INTERNSHIP REPORT ON HABIB BANK LIMITED PAKISTAN

SUBMITTED BY: MUHAMMAD IRFAN ALI LOGID: mc070402338 Pho !" 03#3$%747208 M&'( &))*!++: +,!)'*-& m./,&hoo0com 1 mc070402338/230!)3045 A))*!++: 6&*) " 2 Moh&(& 7h&h K3*&' MBA 8FINAN7E9 2007$0: SUPER;ISED BY: MAHER AMEER MUHAMMAD

DATE OF FINAL REPORT #0$04$200: <o #0$0%$200: NAME OF THE UNI;ERSITY ;IRTUAL UNI;ERSITY OF PAKISTAN

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DEDI7ATION

A((&h A(m'=h<, ( whose claim (to obedience) cannot be satisfied by those who
attempt <o )o +o>9 & His Beloved People.

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A7KNO6LEDGEMENT

Thanks to ALLAH Almighty for giving me such a beautiful opportunity and enabling me to complete my project. Thanks to my loving parents and guardian who help me a lot at every phase of my life encouraged me in the days of depression and sacrificed for my better future. ! am very thankful to "r. "aher Ameer "uhammad my supervisor who has helped me a lot in finding an appropriate project and for his reviews encouragement and support. ! am thankful to all of my teachers and my class fellows and friends whom #heerfulness and guidance is an asset for me .! am especially thankful to the bank staff and particularly.

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E?!c3<'2! S3mm&*,
H%L established operations in &akistan in 1'() and moved its head office to *arachi +ur first international branch was established in #olombo ,ri Lanka in 1'-1 and Habib %ank &la.a was built in 1')2 to commemorate the bank/s 2-th Anniversary. H%L has the largest #orporate %anking portfolio in the country with an active !nvestment %anking arm. !t encompasses product offerings and services in 0etail %anking and in recent years #onsumer %anking as well. ,atisfying customers are the only way to stay competitive in today1s "arket &lace. The balancing act between what customers want and what the H%L can provide must be optimi.ed in order to ma2imi.e H%L/s long3term profits. H%L is e2panding its presence in principal international markets including the 4* 4A5 ,outh and #entral Asia Africa and the 6ar 5ast. 7ith a domestic market share of over (89 H%L was nationali.ed in 1')( and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances :--9; and loans to small industries traders and farmers. !nternational operations were e2panded to include the 4,A ,ingapore +man %elgium ,eychelles and "aldives and the <etherlands. H%L is currently rated AA :Long Term; and A31= :,hort term;. H%L is the first &akistani bank to raise Tier !! #apital from e2ternal sources.

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Introduction
Habib %ank Ltd is a %anking H%L which is engaged in #ommercial @ 0etail %anking and related services domestically and overseas. H%L 5njoy 289 of the market ,hare in &akistan. Today H%L is truly the bank of the people &roviding its customers convenience and ,atisfaction all +ver the world. Habib %ank &la.a the tallest building in &akistan is the proud symbol of H%L leadership !n &akistan/s corporate ground. H%L is currently uses rate AA and A1=.

ESTABLISHMENT:
Habib %ank Limited was established by "r.!smail Habib :Late; on August 2- 1'(2 at %ombay. !t was the first "uslim %ank of the sub3continent. !t was 5stablished with a &aid up capital of 0s. 2.-millon

BRAN7HES:
<umbers of branch of H% L 1($).in the form of 1(8? retail %anking branch 1? commercial banking division 18 #orporate center 1 !slamic banking.

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Board of Directors:

,ultan Ali Allana

7h&'*m&

"oe. Bamal

D'*!c<o*

Ahmad Bawad

D'*!c<o*

0.Cakir "ehmood

P*!+')! < 1 7EO

Dasin "alik

D'*!c<o*

,ajid Cahid

D'*!c<o*

"ushtaE "alik

D'*!c<o*

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R0 I&5'* M&hmoo) &resident @ #5+ Froup 52ecutive #orporate %anking A,&A Ahm!) Froup 52ecutive #hief 6inancial +fficer E&m'( IJ@&( Froup 52ecutive E&m'( A0 Kh& Froup 52ecutive Flobal +perations F&'A& M'<h& Froup 52ecutive Flobal Treasurer M'*A& S&(!!m B&'= Froup 52ecutive #ommercial %anking K&+h'- Sh&h Froup 52ecutive !nvestment %anking A(, M3+<& +'* Head of "arketing @ %rand "anagement

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Overview of the Organization H'+<o*,

The branches of Habib %ank in &akistan

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H%L &la.a in *arachi "ohammed Ali Binnah &akistan1s founding father reali.ed the importance of financial intermediation while he was campaigning for the creation of a separate homeland for the "uslims of !ndia. He persuaded the Habib family to establish a commercial bank that could serve the !ndian "uslim community. His initiative resulted in the creation of Habib %ank in 1'(1 with H+ in %ombay :now "umbai; and fi2ed capital of 2- 888 rupees. The bank played an important role in mobili.ing funds from the "uslim community to finance the All3!ndia "uslim League1s campaign for the establishment of &akistan. Habib %ank also played an important role in channeling relief funds to the people hurt in the communal riots and violence that preceded the departure of the %ritish from !ndia.

After &akistan was born in 1'() Habib %ank at the urging of Fovernor3Feneral Binnah moved its headEuarters to *arachi &akistan1s first capital. This gave *arachi its first commercial bank of the newly formed !slamic 0epublic of &akistan. The Habib family owned and managed the bank until the &akistan government nationali.ed it on 81 Banuary 1')(.

1'-1 H%L opened the first of $ branches in ,ri Lanka. 1'-2 H%L established Habib %ank :+verseas;. 1'-> H%L opened first of - branches in *enya. 1'-) or 1'-? H%L opened a branch in Aden. 1'>1 H%L opened the first of what would become > branches in the 4*.

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1'>( H%L opened the first of ( branches in "auritius and a branch in %eirut.

1'>> H%L opened the first of ? branches in the 4A5. 1'>' H%L opened first of $ branches and an +%4 in %ahrain. However H%/s branch in Aden is nationali.ed. 1')1 H%L opened an +%4 in ,ingapore and a branch in <ew Dork. 1')2 H%L opened the first of 11 branches in +man. H%L constructed Habib %ank &la.a in *arachi to commemorate the bank/s 2-th Anniversary. 1')( The government of &akistan nationali.ed H%L and H%L merged with Habib %ank :+verseas;. 1')- H%L opened a branch in %elgium. H%L also merged with ,tandard %ank a &akistani bank. 1')> H%L opened a branch in the ,eychelles the first of two branches in %angladesh and a branch in the "aldives. 1')' H%L opened a branch in the <etherlands. 1'?8 H%L opened a branch in &aris and another in Hong *ong. 1'?1 H%L established <igeria Habib %ank with (89 ownership. H%L also opened a representative office in Teheran. 1'?2 H%L opened a branch in *hartoum. 1'?$ H%L opened branch in the *arachi 5&C and a branch in !stanbul. 1'?( H%L established Habib American %ank in <ew Dork with a branch each in "anhattan and Hueens and a 4, !nternational %anking 6acility. H%L also opened a branch in #alifornia. 1'?) H%L opened in Australia. 1''1 The Habib Froup established a separate private bank the %ank AL Habib after private banking was re3established in &akistan. H%L opened

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a branch in the 6iji !slands and took over the &aksistani branches of failed bank %##!.

1''2 !n <epal H%L acEuired 289 of Himalayan %ank. 1''- H%L established a representative office in #airo. 1''8s H%L established Habib 6inance :Australia; and Habib 6inance !nternational Limited Hong *ong. 2888 H%L established Habib #anadian %ank. 2882 +n Bune 1$ 2882 &akistan1s &rivati.ation #ommission announced that the Fovernment of &akistan had granted the Aga *han 6und for 5conomic Ievelopment :A*65I; a subsidiary of the Aga *han Ievelopment <etwork rights to -19 of the shareholding in H%L against an investment of &*0 22.(8' billion :4,I $?' million;. H%L1s 4* operation came close to being shut down due to regulatory issues with the 6inancial ,ervices Authority. The issue was resolved by converting the operations to a subsidiary. Then Habib %ank Limited and Allied %ank of &akistan merged their operations :Habib contributed its > branches and Allied its (; into a new bank called Habib3Allied !nternational %ank in which Habib %ank has a '8.- percent shareholding while Allied %ank has '.- percent. ,imultaneously with the transfer of business to the new bank both allied and Habib %ank close down all independent operations in the 4*. 288$ H%L received permission to open a branch in Afghanistan. 288( +n 6ebruary 2> the Fovernment of &akistan handed over management control of Habib %ank to A*65I. The %oard of Iirectors was reconstituted to have four A*65I nominees including the #hairman and the &residentG#5+ and three Fovernment of &akistan nominees 288> H%L sold the operations that it had established in 6iji in 1''1 to %ank of ,outh &acific.

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Vision
,imply the vision of Habib %ank is mass banking. At the time of formation it changed its motto from class banking to mass banking. 52pedite the economic growth of the country through spreading the banking services to the doorsteps of mass people so that they get institutional financial help and participate in the economic activities of the country.

Mission
To be the trendsetter for innovative banking with e2cellence and perfection. To be the best performing bank in the country and the region. To e2ceed customer e2pectations through innovative financial products @ services and establish a strong presence to recogni.e shareholders1 e2pectations and optimi.e there rewards through dedicated workforce. *eeping ahead of other competitors in productivity and profitability. To attain budgetary targets fi2ed in each area of business.

Objectives
Like other business organi.ation the core desire of Habib %ank is to ma2imi.e the profit through saving @ loaning money to the life of the common people. The +bjectives of the Habib %ank is given belowA I0 B*o&) Go&(:

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As a nationali.ed commercial organi.ation Habib %ank belongs to the people. !t implies that it stands for meeting the banking needs of the mass people of the society.

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O4!*&<' = Go&(: !n compliance with the very nature of the organi.ation the objective in mind the bank aims at e2celling Euality and diversified services. To fulfill its mission Habib %ank has its main objectives as followingsA To provide banking services to people. To earn profit. Act as a media of e2change. To contribute to gross domestic product :FI&;. "aintain a satisfactory deposit mi2. To promote and boost up business sector inside the country. To help to grow entrepreneurship. !ncrease loan portfolio diversification and geographical coverage. To mitigate unemployment problem. &rovide finance speciali.ed services to the e2port. To help to boost economic development.

To help in development and industriali.ation of the country

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Habib %ank is a service organi.ation. !t will live and prosper on the Euality of service it provides. Hence Euality of service must be maintained at all levels.

%anks image with people should be identified on the Euality and diversity of services that the people aspire to receive. As a dynamic bank it will remain in search of new field of activity in line with people economic need. ,uggestions by customers and other people shall receive proper attention so as to help identify new activity or improve upon present activities.

The bank shall maintain healthy competition with other banks aiming at e2celling services in meeting economic needs of the people.

Nature of the organization Acc!4<' = D!4o+'<+

The primary function of H%L is to accept and receive surplus money from the people which they willingly deposit with the %ank. Like all other %anks H%L also take incitation to attract as much depositor/s as it can. They offer different deposit schemes to its customers which includes the following types. These schemes as follow. 73**! < D!4o+'<+ This type of account is often maintained by the business

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#urrent deposits are those deposits on which %ank offers no interest but it allows the account holders to withdraw their money at any time they want without giving any prior notice to the community which reEuires large sums of money very often for their business transaction. P*o-'< & ) (o++ +h&*' = &cco3 < 8S&2' =9 ,aving deposits or &L, is those accounts on which %ank offers a lower rate of interest. After the !slami.ation of the %anking system in the country it has been given the name of &L, saving account. The %ank undertakes to repay deposits on demand up to a certain amount. F'?!) )!4o+'<+ 6i2ed deposits are those which can be withdrawn only after the maturity period. !n this type of deposits the %ank allows high rates of interest depending on the time period of deposits. The shorter the period of deposits the less will be the interest and vice versa.

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The second most important function of H%L is to provide financing facility to its customers. These loans and advances are usually made against document of title to goods marketable securities and personal securities. H%L charges different interest rates on these loans and advances depending on the terms and conditions settled with the customers. 6ollowing types of loans and advances are made available to the customers. D!m& ) F' & c!+

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Iemand finances are those finances which are given to the borrowers for specified period and can be called back without any prior notice. !t is a single transaction finance. !t can be long term medium term and short term. "ark up is also charge. Here the amount can be withdrawn once at the time of disbursement. R3 ' = F' & c!

H%L provides these finances against the security of current assets like shares bond cash crops like cotton and other cashable commodities. The borrower/s account is opened with the %ank with the amount of the total loan provided or allowed to the borrower. The borrower is allowed to withdraw any amount from his account within the specified limit and interest is charged only on the amount actually withdrawn. O2!* D*&-< This type of facility is usually given to very loyal clients. This allows them to withdraw over and above the amount held by them in their account and interest is charged only on the amount which is withdrawn in e2cess of the amount actually held in their account. D'+co3 <' = @'((+ o- !?ch& =! Iiscounting bills of e2change can also be considered as a form of loan because it allows the holder to get the bill encased before the maturity period. A bill of e2change is usually issued by the importer of goods to the e2porters which allows them to be paid in their own currency after three months time. !f the e2porter needs the money before the maturity of the bill of e2change he can get his money from the %ank by discounting the bill of e2change. The %ank utili.es their surplus funds by discounting the bills of e2change at their market worth i.e. %ank pay to the holders of the bill on amount eEual

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to their face value after deducting interest at the current rate for the maturity period of the bill. +ur stated objective of being a premier emerging market bank.

