to total income ratio

52

3.3.3 Spread ratio
Formula
Interest earned / interest expenses
Year 2011 Year 2012 Year 2013
27263385 / 19536154

=1.39 times

28566583 / 19654046

=1.45 times
24641671 / 15569764

=1.59times

Working
2011
Page # 117 of 2012 profit and loss account consolidated
2012,2013
Page # 122 of 2013 profit and loss account consolidated


Graphical presentation of Spread Ratio














Interpretation
Spread ratio increased every year.
1.25
1.3
1.35
1.4
1.45
1.5
1.55
1.6
2011 2012 2013
Spread Ratio
Spread Ratio

53

3.3.4 Return on Asset ROA Formula

(Earning before income tax / total assets) * 100
Year 2011

Year 2012 Year 2013
24,180,960
/288,200,657 *100
=8.39 %
24,695,367
/304,310,087*100
=8.12 %
20,687,058
/311,395,637 *100
=6.64 %
Working
2011 EBIT = profit before tax + interest expenses
=4,644,806 + 19,536,154=24,180,960
(page#117 2012 profit and loss account consolidated)
Total assets =288,200,657 (page#116 2012 balance sheet -consolidated)
2012 EBIT = profit before tax + interest expenses
=5,041,324 + 19,654,043=24,695,367
(page#122 2012 profit and loss account consolidated)
Total assets =304,310,087(page#121 2012 balance sheet consolidated)
2013 EBIT = profit before tax + interest expenses
=51,17,294 + 15,569,764=20,687,058
(page#122 2013 profit and loss accounts -consolidated)
Total assets =311,395,637 (page#121 2013 balance sheet -consolidated)
Graphical Presentation of Return on Assets









Interpretation
Return on asset is decrease over the year and it is not a good sign for the organization.
0
2
4
6
8
10
2011 2012 2013
Return on Assets
Return on Assets

54

3.3.5 Return on Total Equity(ROE)
Formula
(Net income / total equity) * 100
Year 2011

Year 2012 Year 2013
7,362,729 /24,581,369 *100
= 29.95 %
8,310,500/28,188,611*100
=29.49%
9,562,533/ 27,985,283*100
=34.16%

Working
2011
Net income 7,362,729 (page#117 2012 profit and loss account -unconsolidated)
Total equity 24,581,369 (page #116 2012 balance sheet unconsolidated)
2012
Net income 8,310,500(page#122 2013 profit and loss account -unconsolidated)
Total equity 28,188,611(page #121 2013 balance sheet unconsolidated)
2013
Net income 9,562,533(page#122 2013 profit and loss account -unconsolidated)
Total equity 27,985,283(page#121 2013 balance sheet -unconsolidated)

Graphical Presentation of Total Equity










Interpretation
Return on total equity is decrease over the year this in not worthy for the organization
and it is increase by profit by saving more and more taxes.
27
28
29
30
31
32
33
34
35
2011 2012 2013
Return on Total Equity
Return on Total Equity

55

3.3.6 Debt Ratio
Formula
Total Liabilities / Total Assets
Year 2011 Year 2012 Year 2013
263,619,288 / 288,206,517

= 0.914 Times
263,619,288 / 304,310,087

= 0.907Times
283,410,354/ 311,395,637

= 0.91 Times

Working
2011
Total liabilities 263,619,288 (page#116 2012 balance sheet -consolidated)
Total assets 288,206,517 (page#116 2012 balance sheet consolidated)
2012
Total liabilities 263,619,288 (page#121 2012 balance sheet -consolidated)
Total assets 304,310,087 (page#121 2012 balance sheet consolidated)
2013
Total liabilities 28,3410,354 (page#121 2013 balance sheet -consolidated)
Total assets 311,395,637 (page#121 2013 balance sheet consolidated)

Graphical Presented of Debt Ratio











Interpretation
Debit ratio has been decrease in 2012 and relatively stable 2013
0.902
0.904
0.906
0.908
0.91
0.912
0.914
2011 2012 2013
Debt Ratio
Debt Ratio

