Commercial Banking

Habib Bank Limited

Allied Bank Limited




5/13/2014



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Commercial Banking Final Project
Habib Bank Limited
Allied Bank Limited

Submitted to:
Mr. Khurram

Submitted by:
Sana Saleem (100814)
Anum Nadeem (100848)
Usman Raza (100852)
Malik Muhammad Haroon Awan (100820)

BBA 8-A









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Table of Contents

Banking --------------------------------------------------------------------------------------------------- 4
Introduction to HBL ------------------------------------------------------------------------------------ 5
Introduction to ABL ----------------------------------------------------------------------------------- 7
Branch Network ---------------------------------------------------------------------------------------- 12
Market Segmentation -------------------------------------------------------------------------------- 15
Strategies ------------------------------------------------------------------------------------------------ 16
Revenues and Expenses ------------------------------------------------------------------------------ 17
Products and Services of HBL ----------------------------------------------------------------------- 20
Products and Services of ABL ----------------------------------------------------------------------- 30
SWOT Analysis of HBL -------------------------------------------------------------------------------- 36
SWOT Analysis of ABL -------------------------------------------------------------------------------- 37
Financial Performance ------------------------------------------------------------------------------- 40
Financial Ratios ---------------------------------------------------------------------------------------- 41
Financial Statements of HBL and ABL ------------------------------------------------------------ 53
Problem Identification ------------------------------------------------------------------------------- 54
Findings -------------------------------------------------------------------------------------------------- 55
Conclusion ---------------------------------------------------------------------------------------------- 56
Recommendations ------------------------------------------------------------------------------------ 57







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Definition of Banking
The best definition of a bank is in terms of its functions. A banker is a dealer in credit, he borrows
from the public or people, and lends to merchants or manufacturers. He borrows by accepting deposits,
and lends by way of advance against goods or securities or by discounting bills.
Collins English Dictionary defines band as an institution offering certain financial services, such
as the safe keeping of money, conversion of domestic into and from foreign currencies lending
of money at interest.
A band is an organization or a business house, which deals with money, credit and other
financial transactions. In general banks attract surplus money from the people who are not
using it at the time and lend to those who are in a position to use for productive purposes. Thus
people who have spare money they deposit the same in the band where it can earn profit. On
the one hand bank receives deposits from the people and pays profit at a specified rate and on
the other hand it advances loans to the people in need at the specified interest rate of mark-up.

Origin Of Banking
The word Bank itself is derived from the words Banco Bancus or Banque which means a
bench. The early bankers, the Jews to Lambardy, transacted the business of money exchange on
benches in the market. Banking is an ancient institution. It is in fact as primitive as human society.
Modern banks have developed from very old system of banking. It has been growing side by
side with the human civilization. Historians are of the opinion that perhaps they were the
Babylonians who developed banking system as early as 2000 BC There is evidence to show that
the temples of Babylon were used as bands
This was all because of the prevailing respect and confidence in the Clergy. King Hammurabi
(1728 - 1686 BC) the founder of the Babylonian Empire drew up a code wherein he laid down
standard rules of procedure for banking operations. In Greece, such temples are those of Ephesus and
Delphi, were the most powerful and biggest band of their time where the people deposited
their money and other callable for safety and security. The private bankers of Greece brought
banking to a high state of safety and security. The private bankers of Greece brought banking to
a high state of development thorough lending. Banking became so popular in the business life
of Athens that a special body of law was developed covering all financial transactions. The
Romans organized and regulated the conduct of private banks in such a way that utmost
confidence was created in them. They were familiar with the use of cheques and bills of exchange.
The Sub-continent society was also quite familiar with banking system right from the beginning.
Borrowing and lending of money existed in this area between2000 and 1400 BC and the banking
institution existed in one form or the other. G.Crowther in his book an out-line of Money suggests that
bankers has three ancestors. Firstly; Gold Smiths, Secondly; merchants and thirdly; money
lenders.In Europe, Eastern Bankers were moneychangers. At that time, these peopletook an
advantage of the process and started keeping deposits of valuables and jewelries on the basis
of their sound financial position in the community. The origin of banking, which started in the
12th century after the fall of Roman Empire subsequently, developed with the development of
trade. The Jewish merchants of Lombard developed baking system. Many of these Lombard
(Merchants) migrated to England in the 14thcentury, were the pioneers of Banking. The Bank of
Venice established in the year 1157 or 1171 AD is perhaps among the first public banking institutions.
Other bands such as Back of Barcelona in Spain was founded in 1401, the Bank of Geneva (Italy) in 1407,


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the bank of Amsterdam in Holland was established in 1609.In England development of bank took place in the
days of Elizabeth-1. In 1640 public banking started. The Bank of England was established in 1694. In 1935,
Reserve bank of India was established. Quaid-e-Azam Mohammad Ali Jinnah inaugurated the State
Bank of Pakistan on 1stJuly 1948.

BANKING IN PAKISTAN

At the time of independence, the areas, which now constitute Pakistan, were producing only
food grains and agricultural raw material for Indo-Pakistan Sub-Continent. There were
practically no industries, and whatever raw material was produced was being exported from
Pakistan. However Commercial banking facilities were provided fairly well here. There were 487
offices of scheduled banks in the territories now constituting Pakistan. Therefore, in accordance
with the provision of Indian Independence. Act of 1947 an Export Committee was appointed to
study the issue. The Committee recommended that the Reserve Bank of Indian should continue
to function in Pakistan until 30thSep. 1948, so that the problems of time and demand liability,
coinage, currencies, exchange etc. are settled between India and Pakistan


INTRODUCTION
Habib Bank Limited
Mohammed Ali Jinnah, Pakistan's founding father, realized the importance of financial
intermediation while he was campaigning for the creation of a separate homeland for the
Muslims of India. He persuaded the Habib family to establish a commercial bank that could
serve the Indian Muslim community. His initiative resulted in the creation of Habib Bank in
1941, in Bombay (now Mumbai), and fixed capital of 25,000 rupees. The bank played an
important role in mobilizing funds from the Muslim community to finance the All-India Muslim
League's campaign for the establishment of Pakistan. Habib Bank also played an important role
in channeling relief funds to Muslims hurt in the communal riots and violence that preceded
the departure of the British from India.
After the formation of Pakistan in 1947, Habib Bank moved its headquarters to Karachi,
Pakistan's first capital, at the urging of Governor-General Jinnah. This gave Karachi its first
commercial bank of the newly formed Pakistan. The Habib family would own and manage the
bank until the Pakistan government nationalized it on 1 January 1974.
In the 1950s, the HBL started its international expansion. In 1951 it opened the first of what
would become three branches in Sri Lanka. The next year HBL established Habib Bank
(Overseas). Then in 1956 HBL opened the first of five branches in Kenya.


