MIS Report of HBL

Prepared by: Fahad Idrees Sehgal Reg # 55540

Submitted To: Sir Rizwan Rasheed

TABLE OF CONTENT
INTRODUCTION...01 OBJECTIVES OF HBL..02 BUSINESS FUNCTIONS................................03 BUSINESS PROCESSES04 BUSINESS STRUCTURE..05 CURRENT MIS SYSTEM.06

REFERENCES07 CONCLUSION08

INTRODUCTION:
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 banks 25th Anniversary. With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. International operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands. On December 29, 2003 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.

OBJECTIVES OF HBL:
Following are some of the main objectives of HBL.

1. To earn profit for the Bank itself and maximize its shareholders value. 2. To provide solutions for multiple requirements of clients of diverse financial nature. 3. To manage with the changing trends of the modern day financial market. 4. To be a diversified bank by offering all basic consumer services along with specialized services 5. Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationship. 6. To provide employment opportunities to people.

7. To help in development and industrialization of the country.

BUSINESS FUNCTIONS OF HBL:

HBL is the largest private commercial bank of Pakistan with more than 1450 branches across the country & have business/branches in around 25 countries of the world. As a result of this huge scope/exposure all over the country HBL has also a huge scope in term of functions. Following are the main Business functions of HBL. 1. Global Treasury 2. General Administrative Division 3. Credit Risk Management 4. Investment Banking 5. Human resource (HR)
6.

Global Compliance

7. Financial Control (Finance Department) 8. Islamic Banking

9. Consumer Banking 10.Information technology

1. TREASURY Treasury is responsible for effective funds and foreign exchange exposure management for the bank. The objective is achieved through participation in Interbank Money Market, Foreign Exchange, Derivatives, and Equity Markets. The Treasury is also responsible for maintaining Cash and Liquidity Reserves in accordance with the Central Bank (State Bank of Pakistan) requirements. Funds are pooled at treasury through the network of bank branches. Branches report their currency positions (surplus balances, shortages & requirements) in domestic & foreign currencies to treasury on daily basis. Treasury compiles & categorizes these positions, on the strength of which dealers carry out deals in Money & Foreign Exchange Markets to accomplish treasury objectives of the bank 1.1 TREASURY OBJECTIVES Treasury objective can be primarily classified into five categories. To manage funds in domestic & foreign currencies. To manage interest, exchange & liquidity risks.
To use Banks funds effectively for profit maximization.

 To provide various services to Bank customers through net work of

Branches e.g.: forward contracts , cross rates, rates for discounting of bills etc. To ensure regulatory compliances. Treasury objectives are achieved by carrying out deals in Money Market & Forex Market, this function is performed by Money Market & Forex Market Dealers.

2. GENERAL ADMINISTRATION General Administration Division (GAD) was formed in 1997 with a view to centralize all financial as well as non-financial administrative activities of the bank in order to improve the efficiency and streamlining of various processes. GAD falls under the administrative control of FINCON Group. The division consists of following eight major departments P Purchase & Expenditure Control Department (P&ECD) P Banks Properties and General Services Department P Printing & Stationery Department (P&SD) P Travel Assistance Department (TAD) P Insurance and Branch License Department P Central Mail Department P Circular Department P Warehousing Department

3. CREDIT RISK MANAGEMENT Risk Management is a discipline at the core of every financial institution and encompasses all the activities that affect its risk profile. It involves identification, measurement, monitoring and controlling risks to ensure that: The individuals who take or manage risks clearly understand it. The organizations Risk exposure is within the limits established by Board of Directors. Risk taking decisions are in line with the business strategy and objectives set by BOD. The expected payoffs compensate for the risks taken Risk taking decisions are explicit and clear. Sufficient capital as a buffer is available to take risk The acceptance and management of financial risk is inherent to the business of banking and banks roles as financial intermediaries. Risk management as commonly perceived does not mean minimizing risk; rather the goal of risk management is to optimize risk-reward trade -off. Notwithstanding the fact that banks are in the business of taking risk, it should be recognized that an institution

need not engage in business in a manner that unnecessarily imposes risk upon it: nor it should absorb risk that can be transferred to other participants. Rather it should accept those risks that are uniquely part of the array of banks services.

