In the name of Allah who is most beneficent and merciful.

HABIB BANK LIMITED

AJK University Branch Muzaffarabad (A.K)

Qaiser Khurshid Anwer

BC030400638
Fall 2003

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 DEDICATION
Dedicated To:

My loving Parents and Grand Parents

Who determined the path and destination for me.

And who always make things possible for me

My loving Brothers and Sisters

Whose prays and support

Enabled me to complete my studies

ACKNOWLEDGEMENT
All praise for almighty Allah who guides us in darkness and help us in all difficulties and
problems. Many thanks to Him, who created us Muslim and blessed us with education so
that we can differentiate between right and wrong. I offer my humblest and sincerest
respect to Holy Prophet Muhammad (SAW) who is the torch of guidance and

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knowledge for the humanity for all the time to come. He enabled us to recognize our
creator.

This all is the fruit of untiring efforts, lot of prayers, encourgement, sacrifices guidance,
moral and financial support of my great, respectable and loving parents. Without them I
am not able to do this. I have no wards to thank my father who is facing lot of difficulties
for providing me financial support. Lot of thanks to my loving mother for constant
prayers and enough courage, which enable me to stand against the worst circumstances.
May Allah shower His blessings on my parents. (Amin)

Teachers are great source of knowledge, love, dignity, determination and patience I wish
to express my thanks to all my teachers for their proper guidence, valueable suggestions
and friendly behaviour during my studies.

I would like to pay my sincerest thanks to my internship fellow and class fellows.

Liaqat Ali, Junaid Nayyer Zaman, Shakir Hussian, Amar Raza Sheikh, Rizwan
Ahmed and all other my friends for their help and joyful company during this project.

I am thankful to all the HBL AJK University Branch Officers who cooperated with me
during my internship program, and provided knowledgeable information to me, which
increase my knowledge & abilities of working in banking institutions. During my
internship program they help me to implement and practice my theoretical concepts in a
practical way in daily routine life.

May almighty Allah shower His blessings on all those who associated me in any way
during completion of my studies and internship report. May Allah have a golden life?

EXECUTIVE SUMMARY:

For the past two years there is overall growth in all the financial aspects of the

Habib bank limited. The assets are increased from $9095487 million dollars to

$10578045 million dollars. And liabilities of HBL also increased form $9643465 million

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dollars to $8283458 million dollars. And owner’s equity increase form $812029 million

dollars to $812029 million dollars. The profit of HBL is decrease by $64661 million

dollars in 2007. The advances, investments, operating fixed assets and deposits & other

accounts of HBL are increased in 2007. These increases are shown the good strategy &

Planning, which is adopted and implemented by the higher management of HBL from

last two years.

During my internship period I have worked in three different departments of

HBL, which exists in most branches of the banks. These departments are (operation

department, Finance department and account opening deparment). In my six – weeks

internship program I have spend almost 1 and ½ weeks with the officers of every

deparment, and I have learned their basic responsibilities and functions, which they have,

perform in daily routine life.

From operation manager I have learned how the cheque are passed or cleared in
the branch and what are remittance facilities, which is provided by the branch to its
customer. There are three types of clearing (inward, outward, and intercity). The cheques
which arrive in branch from other banks is called inward clearing and the cheques/bills
which are send by the branch to other banks for clearing is called outward clearing, and
the bills/cheques which sent for clearing out side the city is called intercity clearing.
There are also three types of remittance of the operation deparment. These are (online
transaction, demand draft, pay order etc) the charges of these remittances are different for
the account holder of the branch and pay through cash.
In finance department I have learned how many types of loans/advances facilities

provided to its customers. There are two types of loans issued/ lending to the customer or

financial institution. There are two types of customer loans are provided by the HBL to

its customer these are (unsecured loans, secured loan). The unsecured loans are that loan,

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which is provided against the salary of a person. On the other hand the secured loans are

those loans, which are provided against mortgage, against hypothecation (stock) or any

other guarantees. I have also learned the documentation process of the HBL of issuing

loan to any party/customer. The loans that are provided by the business organization,

companies or any corporation it is called Business customer loans. These loans are

provided to the large organizations to fulfill their working capital requirements.

In account opening deparment I have learned about the account opening process. I

have learned how the account is open of a new customer. How many types of account

they provide to their customer and what is the minimum/maximum limit amount of every

account. I have also learned what is the documentation process of account opening of a

new customer for first time. The account of new person is open through online process to

use mysis software. Through this software the branches are directly connected with their

head offices.

The last weeks of my internship program I have spend with the branch manger.

From branch manger I have learned the responsibilities and the functions of a branch

manager. How he controls & manages the internal and external affairs/ matters of the

branch. And what is daily routine work in the branch.

Photocopy of the internship certificate (provided by the organization)

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Photocopy of the Evaluation Certificate from the supervisor in organization.

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Table of contents:

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S. # Particular Page No
1. Brief introduction of the sector. 10
2. Overview of the organization 10,26
2.1. Brief history. 10,11
2.2 Mission & Objectives of HBL. 11,13
2.2.1. Mission 11
2.2.2. Objectives 11,12
2.3. Nature of the organization 12,14
2.4. Business volume 15
2.5. Product lines 16,25
2.5.1. Individual Customer Products 16,19
2.5.2. Business Customer Products 20,25
2.6. Competitors 25,26
3. Organizational structure 27,28
3.1. Organizational Hierarchy chart 27
3.2. Number of employees 27
3.3. Main offices 27
3.4. Comments on the organizational structure 28
4. Plan of your internship program 28
4.1. A brief introduction of the branch where you did your internship 28
4.2. Starting and ending dates of your internship 28
4.3. The departments in which you got training and duration of your training 28
5. Training program 29,37
5.1. Introduction of all the departments 29,31
5.2. Detail description of the department you worked in 32,37

6. Structure of the Finance Department 38,39

6.1. Department hierarchy 38
6.2. Number of employees working in the Finance department 38
6.3. Finance & accounting operations 39
7. Functions of the Finance Department 39,41
7.1. Accounting System of The Organization 39
7.2. Finance System of The Organization 39,40
7.3. Use of Electronic Data In Decision-Making 40
7.4. Mobilization Of Funds 40
7.5. Generation Of Funds 40,41
7.6. Sources Of Funds 41
7.7. Allocation Of Funds 41
8. Critical analysis. (Internship with the finance Department.) 42,66
8.1. Financial analysis(Cash Flow Statement) 42, 43
8.2. Ratio analysis 44,57
8.3. Vertical & Horizontal analysis of HBL Last two years. 57,59
8.4. Organization analysis with reference to the industries listed on the 60,62

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 Stock exchange. (If it is listed)
8.5. Future prospects of the organization. 62,65
9. SWOT analysis 65,66
10. Conclusion & recommendations for improvement 66,67
11. Reference & Sources used 67
12. Annexes 67

1. Brief introduction of the Sector:

HBL was the first commercial bank to be established in Pakistan in 1947.
Over the years, the bank has grown its branch network and become the largest
private sector bank with over 1,400 branches across the country and a customer
base exceeding five million. HBL also has a presence in 25 countries with
subsidiaries in Hong Kong and the UK and affiliates in Nepal and Nigeria.
HBL's key areas of operations encompass product offerings and services in Retail
Banking and, in recent years, Consumer Banking as well. HBL has the largest
Corporate Banking portfolio in the country with an active Investment Banking
arm. SME and Agriculture lending programs and banking services are offered in
both urban and rural centers. Using our branch network as a key competitive
advantage, our business concentration has remained consistent for Retail,
Consumer, Corporate and SME clients.
HBL is expanding its presence in principal international markets including the
UK, UAE, South and Central Asia, Africa and the Far East.

2. Overview of the organization

2.1. Brief history

HBL established operations in Pakistan in 1947 and moved its head office to
Karachi. Our first international branch was established in Colombo, Sri Lanka in
1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th
Anniversary. With a domestic market share of over 40%, HBL was nationalized in
1974 and it continued to dominate the commercial banking sector with a major
market share in inward foreign remittances (55%) and loans to small industries,

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 traders and farmers. International operations were expanded to include the USA,
Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands.
On June 13, 2002 Pakistan's Privatization Commission announced that the
Government of Pakistan had formally granted the Aga Khan Fund for Economic
Development (AKFED) rights to 51% of the shareholding in HBL, against an
investment of PKR 22.409 billion (USD 389 million). On February 26, 2004,
management control was handed over to AKFED. The Board of Directors was
reconstituted to have four AKFED nominees, including the Chairman and the
President/CEO and three Government of Pakistan nominees.
2.2 Mission & Objectives of HBL:
2.2.1 Mission:
At HBL growth is not a function of time but rather of performance. As
your performance improves, the role that you play within the organization
will accelerate to reflect your input.
HBL’s performance management and reward systems ensure that goals are
met in an effective and efficient manner. We define a clear path for you to
contribute to the organization’s overall goals, peppered with regular
reviews and feedback to help you gauge your progress.
Our focus is on attracting, developing and retaining the best in the
business by offering market driven compensation and benefits packages.
Our compensation and benefits strategy combines the need to maintain a
high performance culture along with market competitiveness.
2.2.2 Objectives:
Values:
Our values are the fundamental principles that define our culture and are
brought to life in our attitudes and behavior. It is our values that make us
unique and unmistakable. Our values are defined below:
Excellence:
This is at the core of everything we do. The markets in which we operate
are becoming increasingly competitive, giving our customers an
abundance of choice. Only through being the very best - in terms of the

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 service we offer, our products and premises - can we hope to be successful
and grow.
Integrity:
We are the leading bank in Pakistan and our success depends upon trust.
Our customers - and society in general - expect us to possess and
steadfastly adhere to high moral principles and professional standards.

Customer Focus:
We understand fully the needs of our customers and adapt our products
and services to meet these. We always strive to put the satisfaction of our
customers first.
Meritocracy:
We believe in giving opportunities and advantages to our employees on
the basis of their ability. We believe in rewarding achievement and in
providing first-class career opportunities for all.
Progressiveness:
We believe in the advancement of society through the adoption of
enlightened working practices, innovative new products and processes,
and a spirit of enterprise.

2.3. Nature of the organization:

HBL is the largest financial institution in Pakistan with more then 1400 branches

network. HBL is divided into many banking group e.g.

 Retail banking group.

 Corporate banking.
 Investment banking.
 Commercial & wholesale banking.
 Credit division.
 Treasury banking.
 Human resource development banking.

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 Information technology.
 Asset management.
 Consumer banking.
HBL main objective is to put its customer first & try to give every little help to its
customer. Customer relationship and customer reaction are very important for the
HBL. HBL mission is to provide friendly environment to its staff and customer.

Culture of HBL:
At HBL we have created a challenging environment that encourages creativity
and commitment. In our pursuit of excellence, we are focused on attracting,
developing and retaining the best talent in the marketplace. Our dynamic culture
offers diverse growth opportunities across Pakistan and in 25 countries around the
world.
HBL fosters a work environment where employees can realize their potential
whether locally or in the international arena. Thus, we enable our employees to
achieve their professional goals while keeping in synch with the bank’s overall
objectives.
We encourage you to explore this section to find out about current job openings
and how to submit your resume.
Benefits of HBL:
At HBL growth is not a function of time but rather of performance. As your

performance improves, the role that you play within the organization will

accelerate to reflect your input.

Performance Management
HBL’s performance management and reward systems ensure that goals are met in

an effective and efficient manner. We define a clear path for you to contribute to

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the organization’s overall goals, peppered with regular reviews and feedback to

help you gauge your progress.

Compensation & Benefits

Our focus is on attracting, developing and retaining the best in the business by

offering market driven compensation and benefits packages. Our compensation

and benefits strategy combines the need to maintain a high performance culture

along with market competitiveness. Annual benchmarking exercises are

conducted to stay abreast with industry standards.