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On 13 June 2002, Pakistan's Privatization Commission announced that the Government of
Pakistan would grant the Aga Khan Fund for Economic Development (AKFED), a subsidiary of
the Aga Khan Development Network, majority ownership of HBL against an AKFED's investment
in the bank.
During 2002, HBL's UK operation came close to being shut down due to regulatory issues with
the Financial Services Authority. The issue was resolved by converting the operations to a
subsidiary. Then Habib Bank Limited and Allied Bank of Pakistan merged their operations (Habib
contributed its 6 branches and Allied its 4), into a new bank, called Habib-Allied International
Bank, in which Habib Bank has a 90.5% shareholding, while Allied Bank has 9.5%.
Simultaneously with the transfer of business to the new bank, both Allied and Habib Bank
closed down all independent operations in the UK. In 2003, HBL received permission to open a
branch in Afghanistan.
On 29 December 2003, Government of Pakistan granted AKFED rights to 51% of the
shareholding in the bank against an investment of PKR 22.409 billion (USD 389 million). The
next year, on 26 February, the government of Pakistan handed over management control of
Habib Bank 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.
The bank's owners now comprise the Aga Khan Fund for Economic Development (51%),
Government of Pakistan (42.5%), and the general public (7.5%).
Habib Bank Limited operates by the following Vision, Mission & Values:
Vision
"to be the premier organization operating locally and internationally that provides the
complete range of financial services to all segments under one roof"
Mission
"To develop and deliver the most innovative products, manage customer experience, deliver
quality service that contributes to brand strength, establishes a comparative advantage and
enhances profitability, thus providing value to the stakeholders of the bank"
Values
excellence
integrity
customer focus
meritocracy
progressiveness
social commitments


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Allied bank limited
Allied Bank of Pakistan Limited is the first commercial bank established onPakistani soil. It has
emerged as an Australasia Bank on Dec. 3, 1942 at Lahore with paid up share capital of RS. 0.12
million in a motor garage under the chairmanship of Khwaja Bashir Bux with a staff of three.
Initially, it was little more than an agency for the collection of rents from the family
estate.Then, the tenants began to open accounts and the bank to make advancesagainst gold,
insurance policies, and merchandise. The Bank had attracted deposits, equivalent to RS. 0.431
million in its first eighteen months of business. Total assets then amounted to RS. 0.572 million.
Today, Allied Banks Authorized Capital is RS.5000 million, Paid up Capital & Reserves amount to
RS. 3012 million, Deposits come to RS. 93107 million and total assets equal to RS. 106926 million (as on
Dec. 31,1999). The Allied Banks story is one of dedication, commitment to professionalism,
adaptation to changing environment challenges resulting into an all round growth and stability,
envied and aspired by many. Later in 1973, Government of Pakistan decided to nationalize all banks
of the country and in the process, three smaller banks namely Sarhad Bank (Frontier
Based),Lahore Commercial Bank and Pakistan Bank were merged with a relatively bigger and
stronger Australasia Bank. A joint force with fresh zeal and enthusiasm was emerged, named as
Allied Bank of Pakistan Limited. Being a National Bank, ABL kept moving forward steadily,
contributing towards economic growth of country. As time passed, our nation entered into the
phase of denationalization and privatization. During 1991,the Government of Pakistan decided
to privatize Allied Bank of Pakistan Limited. Prime Minister Mian Muhammad Nawaz Sharif
during his first regime handed over management of the bank to its own employees, as a unique
phenomenon in thecountry. At present the employees are acquiring 51% shares where as the
rest of 49%are held by Federal Government apart from holding 49% banks shares the
Government has also representation of 3 Directors in the total strength of 7 member of Board
of Directors of the bank who are fully and actively involved in the banksaffairs such as policy
making and other financial matters.
Today, with its existence of over 70 years, the Bank has built itself a foundation with a strong
equity, assets and deposit base. It offers universal banking services, while placing major
emphasis on retail banking. The Bank has a large network of over 900 online branches and 700
ATMs in Pakistan and offers various technology-based products and services to its diverse
clientele.








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Allied Bank Limited operates by the following Vision, Mission & Values:
Vision
"To become a dynamic and efficient bank providing integrated solutions in order to be the first
choice bank for the customers".

Mission
To provide value-added services to our customers.
To provide high-tech innovative solutions to meet customers requirements.
To create sustainable value through growth, efficiency and diversity for all stakeholders.
To provide a challenging work environment and reward dedicated team members according
to their abilities and performance.
To play a proactive role in contributing towards the society.

Values
Integrity
Excellence in Service
High Performance
Innovation and Growth

Business Volume

The business volume of bank comprises on deposits and advances of any bank so ABL Business
Volume Figures are as under for the year 2008 to 2010:
During 2010, the Group successfully embarked upon its strategy of increasing the proportion of
low cost deposits. Deposits grew by 13% to reach Rs. 371 billion as at December 31, 2010 over
the previous year with share of CASA improving on average volume basis from 53% during
2009 to 55% in 2010, there by managing. The cost of funds in contributing to improved
Profitability






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HabibBankLimited
Habib Bank Limited (HBL), Pakistans biggest IPO of Rs 12 billion in terms of value, will be
formally listed today at the Karachi Stock Exchange (KSE). This listing would further add Rs 162
bn to the banking sector market capitalization of nearly Rs 3,700 bn if we simply take the offer
price of Rs 235/share as a proxy. Pakistans banking.
Sector has already got the biggest share of 29% in the market capitalization of KSE and with this
listing it will increase up to 33%.

1. Our forecasted CY07 ROE of 27% which is also in line with high performing peer banks
viz. MCB Bank & United Bank (UBL)
2. Satiating 10% yield on earning assets
3. Presence of more than 80% low cost deposits and mere 4.2% weighted average cost on
remunerative deposits
4. Greater market share of fee-based income of 16% vis--vis peer banks
5. Management thrust on retail banking
6. Strong brand equity.

On the flipside, recent draft circular by State Bank of Pakistan (SBP) regarding withdrawal of
forced sale value (FSV) facility on illiquid securities in taking provision coverage against non-
performing loans (NPLs) is a blow to HBL. HBL has relatively low provision coverage against
historical NPLs and we expect the bank to make more provisioning to the tune of Rs 5.2 bn that
could impair our CY07 EPS forecast of Rs 26.85/share.























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List of competitors:
Standard Chartered Bank
National Banks
MCB bank limited
UBL bank limited
Bank-al-Habib









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Branch Network:
Allied Bank Limited:
According to 2013 data of Allied bank 75 new branches and 176 ATMs were added at various
locations throughout the country that makes a total of 950 branches and ATM network to 794
ATMs by end of 2013 and maintained a market share of 8.1% according to performance.
Branch Network
HBL BRANCHES
HBL has 1500 branches all over Pakistan.
ALLIED BRANCHES
Allied bank has 945 branches all over Pakistan.

Market Share of ABL according to performance:






ABL
8.10%
8%
Others in
industry
91.90%
92%
Market Share


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Market Share of ABL according to branches:

Habib Bank Limited:
Market share of HBL according to Branch Network:





ABL Branches,
950
Total
branches of
all scheduled
Banks in
Pakistan,
10262
HBL
Branches,
1515
Total Branches
of all
scheduled
banks in
Pakistan,
10262


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Market Share of HBL according to performance:
HBL is a market leader in all of the private scheduled banks in Pakistan with a market share of
40%



Strategic Planning
HBL
At HBL the significance of planning is not critical but also essential to its survival in the modern
day economy .In the light of economic conditions in Pakistan, HBL enlargement strategy aims at
preserving short and long-term deposits to minimize the rate of funds. HBL will continue to
make changes to the actions of their business, with a restructuring of the Consumer and Retail
Banking businesses already in progress. They will also continue to focus on reducing and
optimizing costs, making them a leaner organization that can accept to change much more
rapidly.