4. INVESTMENT BANKING Investment Banking (IB) is one of the important functions of the Bank. IB is generally engaged in Corporate Advisory and Structured Finance, Project Financing, Capital Market, Private Equity Investment, Consortium Financing, Underwriting and other related activities. The Group generates its income mainly by charging fee for the above mentioned services and activities. The Group is not directly involved in any form of investment and lending rather the same are performed by business groups of the bank like Corporate Banking or Treasury Group. 5. HUMAN RESOURCES (HR) HR is one of the most important functions of the Bank, which is responsible for all the matters relating to banks human capital. The Group is headed by the Group Executive who controls all divisions within the group. The Group Executive is responsible for providing support and guidance to the talent sourcing, training, compensation & benefits and organizational development teams. The GE educates and communicates the organization about alignment and how people practices connect with strategy execution, organizational values and desired culture. Organization structure is reviewed and HR requirement is determined in line with changing business needs and automation. All the HR Heads of RBG/Commercial/Corporate/ARM/IBG report their progress on various HR matters to the same.

6. GLOBAL COMPLIANCE Risk is inherent in every business. Amongst several different kinds of risks Habib Bank faces, compliance risk is defined as the risk of legal or regulatory sanctions, material financial loss, or loss to reputation a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its banking activities. These risks can be effectively mitigated if proactively identified, measured, and controlled. The controls and compliance are firstly built into the processes and policies and secondly monitored in day-to-day operations so that compliance risks can be averted.

7. FINANCIAL CONTROL (FINANCE): Financial Control (FINCON) is one of the most important functions of the Bank, primarily responsible for all issues related to finance and accounting with a focus on developing and ensuring effective implementation of financial strategy, policies and procedures for all business groups within the bank and its subsidiaries. Key operations include the preparation and analysis of all financial reports, such as Balance Sheets, Income Statements, reports to shareholders, tax returns and reports for government regulatory agencies. The division broadly comprises of three main departments along with an integration of eight cost centres, which collectively perform its overall operations of the division. 8. ISLAMIC BANKING: HBL Islamic Banking started its full-fledged operations effective from January 2005 with a stand-alone branch located at Finlay House, Karachi. The overall functions of Islamic banking are broadly managed by Islamic Banking branch and Islamic Banking together. The branch is responsible for performing the core functions of Islamic banking, such as, disbursement of finances, generation of deposits, Credit Risk Management and Administration, custodian of all finance documentation and day to day branch operations. Whereas, Islamic banking is responsible to look after the administrative affairs, correspondence with regulatory bodies, Shariah Advisor and Shariah Supervisory Committee, thus serving as a control unit.

9. CONSUMER BANKING: Consumer banking is broadly divided into two segments called Secured Finances and Unsecured Finances depending upon the nature of consumer assets. HBL secured finances consist of products such as House Finance (Mortgage) and Auto Lease Finance. Unsecured Finances primarily contains HBL Flexi Loan and Credit Cards. INFORMATION TECHNOLOGY

10.

Information technology plays a vital role in success of every business organization whether its a bank or any other multi-national company. HBL has a very vast system of technology. Information technology group of HBL updates the core

BUSINESS PROCESSES:
Business Processes of various functions are as follow:

1. Treasury Business Processes

2. General Administration Processes

3. Credit Risk Management Processes

4. Investment Banking Processes

5. Human Resource Processes

6. Global Compliance processes

7. Financial Control processes

1. TREASURY BUSINESS PROCESSES:

The Processes of the Treasury Division are divided into 5 distinct areas as under:A) Liquidity Management B) Interest Rate Risk Management C) Foreign Exchange Risk Management D) Management of Investments E) Balance Sheet Management

2. GENERAL ADMINISTRATION PROCESSES:

The division consists of following eight major departments/Processes 1. Purchase & Expenditure Control Department (P&ECD) 2. Banks Properties and General Services Department 3. Printing & Stationery Department (P&SD) 4. Travel Assistance Department (TAD) 5. Insurance and Branch License Department 6. Central Mail Department 7. Circular Department 8. Warehousing Department

3. CREDIT RISK MANAGEMENT PROCESSES: 3.1 Credit Risk Management Process The basis for an effective credit risk management process is the identification and analysis of existing and potential risks inherent in any product or activity. Consequently, it is important that bank identifies all credit risk inherent in the products they offer and the activities in which they engage. Such identification stems from a careful review of the existing and potential credit risk characteristics of the product or activity. 3.2 Credit Approval Process