56

3.3.7 Debt / Equity Ratio
Formula
Total liabilities / total share holder Equity

Year 2011 Year 2012 Year 2013
263,619,288/ 24,581,369

=10.72 Times
263,619,288/ 28,188,611

=9..79 times
283,410,354/ 27,985,283

=10.12 times

Working
2011
Total liabilities 263,619,288
Total shareholders equity 24,581,369 (page#116 2012 balance sheet consolidated)
2012
Total liabilities 263,619,288
Total shareholders equity 28,188,611 (page#121 2013 balance sheet consolidated)
2013
Total liabilities 283,410,354
Total shareholders equity 27,985,283 (page #121 2013 balance sheet consolidated)

Graphical Presentation of Debt / Equity Ratio










Interpretation
Debt/ equity ratio has been decrease over the years.
9.2
9.4
9.6
9.8
10
10.2
10.4
10.6
10.8
2011 2012 2013
Debt to Equity Ratio
Debt to Equity Ratio

57

3.3.8 Times Interest Earned
Formula
Earning before Income Tax (EBIT) / Interest Expenses
Year 2011 Year 2012 Year 2013
24,180,960/ 19,536,154

=1.24times
24,695,367/ 19,650,443

=1.26times
20,687,058/ 15,569,764

=1.32 times

Working
2011 EBIT = profit before tax + interest expenses
=4,644,806 + 19,536,154=24,180,960
Interest expenses =19,536,154
(Page#117 2012 profit and loss account consolidated)
2012 EBIT = profit before tax + interest expenses
=5,041,324+ 19,650,443=24,695,367
Interest expenses =19,650,443
(Page#122 2013 profit and loss account -consolidated)
2013 2013- EBIT = profit before tax + interest expenses
=5,117,294+ 15,569,764=20,687,058
Interest expense = 15,569,764
(Page#122 2013 profit and loss account consolidated)
Graphical Presentation of Time Interest Earned Ratio










Interpretation Time interest has increased gragually.
1.2
1.22
1.24
1.26
1.28
1.3
1.32
2011 2012 2013
Times Interest Earned
Times Interest Earned

58

3.3.9 Advance /deposit ratio
Formula
Advance / deposit

Year 2011 Year 2012 Year 2013
109656714/185281624

=0.59 times
110444198/217670932

=0.567 times
129833937/247507718

=0.52 times

Working
2011,
Page #116 of 2012 balance sheet unconsolidated
2012, 2013
Page # 121 of 2013 balance sheet -unconsolidated

Graphical presentation of Advance to Deposit Ratio














Interpretation
Advance to deposit ratio is decrease over the period.

0.48
0.5
0.52
0.54
0.56
0.58
0.6
2011 2012 2013
Advance to Deposit Ratio
Advance to Deposit
Ratio

59

3.3.10 Operating cash flow ratio
Formula
Operating cash flow / current liabilities
Year 2011 Year 2012 Year 2013
3,457,088/263,619,288
=0.013times
4,409,215/263,619,288
=0.0159 times
5,072,700/28,3410,354
=0.0178 times

Working
2011
Current liabilities = bill payable + borrowing + deposit +other liabilities
=263,619,288 (Page#116 2012 balance sheet consolidated)
2012
Current liabilities = bill payable + borrowing + deposit +other liabilities
=263,619,288 (Page#121 2012 balance sheet consolidated)
2013
Current liabilities = bill payable + borrowing + deposit +other liabilities
=28,3410,354 (Page#121 2013 balance sheet consolidated)
Graphical presentation of Operating Cash Flow Ratio













Interpretation
Operating cash flow increase every year
0
0.002
0.004
0.006
0.008
0.01
0.012
0.014
0.016
0.018
2011 2012 2013
Operating cash flow ratio

60

3.3.11 Dividend Per share
Formula
Total dividend / no. of outstanding shares
Year 2011 Year 2012 Year 2013
1,062/2,344,818.1

=0.004 5Rs.
1,569,822/ 2,564,969.1

=0.61 Rs.
2,893,214/2,837,546.8

=1.019 Rs.