HBL
40%
Others in
industry
60%
Market Share


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ABL
Bank continued the strategy of steady performance and growth to drive sustainable earnings by
further strengthening assets quality; through adoption of an effective risk management
approach; enhancing focus on introducing new customer centric, efficient and technologically
driven financial services while maintaining focus on quality of services; building Hi-tech on-line
communication infrastructure; improving ambiance of branches and increasing foot print
through organic growth while controlling costs.


HBL Market Segmentation

With a customer base of 5 million and a network of more than 1,450 branches in Pakistan, HBL
is the largest private bank in the country. Their network means that they are geographically
closer to their customers than any other bank. This gives them the insights needed to provide a
variety of products that directly reflects customers need. HBL caters to all market segments,
offering products that are as diverse as the people they service. They remain resolute in their
commitment to provide products that are competitive and services that are exemplary.


HBL MARKETING AND MANAGEMENT STRATEGIES

The all-embracing market presence sustained since 1947, provides HBL with a pragmatic
understanding of the regional monetary and fiscal dynamics. This complements the visionary
approach pertaining to optimal monetary management. The proactive market assessment,
global alliance expansion, return maximization, and effective portfolio diversification has aided
HBL to set challenging standards for market players.

Committed to attain professional excellence, the initial monetary management strategy at HBL
pertained to operating as decentralized functional units. These specialized functions were
categorized as Investment Unit and Foreign Exchange Unit. Investment Unit focused on
managing the local currency portfolio while Foreign Exchange Unit specialized in managing
foreign currency portfolio.


ABL Marketing
Enhanced customer services and product offerings of Your Bank have been the driving force
behind strong growth in total assets which crossed Rs. 700 billion mark at the close of 2013.


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Wide range of alternate delivery channels, including 794 ATMs, internet banking, mobile
banking and call center services remained instrumental in providing quality services with
convenience to their valued customers. Accessibility to Your Banks products and geographical
outreach is growing as a result of continuously expanding branch network of over 950
branches.
Marketing Innovation

Banks Customer base continues to broaden through introduction of innovative products like
SMS Banking and extended banking hours at select branches nationwide. With the high growth
of mobile usage in the country, technology based products and service offerings shall continue
to be the key ingredient in Your Banks endeavors to create value added offerings for its
customers, also serving the broader objective of greater financial inclusion.

ABL SME Segmentation
ABL cater all market segments. Upper to lower income class with different product packages.
Youth and childrens are cater by saving accounts so that they can develop saving habits.
ABL has realigned its focus towards SME Business with a vision to capitalize on the banks
countrywide footprint and long-standing customer loyalty to become a preferred cum prudent
provider of a Total Banking Solution to the Small & Medium Market segment. With this
renewed focus and strategy, ABL offers its customers a wide range of products & services,
meeting the needs of various types of businesses. Having best available technology and a
branch network spread across the country, we are well positioned to cater to all sorts of
business specific requirements
Communication Channels

Advertising is a one way communication with customers. Both banks use the following
communication channels to address their customers with their products and services.

TV
News Paper
Radio
Emails
Telephone Calls





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Revenue& Expenses of HBL Bank:
HBL profits surge 11% to Rs17.4 billion.Core earnings of the bank, the net interest income, grew
18% to Rs84.6 billion on the back of higher earning assets.
Increase in non-interest income to Rs11.5 billion also supported the bottom-line of the bank.
Resultantly, total income of HBL hit Rs96 billion in the period under review.
Provisioning expense was cut down 35% to Rs3.6 billion from Rs5.6 billion, reflective in the
banks earnings. The result was in line with market expectation as analysts expected net profit
to stand, on average, at Rs17.3 billion.
During the period, HBL became the first bank to cross the Rs1-trillion mark in deposits, a
remarkable feat. On the other hand, interest expense jumped 34% attributable to higher costs
of deposits.

Revenues and Expenses of Allied Bank:
Allied Bank earned after tax profit ofRs. 14,643 million during the year ended December 31,
2013 as compared to Rs. 11,641 million in the previous year, a YoY growth of 25.8%. EPS of your
Bank increased to Rs. 14.07 in 2013 compared to Rs. 11.18 in 2012. The ROA and ROE of the
Bank remained strong at 2.1% and 29.9% in 2013 compared to 2.03% and 28.4% in 2012,
respectively.
Further on account of retrospective adoption of the IAS -19 Employee Benefits, the Balance
Sheet footing of December 31, 2012 and December 31, 2011 has been restated upwards by Rs
1,460 million and Rs 221 million respectively. As a result of this retrospective impact, the un
appropriated profit/reserves for the year 2012 and 2011 has also been restated upwards by Rs
1,122 million and Rs 192 million respectively.
Habib Bank Limited Products And Services HBL:
HBL Muhafiz Rupee Travellers Cheques
HBL Auto Finance
HBL Flexi Loans for salaried personnel
HBL LifeStyles Financing Scheme
HBL i-Card
HBL House Financing Loans
HBL Easy Access
HBL Fast Transfer
Haryali Agricultural Loans
HBL E-Bank


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Services:
Retail Banking
The Retail Banking network, with 1425 branches, is the core strength of
Habib Bank. The network provides HBL with the largest diversified low cost deposit base of
any bank in Pakistan, and forms the basis for many of our other business lines: corporate and
investment banking and treasury activities. The network provides HBL with the largest
diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of our
other business lines: corporate and investment banking and treasury activities.

Commercial Banking
Enterprises operating in the middle market contribute significantly to the
economy of a country. During FY-2000 HBLs management decided to address this issue.
On November 1, 2000 Commercial Banking came into being.
The objective of setting-up Commercial Banking was two-fold:
1. First to stop the erosion of market share in the middle market;
2. Second, to regain the lost market share
Commercial Banking is making headway with improvement not only in terms of the business
figures but also in its ambiance. Renovation of is being carried out in order to give a
Professional look to all the Commercial Banking Centers.

Corporate Banking
The Corporate Banking Group serves large institutional customers who
require sophisticated products in an environment of intense competition. HBL Corporate &
Investment Banking Group is now recognized as a market leader and regularly arranges and


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Participates in most large structured finance deals.

International Operations:
HBLs ability to operate successfully in diversified markets and cultures is
a function of a long history in international banking when first international branch was
opened in 1951. The Banks branches in financial centers continue to provide efficient trade
settlement and reimbursement services to the entire network and business with other banks.



1. 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.


Gold Card Green Card







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i. Convenience
ii. Security
iii. Affordability
iv. Cash Advance
v. Balance Transfer Facility
vi. Internet shopping


i. Convenience
Instead of paying with cash, simply present your HBL Credit Card to the shopkeeper and
pay for anything you want.
Bill Payments
We'll pay your bills on your behalf and charge the amount to your HBL Credit Card. You
can give one-time standing instructions to pay your monthly bills. Check the amount in
your monthly card statement and make the payment with your regular card payment.
SMS Alerts
For all transactions, an SMS alert will be sent to you on your mobile phone to confirm
that the transactions have been conducted by you. A nominal fee will be charged for
this service.
E-Statements


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You can enroll for an e-statement with a simple call. An e-statement with details of all
your transactions will be sent to your specified email address every month. You wont
have to wait for your paper statement any more or have to worry about storing it.
Statement by Fax
HBL Credit Card also offers the facility of receiving your card statement by fax. Just give
us a call and your last card statement will be faxed to you at the fax number specified by
you

ii. Security.
HBL Credit Card ensures your money stays completely secure. You cannot lose cash if
you dont carry it. In the unlikely event that your card is stolen, call us at HBL Phone
Banking and your card will be blocked immediately.

iii. Affordability
Buy Now, Pay Later
HBL Credit Card gives you the flexibility to buy what you want, when you want and pay
for it later. A credit card statement will be sent to you every month with details of all
your purchases. You will have 21 credit free days to make the payment from the
statement date. Please pay at least 3 days in advance if you make your payment by
cheques to allow enough time for clearance.
Pay As Much As You Want
You have the freedom to pay the entire outstanding amount on your card statement or
as little as 5% of the outstanding balance in your statement. The remaining amount will
be transferred to next months statement. A nominal service charge will be applied to
the unpaid amount each month.