Business volume
Habib %ank Limited :H%L; &akistan/s biggest !&+ of 0s 12 bn in terms of value will be formally listed today at the *arachi ,tock 52change :*,5;. This listing would further add 0s 1>2 bn to the banking sector market capitali.ation of nearly 0s $ )88 bn if we simply take the offer price of 0s 2$-Gshare as a pro2y. &akistan/s banking sector has already got the biggest share of 2'9 in the market capitali.ation of *,5 and with this listing it will increase up to $$9. 7e have signaled our positive outlook for the bank in our detailed J&akistan/s banking jewel/ !&+ report on H%L mainly due to 1; our forecasted #D8) 0+5 of 2)9 which is also in line with high performing peer banks vi.. "#% %ank @ 4nited %ank :4%L; 2; satiating 189 yield on earning assets $; presence of more than ?89 low cost deposits and mere (.29 weighted average cost on remunerative deposits (; greater market share of fee3based income of 1>9 vis3K3vis peer banks -; management thrust on retail banking >; strong brand eEuity. +n the flipside recent draft circular by ,tate %ank of &akistan :,%&; regarding withdrawal of forced sale 2$

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value :6,L; facility on illiEuid securities in taking provision coverage against non3 performing loans :<&Ls; is a blow to H%L. H%L has relatively low provision coverage against historical <&Ls and we e2pect the bank to make more provisioning to the tune of 0s -.2 bn that could impair our #D8) 5&, forecast of 0s 2>.?-Gshare.

Product

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20 HBL 7&* Lo&

H%L #ar Loan helps you get your preferred car through a simple and hassle3free process backed by superior service and support. <ow you can drive a car you always wanted.

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2'

7&* Sho.*oom

7&* N&2'=&<o*

#hoice of either a new localGimported car or a reconditioned imported car. 0epayment options ranging unto ) years. 4pton ?-9 of financing for the car of your choice. !nsurance at all times for complete peace of mind and security. 0ound the clock support available through

30

HBL Pho ! B& 5' =M

PHONE BANKING

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$8

Dour bank is just a phone call away. Dou can now call H%L &hone %anking and save a trip to the branch. Dour Euery will be resolved in a single telephone call from anywhere and at anytime.

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$1

Dou can place your reEuests and Eueries track the status of your repaymentGloan account and avail other value3added services through H%L &hone %anking.

E('='@'('<, 7*'<!*'&
S!(-$Em4(o,!) B3+' !++ 4!*+o +KP*o-!++'o &(+

S&(&*'!) I )'2')3&(+

#iti.enship

&akistani

&akistani

Age

223>8 years

223>- years

"inimum monthly income

0s. 28 888

0s. 2- 888

Doc3m! <&<'o S&(&*'!) I )'2')3&(+

#opy of #<!# 2 recent passport si.e photographs Latest original salary slip and personal bank statement for last $ months

S!(-$Em4(o,!) B3+' !++ 4!*+o +KP*o-!++'o &(+

#opy of #<!#

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$2

2 recent passport si.e photographs %ank statement for last > months and bank letter confirming details of account &roof of business

Hom! Lo&
H%L yet not offered home loan in the future the management of the H%L will offered Home loan also.

T,4!+ o- &cco3 <+ o--!*!) @, <h! @& 5

T!*m Acco3 <+

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H%L/s Term Accounts are offered in a variety of tenure with deposits as low as 0s.18 888. HBL A)2& <&=! Acco3 < T!*m #0 ,!&* B ,!&* 3 ,!&* # Y!&* P*o-'< #8L #BL #4L #2L

"ultiple options for tenure and profit payout Loan facility up to '89 of deposit "inimum reEuired investment as low as 0s. 2- 888

S4!c'&( No<'c! T'm! D!4o+'< ) days or $8 days :and over; notice "inimum deposit of 0s. 18 888 %alances less than 0s. 1 million %alances eEual to and greater than 0s. 1 million 0eturns range from 8.)-9 to (9 depending on notice period and amount

T!*m D!4o+'< R!c!'4<+ IPD7 $ month term deposit "inimum balance of 0s. 18 million 0eturns range from 8.)-9 to 2.2-9

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"inimum investment of 0s. 28 million e2cept in the case of 1 month where minimum investment is 0s. 188 million Available in 1 month $ month > month 12 month and $ year terms &rofit paid on maturity 0ates on !&I are conveyed on a daily basis by the Treasury Iivision

R!m'<<& c! M3 &-& 4(3+ D!4o+'< 87!*<'-'c&<!+9 Available in 1 year $ year and - year certificates &rofit disbursement is monthly Euarterly bi3annually annually and on maturity &rofit paid on maturity 0eturns range from ).?9 to 119 73**! < Acco3 < <on3profit bearing <o transaction limits "inimum balance of 0s. 18 888. !f the average balance falls below this amount then service charges will be deducted <o restriction on anyone opening a #urrent Account :as long as regulatory guidelines are met; B&+'c B& 5' = Acco3 < 8BBA9 <o minimum balance <o service charges

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$-

S&2' =+ Acco3 <

&rofit paid bi3annually "inimum average balance of 0s. 18 888 -9 profit per annum

HBL ;&(3! Acco3 < )9 profit per annumN &rofit credited every $ months Ieposit ranges from 0s. 18 888 to 0s. 188 888 6le2ibility of withdrawals

HBL S34!*2&(3 Acco3 < ).2-9 profit per annumN &rofit credited every $ months Ieposit ranges from 0s. 188 888 to 0s. -88 88 6le2ibility of withdrawals

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$>

R!m'<<& c! M3 &-& P(3+ S&2' = Acco3 < 0emittance %ased :no credit allowed e2cept remittance; Iaily %asis &roduct Tiered "onthly profit "inimum average balance of 0s. 18 888 Less than 0s. 28 888 earns 8.189 profit 0s. 1 million and above earns -9 profit

S4!c'&( S&2' = B& 5 D!4o+'< Sch!m! Iaily %asis &roduct Tiered "onthly profit "inimum balance of 0s. 28 888 0eturns unto ?9 D&'(, M3 &-& 4(3+ D!4o+'< Acco3 < Iaily %asis &roduct Tiered "onthly profit "inimum balance of 0s. -8 888 0eturns unto ?9

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F7$SB ,avings Account offered in $ currencies 4,I :4, dollar; 540 :5uros; and F%& :4* pound; Tiered product with rates depending on choice of currency To earn profit minimum balance in 4,I 540 and F%& is 1 888

!nterest is payable on a Euarterly basis

HYFFD 8H'=h Y'!() Fo*!'= 73**! c, F'?!) D!4o+'<9

Available in 1 month 2 month $ month > month and 12 "onth in 4,I 540 and F%& Tiered product with rates depending on choice of currency and term &rofit paid on maturity only. <o interim interest is payable.

T&@!!* F 7h'()*! E)3c&<'o :

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$?

An insurance plan that enables parents to cover education and marriage costs.

DEBIT 7ARD

H%L Lisa Iebit #ard allows you to pay for your purchases directly from your bank account. Dou don/t have to carry cash and your monthly statement provides you with a complete record of all your transactions so you can manage your e2penses with ease. No I <!*!+< E&+! 1 S!c3*'<, No L'&@'('<,

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$'

I <!* &<'o &( R!co= '<'o 1 Acc!4<&@'('<, S4! )' = L'm'<+ F*!! Acco3 < S<&<!m! < 24 ho3* 73+<om!* S!*2'c! G(o@&( 73+<om!* A++'+<& c! S!*2'c!

H%L has a long history of being a partner of growth for business and industry. 7e provide tailored banking solutions to business customers of all si.es in a wide range of industries. 7e cater to the needs of a broad spectrum of clients. To do this the business banking group is segregated by the si.e of the customer. 6or customers with an annual turnover between &*0 -8 million to &*0 $88 million our #ommercial %anking group provides a wide range of products that meet specific customer needs.

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The #orporate %anking Froup focuses on personali.ed services to large corporate borrowers who need tailored facilities. The #orporate %ank manages a diverse portfolio being an active player in a multitude of sectors including te2tiles sugar leather pharmaceuticals fertili.er petrochemicals power aviation automotive telecom oil and gas and 6"#Fs. The !nvestment %anking Froup is a market leader. !t provides innovative capital strategy solutions to major local and multinational entities. H%L offers a wide range of products and services for its business customers. They are as followsA

!om"etitors

Loc&( P*'2&<! B& 5+ ' P&5'+<&

Allied %ank of &akistan Limited Arif Habib 0upali %ank Limited Askari #ommercial %ank Limited %ank Al Habib %ank Al 6alah Limited 6aysal %ank Limited "#% %ank 4nited %ank Limited

Fo*!'= B& 5+ ' P&5'+<&

#itibank <A

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A%< A"0+ %ank <L H,%# American 52press %ank Limited 5mirates %ank Ioha %ank %ank of Tokyo "itsubishi Limited

However Habib %ank feels that its major competitors are as followsA 4nited %ank Limited :4%L; "#% %ank #itibank Askari %ank

As far as 4%L is concerned Habib %ank feels that it is a competitor because 4%L itself is a sister H%L of Habib %ank as the Abu Ihabi Froup has stake in 4%L and so there is always a comparison between them. 6urthermore Askari %ank is a competitor because of the fact that the product and services that it offers is fairly similar to that of Habib %ank and its markup rates are similar as well. "#% after being privati.ed has also introduced a wide variety of services and with its large number of account holders it is also a big competitor. #itibank is a foreign bank that has been established in &akistan for a long period of time and has introduced a number of first class services and as Habib %ank is also competing in the services industry it needs to benchmark its product and services to a bank with a stature to that of #itibank

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Their Goals and Strategies

U '<!) B& 5 L'm'<!)

4%L was established in 1'-' to provide banking facilities to the nation after its nationali.ation in 1')1 the bank became an inefficient enterprise however after its privati.ation in 2888M the whole face of 4%L has been changed. Today 4%L stands on a solid network of more than 1888 branches nationwide and 1overseas branches and with an e2perience of (> years its main goal is to become the leading bank of &akistan. To achieve its goal 4%L has introduced innovative products in the banking sector to facilitate the general public. !t was one of the very first banks to introduce internet and ,", banking to its customers. !t has divided its banking into three divisions each having customi.ed products to satisfy the needs of that particular divisionA #onsumerA for individual customers #ommercialA for small and medium enterprises #orporateA for large national and multinational companies

These strategies have helped 4%L to raise its image in the banking sector. !ts long term credit rating is JAA=1/.

M7B B& 5
!n 1')( "#% was nationali.ed along with all other private sector banks. This led to deterioration in the Euality of the %ank/s loan portfolio and service Euality. 5ventually "#% was privati.ed in 1''1. The vision of "#% is J#hallenging and #hanging the 7ay you %ank./

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The main strategies of the bank have concentrated on growth through improving service Euality investment in technology and people utili.ing its e2tensive branch network developing a large and stable deposit base and managing its non3performing loans via improved risk management processes. !n 288> "#% %ank was awarded the 5uro money Award for the Jbest bank in &akistan/ which shows its commitment of changing the way you bank.

A+5&*' B& 5
Askari #ommercial %ank was established in 1''2 with the vision of maintaining e2cellent standards of banking Euality and service so as to serve its customers better. 7ith time Askari %ank has also changed its identity changing its name to a shorter JAskari %ank/ a new logo and a new slogan JAsk 4s/. Askari %ank has a wide variety of product and services that cater to need of all type of customers. !t also developed a wide variety of products for the J*saans/ or farmers of &akistan a segment of &akistani/s neglected by the baking sector of &akistan. Askari

bank was also the first bank in &akistan to introduce AT" machines on a third party basis. Askari %anks long term rating of JAA=/ by &akistan #redit 0ating Agency Limited :&A#0A; also shows its commitment of developing e2cellent standard of products and services for its customers.

7'<' B& 5
#iti %ank was established in &akistan in 1''8 and since then has been using its international roots and knowledge to make a name in the &akistani banking sector. !ts main vision is to provide right financial solutions 3 every time all the time and to fulfill their vision #iti %ank has used its ability to identify market needs and develop products

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which are uniEue in concept and fulfill customer reEuirements. 5very customer is served by a versatile team of relationship managers who ensure in3depth knowledge of trends and opportunities while synchroni.ing their financial activities. ,ome of the innovative products introduced by #iti %ank or the very first time in the &akistani %anking sector are as followsA #itiFold &riority %anking &hoto #redit #ard 6irst to launch &ersonal Loans in &akistan 6irst foreign bank to launch "aster#ard in &akistan #omplaint Tracking ,ystem :#T,; launched

Organizational structure
A well3developed and properly coordinate structure is an important reEuirement for the success of any organi.ation. !t provides the basic framework within which functions and procedures are performed. Any organi.ation needs a structure which provides a framework for successful operations. The operation of an organi.ation 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 organi.ation are achieved successfully.