Recruitment process in HBL:

Meritocracy is an integral part of HBL’s recruitment policy. Our merit-based
recruitment process incorporates the principles of equal opportunity and leads to
the appointment of the most capable candidate. This ensures openness and
transparency, allowing greater confidence in the outcome of the selection process.
The merit principle at HBL aims to identify the most suitable person for the job
assessed on the basis of the following parameters:
• Educational Background
• Skills and Competencies
• Abilities and Attitude
• Experience
• Interpersonal / Communication skills.
Campus Hiring in HBL:
We are proud of our ability to nurture individuals and empower them to hone their
talents. Our size gives us the unique ability to provide fast growth and significant
responsibility early on in a career with multiple avenues to reach the top.
As part of HBL’s human resource strategy, we visit various universities across the
country to induct & groom fresh business graduates every year. Enthusiastic and
talented youth form the backbone of our banking operations and are nurtured to
become future leaders at HBL.

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 To attract the best young talent, our resourcing department employs a pro-active
strategy. We actively participate in campus seminars by giving presentations that
highlight HBL’s background, vision, mission, values, recruitment & selection
process, future career prospects and overall business strategies.
We hire fresh talent on a permanent basis and offer a wide range of career

opportunities across all functions, including Finance, Marketing, Operations,

Information Technology and Human Resources.

2.4. Business volume:

Consolidated Financial Highlights of HBL
(Rupess in million ‘000)
Description
2007 2006 % Age growth
Balance Sheet
Total Deposit 531298 459140 15.72%
Total Assets 691992 594062 16.48%
Advances 382172 349433 9.37%
Liquid Assets 170901 126207 35.41%
Share holder equity & Revaluation 62272 52530 18.55%
Surplus
Capital Adequacy Ratio 13.57% 12.88% 5.36%
Liquid Assets % of deposit 32.06% 27.72% 15.67%
from customer & Bills
payable
Profit & Loss
Total Net Income 41350 38971 6.10%
Total Expenditure 18382 17204 6.85%
Provision for non Performing 7823 2927 167.00%
Loans and & others
Pre Tax Profit 15145 18840 -19.61%
Profit after Taxation 10084 12700 -20.60%
Earning per share (Rs/ 14.49 18.30 -20.82%
Share)
Others
Home Remittance 79322 66556 19.00%
Export / Import 308426 306718 0.56%
Staff Strength 1489 1477 0.81%
Branches 14552 14572 -0.14%

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2.5. Product lines:
We can divide the products of HBL into two different parts. One is Individual
customer’s product and the other is a business product. In Individual customers
we can include those products, which can easily used by the Individual customers
and enjoy the benefit of these products. In business products we ca include those
which benefit directly or indirectly get by the business organization, and used
these business products very easily and frequently. The some of the Individual
customers & business products of the Habib Bank limited are.
2.5.1 Individual customers products
 Debit Card:
HBL Visa Debit Card allows you to pay for your purchases directly from your
bank account. You don’t have to carry cash and your monthly statement provides
you with a complete record of all your transactions so you can manage your
expenses with ease.
• No Interest.
HBL Visa Debit Card is the perfect way of paying for your purchases as it
gives you access to the exact amount of money you need, as and when you
need it. There is no interest or credit on payments because you spend from the
money available in your personal HBL Account.
• Ease & Security.
HBL Visa Debit Card offers ease and convenience because you do not have to
visit an ATM to withdraw cash. Paying with the HBL Debit card is safe
because it eliminates the need to carry cash. A single swipe automatically
debits the exact purchase amount from your personal HBL account.
• No Liability.
In case of a lost or stolen card, you are protected against fraudulent
transactions made on your card after you report the incident. Please report
your card as lost or stolen immediately by calling our 24 hour HBL Phone
Banking service at 111-111-425 within Pakistan or the Global Customer
Assistance Service helpline for the relevant country if you are traveling
abroad.

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 • International Recognition& Acceptability.
Your HBL Visa Debit Card is accepted at over 20 million Visa merchants
worldwide, including over 10,000 merchants in Pakistan. As an ATM card it
is accepted at more than 1,000 1-Link & M-Net ATMs in Pakistan and
864,000 Visa ATMs worldwide. No matter where you are, with the HBL Visa
Debit Card, we are always with you.
• Spending Limits.
The daily spending limit at shops and outlets on your HBL Visa Debit Card is
Rs. 50,000. On the HBL Visa Gold Card your daily spending limit is Rs.
100,000 with no restrictions on the number of transactions. (Please note that
these figures are subject to the balance available in your account).
• Free Account Statement.
Our cardholders receive a free monthly account statement for their Debit Card
and ATM transactions to help them keep track of their spending.
• 24 hour Customer Service.
Local
Contact our 24 hour HBL Phone Banking service at 111-111-425 if you need
assistance related to your HBL Visa Debit Card.
International.
International callers can call +92-21-111-111-425 for 24 hour service.
• Global Customer Assistance Service.
When traveling overseas, HBL Visa Debit cardholders receive global

assistance 24 hours a day, 7 days a week from the local Visa Global Customer

Assistance Service.

 HBL Value Account:

• 7% profit per annum*.
• Profit credited every 3 months.
• Deposit ranges from Rs. 10,000 to Rs. 100,000.
• Flexibility of withdrawals.

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 HBL Super Value Account.
• 7.25% profit per annum*.
• Profit credited every 3 months.
• Deposit ranges from Rs. 100,000 to Rs. 500, 00.
• Flexibility of withdrawals
 PLS – Savings Account
• Profit paid bi-annually.
• Minimum average balance of Rs. 10,000.
• Less than Rs. 20,000 earns 0.10% profit.
• Greater than Rs. 20,000 earns 1% profit
 HBL Munafa Plus Deposit certificate (MPDC).
• Remittance Based (no credit allowed except remittance).
• Daily Basis Product.
• Tiered.
• Monthly profit.
• Minimum average balance of Rs. 10,000.
• Less than Rs. 20,000 earns 0.10% profit.
• Rs. 1 million and above earns 5% profit.

 Credit Cards.
Welcome to a world of convenience, flexibility and opportunity. The HBL Credit
Card will add simplicity and excitement to your life. Accepted at over 24 million
merchants worldwide, HBL Credit Card makes shopping fun and paying simple.
Make the most out of your shopping experience with your very own HBL Credit
Card
 Bancasurance:
HBL and New Jubilee Life Insurance Company Limited (NJLI) introduce Amaan

(Retirement Plan) and Tabeer (Child Education & Marriage). These products have

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 been designed keeping HBL’s customer base as the focus and will provide life

insurance along with an investment option.

 Phone Banking:
Your bank is just a phone call away.
You can now call HBL Phone Banking and save a trip to the branch. Your query
will be resolved in a single telephone call from anywhere and at anytime. For
more details on features and benefits please see below:
• Get your account balance
• Get information about the last 5-10 transactions carried out on your account
• Request your bank statement, either through fax or email (as supplied in your
subscription form)
• Get details of your transactions from the last 6 months on each of the accounts
listed on your subscription form
• Change and/or modify your contact details
• Transfer funds between your own accounts (as listed in the subscription form)
or from your account to a third party account (as listed in the Third Party
Authorization Form)
• Transfer funds from your own account to an account in another bank under
the 1-Link network (Inter Bank Funds Transfer)
• Generate your own choice of ATM Pin without filling a request at your
branch
• Inquire about our product offerings
• Lodge a complaint in case of any inconvenience
• Inquire about the daily accounts related profit rates and currency exchange
rates
• Request a number of physical instruments and/or branch banking related
services that you might require, including:
• Pay Order
• Demand Draft
• Statement

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 • Balance Certificate
• Cheque Book

2.5.2 Business customers Products:

 Corporate Banking.
HBL Corporate Banking Group comprises a seasoned team of Relationship
Managers (RMs) to meet the demanding service standards of large corporations.
A long history of financing and nurturing relationships in Pakistan has given HBL
a unique insight, enabling us to provide timely and effective financial solutions
for our customers to meet the growing challenges of a global economy.
If you are a corporate customer, with a turnover of at least PKR 300 million, we
have a range of solutions designed to help you with your banking needs. Our RMs
have the expertise you need to create tailored financial solutions catering to the
specific requirements of your business.
Whether establishing a new venture or expanding an existing business, our team
understands your banking needs and works closely with you to realize your goals.
Services:
We provide the following services to meet your funding requirements:
• Working Capital Finance, including Overdraft, FE Loans, etc.
• Pre and Post Shipment Export Financing (PKR and USD based)
• Import Financing (PKR and USD based)
• LMM Funding
• Receivable Discounting
• Islamic Banking facilities
• Cash Management Services
• Trade Services including Letter of Credit, Letter of Guarantee and Standby
Letter of Credit, etc.
 Commercial Banking.
HBL’s Commercial Banking Group targets medium sized companies with a
turnover of at least PKR 50 million. Our business units are located in Karachi,

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 Lahore, Faisalabad, Sialkot, Gujranwala and Peshawar. Each unit is dedicated to
service business clusters located within these cities.
We have the ability and the resources to meet the needs of your business with our
pro-active, responsive and experienced Relationship Managers who are
committed to understanding your business.
Services:
We offer financing for the following:
• Working Capital
• Procurement of Inventory
• Receivables
• Procurement of Machinery
• Expansion of production facilities
• Import of raw materials
• Exports
• Guarantees
 Investment Banking.
HBL offers full-service Investment Banking capabilities to its clientele. This year
alone, HBL has closed over thirty transactions with a cumulative worth of over
USD 2 billion. This is a testament to the out-of-box thinking and the innovative
products we bring to our customers.
The Investment Banking Group functions in three specialist business areas:
Project Finance, Debt Capital Markets & Syndications and Equity Capital
Markets & Advisory.
Project Finance:
The bulk of HBL’s project finance practice revolves around the power sector.
Prior to the power policy of 2002, HBL actively pioneered Project Finance in
Pakistan through the funding of a gas-fired co-generation plant (94 Megawatts of
power and desalination of 3 million gallons per day). Subsequent to the 2002
power policy, HBL continues to play a fervent role in the sector and is the only
Investment Bank that was Lead Advisor to all IPP transactions that achieved
financial close. In the fertilizer sector, HBL financed the largest local currency

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 financing in Pakistan, worth PKR 23 billion, as well as a green field venture in the
telecom sector worth PKR 12 billion.
Debt Capital Markets & Syndications:
Depending on the requirements of its customers, HBL offers a variety of products,
including syndications, securitizations, privately placed and listed TFCs, term
finance facilities, commercial papers, etc. HBL played the lead role in a number
of significant debt transactions, including PKR 15.14 billion TFC issue (the
largest privately placed issue in Pakistan), the first bond offering for any
microfinance institution in all of Asia, credit enhancement for a rapidly growing
company in the consumer durables sector and numerous tier-2 capital transactions
for commercial banks.
Equity & Advisory:
HBL offers a breadth of equity and advisory products including innovative capital
raising techniques, restructurings, public and private equity placements and
mergers & acquisitions. The HBL team played a pivotal role across several
sectors, including energy, agriculture, consumer products, fertilizers, etc., for
raising various forms of equity and quasi-equity. Recently, HBL structured a
convertible debt note with a built-in Put feature for a US-based provider of
agriculture technology and dairy solutions – a first of its kind transaction in
Pakistan. HBL also provides valuation for a company in the food and beverages
sector.
 Islamic Banking.
Islamic Banking is a growing market segment that offers attractive opportunities
to potential and existing customers. At HBL, Islamic Banking offers Shariah
compliant products and services to meet the short and long term requirements of
business and trade.
Islamic Banking provides Ijarah (leasing) for vehicles, plants and machinery to
meet long-term customer resource requirements. Murabaha (local & import)
facilities are provided to meet the short-term financial needs of mid-market and
corporate customers.

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 HBL’s Islamic Banking products are fully Shariah compliant and duly certified by
independent Shariah Advisors.