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Lower Rate Every Year
Just make sure all your HBL Credit Card payments are made before the due date and
you will benefit from a reduction in the rate of service charges at the end of each year.
iv. Cash Advance
If you require cash urgently, you can go to any specified HBL branch and withdraw cash
at the counter. You can also go to any 1 Link ATM in Pakistan and

More than 780,000 ATMs and financial institutions worldwide displaying the Visa/Plus
logo. You can withdraw cash up to the available cash advance limit on your HBL Credit
Card. For Cash Advance, nominal service charges will be applied from the withdrawal
date.
v. Balance Transfer Facility
With your HBL Credit Card Balance Transfer Facility, you have the opportunity to pay off
balances you owe to other banks through your HBL Credit Card at lower service charges.

vi. Internet shopping
Enjoy a hassle free shopping experience and shop from a choice of online merchants, all
from the comfort of your home. To activate /de-activate the service please call 111-111-
425

2. HBL Car Loan


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HBL Car Loan helps you get your preferred car through a simple and hassle-free process,
backed by superior service and support. Now you can drive a car you always wanted.

Car Showroom Car Navigator











Choice of either a new local/imported car or a reconditioned imported car.
Repayment options ranging unto 7 years.
Upton 85% of financing for the car of your choice.
Insurance at all times for complete peace of mind and security.
Round the clock support available through
3. HBL Phone Banking;

PHONE BANKING


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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.














You can place your requests and queries, track the status of your repayment/loan account
and avail other value-added services through HBL Phone Banking.






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Eligibility Criteria



Salaried Individuals

Self-Employed
Business persons/Professionals


Citizenship

Pakistani Pakistani

Age

22-60 years 22-65 years

Minimum
monthly income

Rs. 20,000 Rs. 25,000

Documentation
Salaried Individuals
Copy of CNIC
2 recent passport size photographs
Latest original salary slip and personal bank statement for last 3 months
Self-Employed Business persons/Professionals
Copy of CNIC
2 recent passport size photographs
Bank statement for last 6 months and bank letter confirming details of account
Proof of business





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Home Loan
HBL yet not offered home loan in the future the management of the HBL will
Offered Home loan also.
Types of accounts offered by the bank
Term Accounts
HBLs Term Accounts are offered in a variety
of tenure with deposits as low as Rs.10, 000.
HBL Advantage Account

Term Profit
10 year 18%
5 year 15%
3 year 14%
1 Year 12%

Multiple options for tenure and profit payout
Loan facility up to 90% of deposit
Minimum required investment as low as Rs. 25,000
Special Notice Time Deposit
7 days or 30 days (and over) notice
Minimum deposit of Rs. 10,000
Balances less than Rs. 1 million
Balances equal to and greater than Rs. 1 million


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Returns range from 0.75% to 4% depending on notice period and amount
Term Deposit Receipts
3 month term deposit
Minimum balance of Rs. 10 million
Returns range from 0.75% to 2.25%
IPDC
Minimum investment of Rs. 20 million except in the case of 1 month where
minimum investment is Rs. 100 million
Available in 1 month, 3 month, 6 month, 12 month and 3 year terms
Profit paid on maturity
Rates on IPD are conveyed on a daily basis by the Treasury Division
Remittance Munafa plus Deposit (Certificates)
Available in 1 year, 3 year and 5 year certificates
Profit disbursement is monthly, quarterly, bi-annually, annually and on maturity
Profit paid on maturity
Returns range from 7.8% to 11%
Current Account
Non-profit bearing
No transaction limits
Minimum balance of Rs. 10,000. If the average balance falls below this
amount, then service charges will be deducted
No restriction on anyone opening a Current Account (as long as regulatory
Guidelines are met)


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Basic Banking Account (BBA)
No minimum balance
No service charges

Savings Account
Profit paid bi-annually
Minimum average balance of Rs. 10,000
5% profit per annum

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
HBL Supervalu Account
7.25% profit per annum*
Profit credited every 3 months
Deposit ranges from Rs. 100,000 to Rs. 500, 00
Flexibility of withdrawals

Remittance Munafa Plus Saving Account
Remittance Based (no credit allowed except remittance)
Daily Basis Product
Tiered
Monthly profit


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Minimum average balance of Rs. 10,000
Less than Rs. 20,000 earns 0.10% profit
Rs. 1 million and above earns 5% profit



Special Saving Bank Deposit Scheme
Daily Basis Product
Tiered
Monthly profit
Minimum balance of Rs. 20,000
Returns unto 8%
Daily Munafa plus Deposit Account
Daily Basis Product
Tiered
Monthly profit
Minimum balance of Rs. 50,000
Returns unto 8%

FC-SB
Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and GBP (UK
pound)
Tiered product, with rates depending on choice of currency
To earn profit, minimum balance in USD, EUR and GBP is 1,000
Interest is payable on a quarterly basis


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Allied Bank Product and Services

Deposit Accounts
Current Accounts
PLS Saving Accounts
Term Deposits
Short Term Deposits
Special Notice Deposits
Call Deposit Receipts

Money Transfer Services
Bank Drafts (DD)
Mail Transfers (MT)
Allied Express Money Transfers
Letter of Authority to EncashCheques

Collections
Cheques
Bills
Drafts / Pay Orders And Other Instruments




Dealing in Foreign Exchange

Foreign Currency Accounts
Foreign Remittances
Trade Finance
Guarantees
Sale & Purchase of FC Notes / TCs.
Foreign Currency Loans
Correspondent Banking

Government Receipts / Payments

Tex Collection
Pension Payment

Safe custody & sage deposit services


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Safe Custody And Safe Deposits of Securities & Valuables
Safe Deposit Lockers

Utility Services

Collection of Utility Bills


OTHER SERVICES AT ALLIED BANK

Hajj Services
Hajj Service at Allied Bank is available to all pilgrims. The forms and other related services are
provided by the Bank. Hajj applications are available with all branches during Hajj season,
immediately after the Hajj policy is announced by the Government of Pakistan
Demand draft
Demand draft is a popular banking instrument in the trade circles to transfer funds from one
place to another. Allied Bank offers speedy issuance and payment of drafts at the branches.
PAY ORDER
Our customers can walk-in to any Allied Bank branch and make Pay Order to transact payment
to a named payee.
Allied Bankers Cheque
Allied Bankers Cheque (ABC) replaces traditional payment instruments like Demand Drafts and
Pay Orders. This instrument provides added assurance as its unlikely to be returned unpaid due
to lack of funds.

The bank provides its customer various products & services, to cater there need of investments,
and other social or business requirements. These Product & Services offered by the bank are as
follows:
LOAN FOR COMPUTER
Now a days ABL is also standing with the government of Pakistan in spreading the IT education
through financing in the purchase of computer. ABL provides computer to those professionals
who are interested to get computer related education.