#$%&!$&%' O( )B
At present the %ank operates through one central and 2$ 0egional +ffices and 1($' branches all over &akistan. The president and 52ecutives #ommittee look after the affairs of the %ank. 5ach 0egional Head Huarter is headed by a #hief 52ecutive and (-

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assisted by Feneral "anager +perations and Feneral "anager ,upport ,ervices. The 0egional Head Huarter controls the branches in their area. +verseas operations consist of >- main branches two affiliates two representative offices and two subsidiaries. &resident from Head +ffice at *arachi controls the officers of the %ank with the help of the senior management. 6unctional responsibilities of the %anks are broken into seven groups known as 1; !nternational +perations Froup2; #orporate %anking and Treasury !nvestment Froup$; 0etail %anking and +peration Froup

6inance Audit and Administration Froup-; Assets 0emedial "anagement Froup>; #redit &olicy Froup);#orporate %ank 6inancial !nstitutions and &roject 6inance Froup. !n addition to the overall controlling authority president also manages the !nternational +perations Froup individually. 7hile the ,enior 52ecutive Lice &residents supervise rest of the functional groups. 5ach ,enior 52ecutive Lice &resident is individually responsible for the group which is assigned to him. At the level of provinces there are 0egional Head Huarters headed by 0egional #hief 52ecutives :0#5;. 5ach 0#5 is assisted by F" operations and F" ,upport ,ervices. %ranches are also controlled by the 0#5s. #ircle +ffices of the past times have been removed to reduce "anagerial Layers which were working under the control of Conal +ffices. This happened as a result of policy of beginning new changes in the organi.ational structure.

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Organizational )ierarch* chart

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P*!+')! <

Bo&*) o- D'*!c<o*+

SE;P I <!* &<'o &( O4!*&<'o

SE;P F' & c!D A3)'< 1 A)m' '+<*&<'o

SE;P 7o*4o*&<! B& 5' = 1 T*!&+3*,

SE;P A++!< R!m!)'&( M& &=!m! <

SE;P R!<&'( B& 5' = 1 I -o*m&<'o T!ch o(o=,

SE;P 7*!)'< Po('c,

SE;P 7o*4o*&<! B& 5' =D -' & c'&( ' +<'<3<! 1 P*oM!c< -' & c!

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N3m@!* o- !m4(o,!!+
HBL P*o-'(!: T'c5!*: E?ch& =!+: 2008 S&(!+: M&Mo* I )3+<*,: S3@ I )3+<*,: 7o3 <*,: Em4(o,!!+: H&@'@ B& 5 L'm'<!) HBL KAR 73D4:8D000D000 F' & c'&( 7omm!*c'&( B& 5+ PAKISTAN #4#23

M&' o--'c!+
H&@'@ B& 5 P(&A& I0I0 7h3 )*'=&* Ro&) K&*&ch' F 7B%B0 P&5'+<& 0 Pho !: 24#8000 GB0 L' !+H F&?: 02#$:2#7B#

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!omments on the organizational structure

The purpose of an organi.ational structure is to help in creating an environment for human performance. !t is then a management tool and not an end in its own. Although the structure must define the task to be done the rules so established must also be designed in the light of abilities and motivation of the human recourse available. %y analy.ing the organi.ational structure of H%L presence of the following elements can be found in its structure.

7! <*&('A!) D!c'+'o M&5' = %y looking at the organi.ational structure of H%L would be found that the structure at H%L is a critical one. All the decisions are made at the top management level and the subordinates have to obey these decisions. This trend in the decision making shows a pattern of rigidity in structure of H%L.

Do. .&*) 7omm3 'c&<'o

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#ommunication is the process by which information is e2changed and understood by two or more people usually with the interest to motivate or influence the behavior of others in the organi.ation. Iownward communication is the message and information sent from top management to subordinates in a downward direction. "anagers can communicate downward to the employees through speeches massages in H%L publications information leaflets tucked into pay envelops material on bulletin boards policy and procedure mandates. The same pattern is followed at H%L. <o doubt it/s a very

traditional approach but it can create problems because it ignores the receiver of the communication because the issuer +f policies and procedures does not ensure communication. !n reality may the messages communicated downward are not understood perfectly.

7h&' o- 7omm& ) The chain of command is an unbroken line of authority that links all persons in an organi.ation and shows who reports to whom. %y analy.ing the organi.ational structure it can be found that there is a scalar principle followed with in the %ank because each and every person knows to whom can one report. The authority and responsibility for different tasks and duties are different as well as every one knows the successive levels of management all the way to the top.

A3<ho*'<, & ) R!+4o +'@'('<,

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The chain of command illustrates the authority structure of H%L. Authority is the formal and legitimate right of the manger to make decisions issues orders and allocates resources to achieve organi.ational desired outcomes. %y analy.ing the chain of command of H%L one can come to the conclusion that as there is scalar pattern followed at the organi.ational setup of H%L therefore it is implied that everyone in his position knows that what is one/s authority and what is the responsibility and the authority it allocated.

D!(!=&<'o

Ielegation is the process which managers use to transfer the authority and responsibility to position below in the hierarchy. "ost organi.ations today encourage managers to delegate authority to the lowest possible level to provide ma2imum fle2ibility to meet customer needs and adapts to the environment. %ut at H%L no such system prevails the managers try to keep as much of the authority as they can and if some authority is delegated it is sure that it will be misused

Plan of *our internshi" "rogram

A @*'!- ' <*o)3c<'o o- <h! @*& ch

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Habib %ank Limited main branch chubara road Layyah is the center of the employee of different organi.ations cotton and grain business. According to its location majority of its accounts holders are businessmen and employees of different organi.ations and as well as it has huge accounts of the farmers those are the brokers of wheat and cotton. This %ranch work under the very e2perienced "anager #hudary ,arwer.He is very talented and hardworking person he tries to make hard to improve the progress of the branch by leaps and bunds. He manage his employees very efficiently also motivated them according to his work and encourage them. The employees of this branch are also well e2perienced. 5very employee of the branch guide the customers properly.As the working of the branch is organi.ed so different are made in order to make the working easier and error free. 5very person of the branch done his duty beautifully.

#tarting and ending dates of internshi"

! start my internship at H%L from 1838(3288' to 1838>3288'. ! completed two month in the H%L and in this two month ! get great e2perience from different departments of the H%L.

$he de"artments in which I got training and the duration of training

Th!+! &*! )!4&*<m! <+ .h!*! I =!< <*&' ' = #0 20 F' & c! D!4&*<m! < 30 Acco3 < +!*2'c!+ D!4&*<m! < R!m'<<& c! D!4&*<m! <

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40 A=*'F' & c! D!4&*<m! < S*0" # 2 3 4 N&m! o- <h! D!4&*<m! < 0emittance Iepartment 6inance Iepartment Account services Iepartment Agri6inance Iepartment F*om #0$04$200: 2%$04$200: ##$0B$200: 2%$0B$200: D3*&<'o To 2B$04$200: #0$0B$200: 2B$0B$200: #0$0%$200:

$raining "rogram

I <*o)3c<'o o- &(( <h! )!4&*<m! <+

Th!*! &*! +om! N&m!+ o- <h! )!4&*<m! <+

#0 Acco3 < D!4&*<m! < 20 R!m'<<& c! D!4&*<m! < 30 U<'('<, @'((+ 40 7D I ch&*=! D!4&*<m! < B0 F' & c! )!4&*<m! < %0 7&+h D!4&*<m! < 70 A=*' $F' & c! D!4&*<m! <

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Detailed descri"tion of the de"artment I wor+ed

Th!+! &*! <ho+! )!4&*<m! <+ .h!*! I .o*5!) #0 R!m'<<& c! D!4&*<m! < 20 F' & c!KA)2& c! D!4&*<m! < 30 Acco3 < +!*2'c!+ D!4&*<m! < 40 A=*'F' & c! D!4&*<m! <

Th!+! &*! )!<&'( o- <h!*! )!4&*<m! <0

#0 R!m'<<& c! D!4&*<m! <

As it is the function of the %ank to the money to any place where there is a %ank. !t is the most easiest and safe way to send money to any place. %ank charges menial amount as a commission for the remittance. Here in the Habib %ank Limited #hubara 0oad Layyah %ranch there is also remittance Iepartment. There are mostly four methods to remit the money. They Are i. ii. iii. '0 Iemand Iraft :II; "ail Transfer :"T; &ay +rder :&+; D!m& ) D*&-<

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!t is the most commonly method used for remittance of money. !t is very simple firstly a form is to be filled in which all details are specified that where and it which branch the draft is to be sent then the money is depositor which is called draft and money can by drawn after showing to the bank of the specified branch of the %ank. +nly specified person can draw the money on that draft. Another method to secure the payment of the draft could be the crossing of the draft which means that it will only be deposited in the payee1s account. To make it more secured and safe the %ank has coded the amount e2ceeding 0s. 1-888. +nly the banker or the person known the actual amount of the draft in return bank gets a commission which is its mode of earning.

''0

M&'( T*& +-!* 8MT9

The money is transferred through mail. +ne %ranch of the bank sends advice to the branch of the same bank to credit the account of payee. !n this type of transfer the payee must has the %ank account. 6or e2ample now days &TL1s licenses are made all over the &akistan. commission on the mail transfers. %ank also gets

'''0

P&, O*)!* 8PO9

&ay order is less e2pensive method of transfer money. <ormally this method is used to transfer money inside the city. !f it is used city wide it

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takes a long time. The bank charge 0s. 18 which is flat fee the pay order and an e2cise duty of 0s 1 per leaf with holding ta2 of 289 on the sum is also taken from the party. <ow if the pay order is to be cancelled or duplicate of the pay order is to be needed is case of misplacement 0s.28 is to be paid.

20 F' & c!KA)2& c! D!4&*<m! <

This department has been working under the supervision of knowledge e2perienced @ well Eualified banker. "r. <adeem who has been serving this bank for last 22 years. This department has been playing one of the primary function of the bank because a bank is the organi.ation that accept deposits @ give advances. Advances department is one of the most sensitive and important departments of the bank. The major portion of the profit is earned through this department. The job of this department is to make proposals about the loans.

The #redit "anagement Iivision of Head +ffice directly controls all the advances. As we known bank is a profit seeking institution. !t attracts surplus balances from the customers at low rate of interest and makes advances at a higher rate of interest to the individuals and business firms. #redit e2tensions are the most important activity of all financial institutions because it is the main source of earning. However at the same time it is a very risky task and the risk cannot be completely eliminated but could be minimi.ed largely with certain techniEues.

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Any individual or company who wants loan from H%L first of all has to undergo the filling of a prescribed form which provides the following information to the banker.

There are basically two types of loans. 6und base <on3fund base !n fund base the cash is involved while in non3fund base cash is not involved. These are following types of advances those are given by the bank. #ash 6inance 0unning 6inance

Any individual or H%L who wants loan from H%L first of all has to undergo the filling of a prescribed form which provides the following information to the banker. <ame and address of the borrower. a; b; c; d; 52isting financial position of a borrower at a particular branch. Accounts details of other banks :if any;. ,ecurity against loan. 52iting financial position of the H%L. :%alance ,heet @ !ncome

,tatement;.

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e;

,igning a promissory note is also a reEuirement of lending through this

note borrower promise that he will be responsible to pay the certain amount of money with interest. P*' c'4(!+ o- A)2& c!+ There are five principles which must be duly observed while advancing money to the borrowers. ,afety LiEuidity Iispersal 0emuneration ,uitability

&0

S&-!<,

%anker/s funds comprise mainly of money borrowed from numerous customers on various accounts such as #urrent Account ,avings %ank Account #all Ieposit Account ,pecial <otice Account and 6i2ed Ieposit Account. !t indicates that whatever money the banker holds is that of his customers who have entrusted the banker with it only because they have full confidence in the e2pert handling of money by their banker. Therefore the banker must be very careful and ensure that his depositor/s money is advanced to safe hands where the risk of loss does not e2ist. The elements of character capacity and capital can help a

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banker in arriving at a conclusion regarding the safety of advances allowed by him.

