CONTENTS

Contents...........................................................................................................................................1 History:........................................................................................................................................2 FIRST MUSLIM BANK OF THE SUB-CONTINENT....................................................2 Company Management.................................................................................................3 Management Hierarchy...................................................................................................4 ORGANOGRAMME..................................................................................................................4 DEPARTMENTS OF HABIB BANK........................................................................................4 DEPOSIT DEPARTMENT.........................................................................................................4 GROUNDS FOR CLOSING THE CUSTOMERS ACCOUNT............................................4 CLEARING DEPARTMENT.....................................................................................................4 ADVANCES DEPARTMENT....................................................................................................4 1. Guarantees............................................................................................................................4 2. Mortgage..............................................................................................................................4 4. Pledge ..................................................................................................................................5 FOREIGN EXCHANGE DEPARTMENT.................................................................................5 BILLS DEPARTMENT...............................................................................................................5 INWARD BILLS FOR COLLECTION (IBC)........................................................................6 OUTWARDS BILL FOR COLLECTION (OBC)..................................................................6 ACCOUNTS DEPARTMENT....................................................................................................6 INCOME INCLUDES.............................................................................................................7 EXPENDITURES INCLUDES...............................................................................................7 REMITTANCE DEPARTMENT................................................................................................7 WORK DONE AT THE BRANCH................................................................................................7 Financial Analysis..........................................................................................................................10 Ratio Analysis............................................................................................................................15 Recommendations..........................................................................................................................24

Project report on Habib Bank Ltd

Introduction of Habib Bank

History:
On 25th of August 1941, Habib Bank inaugurated its operations with the banks first branch in Bombay. In 1947 Karachi saw its first commercial bank of the newly formed Islamic Republic of Pakistan, when the bank shifted its head office there. Throughout the decades, HBL has held the mantle of a dynamic leader, by adding value to the lives of its customers. It was HBL that introduced products such as Credit Cards, ATMs, Travellers Cheques, etc., to the Pakistani market. We at Habib Bank cater to the needs of millions with our quality products & services. Today, Habib Bank is truly the bank of the people, providing its customers convenience and satisfaction all over the world. Habib Bank Plaza, the tallest building in Pakistan, is the proud symbol of HBLs leadership in Pakistans corporate arena. Today, HBL has more than 1,700 branches all over Pakistan and presence in 26 countries across five continents. With a revamped customer oriented philosophy, we are pursuing new avenues of leadership through innovation, as we gear up to face the challenges of the new millennium.

FIRST MUSLIM BANK OF THE SUB-CONTINENT

Habib Bank Limited was established by Mr. Ismail Habib (Late) on August 25, 1942 at Bombay. It was the first Muslim Bank of the subcontinent. It was established with a paid up capital of Rs. 2.5 million. At an early stage, the number of its branches was only 12. In 1973, all the commercial banks were nationalized under the Bank Nationalization Act 1974. Now Habib Bank Limited is the largest commercial bank of Pakistan comprising 9 Regional Head Quarters, 42 Zones, 1198 branches in the country on 31st December 1999. Overseas operations of Habib Bank Limited are comprising 65 branches, 2 affiliates, 2 representative offices and 2 subsidiaries. These branches are in U.S.A, U.K., Belgium, France, Netherlands, Turkey, Kuwait, Lebanon, Iran, Bangla Desh, Bahrain, Egypt, U.A.E., Hong Kong, Oman, Y.A.R, Sudan, Nigeria, Malaysia, Sri Lanka, Singapore, Kenya, Seychelles, Maldives, Indonesia, Mauritius and Australia.

Project report on Habib Bank Ltd

Company Management
Corporate Information: Registered Office:Habib Bank Limited Habib Bank Plaza I.I. Chundrigar Road Karachi 75650 Pakistan.

Head Office:-

Habib Bank Limited Habib Bank Plaza I.I. Chundrigar Road Karachi 75650 Pakistan. Phones: 2418000 Fax: 21-2411647 Telex: 20086-20751 HBANK-PK Board of Directors

Sultan Ali Allana Chairman

R. Zakir Mahmood President & CEO

Iain Donald Cheyne Director

Sajid Zahid Director

Mushtaq Malik Director

Ahmed Jawad Director

Yasin Malik Director

Project report on Habib Bank Ltd

Project report on Habib Bank Ltd

4. Pledge
In a pledge the ownership remains with pledge, but the pledge has the exclusive possession of property until the advance is repaid in full. While in case of the default the pledge has the power of sale after giving due notice. .