Services:
Visit our Islamic Banking branch for the following services:
• Opening of Current Account and Basic Banking Account (BBA)
• Collection of Foreign/Inland Bills
• Acquisition of Assets on Ijarah
• Purchase of Raw Materials, Semi-Finished/Finished goods or Store or
Spares through Murabaha
• Foreign/Inland Remittances
• Utility Bills Collection
• E-banking/Internet Banking services

 Cash Management.
HBL offers a comprehensive platform for customers to avail Cash Management
Services throughout Pakistan. Our Cash Management Services reduce the cash
turn around of your company, thereby making it cost efficient.
Advantages:
• Centralized Collections / Funds Transfer
• Centralized Payments / Disbursements
• Customized MIS Reporting
• Centralized Customer Support through IT/Operations.
Products and Services Collections:
• Easy Collect
• Standing Instruction via Debit Authority (SIDA)
• Outward Bills for Collection (OBC).
Payments:
• Salaries / Expenses
• Online Cheque Payments (Vendor Payments)
• Utility Bill Payments.
E-Banking/Internet Banking:

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 • Electronic MIS reporting through email
• Viewing of account statement through E-Banking service
• Dedicated Customer Support Officers for Query Handling and Reconciliation.

 Rural Finance:
HBL’s Agriculture loans are spread across the country and provide financing
through over 800 branches. We have the largest private bank portfolio in the
country with over PKR 18 billion in various agriculture sectors. HBL’s presence
in all agriculture belts of the country ensures easy access to farmers in rural areas.
We provide loans to small-scale land owning farmers as well as large
institutionalized and alliance based financing to boost the country's economy and
yield better harvests. HBL enables farmers to buy good quality seeds, fertilizers,
pesticides, agricultural implements and non-farm setups through its various
product programs.
The following products ensure that customer needs are fully met with respect to
their farming requirements:
• Revolving Agri Scheme
• Haryali Farm Transport Scheme
• Agri Development Loan
• Agri Development Loan (Fish Farming)
• Agri Development Loan (Drip Irrigation)
• Agri Production Finance
• Haryali Livestock Loans

 Global Treasury:
In today's fast paced and increasingly global world, Treasury services are even
more important than before as interconnected economies are rapidly blurring
physical boundaries in international trade.
A vibrant, dynamic Treasury department is the hallmark of the changing culture
of Habib Bank with its focus towards improved customer services, and increased
profitability for both customers and shareholders.

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 Our access to information is supplanted by our overseas branch network, with
branches located across all time zones, from Sydney to New York. However,
collection of superior data is not an aim in itself, and our real addition of value is
in our ability to analyze the wide spectrum of data that is available, and from this
analysis, identify opportunities that can be capitalized upon.
Habib Bank in its capacity as the largest commercial bank in Pakistan also has the
largest Treasury in terms of volumes transacted. These increased volumes have
been brought about by the professionalism and expertise brought in by the senior
management of the bank, whereby operations have been streamlined, and
processes re-engineered to increase efficiency.
The ability to manage risk effectively allows us to offer the most competitive
rates to our clients on all facilities ranging from deposits to encashment of export
proceeds. Our global alliances and local treasury expertise provide our clients
with an informed overview of current events as they pertain to our clients'
business, with the consequent ability to take proactive decisions to evolving
market conditions.
These are the major product of the HBL. They use these products to compete in
the market with the products of its competitors. Also HBL provided high level
product quality and loyalty to its customer.
2.6. Competitors:-
All the banking institutions are the competitors of the HBL. These competitors are

(ABL, MCB, NBP, SCB, Askeri Bank, The Bank of Punjab, The Bank of Khyber,

UBL, Bank Alflah, Islamic Bank, etc. these competitors are provided very tuff

competition to HBL in the market. Not only the Pakistani banks are the big

competitors of the HBL some of the foreign banks who are working in the

Pakistan are provided tuff competition to HBL.these local and foreign banks are

all the major competitors of the Habib bank limited and provide tuff competition

to HBL in the market. Every day they launch a new product or services to

24
compete each other. The up to date credit ratings of all the banks are with

comparison to HBL are given below.

Rating:
HBL is currently rated AA+ (Long Term) and A1+ (Short Term). HBL is the first
Pakistani bank to raise Tier II Capital from external sources.

25
26
3. Organizational structure
3.1. Organizational Hierarchy chart
The organization structure of the HBL is Head office Karachi, Regional Head
Quarter and the Branches. These branches are directly connected to the general
head quarter and also connected to their regional head quarters. The branches of
HBL are further connected to each other’s. Graphically we can explain it.
HOK
Head Office Karachi

Regional Head
Quarter

HBL
HBL Chatter HBL AJK Khawaja
HBL Main Uni, Branch Chock
Branch
Branch Branch

3.2. Number of employees:-

In HBL AJK University branch where I am do my internship is consist of 8
employees. In these eight employees (one manager, six officers and one Guard).
These employees’ works interrelated to each other. And they support each other
in every kind of matter.
3.3. Main offices:
The main offices of HBL are (Head office which is situated in Karachi and
Regional head quarter in every region and the branches are working under these
regional head quarters. All the management decisions are taking in Head office
Karachi or regional head quarter. Every branch is supervise by the manager, and
he is responsible all the matters of the branch.

27
 3.4. Comments on the organizational structure:-
The organization structure of the HBL is a very sample. All the branches are
linked to their head office and regional head office and all the branches are
interlinked to each other through a network. Using new technology it is easy for
the all HBL branches to transfer any kind of information/ transaction of money
from one branch to another branch within minutes. Due to using of new
technologies all the daily report are send to the head office. To use new
technologies it is easy for the higher management to monitor every daily
transaction easily.

4. Plan of your internship program.

4.1. A brief introduction of the branch where you did your internship:
The HBL AJ& K university branch is located at upper addah near university of
azad Jammu & Kashmir University. It was established in 28th of February 1995.
It is situated at very busy area where every day lots of its existence and new
customer approach it easily. It is deal both the government and private sector. It is
consist of seven employees. The branch manager is the head of the branch and he
is responsible all the matters of the branch. It is provides the facilities of (online
banking, ATM card, Debit card, one window operation, different types of
finances and different types of accounts facility) to its customer.
4.2. Starting and ending dates of your internship:
My internship is start at 23rd of February 2008 and it is ended 5th of April 2008. It
is consist of 6- week internship training.
4.3. The departments in which you got training and duration of
your training
I am working in HBL AJ & K university branch .In HBL AJ & K
University there is no separate departments, but I am working all the person of the
branch spent 2 weeks for every person. To learn and understand their basic
function, which they have, perform in the branch.

28
5. Training program
5.1. Introduction of all the departments:
There is no permanent structure of different departments is existing in the branches
and also in regional head quarter, but the managers of all departments are existing in
the RHQ (regional head quarter. These managers are performing their responsibilities
according to their job. These departments/ managers are
1. Management Department / Manager.
2. Finance Department / Manager.
3. HRM Department / Manager.
4. Accounts Department / Manager.
5. IT Department /Manager.

• Duties and Responsibilities of Management Department:

Management of the bank’s current activities is performed by the executive
management body (sole management or management through a board).
Formation of executive management bodies of the bank and premature
termination of their authorities is fulfilled upon the resolution of the general
meeting of shareholders unless the bank’s by law does not reserve this right for
the board of directors.
Management of the bank includes the chief executive officer, his deputy
(deputies), chief accountant and other officials of the bank.
There is a direct link between the “quality” of the bank’s management and the
bank’s financial condition. Therefore, during a bank examination it is important
to focus and review in detail the activities of the bank’s executive officers.
Reasonable procedure of the bank’s management should include:
 Planning of operations

 Personnel management

 Organization of internal controls

 Organization of management reporting.

29
 • Duties and Responsibilities of HRM Department:-
The basic responsibilities of the HRM manger / department in the regional head

quarter are:

 The human resource management (HRM) functions in banks.

 The ways in which managers can influence the human resources and take the

action.

 The role of people in a business unit.

 The problem solving function of HR system.

 Developing skills in diagnosing the problems.

 Consolidation of staff appraisal.

 Posting and transfer of staff.

 Deployment of staff.

 Staff benefits and solution of problems.

 Lunch tanning program for new & existence employee.

 Create and advertise new jobs for the unemployed people.

• Responsibilities of Accounts Department in RHQ:

Online Banking: You can use Online Banking to obtain information about your
checking, savings, money market accounts, lines of credit and mortgages.
 View current account balances
 Review transactions on your linked accounts
 View account statements and checks that have posted to your account
 Transfer funds between your linked accounts, either on a one-time basis or set up
reoccurring transfers. Not available for Certificate of Deposit (CDs) accounts.
 Reorder checks, print copies of paid checks
 Download your transaction history to your money management software

30
  Communicate with us electronically.
• Responsibilities of Finance Department:-
The major responsibilities of the finance manager are perform in HBL are different
from position to position. The functions of finance manager of regional head quarter
have more responsibilities then the branch operation manager. The basic
responsibilities of finance manager of regional head quarter and operation manager of
the branch are explained below.
 Understanding various functions and applications of the market.
 Learning how to allocate funds for the public and private sector.
 Working with both domestic and international organizations.
 Accessing financial information online.
 Applying financial document information and developing strategies.
 Working with financial trade analysts and budget departments.
 Researching a client or organization’s financial status.
 Making recommendations based on financial goals.
 Develop cash management strategies and track investment activities.
 Collaborate with financial departments to grow and acquire financial strengths.
 Help build financial futures for business owners, homeowners, and companies.
 Maintenance of books of accounts and preparation of financial statements
of the Bank in accordance with the IAS, as adopted by the Bank.
 Coordination and facilitation for Business planning and budgeting
function in the Bank and periodic reporting to the management and to the Board.

• Responsibilities of IT Department:

The major responsibilities of the IT of the HBL is to maintain the throughout

connectivity of the computers. The flow of information and data on the network. And

maintain the connectivity of the benches with their head office, regional office and as

31
 well as with other branches. It is also the responsibility of the information technology

department to upgrades& maintains the system of the branches as well as the head office.

5.2 . Detail description of the department you worked in:

In a branch there is no permanent structures of any deparment are exists. The
officers who are sites in the branch are performing their duties according to the
given status by the regional head quarter. During my internship period I am not
with any one person, I have work with the entire officers to understand their
responsibilities. I almost spend 1 and ½ weeks with every officer to understand
the basic responsibilities and work of their jobs. During my internship program I
have worked with these four officers of the branch. The functions and
responsibilities of these officers are.
Operation Officer/ Department:
From operation officer I have learned about the clearing of Cheque & Bills of the
branch. I have also learned about the different types of remittance facilities which
were provided by the branch to its customers. In Cheque/ bills clearing three main
types of clearing are processes in the branch. These are.
1. Inward Clearing:
In inward clearing process all the Cheque/ bills arrived in the
branch from different departments/ banks are cleared in the branch.
After the clearance of the Cheque the amount is transferred to the
entire bank in to the account of the bank customer.
2. Outward Clearing:
In outward clearing process the branch is send the Cheque to other
banks for clearing which is presented in the branch by its
customers. After the clearance of the Cheque the amount is
transferred to first bank.
3. Intercity Clearing:
In intercity clearing all the Cheque of the outside city branches are

sent by clearing form the branch.

32
 In remittance part the branch provided three main types of

remittance facilities to its customers. These three types of

remittances are:

1. Demand Draft:
In demand draft if the draft is prepared from the account of the
customer then the bank take charges on this draft with rate of
0.055%, and if the demand draft is prepared through cash then the
bank take charges on this draft with the rate of 0.065%.
2. Online Transaction:
Similar charges like demand draft the branch are taken by its
customer on online transaction through account or through cash. If
the online transaction within a city then there is no charges of the
online transactions.
3. Pay Order:
In pay order the charges is different from the both above
transaction. The charges of pay order is accusation by the branch at
specific rate which is fixed by the state bank of Pakistan to all
commercial banks.
There are also many other types of remittances but these are most
commonly used in the bank.
Account Opening Department:
In account opening department I have learned the process of account

opening of new customer. In account opening process it is depend on a customer

choice which account he wants to open in the bank. The bank provide different

types of accounts it is depend upon the choice of the customer which account he

33
want to open, but the limits of these accounts are different from account to

account. These accounts are.