31

ABL finances 80% of total cost while,
The clients have to bear 20% of total cost.
Markup is 14%
And the repayment period is 5 years.
TRAVELER CHEQUES
Allied Bank issues Traveler Cheques both in foreign currency and in Pak
Rupees. The traveler Cheques issues in foreign currency are called ABL
Traveler Chequeswhilethose issue in Pak Rupees are known as ABL Rupee Traveler Cheques.
DENOMINATION
ABL Rupee Traveler Cheques are issued in the denominations of Rs 1,000, Rs. 5,000, Rs 10,000
and Rs. 50,000.
SERVICE CHARGES
The bank charges Rs 20 on the issuance of traveler cheque of any denomination.
REQUIREMENT
The Bank requires Identity Card on the issuance of the Traveler Cheque.
VERIFICATION
Client makes one sign on the Traveler cheque when he is purchasing it and the other sign is
made when he will cash the cheque.
LOCKER FACILITY
The list of Lockers is maintained in the register. In this register the name of locker holder is
mentioned along with the locker number. The key is provided to the locker holder called the
Normal or Ordinary key. The Bank keeps himself one key himself. When the locker holder wants
to operate to the locker, then he will operate the locker firstly entering the name in the register
along with the initials. The date and time of the transaction will also be recorded in the register.
Then the leaving time will also be recorded in the register.
Criteria for Acquisition of Locker


32

There are certain criteria for acquiring the locker facility.
OPENING FARM
There are opening farms, which are filled by the client to get the locker facility. In this form the
name is mentioned along with the signatures of the locker holder. In the locker number is also
mentioned on the farm.
SECURITY
Certain security is kept by the while providing the locker facility. This security is in shape of the
cash.
SIZES OF LOCKERS
There are four sizes of lockers, small, medium, large, or extra large, on which certain security is
made and the locker holder pays the following amount of rent annually.
Locker Size Security Rent
Small Rs. 1,500 Rs. 750
Medium Rs. 3,500 Rs. 1500
Large Rs. 5,000 Rs. 2500
The key, which is with the Bank, is called Master key and the key, which is kept by the holder, is
called normal key. A locker cannot be operated with one single key. Both the master and
normal keys are required for operating the lockers. If the key is lost from the locker holder,
then the locker holder will pay the entire recovery fee and the client launches FIR. If person
wants to operate the locker, he will operate it alone.
ALLIED BANK MASTERCARD
Types of MasterCard
Allied Bank issues two types of MasterCard.
Local MasterCard
International MasterCard


33

The normal limit of local MasterCard is Rs. 25,000, but it can be extended uptoRs. 50,000 only
for creditworthy customers. The maximum limit of International MasterCard is Rs. 100,000. The
Bank charges 8 to 10 % commission on the used amount.
Its the anytime shopping card
Having the ABL MasterCard is likely having an account with hundreds of shops, restaurants, and
hotel outlets all over Pakistan and abroad. The client no longer waits for his bonus to start
shopping.
Lost card liability
If ABL MasterCard is lost or stolen, the cardholder will have to bear only the first Rs. 100 from
the amount misused, provided the Credit Card Division of the Bank is notified immediately.
Its Free Credit Card
If the total outstanding amount is settled by the due date, (approximately 15 days from the
statement date), no mark-up is charged. This means that you enjoy a maximum of 45 days of
frees credit from the date of transaction.
Free Personal Accident Insurance
As a holder of prestigious ABL MasterCard, the Bank covers the client with the personal
accident insurance value that Rs. 50,000/- in case of death or permanent disability.
Its an Instant Cash Card
ABL MasterCard enables the cardholder to obtain the cash advance from his MasterCard
account from any designation branch of ABL during banking hours, at a two percent service
charge.
Extra Cards. Supplementary +
As an ABL MasterCard holder, client can receive the extra cards with different names and
signatures for two other eligible persons of his immediate family nominated by the client
himself may be his spouse. The two cards are absolutely free any membership fee.
Its the Invaluable Expense Planner


34

The sales slip client receives any time, when he makes a purchase and his monthly statement
helps him to plan out his monthly expenses. Thus the client will never overshoot his Budget
while holding the ABL MasterCard.
RATE OF CHARGES
Local Card Rate of Charges
Membership fee Rs 500 (flat)
Annual fee Rs 1,000 (flat)
Supplementary card fee Rs 500 per card
Cash advance 2.5 % per transaction
Replacement fee Rs 350
International Card rate of Charges
Membership fee Rs 500 (flat)
Annual fee Rs 1,500 (flat)
Supplementary card Rs 750 per card
Cash advance 2.5 % per transaction
Forex markup 1.25 %
Replacement fee Rs 350
UTILITY SERVICES
The banks also provide its customers the non-banking services, such as Collection of Utility bills,
etc.
Utility bills can be paid through cash or cheques drawn on any branch of the branches at their
convenience under "Cheque Drop-in" system. The Bank mails the bills after payment to the
consumer.



35


SWOT ANALYSIS OF HBL
STRENGTHS:
Goodwill & historical background
Professional and well trained staff
Largest customer base
HBL is Pakistan's largest commercial bank
HBL has a domestic network of 1,425 branches with an international network of 48
branches in 26 countries
20% share of HBL in financial market
Large Balance sheet size
Decentralized authority

WEAKNESSES:
Unfavorable union activities and management conflicts
Checking System is at intra-department level
Weak marketing policies
Nepotism & Favoritism
Infected portfolio still exists as bad debts
Centralized management in particular areas

OPPORTUNITIES:
Opportunities for growth and expansion in cash management.
Faster market growth represents opportunity to grow and diversify
Restoration of investor's confidence and pick up in private sector investment flows.
Large deposit base and funds flow can help to avail related market opportunities

THREATS:
Adverse & unstable government policies
Political instability
Advance technology


36

Competition from other banks


SWOT ANALYSIS OF ABL

STRENGTHS

Allied bank has maximum number of branches in all over Pakistan.
Allied Bank has many products for almost all type of customers.. ATM and Credit cards,
online transfer, DD, TT, Rupee Traveler cheques are the main products available for customers.
Allied bank is providing the facility of online banking.
The online banking feature provides less chances of fraud. Because whenever some
transactions take place, they can be checked any time and their receipts are receipts are
given to the customers. Moreover, to prevent illegal acts, the person who transfers any
amount submits his copy of NIC to the bank.

Allied bank is the only bank that provides the lockers facility to their customers at their all branches.
Allied bank has customer care center for its customers.
Allied bank provides the facility of foreign exchange to its customer. The customers may also open their
accounts in foreign currency.
At Allied bank the customers the person who has more than one account can have the
facility of the same account number only the suffix is changed.
For employees the relaxation is that the employees may get the 36 medical leaves and1-
month vacation in one year with their pay in case of some emergency.

Cameras are installed in all the branches of the bank to ensure security of its customers and employees.

Allied bank offers loans to its customers on very low rates. This thing invites the customers to do a business
with ABL.
The staff of the ABL is very much cooperative. This thing enhances its performance very much by facilitating
its customers and also by helping colleagues and sharing workload.

WEAKNESSES

There are mostly no annual increments to employees salary.
Late promotions
Low product credibility.