@0

7h&*&c<!*

!t is the most important factor in determining the safety of advance for there is no substitute for character. A borrower/s character can indicate his intention to repay the advance since his honesty and integrity is of primary importance. !f the past record of the borrower shows that his integrity has been Euestionable the banker should avoid him especially when the securities offered by him are inadeEuate in covering the full amount of advance. !t is obligation on the banker to ensure that his borrower is a person of character and has capacity enough to repay the money borrowed including the interest thereon.

c0

7&4&c'<,

This is the management ability factor which tells how successful a business has been in the past and what the future possibilities are. A businessman may not have vast financial resources but with sound management abilities including the insight into a specific business he may make his business very profitable. +n the other hand if a person has no insight into the particular business for which he

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wants to borrow funds from the banker there are more chances of loss to the banker. )0 7&4'<&(

This is the monetary base because the money invested by the proprietors represents their faith in the business and its future. The role of commercial banks is to provide short3term capital for commerce and industry yet some borrowers would insist that their bankers provide most of the capital reEuired. This makes the banker a partner. As such the banker must consider whether the amount reEuested for is reasonable to the borrowers own resources or investment. !0 L'J3')'<,

LiEuidity means the possibilities of recovering the advances in emergency because all the money borrowed by the customer is repayable in lump sum on demand. Fenerally the borrowers repay their loans steadily and the funds thus released can be used to allow fresh loans to other borrowers. <evertheless the banker must ensure that the money he is lending is not blocked for an undue long time and that the borrowers are in such a financial position as to pay back the entire amount outstanding against them on a short notice. !n such a situation it is very important for a banker to study his borrower/s assets to liEuidity because he would prefer to lend only for a short period in order to meet the shortfalls in the wording capital. !f the borrower asks for an advance for the purchase of fi2ed assets the banker should refuse because it shall not be possible for him to repay when the banker wants his customer to repay the amount. Hence the baker must adhere to the consideration of the principles of liEuidity very careful. -0 D'+4!*+&(

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The dispersal of the amount of advance should be broadly based so that large number of borrowing customer may benefit from the banker/s funds. The banker must ensure that his funds are not invested in specific sectors like te2tile industry heavy engineering or agriculture. He must see that from his available funds he advances them to a wide range of sector like commerce industry farming agriculture small business housing projects and various other financial concerns in order of priorities. Iispersal of advances is very necessary from the point of security as well because it reduces the risk of recovery when something goes wrong in one particular sector or in one field. =0 R!m3 !*&<'o

A major portion of the banker/s earnings comes form the interest charged on the money borrowed by the customers. The banker needs sufficient earnings to meet the followingA a; b; c; !nterest payable to the money deposited with him. ,alaries and fringe benefits payable to the staff members. +verhead e2pense and depreciation and maintenance of the fi2ed assets

of the bank. d; An adeEuate sum to meet possible losses.

e; f;

&rovisions for a reserve fund to meet unforeseen contingencies. &ayment of dividends to the shareholders.

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h0

S3'<&@'('<,

The word Osuitability/ is not to be taken in its usual literary sense but in the broader sense of purport. !t means that advance should be allowed not only to the carefully selected and suitable borrowers but also in keeping with the overall national development plans chalked out by the authorities concerned. %efore accommodating a borrower the banker should ensure that the lending is for a purpose in conformity with the current national credit policy laid down by the central bank of the country.

7&+h F' & c! #ash finance is the biggest loan given to the businessmen industrialists. After the proper investigation and documentation these finances are given and genuine property is pledged as a matter of security. These loans are taken for the purchase of stocks etc. the bank appoints its staff of two or three persons at the place where that stock is lying0 This is a very common form of borrowing by commercial and industrial concerns and is made available either against pledge or hypothecation of goods produce or merchandise. !n cash finance a borrower is allowed to borrow money from the banker up to a certain limit either at once or as and when reEuired. The borrower prefers this form of lending due to the facility of paying markupGservices charges only on the amount he actually utili.es. !f the borrower does not utili.e the full limit the banker has to lose return on the un3utili.ed amount. !n order to offset this loss the banker may provide for a suitable clause in the cash finance agreement according to which the borrower has to pay markupGservice charges on at least on self or one Euarter of the amount of cash finance limit allowed to him even when he does not utili.e that amount.

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%ank also keeps three records of the stock and current position. a notice is also written at the place that the stock are pledged with the bank To get these types of loan prior permission from the .onal office of the H%L is also reEuired the bank gets back its principal amount and also markup for the loan. The rate of markup is 0s. 8.-21G1888 per day. Doc3m! < R!J3'*!) Fo* <h! Lo& #0 D!m& ) P*om'++o*, No<! DP No<! This document is filled in by the party that promises to pay the amount whenever it is demanded. 20 F&c'('<, L!<<!* This is the reEuisition of the finance facilities to the bank by the party. 30 B&(& c! 7o -'*m&<'o After the approval of loan this letter is written by the party that such amount is in the account of the party. 40 L!<<!* o- P(!)=! 8IB2%9 6or the getting of the cash finance a letter of pledge is to be given to the bank that such property is to be pledged with the bank as a security. B0 L!<<!* o- G3&*& <!!+ 8IB 2:9 A letter for the personal guarantees is also reEuired in which the guarantee from a sound person to the party is attached with the application.

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%0 A=*!!m! < -o* F' & c' = 8IB %9 This agreement for the short term medium termGlong term on the markup basis. At most these are the documents reEuired in attaining of the loan. R3 ' = F' & c!

7hen a customer borrows from a banker a fi2ed amount repayable either in periodic installments or in lump sum at a fi2ed future time it is called a OloanP. 7hen bankers allow loans to their customers against collateral securities they are called Osecured loansP and when no collateral security is taken they are called Oclean loansP. The amount of loan is placed at the borrower/s disposal in lump sum for the period agreed upon and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fi2ed amount of money for his use while the banker feels satisfied in lending money in fi2ed amounts for definite short periods against a satisfactory security. This is the most common form of bank lending. 7hen a borrower reEuires temporary accommodation his banker allows withdrawals on his account in e2cess of the balance which the borrowing customer has in credit and an overdraft thus occurs. This accommodation is generally allowed against collateral securities. 7hen it is against collateral securities it is called O,ecured +verdraftP and when the borrowing customer cannot offer any collateral security e2cept his personal security the accommodation is called a O#lean +verdraftP. The borrowing customer is in an advantageous position in an overdraft because he has to pay service charges only on the balance outstanding against him. The main difference between a cash finance and overdraft lies in the fact that cash finance is a bank finance used for long term

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by commercial and industrial concern on regular basis while an overdraft is a temporary accommodation occasionally resorted to.

D!m& ) F' & c' =KLo& + 7hen a customer borrows from a banker a fi2ed amount repayable either in periodic installments or in lump sum at a fi2ed future time it is called a OloanP. 7hen bankers allow loans to their customers against collateral securities they are called Osecured loansP and when no collateral security is taken they are called Oclean loansP. The amount of loan is placed at the borrower/s disposal in lump sum for the period agreed upon and the borrowing customer has to pay interest on the entire amount. Thus the borrower gets a fi2ed amount of money for his use while the banker feels satisfied in lending money in fi2ed amounts for definite short periods against a satisfactory security

30 A77OUNT DEPOSIT DEPARTMENT: $

!t controls the following activitiesA a; b; a; b; AG# opening. !ssuance of cheEue book. #urrent aGc ,aving aGc

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c; d;

#heEue cancellation #ash

Acco3 < o4! ' = The opening of an account is the establishment of banker customer relationship. %efore a banker opens a new account the banker should determine the prospective customer/s integrity respectability occupation and the nature of business by the introductory references given at the time of account opening. &reliminary investigation is necessary because of the following reasons. i. ii. iii. iv. Avoiding frauds ,afe guard against unintended over draft. <egligence. !nEuiries about clients. There are certain formalities which are to be observed for opening an account with a bank. 6ormal Application !ntroduction ,pecimen ,ignature

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 1. 2. $.

"inimum !nitial Ieposit +perating the Account &ay3!n3,lip %ook &ass %ook !ssuing #heEue %ook

&9 N3&('-'c&<'o o- 73+<om!* The relation of the banker and the customer is purely a contractual one however he must have the following basic Eualifications. He must be of the age of majority. He must be of sound mind. Law must not disEualify him. The agreement should be made for lawful object which create legal

relationship <ot e2pressly declared void.

@9 T,4!+ o- Acco3 <+ 6ollowing are the main types of accounts 1; !ndividual Account

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2; $;

Boint Account Accounts of ,pecial Types &artnership account Boint stock H%L account Accounts of clubs societies and associations Agents account Trust account

52ecutors and administrators accounts &ak rupee non3resident accounts 6oreign currency accounts1

I++3' = o- ch!J3! @oo5: This department issue cheEue books to account holders. 0eEuirements for issuing cheEue book a; The account holder must sign the reEuisition slip b; 5ntry should be made in the cheEue book issuing book

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c; three rupees per cheEue should be recovered from aGc holder if not then debit hisGher account.

73**! < &cco3 < These are payable to the customer whenever they are demanded. 7hen a banker accepts a demand deposit he incurs the obligation of paying all cheEues etc. drawn against him to the e2tent of the balance in the account. %ecause of their nature these deposits are treated as current liabilities by the banks. %ankers in &akistan do not allow any profit on these deposits and customers are reEuired to maintain a minimum balance failing which incidental charges are deducted from such accounts. This is because the depositors may withdraw #urrent Account at any time and as such the bank is not entirely free to employ such deposits.

4ntil a few decades back the proportion of #urrent Ieposits in relation to 6i2ed Ieposits was very small. !n recent years however the position has changed remarkably. <ow the #urrent Ieposits have become more importantM but still the proportion of #urrent Ieposits and 6i2ed Ieposits varies from bank to bank branch to branch and from time to time. S&2' = &cco3 < ,avings Ieposits account can be opened with very small amount of money and the depositor is issued a cheEue book for withdrawals. &rofit is paid at a fle2ible

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rate calculated on si23month basis under the !nterest36ree %anking ,ystem. There is no restriction on the withdrawals from the deposit accounts but the amount of money withdrawn is deleted from the amount to be taken for calculation of products for assessment of profit to be paid to the account holder. !t discourages unnecessary withdrawals from the deposits. !n order to populari.e this scheme the ,tate %ank of &akistan has allowed the ,avings ,cheme for school and college students and industrial labor also. The purpose of these accounts is to inculcate the habit of savings in the constituents. As such the initial deposit reEuired for opening these accounts is very nominal0 7h!J3! c& c!((&<'o : This department can cancel a cheEue on the basis ofM a; b; c; d; &ost dated cheEue ,tale cheEue 7arn out cheEue 7rong sign etc

7&+h This department also deals with cash. &ayment of cheEues deposits of cheEues etc.

(.

Agri6inance Iepartment

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At HBL Agri 6inance we understand the peaks and troughs of farming. That/s why we have designed our lease loan and hire3purchase agreements to match your income situation. +n an arable or dairy farm for e2ample cash flow is tight early in the year when you are buying stock and feed. Dou may have a surplus at harvest time or when you receive the single farm payment. 7e simply arrange to take high repayments when cash flow is good and lower ones at Euieter periods. !f necessary you can even hold off payments during periods when your income is under pressure. F(!?'@(! (o& +ur lease loan and hire3purchase agreements do not just apply to farms. 7e also help finance eEuipment used by local authorities landscape gardeners and sports clubs in caring for grounds. 4nlike buying eEuipment outright this allows you to spread your payments over several yearly budgets. !f club membership is an issue it means you can spread costs fairly between present and future members. 6or more information contact your local HBL Agri 6inance Area sales e2ecutive

M3(<'4(! !J3'4m! < 43*ch&+!

&age $ !f you need a range of different pieces of eEuipment or vehicles over period of time we may be able to arrange a credit line for you. 7e can make an agreed amount of finance available to you to draw down :take; as you need. Ask your Agri 6inance area sales e2ecutive about credit lines and agency purchasing.

O3<*'=h< 43*ch&+!

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!f you want to buy eEuipment outright our hire3purchase agreement is the fle2ible and cost3effective alternative to overdrafts or term loans. 6ull ownership passes to you at the end of the agreed term. +n the other hand with a loan agreement you will own the eEuipment from the beginning. This can be useful in grant3aided projects for e2ample where you need an invoice in your own name. Hire purchase and loan agreements offerA fi2ed repayments making budgeting easyM repayments which you can time to suit the income pattern +f your farmM the option to claim capital ta2 allowances on the eEuipmentM interest on your repayments which is ta23deductible M A fle2ible depositM LAT which you can claim back immediately on the whole purchase &rice :e2cept for motor vehicles;M and with a hire3purchase agreement no need for e2tra security or to repay +n demand :unlike bank loans;. Ask your H%L Agri 6inance area sales e2ecutive to e2plain The benefits to you in detail.

L!&+! &=*!!m! <+

Leasing is an efficient way of paying for the use of eEuipment over a set &eriod of time. Dou negotiate the purchase of the eEuipment you want and we will pay The supplier and keep legal ownership of the eEuipment. Dou then rent the eEuipment from us over an agreed term 3 from five up to seven years for tractors. Dou can then choose from the following options. #arry on using the eEuipment for a small yearly rental fee.

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,ell the eEuipment as our agent and keep all the sales proceeds. Trade it in as a repayment against new eEuipment. O<h!* @! !-'<+ o- (!&+' = ' c(3)!: 6i2ed rentals making budgeting easyM 0entals you can time to suit your incomeM 4sing the eEuipment just as if you owned itM 0entals which are fully ta23deductible :e2cept for motor vehicles;M 4sing an overdraft facility for other purposesM Dou do not usually need e2tra security which you would for a bank loanM And a fle2ible first rental payment. Dour HBL Agri 6inance sales e2ecutive will tell you more about The benefits of leasing. Talk to your accountant about which leasing

&roduct is most suitable for you. The key to our success is our focus and dedication to agriculture. 7e know that our business depends on farming 3 a uniEue industry with uniEue problems and challenges. As a result we make it our business to understand the needs of !rish farmers. +ur field service is one of a kind 3 a team of dedicated area sales e2ecutives covering the whole country and backed by teams at regional offices. +ur nationwide network of branches means we understand the rural economy. 7e always try to make sure our service and products meet your needs. 7e work with agricultural dealers and manufacturers to provide a Euality service to the farming community.