1. PLS – Saving Account.

2. Current Account,etc.

All other accounts are sub categories of these two accounts. These two are
major accounts in any banks. These accounts are open minimum amount
of 1000/- . The documentation process of these accounts is.
1. Application form.
2. Two photo copies of NIC card.
3. KYC form.
4. Cards.
5. Letter of Thanks.
6. Provisional Letter.
7. If the customer signature is shaky then three passport size photo of
the customer etc.
This is most simple & easy process of the account opening of new
customer in the bank.
Finance Officer/ Department:
In finance department I have learned different functions and
responsibilities of the finance officer. In finance department two types of
loans are provide by the branch to its customers. These are unsecured loan
& secured loan.
Unsecured loans:
The unsecured loans are those loans which are based on the salary of the
person. These loans are unsecured loans because there more chances of
default of these loans. And these loans are difficult to recover from the
defaulter of the bank. The flexi loan is main type of unsecured loans. The
documentation processes of these unsecured loans are.
1. The salary of the person are up to 10000/-.

34
2. The salary of person arrives in branch from last six months.

3. The person is the employee of any department.

4. The person is bond to pay monthly Installments + markup to the

bank.

Secured loans:
The secured loans are those which are issue/lend to the customer against
mortgage, Stock and any other guarantee which provide by the customer
to the bank. These loans are secured because if the customers become a
defaulter then bank sale his/ her property to repay backs the amount of the
loan which he/ she borrow from the bank. Some of the examples of
secured loans are.
1. House building finance.
2. Auto advance loan.
3. SME loan etc.
The documentation processes of these loans are.
• Party Application.
• Sanction Advice.
• Credit Proposal.
• Financial Statement (Balance sheet & profit & loss) statements of the
party.
• Stock Report. (if against stock)
• Addendum.
• Basic Fact sheet of the party.
• Letter of hypothecation. ( if against hypothecation)
• Guarantee form.
• Declaration Memo.
• Power of attorney.
• Agreement of markup. ( b/w party and bank)
• Mortgage deed. ( if against mortgage)

35
• Insurance Cover.
• Legal Opinion.
• Encumbrance Certificate.
The branch sends these documents of the party after completion to
regional head quarter of HBL for sanctioning. If this loan are less then
1000000/- then it I sanctioned in RHQ. If it is more then 1000000/- then it
is further send to head office Karachi for sanctioning. Before sanctioning
any loans it is send to State Bank of Pakistan to check the 7C’s of the
party through ECIB (Electric credit information bureau). After the
confirmation of ECIB in the favor of the party then the loans are landed to
the borrows. The role of ECIB in the finance system of the banking
institutions are.

The Credit Information Bureau (CIB) is a public sector credit bureau of

Pakistan. It was established in 1992 by the State Bank of Pakistan (SBP)
under Section 25(A) of Banking Companies Ordinance-1962. The
underlying idea behind setting up the CIB envisaged promotion of
financial discipline and better credit risk management among financial
institutions operating in Pakistan and encourage adoption of best practices
to mitigate credit risk. The financial institutions started submitting their
data on quarterly basis effective from March 31, 1993 for the borrowers of
Rs. 0.5 million & above. Subsequently the frequency of data submission
was shortened from quarterly to monthly.

In April 2003, SBP enhanced the efficiency of the CIB by introducing

ECIB online facilities. At that time the CIB was the first bureaus of the

region which introduced online facility to its member financial

institutions. This development made financial institutions able to upload

their data into eCIB system and also generate the CIB reports on online. In

this way time lag was substantially reduced.

36
Recently, the SBP has further upgraded the CIB’s technical and reporting

structure significantly. The limit of Rs.0.5 million has been abolished, now

all fund and non-fund based credit facilities, irrespective of any amount

outstanding amount, are being reported to CIB. Under the new system, the

CIB data is submitted online and connectivity is through Virtual Private

Network (VPN). The member FIs can access new CIB data through online

connectivity and access mediums are DSL, DXX, dedicated leased line

and dial-up. All Banks/DFIs/NBFCs/Modarbas and Micro Finance Banks

in Pakistan are members of the CIB and reporting to the CIB is mandatory

for all the members.

The key other improvements of the new system also include to:

• Separation of Consumer and Corporate reports as well as

data input formats.
• Provisions for consumer credit.
• Improved efficiency in terms of speed, reliability and
security of CIB data in order to reduce the processing cost/time of
FIs.
• The new CIB system has been built on latest state of the art
technology which includes high capacity servers, security
firewalls, broader bandwidth, point to point data encryption, web
based data capturing software having ability to capture the data
from gross route level etc.
• Provisions for online amendments and updations for the
FIs.
• Incorporation of large number of validation rules on data
capturing application to ensure integrity and accuracy of the
submitted data.

37
 • Automated support and help to the FI users.

The above developments are in line with SBP’s proactive approach

manifested right through establishment of CIB to its present day

transformation into state-of-the-art bureau having ability to meet the needs

of financial institutions in a rapidly changing era of technology.

6. Structure of the Finance Department:-

6.1. Department Hierarchy:-
On the head office level the structure of the finance department are very
complex which is not understand without working in that department at
head office level. And it is also impossible to understand their basic
responsibilities and jobs at a branch level. In regional level the structure &
the responsibilities of the finance department manager are. Hierarchy chart
of finance department:

RGM Credit

AM Credit
Officer

CIB Consumer
CPC
Incharge Finance
Officer Officer
Officer

Assistant
Branch Manager
Manager Advances

38
 6.2. Number of employees working in the Finance department:
There are not permanent figures of the employees of the finance
department at a head office level. But at regional level only six to seven
people. Their jobs and responsibilities are varying from there job to job. In
a branch the advances officers are responsible to follow the instruction of
the finance department of the regional level. And he is responsible at
branch level to finance matters.

6.3. Finance & accounting operations:-

The finance and accounting operation of the finance department in
regional head quarter and advances manager at branch level provide all
finance facilities to its customer. Not only provide finance facility but
also keep the record of these finances at branch level and regional
level. Both the officers of the regional and branch level perform all the
jobs which are related to the finance and accounting portions.
7. Functions of the Finance Department:
7.1. Accounting system of the organization:-
The accounting system of the Habib bank limited is double entry system.
Every transaction has one or more alternative affects. They are not using the
long lager books to record the daily entries. Due to new software technologies
it is easy for the hbl to record its daily transaction easily. The hbl used mysis
software to perform these functions. Due to this mysis software it is easy for
every hbl staff to record and maintain transactions record easily. At the end of
the day every officer gets his won JRC print from the computer. These JRC
are shows all the daily debit/ credit entries of the day.
7.2. Finance system of the organization:
The finance system of the organization of tow types one is fund base system
and the other is non-fund base system. When the cash is physically involved
in the transaction it is called fund base finance system. In fund base finance
system there is always the physical involvement of the cash. For example if

39
 some one taking loan from the bank and the loan to the borrower and
borrower utilized the loan. In other words there is direct physical involvement
of the cash in that transaction.
In non-fund base system there is no physical involvement of the cash. In this
non-fund base system the band give the guarantee in the favours of its account
holder to any department. For example if a contractor get any contract from
any department and the says to the contractor to give a guarantee of Rs 1
million to the department. The bank issues a guarantee in the favours of that
person to give the department. This is called the non-fund base finance system
of the organization. If the contract is become a defaulter then the bank is
responsible to pay back the amount of the guarantee to the department, which
is an issue in the favor of that person.
7.3. Use of Electronic Data In Decision-Making:-
It is very important nowadays to use electronic data in decision making in any
organization. In use of electronic data in decision-making the state bank of
Pakistan is the monetary body of all the banks in Pakistan. The stat bank of
Pakistan use (ECIB) to monitor performance of all the banks in the Pakistan.
In decision-making process the stat bank of Pakistan restrict all the banks to
do not take individually decisions in the market. The stat bank of Pakistan use
electronic data of the banks to measure their performance in the market, and
also the share of the investment of the banks in different sectors of the market.
The banks also internally use electronic data to measure the financial
performance of the bank and also the staff of the bank. On the basis of that
electronic data the banks will make their future plans & targets.
7.4. Mobilization of funds:-
In mobilization of funds the HBL encourage his customer to save their money
in HBL. The total deposited accounts of the HBL are in 2006 459140 and in
2007 these are increase to 531298. It means the total deposits of HBL are
increased 15.72% in 2007. The HBL further utilized this money to give loan
to its borrower. Not all the amount of deposited accounts is lend to the
borrower but lend this money to the borrower only some specify rate, which is
given by the stat bank of Pakistan. And to earn profit in the form of markup
from these loans, which are, lend to the borrower. From this markup HBL
spend some money to meets its expenditure and some money pay back to the

40
 deposited accounts holder in form of profit. In that way the whole process of
mobilization process are working in the bank.
7.5. Generation Of Funds
In generations of funds how the consumer and the banks are both generating
the funds. In consumer point of view when the consumer gets loan form the
bank and he/she invest this money to his business. The profit which he/ she
earn from that investment is the generation of funds. From that profit he/she
return the paid the monthly installment of bank loan and invest some money
in his own business. In bank point of view when the banks lend the loan to the
borrower the bank charges some markup to consumer with monthly
installment of the loan. This markup is the income of the bank, which are
generates from the loans that are lend to the borrowers. In that’s way the funds
generate by the bank and the customer.
7.6. Sources of funds

The major sources of funds of the HBL and all other banks are stat bank of

Pakistan. The stat bank of Pakistan is the monetary body of the all banking

institution of Pakistan and it is the major source of funds for all banking

institution of Pakistan. It is decided by the stat bank of Pakistan how much

money hold by all the banking institution and how much money circulate in

the market. The other sources of funds of HBL are income from different

loans which they have lend to different financial institution as well as their

customer. These are the major sources of funds for any bank.

7.7. Allocation of funds

In allocation of funds it is the responsibility of the stat bank of the Pakistan
who is the monetary body of the all banking institution of all banks in
Pakistan. At the end of the every year the state bank call the general meeting
of the all the banks, which are operating in Pakistan. In this general meeting
they check which segment of the market are grow due investment of the banks

41
 last year, and which sector of the market are not grow. If the agriculture sector
grow last year and corporate sector are not grow very well compare to
agriculture sector. Then the stat bank of Pakistan decides in next year all the
banks are invest in a corporate sector and all the banks follow the direction of
the stat bank of Pakistan who monetary body of the all the banks who are
operating in Pakistan. So in allocation of funds the stat bank of Pakistan are
playing major role to allocate funds to different sector of the market.