OPPORTUNITIES
The Allied Bank is having a great opportunity to emerge as the best bank of the country by
giving best possible services to its customers. The banking sector is improving day by day


37

and consumer banking is making great revolutions in the banking sector. Allied Bank is still
working in the corporate sector and its mi ssing a big market share of consumer
banking. If it enters this market then this bank can become the biggest and the most efficient
bank of Pakistan.

THREATS
Allied Bank has the threats from their competitors in the banking sector, from the
Government policies and from the current economic conditions of the country: The main competitors
in the banking sector are the Bank-Alfalah, Faysal Bank, Muslim Commercial Bank, Prime
Commercial Bank etc
Government policies
Political circumstances.
Trade and industry conditions.


Financial Ratio

Liquidity Ratios

Liquidity ratios measure a firms ability to meet its current obligations. These include:

Current Ratio: Current Ratio = Current Assets / Current Liabilities

This ratio indicates the extent to which current liabilities are covered by those
assets expected to be converted to cash in the near future. Current assets normally include
cash, marketable securities, accounts receivables, and inventories. Current liabilities consist
of accounts payable, short-term notes payable, current maturities of long-term debt, accrued
taxes, and other accrued expenses. Current assets are important to businesses
because they are the assets that are used to fund day-to-day operations and pay
ongoing expenses.


HABIB BANK

Year 2006 2007 2008
Current Assets 575611106 671597594 731954693
Current Liabilities 480455832 566659483 631948038
Current ratio 1.20 1.19 1.16






38

ALLIED BANK

Year 2006 2007 2008
Current Assets 265182551 316972828 335217471
Current Liabilities 249906022 286843944 315476169
Current ratio 1.06 1.10 1.06



Interpretation

HABIB BANK

The current ratio for the year 2006, 2007 & 2008 is 1.20, 1.19 & 1.16 respectively, compared to
standard ratio 2:1 this ratio is lower which shows low short term liquidity efficiency at the same
time holding less than sufficient current assets mean inefficient use of resources

ALLIED BANK

The ratios for the last 3 years are 1.06, 1.10 & 1.06, shows below standard of which means
efficient use of funds but at the risk of low liquidity.

Sales to Working Capital:

Sales to Working Capital = Sales / Working Capital

Sales to working capital give an indication of the turnover in working capital per year. Alow
working capital indicates an unprofitable use of working capital.






HABIB BANK

Year 2006 2007 2008
Sales 43685740 43685740 63305033
Working Capital 95155274 104938111 100006655
Sales to working 0.5times 0.5times 0.6times

ALLIED BANK



39

Year 2006 2007 2008
Sales 21191470 25783871 31046583
Working Capital 15276529 30128884 19741302
Sales to working 1.38 0.85 1.57

.

Interpretation

HABIB BANK

This liquidity ratio for the years 2006, 2007 & 2008 is 0.5, 0.5& 0.6 times respectively,
Compared to standard ratio 2:1 this ratio is lower which shows low short term liquidity
efficiency at the same time holding less than sufficient current assets mean inefficient use of
resources

ALLIED BANK

The ratios for the last 3 years are 1.06, 1.10 & 1.06, shows below standard of 2:1 which means
efficient use of funds but at the risk of low liquidity



Working Capital

Current Assets Current Liabilities

A measure of both a company's efficiency and its short-term financial health. Positive
working capital means that the company is able to pay off its shortterm liabilities.
Negative working capital means that a company currently is unable to meet itsshort-
term liabilities with its current assets (cash, accounts receivable and inventory).Also known as
"net working capital", or the "working capital ratio".


HABIB BANK

Year 2006 2007 2008
Current Assets 575611106 671597594 731954693
Current Liabilities 480455832 566659483 631948038
Working Capital 95155274 104938111 100006655





40

ALLIED BANK

Year 2006 2007 2008
Current Assets 265182551 316972828 335217471
Current Liabilities 249906022 286843944 315476169
Working Capital 15276529 30128884 19741302



Interpretation

HABIB BANK:

It is very clear from the above calculations that the working capital of the bank is gradually
increasing over the years, which shows good short term liquidity efficiency.

ALLIED BANK:

This ratio increased to a great extent in 2007, almost double of the year 2006 but later on
In the year 2008 it went down again.


Leverage Ratios:

By using a combination of assets, debt, equity, and interest payments, leverage ratios are
used to understand a company's ability to meet it long term financial obligations.


Leverage ratios measure the degree of protection of suppliers of long term funds. The level of
leverage depends on a lot of factors such as availability of collateral, strength
of operating cash flow and tax treatments. Thus, investors should be careful aboutcomparing
financial leverage between companies from different industries. For example companies in the
banking industry naturally operates with a high leverage as collateral their assets are easily
collateralized.



These include:

Time Interest Earned:
TIE Ratio = EBIT / Interest Charges
The interest coverage ratio tells us how easily a company is able to pay interest expenses
as s oci at ed t o t he debt t hey cur r ent l y have. The r at i o i s des i gned


41

t o under s t and t he amount of interest due as a function of companys earnings
before interest and taxes (EBIT).This ratio measures the extent to which operating income
can decline before the firm is unable to meet its annual interest cost.



Interpretation

HABIB BANK

Ratio analysis shows that, this company has covered their interest expenses 2 . 4 3 t i me s i n
2 0 0 6 , 1 . 7 9 t i me s i n 2 0 0 7 a n d 1 . 8 t i me s i n 2 0 0 8 . I t me a n s t h e y
h a v e performed pretty much same in 2007 and 2008, but has taken a different
look in 2006.As in 2006 they issued a little high number of long-term loans and
does not have good liquidity position, their EBIT became high thus making TIE a little high as
well

ALLIED BANK

We can see that, this company has covered their interest expenses 1.16 times in
2006, 1.27 times in 2007 and 1.08 times in 2008. It means they havent improved
in the past years.


Debt Ratio:



Debt Ratio = Total Debt / Total Assets

The r at i o of t ot al debt t o t ot al as s et s , gener al l y cal l ed t he debt r at i o,
meas ur es t he percentage of funds provided by the creditors. The proportion of a firm's total
assets that are being financed with borrowed funds. The debt ratio is cal culated by
dividing total long-term and short-term liabilities by total assets. The higher the ratio,
the more leverage the company is using and the more risk it is assuming. Assets and liabilities
are found on a company's balance sheet.










42

HABIB BANK

Year 2006 2007 2008
Total debt 536848102 628754092 682747953
Total Assets 590291468 691991521 757928,89
Debt Ratio 0.91 0.91 0.9


ALLIED BANK

Year 2006 2007 2008
Total debt 263443596 312675308 331946025
Total Assets 275685541 328895152 348990764
Debt Ratio 0.95 0.95 0.95


Interpretation:

HABIB BANK
Calculating the debt ratio, we came to see that this company is highly leveraged one

ALLIED BANK
Calculating the debt ratio, we came to see that this company is highly leveraged one

Current Worth / Net worth Ratio:
Current Worth to Net worth Ratio= Current Worth / Net worth Ratio
We can calculate current worth and net worth by using following formulas:
Current Worth
= Total Current Assets Total Current Liabilities
Net Worth
= Total Assets - Total Liabilities




Interpretation

HABIB BANK
This ratios continuously decreasing in the last three years. In 2006 it was 1.78, in 2007 it was
1.66 and in 2008 it was 1.33.

ALLIED BANK


43

This ratio was as high as 1.2 among three years. However, it declined to 1.15 in the year 2008.
In 2007 the ratio somewhat increased to 1.85.