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Agriculture finance is defined as a subset of rural finance dedicated to financing for agricultural related activities vi.. input supply production processing and marketing. understood as the outstanding practice in the particular process or function i.e. producing the best results among those in the same industry. 0ural finance as defined by the 7orld %ank:7% 0eport3288(; includes a range of financial services such as savings credit payments and insurance to rural individuals households and enterprises both farm and non3farm on a sustainable basis. !t includes financing for agriculture and agro processingGagribusiness. "icrofinance is the provision of financial services for poor and low income people and also covers the lower ends of both rural and agriculture finance. !t includes financing
both in rural and urban areas. #onsistent with these operational distinctions agricultural microfinance can be defined as referring to the overlap of agriculture finance andmicrofinance dedicated to providing financial services to poor agricultural households.

Im4o*<& c! o- A=*'F' & c!

Availability of agrifinance is a prereEuisite for enhancing productivity and improving standard of living by breaking the vicious circle of poverty of small farmers. !t has been observed that farmers usually utili.e the credit facility to meet short term credit needs mostly for purchase of inputs. The banks are also interested in e2tending short term credit. The e2perience of developed economies shows that agriGrural credit for investment in the form of machinery eEuipment and

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infrastructure has played major role in increasing productivity and future cash flows. Therefore banks need to increase the supply of credit in the form of medium to long term investment in the farm and nonfarm sector. 6armers can also avail the opportunity to transform their lands into mechani.ed farming units to reduce cost and increase profitability.

F' & c! D!4&*<m! <

S<*3c<3*! o- <h! F' & c! D!4&*<m! < 87EO9

D!4&*<m! <&( h'!*&*ch,
Chief Financial Officer (CFO)

7h'!- E?!c3<'2! O--'c!*

Aya. Ahmed
T*!&+3*!* F' & c! )'*!c<o*

I 2!+<m! < G0E

Acco3 <& < E?!c3<'2!

B3)=!<' = G0E

A3)'<o* E?!c3<'2! )>

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(unctions of the (inance De"artment

Acco3 <' = +,+<!m o- <h! HBL

HBL h&+ +om! &cco3 <' = +,+<!mO+ -3 c<'o + P B&(& c! ' J3'*! P P*o)3c< ' J3'*! P T*& +&c<'o h'+<o*, P S<&<!m! < *!J3!+<+

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P 7h!J3! @oo5 *!J3!+< P S<o4 4&,m! < P P&, o*)!* K DD *!J3!+< P B&(& c! c!*<'-'c&<! P F3 ) <*& +-!*+ P AK 7 m&' <&' + P ;!*'-'c&<'o K =! !*&<'o K ch& =! o- TPIN 3m@!*+ P U<'('<, @'(( 4&,m! <+ Th!+! &*! +om! )!<&'(!) o- <h!+! Iuring the course of daily business of the branch a number of cheEues are presented by customer for cash payment though transfer delivery and clearing cheEues at the counter. Also a number of new accounts are opened and cash is deposited by the customers. A number of new vouchers are passed by the branch by debiting one account and crediting another account.

,o in order to ensure that during the day all the transactions have properly been recorded and they are complete in all respects and are recorded in proper books by the branch this recording is done on daily basis and maintained by account section. %alancing the cash book means that all the transactions have properly been recorded and there is no mistake in any of these vouchers. Arrangement of voucher.

&reparation of suplimentaries.

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&reparation of summary.

Agreement of total of the summary with the total of transfer book.

To Budge the performance of branches the Head +ffice reEuires periodic statements from them. Through these statements the top management watches the progress of the branches and they provide them necessary guidance The top management decisions depend upon these statements also. The following are the important statements prepared by the account sectionA 3 %alance sheet on daily basis.

&ak account on daily basis.

&rovisional income and e2penditure statement on monthly basis.

(inance s*stem of the )B

P D!m& ) -' & c! P F'?!) &++!<+ -' & c' = 8FAF9 P Ho3+! F' & c! P R3 ' = -' & c! P 7&+h F' & c!

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P M3+h&*'5& F' & c' = P LMM F' & c! 8Loc&( M& 3-&c<3*!) M&ch' !*,9 P H'*! P3*ch&+! F' & c' = P B*')=! -' & c!

Mobilization of funds
The business of accepting deposits of money and lending andGor investing of such monies is an activity governed by specific laws. The #entral %ank has in terms of the provisions of the %anking Act <o. $8 of 1'?? or the 6inance #ompanies Act <o. )? of 1'?? authori.ed the following three categories of institutions to carryon such businessA Licensed commercial banks Licensed speciali.ed banks 0egistered finance companies

+nly the following categories of institutionsGorgani.ations are e2empted from the reEuirement to obtain a license from the #entral %ank for the purpose of carrying on the business of.

B, <h!+! &c<'2'<'*!+ .! c& mo@'('A!) o3* @& 5O -3 )+ !mproving member services and patronage #onsider use of outside funding !mproving operating efficiency

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&romoting patronage Fiving priority to mobili.ing member funds Too much institutional capital

#ooperatives need to find ways to increase member funding since this provides the lowest cost lowest risk form of capital for operations and investment. As government and donor support continues to decline increasingly this also becomes the only practical source of funding for cooperatives. 5ven where outside support is still available the advantage of increased reliance on member funding is that it gives greater autonomy to the cooperative and lowers the risk of eventual withdrawal of outside funding. The strategy for increasing member funding depends on the particular circumstances of the cooperative the type of activity it is engaged in and its scale of operation. Among the strategies to consider areA

Im4*o2' = m!m@!* +!*2'c!+ & ) 4&<*o &=!

"ost strategies for cooperative development reEuire increased funds. The strategy for developing the cooperative so that it maintains or e2pands its market position should focus on operational efficiency and on patronage on how the cooperative can maintain e2isting business and attract more business and new members. !ncreased patronage provides an important source of member capital. However it also usually reEuires more working capital for the operation of the business of the cooperative and may reEuire more investment in fi2ed assets such as buildings and eEuipment.

7o +')!* 3+! o- o3<+')! -3 )' =

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!n simple terms the higher the institutional and member capital the more outside lenders such as H%L and suppliers will be willing to loan funds to the cooperative. #are should be taken in borrowing however since the higher the outside funding as a proportion of funds used the higher the risk if something goes wrong. :This risk is measured by the gearing ratio 3 an increased gearing ratio meaning a higher risk;. !f more funds are reEuired a low gearing ratio can be maintained if member contributions are also increased. 6or e2ample if the cooperative owns Q1888 and needs an additional Q1888 it will be highly geared :-89 gearing ratio (; if all funds come from a loan. Alternatively if the cooperative raises an additional Q-88 from member funding the sum to be borrowed would be lower The gearing ratio would then be 2-9 representing a considerably lower risk. !t is also easier to find a bank or other lender willing to provide the less risky loan. The interest rate will also often be lower
(

i.e. gearing ratio R 1888 S :1888 = 1888; T 188 R -89 i.e. gearing ratio R -88 S :1-88= -88; T 188 R 2-9

Im4*o2' = o4!*&<' = !--'c'! c,

!mproving efficiency can be important for the mobili.ation of funds. !t enables a cooperative to offer more competitive prices securing and keeping member loyalty. 6unding and efficiency are related. #ooperatives with sufficient funds are able to invest in training and technology to reduce costs and to increase or improve production. 7ell managed technologically efficient cooperatives are generally more likely to accumulate capital.

P*omo<' = 4&<*o &=!

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The more members use the cooperative/s services 3 that is by selling through or buying from the cooperative 3 the more funds the cooperative will receive. !t is therefore important for the cooperative to promote patronage. This is most easily achieved when

cooperatives provide services valued by members offer competitive prices and prompt payment.

G'2' = 4*'o*'<, <o mo@'('A' = m!m@!* -3 )+ "ost cooperatives will have to rely on member generated funds to finance their operations. "embers/ financial stakes in the cooperative enforce greater accountability of the cooperative to members build member participation in decision making and strengthen cooperative financial self3reliance and operational autonomy. There are a number of ways in which member funds are obtained. !n many cases increased levels of funding can be achieved through adjusting these methodsA No $*!-3 )&@(! m!m@!*+h'4 -!!+ 34o Mo' ' =

These fees are often small but they need not necessarily be so if new members are buying into a successful business that provides valuable services. M!m@!* +h&*!+

All members are reEuired to purchase shares which are usually the primary source of member capital. ,hares purchased should earn interest and are refundable to the member upon withdrawal from membership or to hisGher heirs in the event of the member/s death.

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,hares in some cooperatives can be paid for over time through check3offs from a member/s transactions with the cooperative. The members share account is credited with the amount of the deduction. "any changes in cooperative financing are underway in 5urope. These have included the issue of new classes of shares in addition to member shares that are weighted on the .asis of one share one vote providing control and governance incentives that result from cooperative solidarity but not necessarily by the traditional ownership structure. This techniEue can attract additional members and capital from those who would otherwise not be willing to contribute their capital due to their relative lack of control when capita entitles each member to only one vote regardless of the members/ investment in the cooperative. +ther changes involve the use of limited company forms of organi.ation for certain activities undertaken for the benefit of cooperatives and their members. These activities may include wholesale or other large scale marketing activities.

R!<! <'o o- +3*4(3+0

A surplus arises when the cooperative is able to retain some of the proceeds from sales of members/ produce or from members/ purchases from the cooperative. This surplus can either be retained by the cooperative as institutional capita or paid out in patronage refunds to members following the close of each year !n practice cooperatives often offer prices more favourable than those prevailing in the market creating little surplus and making it impossible to offer patronage refunds. !n other cases cooperatives are protected by governments and do not operate in competitive markets making any surplus unrelated to competitive performance.

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

?(

7henever possible these practices should be altered either to build up surpluses or increase patronage refunds and attract new members. D!-!**!) 4&,m! <+

A surplus creates two opportunities for increasing capital available to a cooperative. +ne is the surplus retained and the other is the patronage refund that is allocated but not immediately paid out in cash. Iuring the period between the realisation of the surplus and the cash pay3out of patronage refunds the cooperative has the use of the cash. &ay3 out may take the form of a share or of an obligation to pay the member in the future. #ooperatives in <orth America have been particularly creative in finding ways of retaining cash while allocating surpluses. The usual procedure is to issue notes payable over several years such as five or seven. The member receives a portion of the allocation each year while the cooperative is able to rotate its capital over the same period. M&5' = m!m@!* )!('2!*, *'=h<+ <*& +-!*&@(!

!n certain new processing and marketing cooperatives in <orth America the founder3 members can purchase delivery rights which guarantee that the cooperative will purchase a given amount of produce each year. They also oblige the member to provide a certain amount of produce. These rights are freely transferable which gives them a market value. This feature gives members an incentive to behave in a manner that maintains and increases the market value of their rights. Too m3ch ' +<'<3<'o &( c&4'<&( 6or the majority of cooperatives in developing countries the possibility of accumulating too much institutional capital any time soon is small. However members should be ?-

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aware that it is actually possible for the original purpose of the cooperative to be lost if the amount of institutional capital becomes too large. This may result in the e2clusion of new members because present members do not want others to benefit from the services provided and surpluses produced by the capital accumulated. !t may lead to strategies for intentional losses so that the capital accumulated returns to the members in the form of unrealistic prices for services. !t may also lead to the conversion of the cooperative to another legal form such as a limited company 7hile this may benefit e2isting members by providing them with higher incomes the members should be aware that many of the ideals of a cooperative may be lost in the process.

G! !*&<'o o- -3 )+
The H%L can generated the funds by these sources M&5' = F' & c!+ I 2!+<' = ' 2&*'o3+ -' & c'&( m&*5!<+

%y giving these facilities to their customers we can generates the funds

&ositive 0eturn on Loan

&rovision of 7orking #apital ,hifting of funds into &roductive Hands ,trengthening !ndustriali.ations %ackbone of <ational 5conomy

L! )' = P*o)3c<+: 0unning 6inance #ash 6inance

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?>

Iemand 6inance #onsumer 6inance &AI

I 2!+<m! < ' F' & c'&( M&*5!<+: The investment functions are usually performed by Treasury +ffice of the bank. Treasury invests deposit forA E +3*' = o4<'m3m 3<'('A&<'o o- A2&'(&@(! *!+o3*c!+0 R'+' = &))'<'o &( *!+o3*c!+ *!J3'*!) -o* M!!<' = c*!)'< )!m& )+0 M& &=' = m&*5!< & ) ('J3')'<, *'+5+0

I 2!+<m! < M&*5!<+

%y investing the H%L in the investment market generat the funds easly and efficiently that a good place for generating the funds by invests the money. These are three "arkets

Mo !, M&*5!<
#0 T$B'(( & ) Go2<0 S!c3*'<'!+ 20 Bo )+ o- P*o2' c'&( Go2<0 30 D!-! +! S&2' = 7!*<'-'c&<!+ 40 M3<3&( F3 )+ !<c0

7&4'<&( M&*5!<
#0 EJ3'<'!+ !0=0 +h&*!+ & ) 20 M3<3&( F3 )+ ?)