FOREIGN EXCHANGE DEPARTMENT

International trade is growing and with the international trade it has become more imperative. development of

For countries to devote more and more attention to the complicated mechanism of Foreign Exchange. It is more important in case of developing countries. It is need of time, that a country should conserve its foreign exchange resources.

I.

BILLS DEPARTMENT
Bills department performs the following functions. a. Inward Bills for Collection (IBC) b. Outwards Bill for Collection (OBC)

Project report on Habib Bank Ltd

INWARD BILLS FOR COLLECTION (IBC)

These are bills or cheques etc. which are collected locally. They are received from outstation branches banks and parties. DEMAND DRAFT: If refers to the payments of money on demand of the holder of draft. Demand draft includes DD issues and DD payable.

OUTWARDS BILL FOR COLLECTION (OBC)

These are negotiable instruments, drawn on outstation branches, bills sent for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.

ACCOUNTS DEPARTMENT
Usually Accounts are maintained in two ways: a. Journal System b. Vouchers System Journal system is adopted by some commercial industrial institutions. In journal system entries are reported in Journal Books and then posted to ledger. Voucher system is used for every transaction. Voucher has to be prepared either in cash or in transfer or in clearing, the Sheet upon which these vouchers are summarized transactions-wise and consolidated into a figure is called supplementary.

Project report on Habib Bank Ltd

INCOME INCLUDES
1. Brokerage (A bank sells and buys share, stocks, debentures, other securities and receives payment for these services). 2. Discount 3. Service Charges 4. Rent (On building) 5. Commission (from utility services)

EXPENDITURES INCLUDES
1. Salaries, allowances and provident fund 2. Rent, taxes, insurance, lighting etc. 3. Profit paid on deposits and borrowings 4. Postage, telegram and stamps 5. Stationary, printing and advertisement charges etc. 6. Auditors fee and legal charges.

REMITTANCE DEPARTMENT
Remittance department performs following functions: i. Mail Transfer (MT) ii. Telegraphic transfer (TT) iii. Demand Drafts (DD)

WORK DONE AT THE BRANCH

Project report on Habib Bank Ltd

As every body knows that "Knowledge without practice is sterile "In order to give vent to this idea an Internship program of two months has been arranged in different esteemed organizations during M. Com. In this regard on 1th of July 2000, I was asked by my principal to go to Habib Bank to have an internship of two months there. So as per standing order of my Zonal Chief I was assigned to work under the supervision of AVP/Manager of Main Branch, Daska. On my first day of Internship, Manager handed me over the charge of Assistant to Accountant. As three departments namely Accounts, Cash and Billing, and Clearing were being managed by the Manager in this particular branch. I started my practical training by tockening the cheques for withdrawals and entering them into token book. This was the routine work that I had to daily and, at the time of closing exact position of cash in hand, Receipts and Payments was evaluated. The Manager and the Accountants duly signed this evaluation. Secondly I was advised by my Manager to be remained vigilant about the fake cheques giving some instructions for the scrupulous examination of cheques like signature verification from specimen card. Unfortunately the branch where I got my Internship was not computerized, all the things were to be done manually. Right after two weeks, the date of balancing came. Here balancing means balancing of ledgers of Current Deposit and Saving Deposits. The balancing of Current Deposit Ledgers was done on weekly basis while Saving Deposits Ledgers were balanced on semi monthly basis. Then I collected bills of LESCO, PTCL and SNGPL during period of my internship. I also used to write scrolls, which are written to keep record of bills collected by the branch and one copy of them is sent to the concerned organization.

Project report on Habib Bank Ltd

After one month I came under the supervision of the Cashier who got me to know, how the books of cash are balanced at the closing of each day. I too learnt to prepare General Ledger which is called as the mother of all books used in the branch. It was really a tough and daunting task. I consumed lot of my time in scrolling the Utility bills of WAPDA, TELEPHONE, and SUIGAS, the collection from these bills were to be performed by me and after the proper vouchering of these bills, a copy of collections was sent to respective departments. After Six Weeks My Manager tells me about the transfer book which keeps the record of the transfer of funds between clients of bank.