8. Critical Analysis:
8.1. Financial Analysis:

Unconsolidated Cash Flow Statement:

For the year ended 31 December 2007

CASH FLOW FROM OPERATING Note 2006 2007

ACTIVITIES (Rupess in (Rupess in
‘000) ‘000)
Profit before taxation 13,127,002 18,026,964
Less: Dividend Income (606,882) (762,838)
Gain on sale of investment-net (302,032) (27,410)
12,218,088 17,236,716
Adjustment for:
Depreciation / Amortization/ adjustments 1.120.511 914,942
Reversal against diminution in the value of (84.310) (13,697)
investment
Provision against non-performing loans and advances – 8,159,702 2,861,093
net of reversal.
Amortization of premium on investment 320,166 361,750
Gain on sale of property and equipment-net (51,817) (73,539)
Miscellaneous provision (464,718) (71,469)
8,999,534 3,979,080
21,217,622 21,215,796
(Increase) / decrease in operating assets N-1 (81994424) (40604727)
(Increase) / decrease in operating liabilities N-2 80,957,732 43,541,072
20,180,930 24,152,072
Income tax paid-net (9970404) (8661207)

42
Net Cash Flows from Operating Activities 14,210,526 15,490,934
CASH FLOW FROM INVESTING ACITIVITIES
Net investment in securities associated and joint (9788917) (201,914)
venture companies
Repatriation from/ (investment in) subsidiary 242,747 (200,000)
companies
Dividend income received 599,634 762,457
Fixed capital expenditure (2956509) (1781366)
Proceeds from sale of fixed assets 108,415 90,371
Exchange adjustments on translation of balances in 1,006,970 (10,228)
foreign branches
Net Cash Flows from Investing Activities (10787630) (1340680)
CASH FLOW FROM FINANCING ACITIVITIES
Sub oriented loans 3,100,000
Dividend paid (1380000) (692,295)
Net Cash Flows From/ used in Financing 1,720,000 (692,295)
Activities
Increase in cash & cash equivalents during the year 5,142,896 13,457,959
Cash & cash equivalents at the beginning of the 68,043,803 54,317,840
year
Effect of exchange rate changes on cash & cash 1,739,165 2,001,169
equivalents
69,776,968 56,319,009
Cash & cash equivalents at end of the year N-3 74,919,864 69,776,968

Notes:
Note-1 :( Increase/decrease in operating assests)
Particular 2006 2007__
(Rupees in ‘000)
Government Securities (46,804,412) (13,606,379)
Lending to financial institution 4,921,998 5,722,120

Loans & Advances (34,434,772) (31,243,803)

Other assets-net (5,677,238) (1,476,665)
Total (81,994,424) (40,604,727)
Note-2 :( Increase/decrease in operating liabilities)
Particular 2006 2007___
(Rupees in ‘000)

43
Deposits & other accounts 69,262,206 23,121,305
Borrowing from financial institution 2,237,434 19,820,293

Bills Payable 6,031,831 (116,589)

Other liabilities-net 3,426,261 716,063
Total (80,957,732) (43,541,072)
Note-3 :( Cash & cash equivalents at end of the year)
Particular Note 2006
2007____
(Rupees in ‘000)
Cash & balance with treasury banks 5 46,244,803 55,361,813
Balance with other banks 6 23,532,165 19,558,051
Total 74,919,864 69, 776, 96

8.2. Ratio Analysis:

Liquidity of Short term Assets; Related Debt Equity Ability
1. Working Capital
Working capital compares current assets to current liabilities, and serves as the
liquid reserve available to satisfy contingencies and uncertainties. A high working
capital balance is mandated if the entity is unable to borrow on short notice. The
ratio indicates the short-term solvency of a business and in determining if a firm
can pay its current liabilities when due.

 Formula

Working capital = Current Assets- Current Liabilities

= 580775771- 594794901
= -14,019,130

2. Current Ratio
provides an indication of the liquidity of the business by comparing the amount of
current assets to current liabilities. A business's current assets generally consist of

44
 cash, marketable securities, accounts receivable, and inventories. Current
liabilities include accounts payable, current maturities of long-term debt, accrued
income taxes, and other accrued expenses that are due within one year. In general,
businesses prefer to have at least one dollar of current assets for every dollar of
current liabilities. However, the normal current ratio fluctuates from industry to
industry. A current ratio significantly higher than the industry average could
indicate the existence of redundant assets. Conversely, a current ratio significantly
lower than the industry average could indicate a lack of liquidity.

 Formula

Current Assets
Current Ratio =
Current Liabilities
580775771
= = 0.9764 = 97.64%
594794901

3. Acid Test or Quick Ratio

A measurement of the liquidity position of the business. The quick ratio compares
the cash plus cash equivalents and accounts receivable to the current liabilities.
The primary difference between the current ratio and the quick ratio is the quick
ratio does not include inventory and prepaid expenses in the calculation.
Consequently, a business's quick ratio will be lower than its current ratio. It is a
stringent test of liquidity.

 Formula
Cash + Marketable Securities + Accounts Receivable
Asset − Test Ratio =
Current Liabilities
55361813+171932281+1628130+362260528
=
594794901
= 0.9939 = 99.39%

4. Cash Ratio:
Indicates a conservative view of liquidity such as when a company has pledged its

45
 receivables and its inventory, or the analyst suspect’s severe liquidity problems
with inventory and receivables.
 Formula
Cash Equivalents + Marketable Securities
Cash Ratio =
Current Liabilities

55361813+171932281
= = 0.3821 = 38.21%
594794901
Interpretation of Liquidity ratios:
The business should not only provide information on its profitability, but also to provide
information that indicates whether or not the business will be able to pay its creditors,
expenses, loans falling due at correct times. A company may be profitable but if it fails to
generate enough cash to settle its liability is said to be insolvent.
Suppliers and providers of short term finance are interested in these ratios as are used in
assessing the ability of the business to settle its current liabilities
a) Current Ratio
This compares assets which will become liquid within approximately twelve months with
liabilities which will be due for payment in the same period and is intended to indicate
whether there are sufficient short term assets to meet the short- term liabilities.
Recommended current ratio is 2: 1. Any ratio below indicates that the entity may face
liquidity problem but also Ratio over 2: 1 as above indicates over trading, that is the
entity is under utilising its current assets.
Current ratio of HBL of following year is 1:1. Which shows that for each liability there is
an asset. While the current ratio of current year is slightly higher then the previous.
Which shows steadily increase of the current ratio. It means the HBL during the
operating cycle payback all his current liabilities to used current assets of the
organization. This depicts effective & efficient performance of the management of the
HBL.
b) Acid test ratio
This shows that, provided creditors and debtors are paid at approximately the same time,
a view might be made as to whether the business has sufficient liquid resources to meet
its current liabilities.

46
A company in the service industry will not have inventories as such current ratio will not
significantly be different from the current ratio. The calculation can be as:
This ratio should ideally be 1 for companies with a slow inventory turnover. For
companies with a faster inventory turnover, a quick ratio can be less than 1 without
suggesting that the company should be in cash flow trouble.
The acid test ratio of the HBL for the current year are slightly increase compare to
previous year. It is due to financial policy of the bank. The ideal market acid test ratio of
banks is 1:1. The acid test ratio of HBL is 1:1 this shows the good performance of the
HBL.
Both current and quick ratio offer an indication of the company’s liquidity
position, but the absolute figures should not be interpreted too literally. It is often
theorised that an acceptable figure should be 2:1 for current ratio and 1: 1 for quick ratio
but these should only be used as a guide. Different businesses operate in very different
ways.

Long term Debt Paying Ability

Borrowing capacity ratios measure the degree of protection of suppliers of long
term Funds.
1. Time Interest Earned
Indicates a company's capacity to meet interest payments. Uses EBIT (Earnings
before Interest and Taxes)
 Formula
EBIT
Time Interest Earned =
Interest Expense
13127002
Time Interest Earned = = 0.765 = 76.5%
17164773

2. Fixed Charge Coverage

Formula.

47
 EBIT + fixed charge (before tax)
Fixed Charge Coverage =
Fixed charged before tax- interest
13127002+17355732
Fixed Charge Coverage= = -4.72
17355732-18001496

3 Debt Ratio:
Formula.
Total liabilities
Debt Ratio =
Total Assets
597894901
Debt Ratio= =0.9116 = 91.16%
655838856

4. Debt / Equity Ratio

Formula.
Total Debt
Debt / Equity Ratio =
Total Equity
52218228
Debt / Equity Ratio =
57943955
Debt / Equity Ratio = 0.901 = 90.1%

5. Debt to Tangible Net worth Ratio

Formula:

Total Liabilities
Debt to Tangible Net worth Ratio =
Tangible net worth
597894901
Debt to Tangible Net worth Ratio = =0.9116 = 91.16%
655838856

6. Total Capitalization Ratio

Formula.
Long-Term Debt
Total Capitalization Ratio =
Long-Term Debt + Owners' Equity
52218228
Total Capitalization Ratio =
52218228+50741564
Total Capitalization Ratio = 0.50710 =50.71%

48
Interpretation of Debt management ratios (Solvency ratios):

These ratios are also called the gearing ratios. These are mostly used by providers of
finance to assess the finance risk of the business. A business with large proportional of
debt capital to equity capital is said to be high geared.
Long-term solvency has to do with the business’s ability to survive for many years. The
aim of long-term solvency analysis is to point out early that a business is on the road to
bankruptcy. Declining profitability and liquidity ratios are key signs of possible business
failure. As indicated earlier on, the ratios on their own carries less business meaning
unless interpreted together with other non-financial indicators, such as loss of key
suppliers, threatened litigation against the business, failure to settle liabilities and failure
to adapt to new technologies.
Increasing amounts of debt in a business’s capital structure mean that the business is
becoming heavily geared. This condition negatively affects long-term solvency because it
represents increasing legal obligations to pay interest periodically and principal at
maturity. Failure to make these payments can result in bankruptcy.
Business still require debt capital, in spite of its riskiness, debt is a flexible means of
financing a certain business operation. Interest on debt is allowed for tax purpose as
opposed to equity dividends paid. Debt capital avoids dilution of ownership for original
members of the business as opposed to issuing of new shares. Also because debt usually
carries a fixed interest charge, the cost of financing can be limited and the gearing can be
used to advantage. If a business can earn a return on assets greater than the cost of debt
(interest), it makes overall profit. However, it runs the risk of not earning a return on
assets equal to the cost of financing those assets, thus incurring a loss.
The business with relatively high gearing ratios have a high expected return when the
economy is normal as it debt offers a cheaper source of capital. When the economy goes
into recession these businesses will be exposed to loss as the interest rates increases not
matching with the expected return on business assets.
a) Debt equity ratio

Measures the direct proportion of debt to equity capital. A ratio over 100% indicates a
highly geared company and any prudent lender will not be will to extend loan finance to

49
such businesses. The equity holders will also be threatened as much of the profit earned
during the year will have a bigger portion used in interest payments leaving less returned
profit for the shareholders.
The debt to equity ratio of the HBL of current year is 90.1% which is slightly decrease
from the previous year 99.28%, but it is still in a healthy position. From the creditors
point of view the creditors generally would like this ratio to be low. The lower the ratio,
the higher the level of the firm that is being provided by the shareholder and the larger
the creditor cushion in the event of shrinking asset values of outright losses.
b) Total Capitalization ratio:
This is calculated as the proportion of borrowed capital to total capital employed
for the business. The purpose is the same as the debt equity ratio that is to measure
financial risk of the business.
The total capitalization ratio of the HBL of 2007 is 50.71% which is decrease
slightly form 2006 53.75%, but is still healthy for the organization. This ratio is shown
how much business invests form the equity and how much form the debt. This ratio of the
current year is shown that the firm is 50% invest from the equity and 50 % from the debt
to meet the long term goals of the organization.

c) Interest cover
If a business is highly geared it will be paying more interest. The ratio measures the
ability of the business to pay interest to its lenders. Low interest cover is associated with
high gearing. The interest cover ratio shows whether a company is earning enough profits
before interest and tax to pay its interest cost comfortably, or whether its interest cost are
high in relation to the size of its profit, so that a fall in PBIT would then have a
significant effect on profits available for ordinary shareholders.
The interest coverage ratio of HBL in 2007 is 76.5% which is decrease from the previous
year, but it is still good the higher the ratio, the greater the likelihood that the company
could cover its interest payments without difficulty. It also sheds some light on the firm
capacity to take on new debt.

50
Analysis of Profitability
Profitability ratios measure the earning ability of a firm.

1. Net Profit Margin

Formula.
Net income
Net Profit Margin =
Net Sales
8041416
Net Profit Margin = = 0.265= 26.5%
30291775
2. Total Asset Turnover
Formula.