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30 Bo )+ 40 D!@< M&*5!<

Fo*!'= E?ch& =! M&*5!<

#0 S4o< T*& +&c<'o + 20 TOM T*& +&c<'o + 30 O3<*'=h< T*& +&c<'o + 40 S.&4 T*& +&c<'o +

So3*c!+ o- -3 )+
%anks reEuire funds to support lending. %anks lend to home buyers credit card customers small and medium businesses and institutional clients. %anks source their funds from customer deposits and wholesale markets :domestic and international;. ,ince the onset of the global financial crisis in late 288) bank funding costs have become a topic of considerable discussion given their link to retail interest rates. The deposits are the major sources for a commercial bank. There are two kinds of deposits in a bank including checkable deposits and non3transaction deposits. #heckable deposits form '9 of the all sources of funds and non3 transaction deposits form >19 of all sources of funds. The other sources of funds for a bank are borrowings from other banks and bank capital which almost makes 2(9 and >9 of the total sources of funds respectively. 7hen e2amining banks/ funding it is important to recogni.e that it is not free and the price of funding varies according to a range of factors.

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

??

6or most of the last decade banks/ funding sources and the cost of funding has been relatively predictable. "ovements in the 0eserve %ank/s cash rate have generally closely appro2imated changes in total bank funding costs. ,ince the global capital markets crisis in late 288) the 0eserve %ank/s cash rate has not provided an accurate indicator of changes in bank funding costs. %y providing an overview of bank funding the paper aims to help e2plain why this is the case. +ver the past year financial markets have e2perienced a serious global financial event triggered by the 4, sub3prime lending market

6or banks the global credit crisis has made it more difficult to access funds and those funds are more e2pensive <o3one is predicting a Euick end. There is a possibility that it may take two years to see conditions in financial markets stabili.e.

D!@< m&*5!<+
!n terms of funding access for well3rated institutions :i.e. those with strong credit ratings; borrowing money in their own name there is generally sufficient liEuidity in the global debt markets. However prices remain elevated.

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?'

6unding bank lending through securiti.ation markets however is very strained. There is very little issuance occurring

F3 )' =
About -89 of banks/ funding comes from depositsM a further 2-9 from short3term wholesale funding and 2-9 from long3term wholesale funding. 7holesale funding comes both from domestic and global financial markets :splits will vary from bank to bank;. ,hort3term funding :e2cluding bills of e2change; constitutes >(9 domestic issuance and $>9 offshore issuance. 6or long3term funding the spit is 2-9 domestic issuance and )-9 offshore issuance. :These proportions vary between banks.; ,hort3term funding costs have been volatile since August 288). +n several occasions the '83day %ank %ill ,wap 0ate :%%,7;1 spiked sharply :August 288) ,eptember 288) Iecember 288) 6ebruary 288? "arch 288? Bune 288? ,eptember 288? and +ctober 288?;. Long3term funding costs remain elevated with no evidence of easing.

,ince the onset of the financial crisis net flows into deposit accounts have been strong particularly higher yielding personal investment accounts. %alances in these accounts have increased 1'9 :annuali.ed; compared to 19 for lower yielding personal transaction accounts.

M&*5!< ' <!*!+< *&<!+ & ) <h! c&+h *&<!

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'8

A number of factors influence interest rates including changes in the official cash rate inflation e2pectations credit ratings and the broader global financial environment. 4nder normal circumstances cash rate changes are e2pressly linked to market interest rate changes. +ver the past year however global events have had a greater influence on market rates.

I <!*!+< R&<! M&*=' +

%anks/ interest rate margins continue to contract. !nterest rate margins for

Australian banks have contracted at a slightly faster pace since the beginning of the global financial crisis.

#0 G(o@&( ! 2'*o m! <

+ver the past year financial markets have been in the midst of a serious global financial event caused by the sub3prime crisis in the 4,A. The 0eserve %ank has commented on the large increase in the delinEuency rate on 4, sub3prime mortgages which had grown to about 1? per cent of housing loans in the 4,. Also of the Q4,2 trillion of 4, residential mortgage backed securities :0"%,; issued to investors in 288>M around a Euarter were backed by sub3prime mortgages. As a result of the global credit crisis there was a sharp decline in investor appetite for 0"%, even those of the highest credit Euality. The 0eserve %ank said that the increase in risk aversion and the e2istence of considerable uncertainty about where the spreads on these securities will settle has meant that traditional investors in 0"%, have preferred to wait until more settled conditions return. This increased risk aversion has significantly increased the cost of short3term and long3term funds sourced by financial institutions internationally and in Australia.

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'1

Additionally there has been considerable volatility in the cost of funds. 6inancial e2perts are not predicting a Euick end to the current financial scenario with some suggesting it will take up to two years to see financial market conditions stabili.e though there is still uncertainty over whether funding costs will return to the lower levels they have been in the past. 20 O2!*2'!. o- @& 5 -3 )' = Fenerally speaking banks source their funds from deposits :-89; and through wholesale funding that is short3term wholesale funding :2-9; and long3term wholesale funding :2-9; in both the domestic and global markets :this split will vary from bank to bank;. ,hort3term funding relates to borrowings for up to 12 months while long3term funding includes borrowings of greater than 12 months. %anks borrow money from global financial markets to facilitate lending to Australian businesses and households. %orrowing costs for banks short3term and long3term funding reEuirements have increased significantly as a result of the current global financial crisis. The price or cost that banks pay for funds depends on many factors. These includeA changes in the official cash rateM competitionM international eventsM the credit rating of the bankM and the supply of wholesale funds. %anks must pay for all funding either though paying deposit interest rates or paying interest on domestic and global debt. Therefore to determine a bank/s cost of funds it is important to conduct a detailed analysis of all funding components and how these are changing. This is discussed further below.

30 S<&<! o- <h! )!@< m&*5!<+

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'2

6or banks with a strong credit rating :i.e. AA or A; wanting short3term funding there is generally good liEuidity in debt markets but prices remain elevated when compared with levels prior to the financial crisis.

6or term funding markets have been very difficult to access and issuance by banks has been very low particularly in the most recent months. ,preads are now at very high levels.

%anks rated %%%= are finding it more difficult to access longer3term funding and are concentrating more on short3term funds private placements and deposit growth. ,ecuriti.ation markets continue to see very low issuance levels. "uch of the Australian issuance was to the 4,. !nvestor interest in securiti.ed assets has virtually dried up. 0ecent initiatives designed to stimulate debt markets includeA

guarantee of banks/ term fundingM deposit guaranteesM and 7idening the range of securities eligible for its repurchase operations :repos; by

the 0%A. These initiatives align Australia/s response within the conte2t of the broader global initiatives which are aimed at resolving the financial crisis.

40 F3 )' =
%anks source funds from deposits and through wholesale funding 3 short3term and long3term funds in both the domestic and global financial markets. 7hen the term of any funding arrangement e2pires either in domestic and global

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

'$

markets banks have to re3finance. ,ince the onset of the global financial crisis wholesale funding costs have increased significantly. 6urthermore interest rate volatility has increased on these markets and it is widely reported considerable uncertainty will remain over the ne2t year at least. Iue to the protracted nature of the sub3prime crisis pressures in financing from the wholesale market continue. A%, 6inancial Accounts shows retail deposits constitute ('9 :Q>>- billion; of bank funding as at Bune 288?. 7holesale funding accounts for -19 or Q)8$ billion. +f the short3term funding e2cluding bills of e2change :which are not classified by domesticGoffshore; short3term funding is >(9 domestic and $>9 offshore. 6or long3term funding 2-9 is domestic and )-9 offshore. The '83day bank bill swap rate is commonly viewed as the short3term funding cost benchmark in the market. The divergence :i.e. spread; of the '83day from a market indicator of the cash rate can indicate changes to the banks/ short3term funding costs. This cash rate Jmarket/ indicator is called the '83day +vernight !nde2 ,wap rate :'83day +!,;. The '83day +!, is a traded instrument by large treasuries. !ts value reflects the e2pectation of where the cash rate will be in '8 days :it/s like a futures contract;. Analy.ing the spread between the '83day and the '83day +!, provides a broad measure of changes to banks/ short3term funding costs. This spread reflects market conditions as interest rates incorporate both credit premiums and liEuidity in financial markets. #hanges in these measures also reflect banks/ product pricing and risk management. The chart below shows that the cost of short3term funds has been volatile since August 288). +n numerous occasions the '83day has increased significantly :August 288) ,eptember 288) Iecember 288) 6ebruary 288? "arch 288? Bune 288? ,eptember 288? and +ctober 288?;. %anks/ short3term funding costs :i.e. over and above the '83day +!,; have '(

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

significantly increased since the global financial crisis. The chart shows that prior to August 288) the cost above the '83day +!, was about ?318 basis points. After August 288) this spread reached a high of 1(( basis points in early +ctober 288?. Longer term funding costs continue to stay high with little evidence of easing. The chart below shows the spread to swap2 for banks/ three3year term funding. 0ecent pricing for bank issuance remains about 1)- bps above swap for three3 year terms. The widening spreads for long term funding are detailed in The ,heet :1? August 288?;A JAs for the cost of longer term funding the credit spreads the banks have to pay on their borrowings have been moving steadily wider since the credit crunch began. !n the domestic market this is best e2emplified in the two and four year parts of the curve. %ond issuance in "ay attracted a spread of () bps and '- bps for two and four years respectively.

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'-

7*'<'c&( & &(,+'+

6inancial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relation ship between the items of balance sheet and profit and loss account in order to make rational decision in keeping with the objective of the organi.ation for that purpose the management use analytical tools. To evaluate the financial condition and performance of the business entity the financial analyst needs to perform UcheckupsU on various aspects of the business financial health. A tools freEuently used during these checkups is a financial ratio analysis which relates two piece of financial data by dividing one Euantity by the other we calculate ratios because in this way we get a comparison that may prove more useful than the raw number by themselves. The business itself and outside providers of capital :creditors and investors; all undertake financial statement analysis. The type of analysis varies according to the specific interest party involved. The nature of analysis is depending at the purpose of analyst.

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

'>

%alance ,heet As at December 31, 2008 200% 2007 2008 0upee1s in 888 cash and balances with treasury banks balances with other banks lending/s to financial institutions investment3net advances3net operating fi2ed assets deferred ta2 assets3net other assets3net $2(>-')> >-))81) 218?1?88 >$(?>$1> 1'?2$'1-'8-(1-> 1)2$)$ 118$1(-8 $(218?2($ $'>?$??$ $?8)-1' 18-1$)2 11$8?'2>1 21?'>8-'? 1>82(12$ 8 1)?>?)>1 (18(?--1) $'>$11)2 (8($188 (1888)' '>2->?)( 2>2-18()8 1)2>$)$$ 8 1'?18()> (($>1-'8(

L'&@'('<'!+ %ills payable borrowings deposits and other accounts sub3ordinate loan liabilities against assets subject to finance lease deferred ta2 liabilities3net other liabilities )8?'>)' 2$'($()> 2-)(>1?$? 1-')((8 8 8 111)1('> $812>$'2' N!< &++!<+ R!4*!+! <!) @,: ,hare capital 0eserves 4nappropraited profit ,urplus on revaluation pf assets3net of ta2 -(>$2)> 2(>>2(2> --$8')$ $->->>)-1?)>$' >2?2)>? $(888>$? -1$8)-8 (-(1(1-> ')8--1' >2?2)>? $>)>?)>'1'$$$2 -22((?>>1'11?' 408443#4 18()'8-? $'(8>?$1 2'28'?8>> ()'2$2 8 11?81>2 11)22('$ $--$>-?(2 BB##:%7B 18--1(>? 22>>$?(8 $$82)(1-8 8 ($)1$) 212-$2-8 $?-1)'?-8 B843%0B4

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')

408443#4

BB##:%7B

B843%0B4

&rofit and Loss Account For the year ended December31, 2008. "ark3upG return G interest earned "ark3upG return G interest e2pensed <et mark3upG interest income &rovision for diminution in the value of investments3net &rovision against loans and advances3net %ad debts written off directly <et mark3upG interest income after provision No m&*5$34K ' <!*!+< ' com! 6ee commission and brokerage income Iividend income !ncome from dealing in foreign currencies Fain on sale of securities3net 4nreali.ed loss on revaluation of investments classified as held for trading +ther income3net Total non3mark3upG interest income No $m&*5$34K ' <!*!+< !?4! +! Administrative e2penses +ther provisionsG :reversal;3net +ther charges Total non3mark3upG interest e2pense 52tra ordinaryG unusual item &rofit before Ta2ation Ta2ation 3 #urrent year 3 &rior years 3 Ieferred >(?2-'2 11(11 >>)8? >->8)11 8 1?-88>)8 -)81(($ -'$(') >$$$2 >$-?2)2 &rofit after Ta2ation 121(2$'? -(2>11> 3$)($ -)$?$8 -''>28$ 8 21$8?8$>((2$-> 312'(()$ ?'(-'8 >8(2()$ 1-2>-->2 )-(>?)? 18128 ?$8?$' ?$?)?$) 8 21?>)->> )$(12-) 3?>(?2( 1>-$$ >('2'>> 1-$)(>88 -)8-8(''1(1> 2-8>1$?1 31$1818881(' >((?22) 2)$8(2$? 318$1'? '(2$>2 -)'1((8 $82--(8$ 2$112$?11?81 >'2818 >8-?>2>$(>18 >$2$88 >'$(8? 1-88?>2?>>)2' >1)--( )2)->( )(8(2' 200% 2-))?8>1 (-2-$-' 212-2)82 1211') 181(-(8 ()888 11?2)$) 288>''>2007 $1)?>-')?>--$$ 2$'218>2 18-2>' 2'-'-?$ 1'' $8>-8-1 28?->811 2008 (88($?2( 11->8)(8 2?(?$8?( 2>?$''( 1$$-12) 8 (81'121 2((>$'>$

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'?