Working
2011
Dividend paid = 1,062(page120 2012 cash flow consolidated)
No. of outstanding shares = 2,344,818.1
2012
Dividend paid = 1,569,822(page124 2012 cash flow consolidated)
No. of outstanding shares = 2,564,969.1
2013
Dividend paid = 2,893,214 (page124 2013 cash flow consolidated)
No. of outstanding shares = 2,837,546.8

Graphical Presentation of Dividend per Share










Interpretation
Dividend per share of the company is fluctuation over the years. It depend upon the
companys policy how much dividend it likes to share with its share holder.
0
0.2
0.4
0.6
0.8
1
1.2
2011 2012 2013
Dividend per Share
Dividend per Share

61

3.3.12 Earning per share
Formula
Net income / number of outstanding
Year 2011 Year 2012 Year 2013
7,362,729/ 2,344,818.1

=3.14 Rs.
8,310,500/2,564,969.1

=3.24 Rs.
9,562,533/ 2,837,546.8

=3.37 Rs.

Working
2011
Net income = 7,362,729
Number of shares outstanding = 2,344,818.1
2012
Net income =8,310,500
Number of shares outstanding = 2,564,969.1
2013
Net income = 9,562,533
Number of shares outstanding = 2,837,546.8
Graphical Presentation of Earning Per Share











Interpretation
Earning per share has decreased over the years; it is need to be increasing it by
increasing the net income.
3
3.05
3.1
3.15
3.2
3.25
3.3
3.35
3.4
2011 2012 2013
Earning per Share
Earning per Share

62

4 CHAPTER NO. 5
ANALYTICAL ANALYSIS

4.1 SWOT ANALYSIS

4.1.1 Strengths
Habibmetro Limited has certain strengths which are different from the other Banks.
Habibmetro is one of the first Muslim Bank of the world, which is owned and
managed by its own employs. This is the biggest strength of the Bank. A feeling
of ownership is present in every employ, which not only helps in increasing the
productivity of employs but also creates sincerity with the Bank in them.
Strength is the high motivation of employees to their work because they know that
what so ever they do, it will be in their own benefit. They know that the profit,
which they will earn, will be distributed among all the employees. So they work
with high motivation and concentration.
Salaries are very reasonable, so the employees are not financially disturbed and
they devote their selves fully to their work.
They have wide area network in all over the Pakistan, so that they cover a lot of
portion of cash transactions and make customer satisfied.
The Bank has very strict rules and regulations about the customers complaints.
The customers are treated as very special persons in the Bank.
Conservative and sustainable business policy
Flat hierarchies, high degree of flexibility and lean decision-making
Highly qualified and experienced staff
Customized products packages and services, high level of client service and close
contacts to manufacturers and leasing companies
Extensive market and asset expertise
Credit portfolio diversified by multiple criteria and categories
Advanced risk management and pricing systems
Maturity matched funding
Strong capital base due to own funds

63

Unique business model with a clear focus, cycle-neutral business approach and
global presence in all key transport markets

4.1.2 Weaknesses
Relatively high sector exposure
Global presence requires high staff resources
High staff costs due to high levels of employee qualification in terms of academic
expertise and experience
No material client deposits
Dependence on the money and capital markets
Exposure to the Euro/US dollar exchange rate, with an impact on growth and
results
No entertainment facilities are available in the Bank when customer goes to the
Bank and wait for a longer time. These facilities can be the newspaper,
magazines, etc.
Advertisement of Habibmetro is not such goods as of other banks.
Out look of the Habibmetro branches is not attractive to the people.
As compare to other private commercial banks the limited branches of
Habibmetro are computerized.

4.1.3 Opportunities
Realization of margins in line with risks taken
Expansion of anti-cyclical Investment Management activities
Building new client relationships
Expanding the advisory and other services offered to clients, investors, and banks
Boosting our reputation as a reliable partner to the international transport industry
The policies of the new government to uplift the economy and pursue financial
sector reforms are expected to yield positive results in the banking industry of the
country. The Habibmetro is very well praised to avail promising opportunities.
As a result of the different steps taken by the Government regarding the
betterment of the economy, small borrowers are attracted to get the financing and
start small businesses. So, the Habibmetro has an opportunity to attract the
customers by giving them attractive schemes.

64

They have wide area network in all over the Pakistan, if Habibmetro can make it
possible the fast delivery of fund from abroad through online banking, it can cover
the major market of Pakistan which still is capturing by Hundi.