Net Sales
Total Asset Turnover =
Average Total Assets
30291775
Total Asset Turnover = = 0.0496 = 4.96%
609879520

3. Return on Assets
Formula.

Net Income *
Return on Assets=
(Beginning + Ending Total Assets) / 2
8041416
Return on Assets= = 0.0138 = 1.38%
609879520

4. Dupont Return on Assets

Formula.
Net Sales Sales Assets
= × ×
Sales Assets Equity
30291775 22319785 655838856
= × ×
22319785 655838856 57943955
= 1.3571 × 0.0340 × 11.3185
= 0.5222 = 52.22%

5. Operating Income Margin

Formula.
Operating Income
Operating Income Margin =
Net Sales
13127002
Operating Income Margin= = 0.4335 = 43.35%
30291775

51
 6. Operating Assets Turnover
Formula.
Revenue
Operating Assets Turnover =
Total Assets
30291775
Operating Assets Turnover= = 0.046 = 4.6%
655838856

7. Sales to Fixed Assets

Formula.
Net Sales
Sales to Fixed Assets =
Total Assets
30291775
Sales to Fixed Assets = = 0.0461 = 4.61%
655838856

8. Return on Investment (ROI)

Formula.
Net Income
=
Return on Investment (ROI)
Long Term Liability + Equity
8041416
Return on Investment (ROI)= = 0.136
3.6%
=1
52218228+6900000

9. Return on Total Equity

Formula.
Net Income
Return on Total Equity =
Equity
8041416
Return on Total Equity= = 1.1654= 116.54%
6900000

11. Gross Profit Margin

Formula.
= Gross Profit = 13127002 = 0.4333 = 43.33%
Net Sales 30291775

Interpretation of Profitability ratios:

52
The objective of profitability relates to a company’s ability to earn a satisfactory profit so
that the investors and shareholders will continue to provide capital to it. A company’s
profitability is linked to its liquidity because earnings ultimately produce cash flow. For
these reasons ratios are important to both investors and shareholders.

When calculating profitability ratios we always use Profit on ordinary activities before
taxation because there might be unusual variations in the tax charge from year to year
which would not affect the underlying profitability of the company’s operation.

Another important profit figure used should be the Profit before interest and tax
(operating profit) which represents the profit generated by the entity through its normal
business operations.

Examples on profitability ratios using the Accounts Dean Transport Company above will
include:

a) Return on Investment
It is impossible to assess profits or profit growth properly without relating them to the
amount of funds (capital) that were employed in making profits. ROI is one of the most
important profitability ratios which assess how much the capital invested has earned
during the period. ROI is an opportunity cost to the potential investor and when making
decisions investor will always compare the return which the entity will generate as
opposed with the return they can earn on other investments.ie Bank’s investment rates.
The return on investment of HBL in 2007 is 13.6% which is decrease from the last year
21.19%, but it is still in healthy position. It is shown that how much HBL earn form its
investments during the year in different sector of the market.

b) Return on Equity. (ROE)

Measures again return on investment but targeting on ordinary shareholders. This ratio is

specifically for shareholders and is aimed at measuring the return they should expect

from their shares in the business.

53
The return on equity of the HBL in 2007 116.54% which is decrease to the previous year,

but is still more than 100% which is shown strong position of the HBL. A higher return

on equity often reflects the firm’s acceptance of strong investments opportunities and

effective expensive management. If the HBL chosen to employ a level of investment of

debt that is higher by industry standard, a higher ROE might simply be result of assuming

excessive financial risk.

C) Gross profit margin and Net profit percentage

These ratios are used to measure the financial performance of the business. The ratios

show how aggressive the entity was in its sales promotion. For service sectors the gross

profit margin will not be calculated as it is not involved in trading activities.

Both the gross profit margin and net profit margin of HBL in 2007 are 43.33% & 26.5%

it is decrease from previous year but it is still shown strong healthy profitability position

of the HBL. These both profitability ratios are shown that how much the firm generates

revenue to utilized its assets & sales efficiently & effectively during the financial year.

Analysis for the Investor

Investors are interested in a special group of ratios, in addition to liquidity, debt and
profitability ratios. These are:

1. Computation of the Degree of Financial Leverage

Formula.
DFL= % Change in EPS
% Change in EBIT
= ____ -5.81___ = 0.00044 = 0.044%
40089.33

54
2. Earning per Common Share
Formula.
Net profit after tax
Earning per Common Share =
No or shares outstanding
8041416
Earning per Common Share= = 11.65
690000

3. Price / Earning Ratio

Formula.
Market Price per share
Price / Earning Ratio =
Earning per share
10
Price / Earning Ratio= = 0.85
11.65

4. Dividend Payout.
Formula.
= Dividend per share
Earning per share
= ___2____ = 0.17167 = 17.16%
11.65
5. Dividend Yield
Formula.
= Latest annual dividend
Current market share
= __2760000__ = 0.4 = 40%
6900000
6. Book Value per Share
Formula.
= Common stock equity
Total common share
= 57943955 = 8.3976

55
 6900000
Interpretation of Market value ratios:
The market price of a company’s shares is of interest to the analyst because it represents
what investors as a whole think of the company at a point in times. Market price is the
price at which people are willing to buy or sell the shares. It provides information about
how investors view the potential return and risk connected with owning the company’s
shares. Market Price by itself however is not very informative for this purpose.
Companies differ in number of outstanding shares and amount of underlying earnings and
dividends. Thus, market price must be related to earnings by considering the price
earning ratio and the dividend yield.
Investment ratios are concerned with the return on investment for shareholders, and with
the relationship between return and the value of an investment in company’s shares.
a) Earnings per Ratio. (EPS)
Earnings are profits for the year available to ordinary shareholders, which can either be
paid out as dividends to the shareholders or retained in the business.
EPS measures the profit earned per share. The higher EPS will attract more investors to
acquire shares in the company as it indicates that the business is more profitable enough
to pay the dividends in time. But remember not all profit earned is going to be distributed
as dividends the company also retains some profits for the business.
The earning per share of the HBL in 2007 is 11.65 which is decrease form the 2006
-5.81%, but it is still good. Higher the earning per share higher the investors would like
to invest in the firm. The earning per share of the HBL decrease in 2007 but it is still
attract to the investors to acquire the shares of the HBL as it indicates that the business is
more profitable enough to pay dividends to its investors in time.
c) Price / Earnings ratio
This ratio measures the investors’ confidence in a company. The P/E ratio is useful in
comparing the relative values placed on the earnings of different companies and in
comparing the values placed on a company’s shares in relation to the overall market.
The price earning ratio of HBL in 2007 is 0.85 it is increase compare to previous year
2006 is 0.5727. The higher the P/E the more the market is willing to pay for the
company’s earning. Some investors read a high P/E as an overpriced stock and that may

56
be the case, however it can also indicate the market has high hopes for this stock’s future
and his bid up the price.
On the other hand conversely, a low P/E may indicate a “ vote of no confidence” by the
market or it could mean this is a sleeper that the marker has overlooked.
c) Dividend yield
This expresses dividend per share as a percentage of the current share price. Dividend
yield is the return a shareholder is currently expecting on the shares of a company. It is
calculated as follows
Shareholders look for both dividend yield and capital growth. Obviously dividend yield is
therefore an important performance measurement tool for shares. The company needs to
balance the dividend pay out and the retained profit. A company with high dividend yield
may be considered as risky as it may imply that the company is returning a huge portion
of profit back to the shareholders as dividends leaving less profit which is an important
internal source of funds.
The dividend yield of the HBL in 2007 is 40% which is decrease to the previous year
2006. The dividend yield on company stock is the company annual dividend payment
which is paid by the debtors at the end of the financial year. Dividends paid to share
holders of a common stock are set by the management, usually in relation to the company
earnings. There is no guarantee that the future dividend will match the past dividend or
even be paid at all.
d) Dividend Payout Ratio
Growing companies will typically retain more profits to fund growth and pay lower or no
dividends. The dividend payout ratio of HBL in 2007 is 17.16% it is increase compare to
previous year.
Companies that pay higher dividends may be in mature industries where there is little
room of growth and paying higher is the best use of profits. On the other hand the higher
the dividend payout ratios the higher the investors invest in the business, because they get
high amount of profit form this investment in shape of dividend.
8.3 Vertical & Horizontal Analysis of the Balance Sheet and Income
statement of the Habib Bank Limited Last two years.
Horizontal Financial Statement Analysis

57
This technique is also known as comparative analysis. It is conducted by setting
consecutive balance sheet, income statement or statement of cash flow side-by-
side and reviewing changes in individual categories on a year-to-year or multiyear
basis. The most important item revealed by comparative financial statement
analysis is trend.
A comparison of statements over several years reveals direction, speed and extent
of a trend(s). The horizontal financial statements analysis is done by restating
amount of each item or group of items as a percentage.
Such percentages are calculated by selecting a base year and assign a weight of
100 to the amount of each item in the base year statement. Thereafter, the
amounts of similar items or groups of items in prior or subsequent financial
statements are expressed as a percentage of the base year amount. The resulting
figures are called index numbers or trend ratios.
Vertical/Cross-Sectional/Common Size Analysis Techniques
Vertical/Cross-sectional/Common size statements came from the problems in
comparing the financial statements of firms that differ in size.
• In the balance sheet, for example, the assets as well as the liabilities and
equity are each expressed as a 100% and each item in these categories is
expressed as a percentage of the respective totals.
• In the common size income statement, turnover is expressed as 100% and
every item in the income statement is expressed as a percentage of turnover
(sales).

58
 Vertical & Horizontal Analysis of
Unconsolidated Balance Sheet
As at December 31,2007
Vertical Horizontal
Analysis Analysis
Not
e 2006 2007 2006 2007
ASSETS (US $ ' 000)
Cash & Balance with treasury banks 5 8.20 8.44 100.00 119.71
Balance with other banks 6 4.17 2.98 100.00 83.11
Lending to financial institution 7 1.16 0.25 100.00 24.85
Investment 8 20.54 26.22 100.00 148.44
Advances 9 59.58 55.24 100.00 107.82
Other Assets 10 3.76 3.87 100.00 119.69
Operating fixed assets 11 2.09 2.07 100.00 115.07
Deferred tax assets 12 0.49 0.93 100.00 221.36
100.0 100.0 100.0 116.3
Total Assets 0 0 0 0
LIABILITIES
Bills Payable 13 1.66 2.34 100.00 164.52
Borrowing from financial institution 14 8.86 7.96 100.00 104.47
Deposit & other accounts 15 77.98 77.61 100.00 115.75
Sub-ordinated loans 16 - 0.47 - 100.00
Liabilities against assets subject to finance
lease - - - -
Other liabilities 17 2.58 2.78 100.00 125.40
Deferred tax liabilities - -
Total Liabilities 91.07 91.16 100.00 116.41
100.0 115.0
Net Assets 8.93 8.84 0 9

REPRESENTED BY SHAREHOLDER'S
EQUITY
Share capital 18 1.22 1.05 100.00 100.00
Reserve 2.98 2.84 100.00 110.76
Unappropriated profit 3.42 3.84 100.00 130.75
Surplus on revaluation of assets- net of tax 19 1.30 1.10 100.00 98.04
100.0 115.0
Total Shareholder's Equity 8.93 8.84 0 9

59
 Vertical & Horizontal Analysis of
Unconsolidated Profit & Loss Account
For the year Ended December 31,2007
Vertical Horizontal
Analysis Analysis
Particular Note 2006 2007 2006 2007
(US $ ' 000)
100.0 100.0
Markup/ return/ interest earned 21 0 0 100.00 114.68
Markup/ return/ interest expensed 22 29.66 37.24 100.00 143.96
70.3 62.7 100.0 102.3
Net markup / interest income 4 6 0 3
Provision against non performing loans &
advances-net 9.6 6.79 16.88 100.00 285.19
(Reversal) / Provision against off- balance sheet
obligations 17.1 0.11 0.11 100.00 120.19
Reversal of Provision against diminution in value
of investments 8.8 0.03 0.17 100.00 615.38
Bad debts written off directly - - - -
Total Provision & bad debts 6.65 16.59 100.00 286.25
Net markup / interest income after 63.6 46.1 100.0
provision 8 7 0 83.13
Non mark-up / interest Income
Fee, commission and brokerage income 8.55 6.58 100.00 88.15
Income / gain on investment 23 1.87 1.88 100.00 115.01
Income from dealing in foreign currencies 2.60 2.93 100.00 129.33
Other Income 24 5.15 5.09 100.00 113.24
Total non mark-up / interest income 18.19 16.49 100.00 103.92
81.8 62.6 100.0
Total Gross Income 8 6 0 87.75
Non mark-up / interest Expenses
Administrative expenses 25 38.69 35.90 100.00 106.39
Other provision / written off – net 0.29 0.57 100.00 225.35
Other Charges 26 0.13 0.18 100.00 155.14
Total non mark-up / interest 39.1 35.5 100.0 104.0
expense 1 0 0 9
Profit before Taxation 42.76 27.15 100.00 72.81
Taxation: 27
Current 16.64 13.88 100.00 95.70
Prior 0.15 3.45 100.00 2700.80
Deferred 2.31 6.81 100.00 337.68
Total Taxation 14.18 10.52 100.00 85.09
Profit after Taxation 28.5 16.6 100.0 66.73