4nappropriated profit brought forward Transfer from surplus on revaluation of fi2ed assets3net of ta2

(''82>8 $21>> -822(2>

--$8')$ 11?---(2?2? 208083:0 2403

-1$8)-8 21$1' -1-28>' 20B2%%%: 24047

&rofit available for appropriation %asic and diluted earnings per share 3 after ta2 %alance ,heet Lertical Analysis

#7#%4824 2304

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

''

%alance ,heet As at December 31, 2008 2007 2008 2007 9 cash and balances with treasury banks balances with other banks landings to financial institutions investment3net advances3net operating fi2ed assets deferred ta2 assets3net other assets3net $'>?$??$ $?8)-1' 18-1$)2 11$8?'2>1 21?'>8-'? 1>82(12$ 8 1)?>?)>1 (18(?--1) $'>$11)2 (8($188 (1888)' '>2->?)( 2>2-18()8 1)2>$)$$ 8 1'?18()> (($>1-'8( '.>) 8.'$ 8.2> 2).--$.$( $.'8 8.88 (.$188.88 2008 9 ?.'$ 8.'1 8.'2 21.)8 -'.1? $.?' 8.88 (.() 188.88

Liabilities %ills payable borrowings deposits and other accounts sub3ordinted loan liabilities against assets subject to finance lease deferred ta2 liabilities3net other liabilities 18()'8-? $'(8>?$1 2'28'?8>> ()'2$2 8 11?81>2 11)22('$ $--$>-?(2 N!< &++!<+ R!4*!+! <!) @,: ,hare capital 0eserves 4nappropraited profit ,urplus on revaluation pf assets3net of ta2 >2?2)>? $(888>$? -1$8)-8 (-(1(1-> ')8--1' BB##:%7B >2?2)>? $>)>?)>'1'$$$2 -22((?>>1'11?' B843%0B4 BB##:%7B 18--1(>? 22>>$?(8 $$82)(1-8 8 ($)1$) 212-$2-8 $?-1)'?-8 B843%0B4 2.'11.8' ?2.28 8.1$ 8.88 8.$$ $.$8 188.88 2.)( -.?? ?-.)8.88 8.88 8.11 -.-2 188.88

%alance ,heet Hori.ontal Analysis

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

188

%alance ,heet As at December 31, 2008 200% 2007 2008 200% 0upee1s in 888 9 cash and balances with treasury banks balances with other banks lending/s to financial institutions investment3net advances3net operating fi2ed assets deferred ta2 assets3net other assets3net $2(>-')> >-))81) 218?1?88 >$(?>$1> 1'?2$'1-'8-(1-> 1)2$)$ 118$1(-8 $(218?2($ $'>?$??$ $?8)-1' 18-1$)2 11$8?'2>1 21?'>8-'? 1>82(12$ 8 1)?>?)>1 (18(?--1) $'>$11)2 (8($188 (1888)' '>2->?)( 2>2-18()8 1)2>$)$$ 8 1'?18()> (($>1-'8( 188 188 188 188 188 188 188 188 188 9 22.2$ 3(2.11 3'-.81 )?.1$ 18.()>.'? 3188.88 >1.'? 1'.'' 9 22.8) 3$?.-$ 3?8.--1.>2 $2.(2 '8.>) 3188.88 )'.-? 2'.>) 2007 2008

Liabilities %ills payable borrowings deposits and other accounts sub3ordinted loan liabilities against assets subject to finance lease deferred ta2 liabilities3net other liabilities )8?'>)' 2$'($()> 2-)(>1?$? 1-')((8 8 8 111)1('> $812>$'2' N!< &++!<+ R!4*!+! <!) @,: ,hare capital 0eserves 4nappropraited profit ,urplus on revaluation pf assets3net of ta2 -(>$2)> 2(>>2(2> --$8')$ $->->>)-1?)>$' 408443#4 >2?2)>? $(888>$? -1$8)-8 (-(1(1-> ')8--1' BB##:%7B >2?2)>? $>)>?)>'1'$$$2 -22((?>>1'11?' B843%0B4 408443#4 18()'8-? $'(8>?$1 2'28'?8>> ()'2$2 8 11?81>2 11)22('$ $--$>-?(2 BB##:%7B 18--1(>? 22>>$?(8 $$82)(1-8 8 ($)1$) 212-$2-8 $?-1)'?-8 B843%0B4 188 188 188 188 188 188 188 188 ().?1 >(.-? 1$.(3)8.88 8.88 8.88 (.'$ 1).'> (?.?$ 3-.$( 2?.2? 3188.88 8.88 8.88 '8.22).?-

;!*<'c&( A &(,+'+

&rofit and Loss Account

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

181

For the year ended December31, 2008. "ark3upG return G interest earned "ark3upG return G interest e2pensed <et mark3upG interest income &rovision for diminution in the value of investments3net &rovision against loans and advances3net %ad debts written off directly <et mark3upG interest income after provision No m&*5$34K ' <!*!+< ' com! 6ee commission and brokerage income Iividend income !ncome from dealing in foreign currencies Fain on sale of securities3net 4nreali.ed loss on revaluation of investments classified as held for trading +ther income3net Total non3mark3upG interest income No $m&*5$34K ' <!*!+< !?4! +! Administrative e2penses +ther provisionsG :reversal;3net +ther charges Total non3mark3upG interest e2pense 52tra ordinaryG unusual item &rofit before Ta2ation Ta2ation 3 #urrent year 3 &rior years 3 Ieferred &rofit after Ta2ation 4nappropriated profit brought forward Transfer from surplus on revaluation of fi2ed assets3net of ta2 &rofit available for appropriation %asic and diluted earnings per share 3 after ta2

2007 $1)?>-')?>--$$ 2$'218>2 18-2>' 2'-'-?$ 1'' $8>-8-1 28?->811

2008 (88($?2( 11->8)(8 2?(?$8?( 2>?$''( 1$$-12) 8 (81'121 2((>$'>$

2007 188 2(.)(-

2008 188 2?.?)

8.$$12 '.$18? 8.888> >-.>1$

>.)82> $.$$(2 8 >1.8'$

2>$(>18 >$2$88 >'$(8? 1-88?>31$1818881(' >((?22) 2)$8(2$? -(2>11> 3$)($ -)$?$8 -''>28$ 8 21$8?8$>((2$-> 312'(()$ ?'(-'8 >8(2()$ 1-2>-->2 --$8')$ 11?---(2?2? 208083:0 2403 Ho*'Ao <&( A &(,+'+

2?>>)2' >1)--( )2)->( )(8(2' 318$1'? '(2$>2 -)'1((8 $82--(8$ )-(>?)? 18128 ?$8?$' ?$?)?$) 8 21?>)->> )$(12-) 3?>(?2( 1>-$$ >('2'>> 1-$)(>88 -1$8)-8 21$1' -1-28>' 20B2%%%: 24047

(8.?-? '.?8-? 18.)-$ 2$.2)> 38.28$2 1-.-1 188

('.('' 18.>>$ 12.->$ 12.)?31.)?1' 1>.2)2 188

$-.-(38.82($.)-' $'.2)' 8 1$'.-? (2.282 3?.()') -.?>82 $'.-?2 188

('.8?) 8.8>-? -.(8( -(.--> 8 1(2.2$ ().)(' 3-.>28.18)(2.2$2 188

&rofit and Loss Account

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For the year ended December31, 2008.

200% 2-))?8> 1 (-2-$-' 212-2)8 2

2007 $1)?>-' )?>--$$ 2$'218> 2

2008 (88($?2 ( 11->8)( 8 2?(?$8? (

200 %

2007

2008

"ark3upG return G interest earned "ark3upG return G interest e2pensed <et mark3upG interest income

188 188 188 188

2$.$1 )$.?1 12.->

--.$( 1--.() $(.82 211(.) $1.>8 3188.88 2$'.?2 21.?' 2(.8$ 32$.'$ -.1( 22.21

&rovision for diminution in the value of investments3net &rovision against loans and advances3net %ad debts written off directly

1211') 181(-(8 ()888 11?2)$) 288>''> 2$112$?11?81 >'2818 >8-?>-

18-2>' 2'-'-?$ 1'' $8>-8-1 28?->81 1 2>$(>18 >$2$88 >'$(8? 1-88?>31$18-

2>?$''( 1$$-12) 8 (81'121 2((>$'> $ 2?>>)2' >1)--( )2)->( )(8(2' 318$1'? '(2$>2 -)'1((8 $82--(8 $ )-(>?)? 18128 ?$8?$' ?$?)?$) 8 21?>)-> > )$(12-) 3?>(?2( 1>-$$ >('2'>> 1-$)(>8 8 -1$8)-8 21$1' -1-28>' 20B2%%% : 24047

188 188 188 188 188 188 188 188 188

31$.1( 1'1.)2 3''.-? 1-'.1$.'2 1$.'' 322.11 8.28 1().)2

<et mark3upG interest income after provision No m&*5$34K ' <!*!+< ' com! 6ee commission and brokerage income Iividend income !ncome from dealing in foreign currencies Fain on sale of securities3net 4nreali.ed loss on revaluation of investments classified as held for trading +ther income3net Total non3mark3upG interest income

-)8-8(''1(1> 2-8>1$? 1 >(?2-'2 11(11 >>)8? >->8)11 8 1?-88>) 8 -)81(($ -'$(') >$$$2 >$-?2)2 121(2$' ? (''82>8 $21>> -822(2> #7#%482 4 2304

18881(' >((?22) 2)$8(2$ ? -(2>11> 3$)($ -)$?$8 -''>28$ 8 21$8?8$ >((2$-> 312'(()$ ?'(-'8 >8(2()$ 1-2>--> 2 --$8')$ 11?---(2?2? 208083: 0 2403

188 188 188 188 188 188 188

)-.$1 2'.1' ?.'31>.$8 31$2.?8 )>8.21 3?.>8

>-.1? 1>.8$ 28.)$ 1>.(2 311.$1 11(-.( ' 2).?-

No $m&*5$34K ' <!*!+< !?4! +! Administrative e2penses +ther provisionsG :reversal;3net +ther charges Total non3mark3upG interest e2pense 52tra ordinaryG unusual item &rofit before Ta2ation Ta2ation 3 #urrent year 3 &rior years 3 Ieferred

188 188 188 188 188 188

1-.1) 1$.88 3$1?.11 1$12.( 3(.') 2-.)2

1?.28 2?.)> 32(-.)2 3)$.?' 2.12 2>.>2

&rofit after Ta2ation 4nappropriated profit brought forward Transfer from surplus on revaluation of fi2ed assets3net of ta2

&rofit available for appropriation %asic and diluted earnings per share 3 after ta2

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RATIO ANALYSIS
0atio Analysis is an important and age3old techniEue of financial analysis. 0atios are important and helpful in the reference thatA

These simplify the comprehension of financial statement and tell the whole story of changes in the financial conditions of the business. These provide data for inter3firm comparison. The ratios highlight the factors associated with successful and unsuccessful firms also reveal strong and weak firms.

These help in planning and forecasting these can assist management in its basic functions of forecasting planning coordination and control. These help in investment decision in case of investor and lending decision in case of %ankers etc.

However the ratios are only indicators they cannot be taken as final regarding good and bad financial position of the business other things have also to be seen.

#0 RETURN ON ENUITY Iividing profit after ta2ation by share holder/s eEuity. 0+5 compares net profit after ta2es to the ,hare holder/s 5Euity.