As per best practices, Banks must operate within sound, well-defined creditgranting criteria. These criteria should include a clear indication of the banks target market and a thorough understanding of the borrower or counterparty, as well as the purpose and structure of the credit, and its source of repayment. Establishing sound, well-defined credit-granting criteria is essential to approving credit in a safe and sound manner. 4. INVESTMENT BANKING PROCESSES: The services offered by IB include the following: 1. Structured finance 2. ECM and private equity 3. Project finance 4. DCM and Syndication

5. HUMAN RESOURCE PROCESSES:

The Processes of HR Group are divided into the following areas: 1. HR Policy & Strategic Planning 2. Resourcing 3. Human Resource Management

4. Litigation and Disciplinary Action

6. GLOBAL COMPLIANCE PROCESSES:

GCG is required to assist them in achieving the desired objectives by: (i) Ensuring that all employees are fully conversant with the relevant laws and regulations as well as HBLs internal policies and procedures; (ii) Ensuring that all groups of the bank are aware of the compliance risk and its implication, whether financial, reputational etc. (iii) Monitoring of business groups through a system of self assessment; (iv) Examining the compliance environment through sample checks at regional / branch level. 7. FINANCIAL CONTROL PROCESSES: 7.1 Taxation Dealing with and providing assistance in taxation matters to all the departments of the bank is an important function of FINCON. Taxation department is responsible for evaluating financial events and their impact on taxation and reporting of the same to the management. All the important documents relating to taxation are in the custody of this department with the responsibility for ensuring the accurate and timely calculation of the tax impact in accordance with the rules set by the government regulatory bodies. 7.2 Financial Reporting One of the most important functions of FINCON is the preparation of financial statements on a periodic basis. Annual/Semi Annual/Quarterly Statements of

accounts, i.e., Balance Sheets, Income Statements and other statements are being prepared and reported both to the higher management and the regulatory bodies, such as SBP, and SECP etc. The Department is also responsible for provisioning requirements against Non-Performing Portfolio of the Bank, preparation of annual/half yearly Capital Adequacy Statement; follow up of Management Letters issued by external auditors. Financial Reporting Department is comprised of I) Statutory Reporting, II) Regulatory Reporting and III) Data Quality which together ensure the effectiveness of the financial statements prepared periodically.

ORGANIZATION STRUCTURE
Any organization needs a structure, which provides a framework for successful operations. The operation of an organization involves a number of activities, which are related to decision-making, and communication of these decisions. These activities must be well coordinated so that the goals of the organization are achieved successfully.

A chart defines the line of authority in an organization and its departmentation. It is a sort of visual presentation of the organizational structure. It specifies the duties and responsibilities of the personnel of the organization. At present the Bank operates through one central and 23 Regional Offices and 1439 branches, all over Pakistan. The president and Executives Committee look after the affairs of the Bank. Each Regional Head Quarter is headed by a Chief Executive and assisted by General Manager Operations and General Manager Support Services. The Regional Head Quarter controls the branches in their area. Overseas operations consist of 65 main branches, two affiliates, two representative offices and two subsidiaries. President, from Head Office at Karachi controls the officers of the Bank with the help of the senior management.

CURRENT MIS SYSTEM:

In HBL, the current system of MIS is ERP (Enterprise Resource Planning) system. ERP is a cross-functional enterprise system driven by an integrated suite of software modules that supports the basic internal business processes of a company. In HBL, ERP system can generate significant business benefits for this organization. ERP systems track business resources like customer, order, capacity and the status of commitments made by the business (customer orders, purchase orders and employee payroll). There is not hard and fast rule that whether accounting department or finance department has entered the data into the system. In HBL, ERP systems support human resource processes from personnel requirements planning to salary and benefits administrative and accomplish most required financial recording and according accounting applications. In nowadays highly competitive environment, the right ERP software can make a huge impact on the management and success of the organization. ERP software can help to streamline the business operations, to provide superior customer service, to increase employee productivity, to access critical business information for accurate.

CONCLUSION:
To sum up, internship is like The First Flight for a young business graduate who is to enter his professional life very soon. It provides a gateway to youngsters and an insight of corporate world. It helps them in the orientation phase of their first job as well and if we talk about internship decision in banking sector, HBL is clearly the

first choice of everyone who believes in qualitative approach of banking an environment of highly responsible people. Bank is enjoying a healthy market share and taste of good status in terms of its operative features and customer support. HBL is clearly the best bank operating in Pakistan. Many young generations wish to start their professional career with HBL as it has a power good will and an inspiration for all their rivals.