4.1.4 Threats
Distortions on the money and capital markets, in the broadest sense.
Decline in transport asset values in the various transport market segments.
Impact of the global financial markets crisis and the sovereign debt crisis in
Europe.
Increasing debt levels in some industrial countries and emerging markets.
Unanticipated rise of the US dollar against the Euro.
Further government support for Habibmetro's bank competitors growing
regulatory requirements.
Spikes in crude oil prices.
First threat is that of political influence. Three boards of directors are of
government. So that they can influence on the decisions of the Habibmetro.
The biggest threat in the banking sector is the continuous downfall of the country
economy since the last few years. If this downfall remains for more few years
then it may be the great hindrance in achieving the Banks objectives.
New Privates Bank coped with emerging new Technology of IT.



65


5 CHAPTER NO 6
CONCLUSION AND RECOMMENDATION

5.1 CONCLUSIONS

During my internship in HABIB METRO bank (Ltd) it has a good experience of 6
weeks and I learn so much about the banking and the working and I also observe
many thing in which some thing are good for the banking business and I observe
some weakness in the HABIB METRO branches. the good thing is that most of the
branches are online and connected with the main Bank and the online system which I
like and observe is secure and time saving and there is less chances of the mistake as
compare to non-online bank branches there is also facility of ATM machine almost all
the branches of HABIB METRO bank which is good for bank and the customer too
and the working and the functioning of the HABIB METRO bank is smooth and
customer oriented and the management is good but there is also the drawback is that
some employees has not professional degree which makes the difference as compare
to the work of the professional degree holder some employee not paid full attention to
the customer and not use the proper business language with the customer but the
professional have the very good manner and they give proper attention to their
customer.
I experienced that the management is hesitate to give internee chance of working in
the cash department because they are not take any risk. Also some branches have not
full decorated and in some branches there is no installation of rotation camera which
is not good for the security.
I conclude through the study and perpetration of the ratio analysis I conclude that the
Net profit margin of the company decrease and it is need to be improved and Gross
spread ratio also decrease need to be improved, non interest income to total income is
relatively increase which is good sign for organization . Debt ratio of the company
decreased over the years. Return on asset (ROA) increasing on the year base its good
because the organization uses its asset effectively and efficiently and there is also

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need to improve the return on equity. Price earn ratio is stabilizing over the period of
time and the return of equity has been decreased.

Finally I conclude that by keep the entire thing in mind that organization doing good
business overall but the need to make the policies of the organization is more effective
and stabilized which makes the organization more sound reliable and strong.

5.2 RECOMMENDATIONS FOR IMPROVEMENT

The HABIB METRO bank (Ltd) doing good gob over the years that way the deposit
of the organization increase and the profitability also increase. The recommendation
for the improvement is as follow
Recommendation as the basis of the ratio analysis
Gross spread ratio of the organization is steady decreasing and need to be
improved.
Noninterest income to total income ratio is improving and need to be continued.
Spread ratio is good but organization must decrease the interest expenses which
help in improving in the interest income which is very good for the organization.
Debt ratio is decrease over the period of the time and its thing need to be
continued.
Return on assets is improving over the year and make sure this is continued.
Organization takes the necessary step to stabilize the net profit margin.
Return on asset is increasing and this trend need to be continue
Gross profit margin and return on equity is not satisfactory need to be improved
And also the earning per share of organization needed to be improved.
And the other recommendation on the bank management for improvement is as follow

5.2.1 Security cameras
In some branches there is not the proper installation of the security cameras so I
suggest that in every branch there is the installation of the rotation security cameras
which is necessary for the security of the organization



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5.2.2 Proper reception
There is no proper reception in the bank branches so the people have no proper
information no guide line so the organization takes a measure for the reception so that
it is good for the customer because every customer is valuable for the bank.

5.2.3 Token system
I observed that the token system has many problem because if there is lot of customer
and after the break or the closing of the bank and some time people have no time so
that they bring token with them it creates a problem for the bank and the customer too
so there is chance to loss the customer in my suggestion the organization doing the
measure no to loss the value able customer and increase the staff such as if there is
one casher counter increase it to two so that customer is treated hurry and there is time
saving both for the bank and the customer .

5.2.4 Behavioral and professional training
Last suggestion is that there is proper education and training of the staff of the
organization and also the work on the behavior of the staff. If there is proper training
and behavior it is good of the organization and this step hold the customer for long
period of time







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References

http //habibmetro.com/
http //www.google.com
http //www.sbp.com
http //www.finance.gov.pk/
http //www.wikipedia.com





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