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This ratio is calculated asA

0+5R&rofit after ta2esG,hare holder/s 5Euity

2008 2007

Q Q

2:042L 330%#L

20 RETURN ON ASSETS: This ratio shows the efficiency of organi.ation that how efficiently utili.es their assets. This ratio relates profits to assets. !t is calculated asA P*o-'< &-<!* T&?KTo<&( A++!<+

2008 2007

Q Q

30%0L 40%0L

30 EARNING PER SHARE:

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18-

<.&.A.T

<o. +f outstanding shares

2008 2007

Q Q

24047L 24030 L

40 RETURN ON DEPOSIT:

<.&.A.T N 188

S
Q Q

Total Ieposit

2008 2007

40%B L B022 L

B0

7ASHKDEPOSIT RATIO:

OThis ration is obtained by dividing cash by current liabilities G liabilitiesP. This ratio shows that the cash is enough for payment of current liabilities or not. !t is calculated as cash 0atioR#ashGcurrent liabilities +r R#ashGTotal Ieposit

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2008 2007

Q ##0:: L Q #30B8 L

%0 INTEREST IN7OMEKTOTAL IN7OME RATIO:

!nterest !ncome

S
Q Q

Total !ncome

2008 2007

8703% L 830#3 L

70 NET PROFIT MARGIN: This ratio measure the firm/s profitability of salesG interest earned after taking account of all e2penses and income ta2es. This ratio can be calculated asA N!< 4*o-'< m&*=' *&<'o Q N!< P*o-'< &-<!* <&?!+ K ' <!*!+< !&* !) R#00

2008 2007

Q Q

330B4L 3:0:2 L

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18)

80 A;ERAGE PROFIT PER BRAN7H:

&rofit <et

S
Q Q

<o. +f %ranches

2008 2007

R+0 #4D:84D::002B R+0 #4D878D7#B04

:0 OPERATING ECPENSE RATIO: <on markup e2pense

S
Q Q

Fross income

2008 2007

27072 L 2#0:% L

#00 TOTAL ASSET TURNO;ER:

!nterestGmarkup earnedN188

S
Q :002 L

Total asset

2008

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18?

2007

7074 L

##0 RISK ASSETS TURNO;ER:

<et interest income after provision

0isk assets

2008 2007

Q Q

%B0:8 L %80##L

#20 AD;AN7ES TO TOTAL DEPOSITS: This ratio show that how much efficiently the bank advances the deposits of their customer to borrower. !t is calculated as. A)2& c!+ )!4o+'< *&<'o Q A)2& c!+K )!4o+'<

2008 2007

Q Q

7:048 L 740:% L

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18'

#30 DUE FROM BANK TO DUE FROM BANK:

Landing to financial institutionN 188 institution

S
#800: L 20%% L

%orrowing

from

financial

2008 2007

Q Q

O*=& 'A&<'o com4!<'<o*+9

& &(,+'+ '

com4&*'+o

.'<h '<+ ' )3+<*, 8o* .'<h '<+

#ompetitive advantage spells out the JuniEueness1 of the organi.ation vis3K3vis its competitors. so the H%L also have uniEueness in its dealing with customers and also have uniEueness in his strategy with other their competitors. %usiness analysis is imperative for the organi.ation to ascertain the mood and the conditions for starting or consolidating a business venture. %usiness strategy analysis involves analysis of the organi.ational strategy to create a sustainable competitive advantage

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118

primary objective of competitor analysis is to understand and predict the rivalry or interactive market behavior between firms in their Euest for a competitive position in an industry. Therefore the H%L also always analy.e their competitors %anks Toward this end researchers have e2amined factors that influence competitive and patterns of entry into and e2it from rivals1 markets However researchers have made limited effort to investigate the prebattle competitive relationship between rivals and the e2tent to which it may predict rivalrous behavior in the market. This omission is due partly to the restricted conceptual treatment of competitor analysis which has not fully incorporated the essential antecedents that affect a firm1s competitive activity let alone considered them in an integrated way.

!ntensity of rivalry one of &orter1s :1'?8; well3known five forces driving competition has remained mainly a theoretical construct confined to the industry level. !n terms of analy.ing firms competing in an industry the strategic3group far the most popular and relevant. However researchers who use this approach have largely ignored the market conte2t in which competitors carry on their battles and the e2tent to which two firms actually compete directly against each other. Although the marketing literature recogni.es the importance of the market conte2t its contribution has been primarily in analy.ing competitors and competition at the brand or individual3market level rather than at the firm level. +ther approaches usually represent a high degree of abstraction and rely primarily on managers1 or researchers1 subjective perceptions which often are too remote to be linked to competitive behaviors in the market Thus far some of the most fundamental Euestions in competitor analysis have remained une2plored 1'?-;. 6or e2ample how can researchers studying competition differentiate among players in an industry to e2plain each player1s market behaviorsV How can a firm before launching an attack assess its prebattle relationship with a given rival and the resultant likelihood that this rival would retaliateV How can a firm gauge which

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111

opponent is most likely to attack its marketsV How can strategists differentiate among a set of competitors to allow the firm to allocate appropriate resources and attention to eachV 6inally although the importance of competitor analysis and interfirm rivalry is well recogni.ed there has been no systematic attempt to integrate the two topics.

This article seeks to provide a conceptual link by proposing two firm3specific theory3based constructsA the market commonality and the resource similarity between a given pair of competitors. Taking the firm as the basis for analysis ! argue that each firm has a uniEue market profile and resource endowment and that a comparison with a given competitor along these two dimensions will help to illuminate the competitive relationship between them and to predict how they may attack :or respond to; each other in the market. This firm3specific conceptuali.ation also leads to the idea of competitive asymmetry the notion that a given pair of firms may not pose an eEual threat to each other. ! first offer a number of propositions that use market commonality and resource similarity to predict competitive attack and response. ! also propose measures to assess market commonality and resource similarity along with a demonstration of how such measures could be implemented. The article ends with a number of implications for research and practice.

F3<3*! 4*o+4!c<+ o- <h! o*=& 'A&<'o . The structure of the %anking markets has changed radically over the last decade while in contrast the futures markets more or less maintained the status Euo. %ut now the futures markets are in catch3up mode as evidenced by the emergence of some dark pools and %anking firms are beefing up their technology to take advantage of what is coming down the pike. 6or the future aspects the H%L should be make itself active and also efficient 112

;'*<3&( U '2!*+'<, o- P&5'+<& ...023+<3)! <+0 ' =0com

and effective in the banking field and get the competitive advantage. That when occur truly when the H%L produce new products and services to their customers. The H%L should also introduce the new technologies in the %anking field before their competitors and provide the facilities to their customers and get the customer1s loyalty . The H%L should also provide the better service than their competitors and also should give the full response in the any branch. The H%L also should improve their computeri.ed system in the bank and the bank in the future also want to trained their employees in any technology and also will provide the new technology that facilitate the customers of the H%L

S6OT & &(,+'+ o- o*=& 'A&<'o ' <h! @3+' !++ +!c<o*
H%L is considered to be a very sound bank in the financial circles. The bank where the customers can safely keep their money as long as they want. !n ,7+T analysis the best strategies accomplish in organi.ation/s mission byA 1.52ploiting opportunities S<*! =<h+ A skill or capability that enables H%L to conceive and implement its The officers of H%L are considered as one of the most able professionals in and strengths.2.<eutrali.ing its threats and$.Avoiding its weaknesses. 6ollowing is a list of ,7+T of H%L

strategies. the banking world.

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11$

! observed that H%L employees interact with their clients as if they are their

personal friends and discuss about their problems as their own. H%L has got a reliable and easy to use internal computer system. 5very

information regarding the transactions in customers/ deposits has been computeri.ed. H%L maintained its data properly. H%L has very good security system. H%L is the larger commercial bank in &akistan with the network of over 1($'

domestic and international branches. %eing the pioneer of banking in &akistan H%L is the oldest and is the richest H%L focuses on consumer banking by lucrative schemes products and

in e2perience. services suiting best to the wants and demands of the customers.

H%L has opened all its branches at commercial areas so that the customers or The band is always on the look to improve its services both to the domestic as

clients face no problems in reaching to the bank. well as overseas customers. Human resources development and introduction of new technology towards 2( hours cash access and safe payment products for high value transaction. Having potential to encounter the competitive environment in the market. Leteran and e2perience private management group also involved in other

modern banking.

interests like te2tile and cement industry. #ustomer enjoys the services at the residential localities.

6!&5 !++!+

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11(

Highest number of branches effecting the proper maintenance and difficulty

in providing same working environment at the each branch &oorer system of recovery of the system is a threat to bankruptcy. Lack of customer feed back. Low job satisfaction. &oor AT"/s ,ervice !nconsistency in efficiency and working atmosphere due to the largest of ,ense of insecurity in the employees serving at low profitable branches due

branches. to the down si.ing. 6emales feel uneasy in an environment among the male workers. Lictim of political legal and socio3cultural pressures .Lack of professionalism in the branch employees mostly.

O44o*<3 '<'!+ Huge untapped market potential in consumer banking !n opportunity e2ist in form of opening of ladies banking section within the +pportunity for developing value added services combined with corporate

branch which is entirely a new idea and it will attract customer. banking relationships cash management services to large and medium si.ed corporate clients. Frowing policies of government on business and commerce sector provide

H%L opportunities to take advantages of these policies to meet efficiently with the 11-

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business people to solve their problems with the instant cash and financing facilities. Fovt. is taking very bold steps to promote !T in &akistan. H%L has an opportunity to improve in technology. Large international network which principally focuses on trade finance with

&akistan can be utili.ed to tap trade activities in other markets. !n addition services such as cross border G offshore financing for corporate customers can be enhanced. #ustomer feedback on different products and accounts has really improved the bank performance and encourage the atmosphere for other future policies. H%L also has an opportunity to e2pand its new technological advancement

likeM tele banking and internet banking facilities in order to serve the customer more efficiently specially 53banking facility is also a new opportunity which is a flourishing business in foreign countries and can also be here if H%L takes the initiatives. 6urther reduction in intermediation costs possible with improving

technology. Iue to efficient and veteran management group H%L can also improve !ll and e2pand its foreign operation successfully.

Habib %ank Limited provides opportunity to utili.e its skills and efficiencies

in leasing business.

Th*!&<+
An area in the environment that increases the difficulties the organi.ation/s #onsolidation in the banking sector resulting in increased competition. achieving high performance.

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11>

,hortage of trained and speciali.ed staff at lower e2ecutive and officer levels The threat of inconsistency and government policy regarding to business and

economics sectors specially political and regional situation which makes the environment uncertain. Frowing global technological advancement. ,trict regulation by government over credit facilities to the customers as !ll as Loss of confidence of overseas customers due to free.ing of accounts. 6acing more competition by foreign banks in the market. 6oreign banks are flourishing in field of consumer financing. Also the increasing operation of private banks. Highly attractive and advance services by foreign banks to their customers.

to meet the prudential.

7o c(3+'o 1 *!comm! )&<'o + -o* 'm4*o2!m! <

R!comm! )&<'o I P*o4o+!
1; ! will give following suggestions for the better function of the %ankA

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11)

2; $;

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 hajj applications acceptance counter should be provided to

overcome inconveniences faced by the customers. -; >; ); ?; A separate ladies counter should be there The %ank management should be very careful while granting the loans. &ersonal interests should not be given importance and customers &ersonal credit worthiness must be carefully scrutini.ed public relation

desk should be established in each and every branch for guidance as well as redresses of grievance of customers at the spot. '; 18; policy. 11; <ew talent G professionals should be hired to coupe with the competitive +nline %anking should be introduced in all the branches. Aggressive publicity campaign must be introduced through press and

5lectronic media for new products and scheme by initiating vigorous marketing

demand in the industry. 12; !nformation technology should be introduce in all the branches to

enhance the efficiently. 1$; The commission on government rashed enhanced G made rational to

increase the %anks profitability. 1(; 1-; 1>; on merit. The financial statement should be made more transparent and reliable. #onsumer financing should be initiated to capture the market share. 5mployee/s induction promotion and transfer should always be made

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11?

1);

To motivate the employees their remuneration G salaries should be made

at par with top tier %anks.

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11'

R!-!*! c! 1 So3*c!+ 3+!) 8Sho3() @! 4*o2')!) ' APA -o*m&<9

! collect this information from 1. Habib %ank Limited of &akistan Annual 0eports 2. ,tate %ank of &akistan &rudential 0egulation for #orporate and #ommercial %anking. $. ,tate %ank of &akistan %&0I #irculars (. Iawn <ewspapers for updated information -. !nstruction #irculars of <ational %ank Limited >. 5conomic 0eviews for %anks and their activities ). ,tate %ank of &akistan 7ebsite httpAGGwww.sbp.gov.pk ?. Habib %ank1s website httpAGGwww.hbl.com ! also visit @ complete ? weeks internship in Habib bank of &akistan "ain #hubara 0oad Layyah for collecting data.

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A
List of Anne2es

!?!+

A
A

!? #
+verview of the organi.ation %rief history <ature of the organi.ation %usiness volume &roduct lines #ompetitors

!? 2 +rgani.ational structure +rgani.ational Hierarchy chart1 <umber of employees1. "ain offices #omments on the organi.ational structure

!? 3
&lan of your internship program A brief introduction of the branch where you did your internship ,tarting and ending dates of your internship The departments in which you got training and the duration of your training

!? 4
Training program

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121

!ntroduction of all the departments Ietailed description of the department you worked in +0 Ietailed description of the project assigned.

!? B
,tructure of the 6inance Iepartment Iepartment hierarchy

!? % Accounting system of the organi.ation 6inance system of the organi.ation 4se of electronic data in decision making "obili.ation of funds Feneration of funds ,ources of funds

A A

!? 7 #ritical analysis 0atio analysis Hori.ontal @ vertical Analysis +rgani.ation analysis in comparison with itscompetitors; 6uture prospects of the organi.ation. !? 8 S6OT & &(,+'+ o- o*=& 'A&<'o ' <h! @3+' !++ +!c<o* !? : #onclusion @ recommendations for improvement 0eference @ ,ources used

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122

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12$