Total Capitalization Ratio:
Total Capitalization Ratio = Long-term debt / long-term debt + shareholders' equity
The capitalization ratio measures the debt component of a company's capital structure,
or capitalization (i.e., the sum of long-term debtliabilitiesandshareholders' equity) tosupport a
company's operations and growth. Long-term debt is divided by the sum of long-term debt and
shareholders' equity. This ratio is considered to be one of the more meaningful of the "debt"
ratios - it delivers the key insight into a company's use of leverage.

HABIB BANK
Year 2006 2007 2008
Long Term debt 56392270 62094609 50799915
Long term debt + Equity 101569934 117157734 122080817
Capitalization Ratio 0.56 0.53 0.42

ALLIED BANK
Year 2006 2007 2008
Long Term debt 13537574 25831364 16469856
Long term debt + Equity 24110179 39598037 31078379
Capitalization Ratio 0.56 0.65 0.52


HABIB BANK
It is obvious from the above calculations that there is a gradual fall in this ratio over the years.

ALLIED BANK
The ratios for the last 3 years are 0.56, 0.65 and 0.52. Shows below standard of 2:1



44




Net Profit Margin:
Net Profit margin = Net Profit / Sales x 100
Net Profit Margin gives us the net profit that the business is earning per dollar of sales. This
margin indicates the profit after all the costs have been incurred it shows that what% of
turnover is represented by the net profit. An increase in the ratios indicates that a firm is
producing higher net profit of sales than before



HABIB BANK

Year 2006 2007 2008
Net Profit 1762691 3130229 1301301
Sales 21191470 25783871 31046583
Net Profit Margin 8.31% 12.1% 4%

BANK ALLIED

Year 2006 2007 2008
Net Profit 12700315 10084037 15614020
Sales 43685740 50481021 63305033
Net Profit Margin 29.07% 19.97% 24.66%


Interpretation
HABIBBANK
Therefore, the Net Profit Margin was 8.31% in 2006, increase to 12.1% in 2007 and then
decrease to 4% in 2008

BANK ALLIED
Therefore, the Net Profit Margin was 29.07% in 2006, decrease to 19.97% in 2007 and then
again increased to 24.66% in 2008

Return on Assets:
Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100
ROA, A measure of a company's profitability, equal to a fiscal year's earnings divided by its
total assets, expressed as a percentage. This is an important ratio for companies deciding
whether or not to initiate a new project. The basis of this ratio is that if a company is going to


45

start a project they expect to earn a return on it, ROA is the return they would receive. Simply
put, if ROA is above the rate that the company borrows at then the project should be accepted,
if not then it is rejected.


HABIB BANK

Year 2006 2007 2008
Net income 12700315 10084037 15614020
Total Average assets 559592686.5 641141494.5 724959955
ROA 2.27% 1.57% 2.15%

BANK ALLIED

Year 2006 2007 2008
Net income 1762691 3130229 1301301
Total Average assets 137966927.5 302290346.5 338942958
ROA 1.27% 1.01% 0.038%


Interpretation
HABIB BANK
Return on assets decreased in 2007 and 2008 and it was maximum in year 2006. This may have
occurred because Square used more debt financing in 2006 compared to 2007and 2008 which
resulted in more interest cost and brought the Net income down..
BANK ALLIED
Return on assets decreased gradually throughout the years.
Return on Equity (ROE):

Return on Total Equity = Profit after taxation x 10Total Equity
Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total
common equity. It is the most important of the Bottom line ratio. By this, we can find out
how much the shareholders are going to get for their shares. This ratio indicates how profitable
a company is by comparing its net income to its average shareholders' equity. The return on
equity ratio (ROE) measures how much the shareholders earned for their investment in the
company. The higher the ratio percentage, the more efficient management is in utilizing its
equity base and the better return is to investors.



Interpretation
HABIB BANK


46

The Return on Equity was maximum in 2006 but decreased in 2007 and went down more in
2008. This again may have happened due to the issue of more long-term debt in
2007and 2008.
ALLIED BANK
The Return on Equity was maximum in 2007 but decreased to an extent in the following years
2007 and 2008. This again may have happened due to the issue of more long-term debt in 2007
and 2008.













Detail of Operating Assets of Habib Bank Limited

2008
Operating Assets:
Cash and balances with treasury banks 56533134
Balances with other banks 39307321
Operating fixed assets 14751252
110591707

2007
Operating Assets:
Cash and balances with treasury banks 55487664
Balances with other banks 27020704
Operating fixed assets 13780555
97259620

2006
Operating Assets:
Cash and balances with treasury banks 46310478
Balances with other banks 35965048
Operating fixed assets 11954876
94,230,402



47







ALLIED BANK

Detail of Operating Assets of ALLIED BANK LIMITED

2008Operating Assets:
Cash and balances with treasury banks 27859360
Balances with other banks 12731952
Operating fixed assets 10502990
51094302
2007
Operating Assets:
Cash and balances with treasury banks 29436378
Balances with other banks 18380738
Operating fixed assets 11922324
59739440

2006
Operating Assets:
Cash and balances with treasury banks 32687335
Balances with other banks 21581043
Operating fixed assets 13773293
68041671








HABIB BANK

Year 2006 2007 2008
Net Profit 12700315 10084037 15614020
Operating Assets 94230402 97259620 110591707
Return on Operating Assets 13.48% 10.37% 11.19%



48


ALLIED BANK

Year 2006 2007 2008
Net Profit 1762691 3130229 1301301
Operating Assets 51094302 59739440 68041671
Return on Operating Assets 0.034 0.052 0.019










Market Ratio:
Market Value Ratios relate an observable market value, the stock price, to book values
obtained from the firm's financial statements.

Dividend per Share DPS:
Dividend per Share = Total amount of Dividend Number of outstanding shares
Per share capital = 10 per share
Or
No. of shares outstanding = share capital / 10


HABIB BANK

Year 2006 2007 2008
Total amount of Dividend 691350 1381000 2730251
Number of Shares 690000 690000 759000
Dividend per Share 1.0019 2.0014 3.597




ALLIED BANK

Year 2006 2007 2008
Total amount of Dividend 00 00 975000


49

Number of Shares 500000 650000 799500
Dividend per Share 00 00 1.21


Note: There is no dividend paid by the bank in the year 2006 and 2007

Earnings per Share- EPS:
Earnings per Share = Profit after Taxation

Number of Shares
The portion of a company's profit allocated to each outstanding share of common stock.
Earnings per share serve as an indicator of a company's profitability. Earnings per share are
generally considered to be the single most important variable in determining a
share's price. It is also a major component used to calculate the price-to-earnings valuation
ratio.