60
 9 3 0

8.4 Organization analysis with reference to the industries listed on the

stock exchange. (If it is listed).
Comparison of HBL to the industries listed on the stock exchange.
S. # Name of bank No of shares Basic Basic Basic Earning
in KSE 100 Earning per Earning per per share
index share 2005 share 2006 2007
1. Habib Bank Limited 690,000,000 12.92 17.46 11.65
2. Allied Bank Limited 538,636,938 6.88 8.16 7.57
3. Bank Alflah Limited 4000,000 1.13 0.97 1.02
The numbers of outstanding shares of HBL in Karachi stock exchange are higher
then all other banks, which is listed in the KSE100 index. The earning per share
of HBL last three years are higher then the other banks of the stock exchange.
Comparison of HBL with KSE 100 INDEX COMPANIES
May 01-2008
Index Outstanding
Open High Low Current Price % Index Market Capt.
Symbol Volume Weightage Shares
Rate Rate Rate Rate Change Change Points (million)
(million)
(%)
B.O.Punjab XB 30,470,700 62.35 63.30 59.24 60.00 -2.35 -3.77 0.76 -4.52 528.80 31,727.84
Arif Habib Sec. 9,964,400 183.00 187.35 181.60 183.25 0.25 0.14 1.32 0.27 300.00 54,975.00
Nishat Mills 7,977,500 133.25 135.39 130.60 131.00 -2.25 -1.69 0.50 -1.31 159.79 20,931.93
MCB Bank 7,487,800 412.00 426.50 407.50 415.00 3.00 0.73 6.28 6.86 628.28 260,734.85
National Bank XDXB 7,086,900 229.90 229.35 225.00 225.05 -4.85 -2.11 4.86 -15.84 896.98 201,864.25
D.G.K.Cement 6,545,500 110.40 112.00 109.00 109.20 -1.20 -1.09 0.67 -1.11 253.54 27,686.69
Pak Oilfields 6,177,500 422.90 426.80 416.50 418.60 -4.30 -1.02 1.99 -3.09 197.12 82,515.10
Engro ChemicalXD 5,849,900 343.40 345.00 328.00 329.05 -14.35 -4.18 1.53 -10.11 193.47 63,661.03
Attock Refinery 5,801,800 302.00 312.00 301.06 305.50 3.50 1.16 0.52 0.91 71.08 21,714.18
Askari BankXDXB 5,801,000 54.10 56.40 53.00 55.50 1.40 2.59 0.54 2.07 405.88 22,526.19
Lucky Cement 5,430,300 142.80 144.75 142.10 143.20 0.40 0.28 0.91 0.38 263.38 37,715.30
Oil and Gas Dev.XD 4,919,200 136.20 136.50 133.70 134.00 -2.20 -1.62 13.87 -34.45 4,300.93 576,324.41
P.T.C.L.A 4,511,500 46.60 46.50 44.50 45.30 -1.30 -2.79 4.12 -17.86 3,774.00 170,962.20
Bank Al-FalahXDXB 4,301,800 56.45 56.45 54.91 55.08 -1.37 -2.43 1.06 -3.99 799.50 44,036.46
Azgard Nine XD 4,284,500 89.00 90.50 84.75 85.00 -4.00 -4.49 0.64 -4.55 312.71 26,580.35
JS Investment 3,628,200 118.70 119.49 112.77 112.77 -5.93 -5.00 0.27 -2.16 100.00 11,277.00
Pak Petroleum 3,561,800 278.00 279.00 273.50 273.60 -4.40 -1.58 4.97 -12.08 754.41 206,405.32
NIB Bank 3,337,500 17.39 17.29 16.70 16.75 -0.64 -3.68 0.89 -5.13 2,201.80 36,880.10
Pak Refinery 3,186,500 262.00 275.10 260.00 274.00 12.00 4.58 0.23 1.53 35.00 9,590.00
United Bank XDXB 2,526,800 150.10 149.50 142.60 143.00 -7.10 -4.73 3.48 -26.15 1,011.72 144,675.78
Fauji Fert Bin 2,493,500 39.54 40.00 38.55 38.70 -0.84 -2.12 0.87 -2.86 934.11 36,150.06
Bosicor Pakistan 2,051,000 17.60 18.10 17.50 17.60 0.00 0.00 0.17 0.00 392.10 6,901.04
Pak.PTA Ltd. 1,917,500 5.14 5.39 5.15 5.16 0.02 0.39 0.19 0.11 1,514.21 7,813.31
Hub Power 1,780,000 32.70 33.10 32.00 32.00 -0.70 -2.14 0.89 -2.95 1,157.15 37,028.94
Fauji Cement 1,396,000 13.60 13.60 13.25 13.25 -0.35 -2.57 0.22 -0.88 693.29 9,186.09
Faysal BankXD 1,175,200 55.49 57.70 55.30 55.50 0.01 0.02 0.71 0.02 529.64 29,395.27
Jah.Siddiq.Co. 1,161,500 677.10 677.00 645.00 649.80 -27.30 -4.03 3.13 -19.88 200.00 129,960.00
Pak ReinsurXB 1,130,300 173.85 182.54 175.00 182.54 8.69 5.00 1.32 9.49 300.00 54,762.00
National Refinery 944,000 357.70 369.65 356.00 365.30 7.60 2.12 0.70 2.21 79.97 29,211.78
Adamjee InsurXD 912,100 369.25 377.00 364.00 369.00 -0.25 -0.07 0.91 -0.09 102.24 37,724.77
Pakistan Cement 827,500 10.34 10.30 9.92 9.96 -0.38 -3.68 0.27 -1.57 1,134.51 11,299.77

61
ICI Pakistan 799,900 202.05 207.40 200.30 202.39 0.34 0.17 0.68 0.17 138.80 28,092.20
WorldCall Telecom 782,500 16.25 16.75 15.90 16.75 0.50 3.08 0.30 1.37 752.06 12,597.02
Maple Leaf Cem. 770,500 19.70 19.90 19.30 19.30 -0.40 -2.03 0.17 -0.54 372.26 7,184.68
Pioneer Cement 692,000 30.70 32.23 29.90 32.23 1.53 4.98 0.15 1.11 199.53 6,430.93
Fauji Fertiliz 679,100 144.00 143.15 140.00 141.00 -3.00 -2.08 1.67 -5.39 493.47 69,579.86
Pak.Int.Con.Ter. 626,700 104.88 104.98 99.64 100.00 -4.88 -4.65 0.22 -1.62 90.96 9,096.10
P.S.O. 575,700 505.00 509.50 503.00 503.00 -2.00 -0.40 2.08 -1.25 171.52 86,274.36
Indus Motor 542,200 352.50 352.00 334.90 334.90 -17.60 -4.99 0.63 -5.04 78.60 26,323.14
Sui North Gas 521,400 64.99 65.00 62.70 62.80 -2.19 -3.37 0.83 -4.38 549.11 34,483.82
Habib BankXDXB 431,100 271.00 270.75 263.95 269.00 -2.00 -0.74 4.91 -5.53 759.00 204,171.00
Kot Addu 372,300 53.00 53.70 52.90 53.70 0.70 1.32 1.14 2.24 880.25 47,269.60
Ist.Capital Sec. 369,600 79.05 79.74 77.00 77.01 -2.04 -2.58 0.30 -1.21 162.52 12,515.86
Habib Mod 302,000 10.10 10.30 10.15 10.15 0.05 0.50 0.05 0.04 201.60 2,046.24
Mari Gas Company 299,100 396.99 399.95 380.10 385.00 -11.99 -3.02 0.34 -1.60 36.75 14,148.75
Packages Limited 291,700 340.00 343.40 336.00 337.50 -2.50 -0.74 0.69 -0.77 84.38 28,478.08
Attock Petroleum 249,800 536.10 545.50 533.50 542.00 5.90 1.10 0.63 1.03 48.00 26,016.00
K.E.S.C. 237,500 4.62 4.65 4.50 4.56 -0.06 -1.30 0.25 -0.49 2,266.22 10,333.94
PICIC Growth 203,500 28.33 28.50 28.01 28.10 -0.23 -0.81 0.19 -0.24 283.50 7,966.35
Intern Ind 187,200 145.00 144.00 137.75 138.00 -7.00 -4.83 0.28 -2.12 83.26 11,489.71
EFU General Ins
185,800 695.00 685.15 660.25 670.00 -25.00 -3.60 1.85 -10.47 115.00 77,050.00
XDXB
Pak Suzuki XD 185,300 221.12 228.00 212.33 216.99 -4.13 -1.87 0.43 -1.24 82.30 17,858.24
Saudi Pak
181,500 25.70 25.65 24.50 25.50 -0.20 -0.78 0.31 -0.36 500.18 12,754.46
BankSPOT
Allied Bank 160,100 119.89 118.75 114.01 117.99 -1.90 -1.58 1.84 -4.47 646.36 76,264.53
P.I.A.C.(A) 154,000 6.05 6.19 5.95 6.05 0.00 0.00 0.30 0.00 2,088.56 12,635.77
New Jubilee
135,900 185.00 193.55 176.25 189.50 4.50 2.43 0.30 1.08 65.91 12,490.85
Ins.XDXB
Soneri Bank 135,400 34.61 34.99 34.40 34.45 -0.16 -0.46 0.34 -0.24 411.42 14,173.51
Samin Tex. 130,000 49.97 48.50 47.48 47.48 -2.49 -4.98 0.02 -0.12 13.36 634.52
Bank AL-Habib 118,700 52.98 53.62 52.00 52.99 0.01 0.02 0.61 0.02 478.54 25,357.77
Stand.Chart.Bank 107,200 33.80 34.50 33.10 34.01 0.21 0.62 3.17 2.96 3,871.59 131,672.61
Cres. Comm.Bank 106,500 15.90 15.90 15.20 15.89 -0.01 -0.06 0.34 -0.03 876.95 13,934.76
EFU Life Assur 87,100 503.90 510.00 483.50 492.00 -11.90 -2.36 0.89 -3.25 75.00 36,900.00
Pak TobaccoXD 83,800 152.10 156.00 150.00 155.00 2.90 1.91 0.95 2.70 255.49 39,601.51
Pak Elektron 78,300 67.30 68.50 67.00 67.05 -0.25 -0.37 0.15 -0.09 95.45 6,399.85
AL-Ghazi Trac. 74,800 278.50 290.50 275.01 279.99 1.49 0.54 0.29 0.23 42.94 12,021.73
Sui South Gas 64,500 27.90 27.89 27.30 27.75 -0.15 -0.54 0.45 -0.37 671.17 18,625.09
Meezan Bank 51,000 39.50 40.00 38.51 38.55 -0.95 -2.41 0.42 -1.57 453.59 17,485.80
Habib Metro
50,400 50.50 51.64 49.80 51.00 0.50 0.99 0.74 1.10 602.20 30,712.30
BankXDXB
Kohinoor Energy 33,500 30.35 30.70 30.30 30.70 0.35 1.15 0.13 0.22 169.46 5,202.38
Habib Sugar 32,500 55.90 56.10 55.35 56.00 0.10 0.18 0.10 0.03 72.00 4,032.00
Thal Limited 30,000 276.35 273.85 263.20 265.50 -10.85 -3.93 0.19 -1.20 30.45 8,084.36
Shell PakistanXD 28,300 475.00 479.00 471.00 476.00 1.00 0.21 0.63 0.20 54.79 26,080.19
ABN AMRO Bank 26,000 32.78 33.70 31.30 33.00 0.22 0.67 1.07 1.08 1,347.44 44,465.40
P.N.S.C. 18,300 96.05 95.00 91.55 92.99 -3.06 -3.19 0.30 -1.47 132.06 12,280.57
Attock Cement 16,100 98.50 96.99 95.00 96.50 -2.00 -2.03 0.17 -0.53 72.16 6,963.72
Dawood Herc. 10,800 485.80 488.00 462.00 470.00 -15.80 -3.25 1.13 -5.72 99.44 46,736.56
IGI Insurance 9,400 317.25 311.75 306.10 306.50 -10.75 -3.39 0.29 -1.56 39.91 12,233.23
GlaxoSmith XD 8,200 185.00 184.75 184.00 184.75 -0.25 -0.14 0.76 -0.16 170.67 31,531.63
Ibrahim Fibres 6,000 61.50 62.00 60.20 60.20 -1.30 -2.11 0.45 -1.47 310.51 18,692.52
Orix Leasing 5,500 28.40 27.60 27.55 27.55 -0.85 -2.99 0.05 -0.21 69.48 1,914.13
Mybank Ltd 5,000 22.05 22.45 21.80 22.45 0.40 1.81 0.23 0.62 424.29 9,525.23
JS Global Cap. 4,500 389.90 384.00 370.45 370.45 -19.45 -4.99 0.32 -2.53 35.71 13,230.46
Atlas Honda 3,800 232.05 231.00 220.45 228.90 -3.15 -1.36 0.26 -0.54 47.30 10,826.61
Agriautos Ind 3,400 90.30 89.50 86.00 86.00 -4.30 -4.76 0.05 -0.38 24.00 2,064.00
Bannu Woollen 3,000 42.10 42.90 40.26 42.50 0.40 0.95 0.01 0.01 7.60 323.21
Abbott (Lab) 2,400 182.00 182.51 181.10 182.00 0.00 0.00 0.43 0.00 97.90 17,817.85
Ghani Glass 1,200 87.00 86.99 85.00 86.99 -0.01 -0.01 0.18 -0.00 83.97 7,304.50
Wazir Ali 1,000 29.40 29.31 29.30 29.30 -0.10 -0.34 0.01 -0.00 7.99 233.99
Bestway Cem 800 48.70 50.00 48.50 50.00 1.30 2.67 0.34 1.34 283.26 14,162.94
Colgate Palm 800 645.00 632.00 612.75 632.00 -13.00 -2.02 0.29 -0.90 19.11 12,077.38