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Financial Analysis

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Financial Analysis Habib Bank Limited Balance sheet

As on 31 December 2008

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Assets
Cash and balances with treasury bank Balances with other banks Lending to financial institutions Investments Advances Other Assets Operating fixed assets Deferred tax asset-net Net Investment in finance lease Capital work in progress Total Assets

2008 Rs.(000)
27,449,292 26,870,767 10,001,123 142,877,930 167,523,299 18,137,931 7,184,623 2,967,570 403,012,535

2001 Rs.(000)
27,669,276 25,087,525 22,843,841 57,592,325 167,225,401 21,256,518 5,874,422 6,001,297 333,750,605

2000 Rs.(000)
12,869,044 24,474,658 766,674 72,525,352 173,822,905 30,246,684 5,923,411 267,359 30,246,684 320,926,758

Habib Bank Limited Balance sheet

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As on 31 December 2008

Liabilities
Deposits and other accounts Borrowings from financial Institutions Bills payable Other liabilities Deferred tax liabilities Subordinated loans Minority Interest Share Holder Equity Share Capital Other tier1 capital Capital Reserves Accumulated loss and other reserves Surplus on revaluation of fixed assets

2008 Rs.(000)
328,182,054 38,045,541 5,834,673 11,243,342 208,665

2001 Rs.(000)
283,444,680 23,443,322 5,419,260 8,629,175 203,520

2000 Rs.(000)
265,751,324 23,923,589 5,376,924 13,340,485 -

12,178,495 8,000,000 1,027,348 (8,931,643) 7,224,050

12,178,495 8,000,000 985,942 (11,662,155) 3,108,366

12,178,495 8,000,000 6,468,385 (17,876,069) 3,763,625

Total Liabilities and Owner equity

403,012,53 5

333,750,60 5

320,926,75 8

Profit and Loss Account

For the year Ended Dec 31-2008

Habib Bank Limited

Description

2008 2001 2000 Rs.(000) Rs.(000) Rs.(000)

24,271,792 17, 385,761 6,886,031 1,222,172 142,550 1,364,722 5,521,309 14

on Habib Bank Ltd 23,956,114 26,738,446 Mark-up\revenue\Interest earned Project report 11, 580,431 15,434,544 Mark-up\Return\Interest expensed Net mark-up interest Income Provision against non performing loans and advances Provision against Diminution in value of investments Bad Debts written off directly Net mark-up\Interest Income after provision 12,375,683 2,656,361 (144,154) 2,512,207 9,863,476 11,303,902 2,632,960 3,747 2,636,707 8,667,195

Non mark up Interest Income

Fee, Commission and brokerage Income Income\Gain on Investments Income from dealing in foreign currencies Other Incomes Joint Venture Total Non mark up and Interest Income 2,096,871 1,795,385 1,144,350 1,151,751 6,188,357 16,051,833 1,827,685 1,099,947 1,453,522 1,102,845 5,483,999 14,151,194 11,724,443 72,896 12,381 1,855,324 385,912 1,135,343 2,813,842 1,509,213 7,699,684 13,220,993 12,071,531 6,013 68,924

Non markup\ Interest Expenses

Administrative expenses Other provision\write off-Net Other Charges Total Non mark up and Interest expenses Staff Welfare Fund 11,807,129 (62,542) 4,061

11,748,648 4,303,185 (215,159) 4,088,026

11,809,720 2,341,474 (117,244) 2,224,230

12,146,468 1,074,525 1,074,525

Profit before taxation

Taxation current
Deferred

842,631 1,211,435 2,054,066 2,033,960 9,449 2,043,409 1.68

1,111,826 62 1,111,888 1,112,342 3,410 1,115,752 0.92

465,000 465,000 609,525 (121,905) 487,620 0.50

Profit after taxation Share of Loss attributable to minority Interest Profit attributable to share holder Basic earning per share

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RATIO ANALYSIS

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2000 current Ratio Liquid Ratio Loan to Deposits Ratio Loans to Assets Ratio Return on Assets Return on Shareholder's Fund Return on Equity Capital Earning per Share Rate of Return on loans Net Profit Ratio 1.2742 51.0458 41.5678 0.5046 10.3210 16.7012 1.6800 14.3002 8.4904

2001 1.3218 5 8.9975 5 0.1049 0.3333 8.6806 9.1337 0.9200 1 5.9895 4.1601

2008 1.0205 6 5.4081 5 4.1628 0.1899 4.8667 5.0049 0.5000 1 3.9635 2.5112

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2008

2001

2000

Return on Equity Ratio

Net Profit after tax X 100 Owner Equity Net Profit after tax Owner Equity Return on equity

2,033,960 19,706,925 10.32

1,112,342 12,814,168 8.68

609,525 12,534,436 4.86

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Return on Equity Ratio

Return on equity capital

12.0000 10.0000 8.0000 6.0000 4.0000 2.0000 2002 2001 years 2000

The past three years data shows an improvement in the return on equity which is a positive sign. The Bank should have to continue its policies. By observing the audited account we find that the this improvement is due to increase in the Net profit which is good sign.