HABIB BANK

Year 2006 2007 2008
Profit after Taxation 12700315 10084037 15614020
Number of Shares 690000 690000 759000
Earnings Per Share 18.41 14.61 20.57


BANK ALLIED

Year 2006 2007 2008
Profit after Taxation 1762691 3130229 1301301
Number of Shares 500000 650000 799500
Earnings Per Share 3.525 4.815 1.627

Price / Earnings Ratio:
Price / Earnings Ratio = Stock Price Per Share Earning Per Shares
The Price-Earnings Ratio is cal culated by dividing the current market price per
share of the stock by earnings per share (EPS). (Earnings per share are calculated by dividing
net income by the number of shares outstanding.)The P/ E Rat i o i ndi cat es how much
i nves t or s ar e wi l l i ng t o pay per dol l ar of cur r ent earnings. As such, high P/E
Ratios are associated with growth stocks. (Investors who are willing to pay a high price for a
dollar of current earnings obviously expect high earnings in the future.) In this manner,


50

the P/E Ratio also indicates how expensive a particular stock is. This ratio is not
meaningful, however, if the firm has very li ttle or negative earnings. The Price-
Earnings Ratio is calculated by dividing the current market price per share. Of the stock by
earnings per share (EPS). (Earnings per share are cal culated by dividing net income by
the number of shares outstanding.) The P/E Ratio indicates how much investors are willing to
pay per dollar of current earnings. As such, high P/E Ratios are associated with growth
stocks. (Investors who are will ing to pay a high price for a dollar of current
earnings obviousl y expect high earnings in the future.) In this manner, t he
P/ E Rat i o al s o i ndi cat es how expens i ve a par t i cul ar s t ock i s . Thi s r at i o
i s not meaningful, however, if the firm has very little or negative earnings.



HABIB BANK

Year 2006 2007 2008
Stock price per share 10 10 10
EPS 18.41 14.61 20.57
Price / Earning Ratio 0.54 0.68 0.49



ALLIED BANK

Year 2006 2007 2008
Stock price per share 10 10 10
EPS 3.525 4.815 1.627
Price / Earning Ratio 2.83 2.07 6.14




Interpretation
HABIB BANK
The P/E ratio was 0.54 times in 2006 and increased further to as high as 0.68 times in the
following year. However, in 2008 it declined to 0.49 times which is an alarming
sign al for the potential investors.

ALLIED BANK
The P/E ratio was 2.83 times in 2006 and decreased a little bit i n 2007. However, in
2008 It increased as much higher than before to 6.14 times.



51


Dividend Payout Ratio:
Dividend Payout Ratio = Dividend per Share/ Earning per Share
The percentage of earnings paid to shareholders in dividends. The payout ratio
providesan idea of how well earnings support the dividend payments. More maturecompanies
tend to have a higher payout ratio. This ratio identifies the percentage
of earnings (net income) per common share allocated to paying cash dividends toshareholders.
The dividend payout ratio is an indicator of how well earnings support the dividend payment.

HABIB BANK

Year 2006 2007 2008
DPS 1.0019 2.0014 3.597
EPS 18.41 14.61 20.57
Dividend Payout Ratio 0.0544 0.137 0.175


ALLIED BANK

Year 2006 2007 2008
DPS 00 00 1.21
EPS 3.525 4.815 1.627
Dividend Payout Ratio 00 00 0.74



Statement of cash flow:
Cash flow ratios indicate liquidity, borrowing capacity or profitability. This section of the
financial ratio looks at cash flow indicators, which focus on the cash
being generated in terms of how much is being generated and the safety net that it provides
to the company. These ratios can gi ve users another look at the financial health and
performance of a company.


Allied Bank

Balance Sheet 2008 2007


Assets Rs (millions) Rs (millions)
Cash and balances with
treasury banks
6 23,653,754

29,739,857


52

Balances with other banks 7 2,096,779

668,449
Lendings to financial
institutions
15,793,183

18,419,241
Investments 82,631,118

83,958,463

Advances 212,972,008

168,407,280
Operating fixed 11,134,436 7,548,628

Deferred tax assets 1,029,223 662,431

Other Assets 17,369,691

10,705,374
366,680,192

320,109,723















Liabilities


Bills payable



2,952,490


3,494,384
Borrowings 27778151 22933656
Deposits and other accounts 297475321 263972382
Sub-ordinated loans 2498000 2499000
Liabilities against assets
subject to finance lease
- -
Deferred tax liabilities - -
Other Liabilities 13620616 7332059
344324578 300231481


53

Net Assets 22355614 19878242

Share Capital 6463644 5386370
Reserves 5804776 6050713
Unappropriated Profit 8536697 6971308
20805117 18408391
1550497 1469851
Surplus on revaluation of
assets-net of tax
22355614 19878242













Habib Bank


54










Main problems in HBL

There is noticeable communication gap between upper level management
and operational staff.
There is also over staffing in HBL moreover inefficient individuals are in credit card
department.
There is huge difference in approaches of experienced staff & young staff


55

Imported upper level management
Experienced staff is frustrated mainly because of two reasons
Salaries have not been revised from last 10 years
Experienced Habibians are neither satisfied by the privatization of bank nor they were
taken into confidence at that times

Main Problems of ABL

Most Branches has good staff combination on the basis of experience, but their training capabilities are
not up to the requirements of the fast changing banking environment.
The customers Long-term contacts are not maintained with customers
The discretionary powers of manger are very low to offer more incentives and value added services to
its customers.
There is a lack of commitment and professionalism on part of the employees. The staff is always in a
hurry to leave the bank as soon as possible. They were also observed to starting their operations
comparatively late.
The organizational culture is not cooperative
Nepotism was observed on part of the manger as well as the top management towards some staff
members.


Conclusion / Findings


We compare and anal ysis the financial statements of Habib Bank Limited and Bank
ALLIED Limited.

Liquidity position of both companies is not up to standard, both are below
industry average, but the liquidity position of Habib Bank is better from Bank AL Falah
Limited. Working capi tal of Habib Bank i s better than Bank ALLIED, but both
companies must improve their liquidity position.

Leverage ratios indicate the high risk associ ated with both the
companies.Generall y leverage ratios, measures the percentage of funds
provided by thecreditors. The proportion of a firms total assets is being
financed with high percentage of borrowed funds.

Profitability ratios of Habib Bank Limited are better than Bank ALLIED
Limited. Net profit of ALLIED Li mited is low due to heavy financial charges.

Habib Bank has a good market perception due to continuous declaration
of dividends but on the other hand ALLIED BANK limited has not announced individend
in the year 2006 and 2007.


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Book val ue per s har e of Habi b Bank Li mi t ed i s much hi gher t han t he
ALL I ED Bank. It is the Indication of the net worth of the corporation. Somewhat similar
to the earnings per share, but it relates thestockholder's equityto thenumber of shares
outstanding, giving the shares a raw value. So the net worth of Habib Bank is better than
ALLIED Bank.

Earnings per Share and Operating cash flow of Habib Bank Limited is
also better than Bank ALLIED Limited



Habib Bank limited was rated among first 500 banks of the world but now it is in among 1000
banks in the world, H.B.L. is not progressing due to political influence, in efficient management
& corruption. If these draw backs have removed then bank will not only join its previous
position rather we hope it will be rated among world top ten bank.








Recommendations
The management should provide better arrangement for the employees.
The daily newspapers and journals should be provided to the employees and customers
visiting there.
A separate ladies counter should be there.
The Bank management should be very careful while granting the loans.
Personal interests should not be given importance and customers Personal credit
worthiness must be carefully scrutinized public relation desk should be established in


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each and every branch for guidance as well as redresses of grievance of customers at
the spot.
Online Banking should be introduced in all the branches.
Aggressive publicity campaign must be introduced through press and Electronic media
for new products and scheme by initiating vigorous marketing policy.
New talent / professionals should be hired to cope with the competitive demand in the
industry.
The financial statement should be made more transparent and reliable.
Consumer financing should be initiated to capture the market share.
Employees induction promotion and transfer should always be made on merit.
To motivate the employees their remuneration / salaries should be made at par with
top tier Banks.