62
Lakson Tob XD 400 381.00 396.00 380.00 396.00 15.00 3.94 0.59 3.36 61.58 24,385.82
Siemens Pakistan 200 1649.00 1651.00 1650.00 1650.00 1.00 0.06 0.33 0.03 8.25 13,607.61
Bata (Pak) XD 0 640.00 640.00 640.00 640.00 0.00 0.00 0.12 0.00 7.56 4,838.40
Fazal Textile 0 579.99 579.99 579.99 579.99 0.00 0.00 0.09 0.00 6.19 3,588.69
Unilever Foods 0 1770.00 1770.00 1770.00 1770.00 0.00 0.00 0.26 0.00 6.16 10,898.95

8.5. Future prospects of the organization.

The future prospects of the HBL are to build strong relationship to its
customer, and hire young energetic staffs that are more efficient and skillful
from the older experienced one. The second future prospect of the HBL hire
very well technical human resource interims of IT knowledge, communication
skills and customer care.

In future almost every account holder of HBL will have plastic card. The
future of HBL is very keen to keep strong and long time relation ship with its
client.

The privatization of Habib Bank Limited is a historic and the country's biggest
strategic sale in the financial sector and we expect that the new buyer will
improve the bank's network in central Asia, Europe and other parts of the
world to turn the bank into a prestigious Pakistani Bank. Dr. Abdul Hafeez
Sheikh stated this while addressing the ceremony held for the transfer of the
management of Habib Bank Limited to Aga Khan Fund for Economic
Development (AKFED) here today.
He said that the Government of Pakistan still held 49 % of the shareholding in
the bank and the government would benefit from the future earnings from the
bank as recently witnessed in case of 22.5 % dividend from United Bank
Limited. It would also improve the overall banking and the financial sector of
Pakistan, he hoped.
We had given protection to the employees and every organization required
more employees to expand their area of activity and to generate maximum
profits and obviously the best performers would get raise in their emoluments
and advanced training to improve their skills, he stated.

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He further added that the upcoming transactions in the financial sector
included Allied Bank Limited and National Investment Trust, while other
major transactions to be privatized include Pakistan State Oil, Jamshoro
Power Company, Faisalabad Electric Power Company, Pakarab Fertilizers
Company and Capital market transactions of Pakistan Petroleum Limited,
Pakistan International Airlines, Kot Adu Power Company and at a later stage
the share offering of United Bank Limited.
While expressing his thanks to the President General Pervez Musharraf and
the Prime Minister Mir Zafarullah Jamali, Dr. Abdul Hafeez Shaikh said that
without such top level commitment the completion of such historic transaction
could not have been possible and the most transparent process at all levels
appreciated by everyone was also a matter of satisfaction and encouragement.
He said that the past 12 month were greater in the history of the country's
privatisation, when we were able to accomplish transactions worth Rs.42
billion.
Addressing on this occasion Mr. Shaukat Aziz, Federal Minister for Finance
said that the Privatisation Program was the pillar of the country's economic
reforms and it was the policy of the government to put more assets for the
private sector, which was a global phenomenon. HBL was an Icon of our
structural reforms and we were handing over a jewel of our national assets
with a bit of heavy heart and now the greater responsibility lie with the new
management. The government had launched a series of structural reforms,
which had strengthen the institutions with independence and we were able to
improve the environment for the banks to grow, he added.
Mr. Ahmad Waqar, Secretary Privatisation Commission said that the
privatisation of HBL was the manifestation of the government's commitment
to the continuity of the economic reforms agenda.
Later, Mr. Ahmad Waqar, Secretary Privatisation Commission and Mr. Sultan
Allana, representative of Aga Khan Fund for Economic Development signed
and exchanged the documents of the transfer of management agreement in the
presence of Dr. Abdul Hafeez Shaikh, Federal Minister for Privatisation &

64
Investment, Mr. Shaukat Aziz, Minister for Finance, Mr. Iain Cheyne,
Director AKFED and the senior officers of Finance Division, State Bank of
Pakistan and HBL.
On December 29, 2003, AKFED gave the highest bid of Rs. 22. 409 billion
for acquiring 51 % Strategic stake and acquiring the management control in
Habib Bank Limited (HBL), the country's first ever biggest transaction in the
history of Pakistan's privatisation.
The State of Qatar Supreme Council for Economic Affairs Investment
remained runner up with an offer of Rs. 21. 99375 billion while Central
Insurance Company
Limited did not turn up for the bidding.
PC Board has given their nod for the highest bid while Cabinet Committee on
Privatisation gave approval to the bid and declared AKRFD as successful
bidder.
The pre-qualification committee, which included representatives of
Privatisation Commission, Finance Division and the State Bank of Pakistan,
had allowed three parties for pre-qualification for the bidding. The three
parties included Agha Khan Fund for Economic Development, Central
Insurance Company Limited and State of Qatar Supreme Council for
Economic Affairs and Investment. All the key issues were resolved and the
bidding process was made known to the potential pre-qualified bidders.
Pakistan's Privatisation Commission ("PC") had received unprecedented
interest from around the world by receiving 19 Expression of Interest (EOI)
for the privatisation of Habib Bank Limited ("HBL"), from reputed
International and Pakistani parties (participating solely, or as part of a
consortium) for entering the process towards acquiring the indicated
shareholding in HBL for a better competition.
HBL is Pakistan's second largest commercial bank, having a countrywide and
international branch network. HBL has full service licence covering
commercial, retail banking, consumer and investment banking activities in
Pakistan and most of the other countries where it is present. HBL has an

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 extensive domestic network consisting of 1,425 branches with a market share
of approx. 20%. HBL operates a large international network of 48 branches in
25 offshore locations spread over Europe, the Middle East, Far East, Asia,
Africa and the United States. It operates
three wholly owned subsidiaries namely Habib Bank Financial Services
(PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and
Habib Finance Australia Ltd. - Sydney; 2 Joint Ventures namely Habib
Nigeria Bank Ltd. (40%) and Himalayan Bank Ltd. (20%).
In addition, the Bank owns 90.5% shares in Habib Allied International Bank
Plc, a bank incorporated in the UK. HBL also has 2 representative offices in
Iran and Egypt.

9. SWOT Analysis
The SWOT analysis is used to measure the internal strength and weakness of the

organization and also measure the external opportunities and threats of the organization.

The major strength, weakness, opportunities and threats of the HBL (Habib Bank

Limited) are.

Strength:
1. Mysis software only available in HBL.
2. More then 700 hundred online branches network.
3. Largest branch network in Pakistan.
4. Brand Exposure.
5. Brand equity and loyalty.
6. Large number of product line.
7. Presence of branches in many overseas countries.

Weakness:

66
 1. Customer care not at a high level.
2. Lack of Customer relationship.
3. Less personal training of HBL staff.
4. Shortage of knowledge of IT skills of HBL staff
Opportunities:
1. Slope of finances.
2. Large number of products available compare to its competitors.
3. Products are available for both the individual customer and business customer
compare to its competitors.
4. High level of quality staff available only in HBL.
5. Only facility in all over Pakistan and in some of overseas country available in
HBL.
6. Islamic banking Opportunity available in HBL for its customer.
Threats:
1. Big threat from Islamic banking because large numbers of customer are
switching to Islamic banking.
2. Big threats to its competitors who are 10 years ago only 5 to 10, but in recent
this number increase more then 30. These competitors are providing tuff
competition to HBL.
3. Overseas banking is very keen to open their branches in Pakistan. They have
strong financial muscle and vast experience in banking sector and also global
presence of bank branches and vast varieties of brands.

10. Conclusion & recommendations for improvement:

There are some areas of the Habib bank limited, which needs improvement for the
betterment of the bank in future. If HBL improves these areas it will get more
benefit to HBL in future. These areas are advertisement of HBL products &
service to remote areas, more customer care in both remote & urban areas of the
country, staff skills improvement in use of IT technologies. The HBL used these
strategies to improve these areas, in advertisement area HBL advertise their
products and services in local language, which is understandable for every
common person. To improve customer care improvement the HBL will adopt
customer focus strategy to build strong relationship with their customer. In respect
of improvement of skills of staff IT techniques the HBL launch workshops and

67
 training programs for both new and existence employee of the HBL. If HBL take
steps to improve these areas of the bank then it will get the benefits of these
improvements in future.
What I have learned from Internship Program:
I have experienced many things from my internship program. First of all I have
experienced the role the banker in the bank. The banker is not only word to say
he/she a person who is responsible to his/ her daily routine work in the bank. He/
she manage all the internal/external matters of the bank very efficiently and
effectively. In a bank the banker is always give the impression of being well
dressed, healthy, haSppy and also welcome to their customer with a smiley face. I
have also experienced to apply almost all my theoretical concepts which I have
learned during my studies in practical daily routine life.
This internship program not only provides me an opportunity to experienced
working environment of the bank but also deeply effected on my daily routine
life. Due to this internship program my confident is built, my personality is
improved and my dressing is also improved. This is not only six weeks training
for me it is more then that which I can never explain in words.

11. Reference & Sources used

To complete my internship report I have used different source of material to
complete it. The material which I have used t complete my report are important
part of completion of my internship report. The sources that I have used to
complete my report are
1. Balance sheet of HBL last to years.
2. Profit & loss statement of HBL last two years.
3. Notes of these to financial statements last two years.
12. Annexes
All the hard copies of material, which I have been, used my internship report are
attach with my internship report.

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