%age

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2008

2001

2000

Return on Assets
Net Profit after tax X 100 Total Assets Net Profit after tax Total Assets Return on Assets

2,033,960 403,012,535 0.50

1,112,342 333,750,605 0.33

609,525 320.926.758 0.19

Return on Assets
Return on assets 0.6000 0.5000 0.4000 0.3000 0.2000 0.1000 2002 2001 years 2000

Return on assets ratio shows an improving trend. This ratio shows that the both the Net profit and Total Assets has improved in the previous years.

%age

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current Ratio
Current Assets Current Liabilities Current Assets Current Liabilities

2008

2001

2000

395,827,912 310,646,6 13 1.274 2

327,876,183 248,053,80 7 1.321 8

314,705,317 308,392,32 2 1.020 5

current Ratio

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Current Ratio 2008 2001

current Ratio 1.4000 1.2000 167,523,2 1.0000 99 0.8000 0.6000 0.4000 403,012,535 0.2000 -

2000

Loan to Assets ratio

Loans Assets Advances Assets

167,225,40 1 333,750,605 50.1049 2001

173,822,90 5 320.926.758 54.1628 2000 2000

Loan to Assets ratio

41.5678

2002

2008

2001

Net Profit Ratio

Current ratio has decreased in comparison to 2001 but it is still above than 1.1 . The Net profit / that this is due to both increase in current assets and current liabilities but the data shows Interest Income X 100 current liabilities raises more rapidly than current Assets. 19,706,9 12,814,16 12,534,43 Net profit 25 8 6 Interest Income Net profit ratio 23,956,1 14 8.490 4 26,738,44 6 4.160 1 24,271,79 2 2.511 2

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Net Profit Ratio Loan to Asset Ratio

Net Profit Ratio Loans to Assets Ratio 10.0000 60.0000 8.0000 50.0000 6.0000 40.0000 4.0000 30.0000 2.0000 20.0000 10.0000 2002 2002 2001 2001 2000 2000

Net profit Ratio Ratio is giving upward trend. This trend observed due to increase in Net Loan to Asset is continuously decreasing inisthe previous years. The figures profit but on this the other the expenses decreases which a efficient reveals that trend hand was due to decrease in Advances ofshows the bank but on management. the other hand the Asset of the Bank increases rapidly.

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Loan to Deposit Ratio

Loan to Deposti Ratio 70.0000 60.0000 50.0000 40.0000 30.0000 20.0000 10.0000 2002 2001 2000

Loans to deposit ratio show a decreasing trend in the previous years. This trend is observed as The advances of the bank decreases but on the other hand total Deposits of the bank increases which result in decrease in this ratio.

2008

2001

2000

Rate of Return on loans

Net profit / Loans Net profit Loans Rate of Return on loans 19,706,9 25 167,523,2 99 14.300 2 12,814,16 8 167,225,40 1 15.989 5 12,534,43 6 173,822,90 5 13.963 5

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Recommendations
As we seen from the previous analysis of the financial statements we have realized that that Habib Bank is performing very well since its inception. It is quite difficult to give suggestion to improve the banking conditions Habib Bank Limited. As we know that nothing is perfect, there is always a room for improvement, so I have found during my internship can be made up taking into account the following suggestions. HBL is in the process of providing the services of Automated Teller Machine. In order to complete with the other banks ATM services must be provided throughout the country as this service is becoming very popular in bank customers. The bank is also in process of computerizing its records which is good sign but it is going on with small progress Computerization must be done on early basis. This will help in increasing efficiency of work don, customers satisfaction decrease the stationary cost and resultantly it will increase profits. In Past Habib Bank Limited has always being suffered from bad Government policies. Government intervention should avoided completely.

Employees Training programme must be introduced on continuous basis so that Employees have understanding with the latest developments especially with the customers.

Bank should introduced incentive plans for employees on regular basis so that if employees may work whole heartedly for the welfare of their organization. While giving incentives qualification, work, experience, hard work and such other factors must be considered.

Mismanagement of resources must be avoided as much as possible as it decreases profit but also discourage hard worker and honest employees.

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Fresh graduates must be recruited. As the combination of Experienced and fresh can produce better results and it will improve the efficiency of management.

Habib Bank is going towards mobile banking but the problem is that a common client has no idea of its usage due to lack of marketing. I think that a proper marketing programme must be launched for clients awareness.

Banks different schemes must be conveyed to the targeted customers so that to have a reasonable share in market.

Bank should help the society by providing interest free loans to the Talented Students.