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Virtual University of Pakistan

Evaluation Sheet for Internship Report
Spring 2010
FINI619: Internship Report (Finance) Credit Hours: 3

Name of Student: Mudassar Yameen

Evaluation Criteria Result
Written Work Status
pass
(Internship Report)
Student’s ID: mc080407726 Presentation & Viva Voce

Final Result

Supervisor:
Graphical presentation of ratio analysis is not included
SWOT analysis and Recommendations are in generalized form and are not relevant to Finance.

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Organization:
Habib Bank Limited (College road Branch Sargodha)
Name:
Mudassar Yameen
VU_ID:
mc080407726
Session:
Fall 2008 to Spring2010
Date of Submission:

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 27/09/2010
University:
Virtual University of Pakistan

Letter of Undertaken

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Internship Certificate

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 Dedication
I dedicate to my beloved parents and Respectable teachers
whose assistance is always with me, and all those who have
a soft corner for me in their hearts.

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 Acknowledgement
All gratitude and thanks to almighty “ALLAH” the gracious, the most
merciful and beneficent who gave me courage to undertake and complete
this task, as well as to complete this report in a very limited time. I am very
much obliged to my ever caring and loving parents whose prayers have
enabled to reach this stage.

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My thanks also goes to young, dynamic, congenial, and qualified staff of
HBL who never let me alone in different situations related to my internship.
My friend Mr. Sajid and Mr. Naeem also help me to prepare this report.
I am also thankful to bank manager Raja Faiz Muhammad who cooperative
with me.

Executive Summery

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This report is about my internship program with Habib Bank limited. In this report I discussed the main aspects of the bank, which I observed
and perceived during my internship program. In this report I have explained the complete details of bank. Along with it, the processes,
policies and procedures of the bank are also discussed in detail.

The main purpose of internship is to learn and get some knowledge by working in practical environment and also to apply the knowledge that
acquired during the studies in order to face and deals with problems using the knowledge and skill learned during the academic process.

In this report I have provide the detailed analysis of the organization, and the financial, technical, managerial and strategic aspects have been
evaluated to analyze the current position of the organization.

During the time of my internship in Habib Bank College road branch Sargodha I got the chance to work in all the departments of HBL
working there. Duties and learning in each department is given in this report. Talking about financial performance of the bank in 2010 all the
financial indicators are showing positive results when the financial performance of the bank in 2010 is compared with financial performance
of 2009. At the end of this report I have given my suggestion for the improvement of the bank.

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 Table of Content
No. Description Pages
08 Brief introduction 08 - 09
09 Overview of the organization 10 - 15
Brief history
Nature of the organization
Business volume
Product lines
Competitors
10 Organizational structure 15 - 23
Organizational Hierarchy chart
Number of employees
Main offices
Introduction of all the departments
Comments on the organizational structure
11 Plan of your internship program 23 - 24
A brief introduction of the branch
Starting and ending dates of your internship
Names of the departments
12 Training program 24 - 25
Detailed description of the operations/activities

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 Detailed description of the tasks assigned to you.
13 Structure of the Finance Department 26
Departmental hierarchy
Number of employees working in the finance department
Finance & accounting operations
14 Functions of the Finance Department 27 - 28
Accounting system of the organization
Finance system of the organization
Use of electronic data in decision making
Sources of funds
Allocation of funds
15 Critical analysis 28 - 51
Financial analysis
Ratio Analysis
Horizontal Analysis
Vertical Analysis
Industry Analysis
Trend Analysis
Future prospects of the organization.
16 SWOT analysis of organization 52 – 53
17 Conclusion 53
18 Recommendations for improvement 53 – 54
19 Reference & Sources used 54
20 Annexes 54

8 - Introduction of Habib Bank Limited:

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HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network and become the
largest private sector bank with over 1,450 branches across the country and a customer base exceeding five million relationships.

The Government of Pakistan privatized HBL in 2004 through which AKFED acquired 51% of the Bank's shareholding and management
control. HBL is majority owned (51%) by the Aga Khan Fund for Economic Development, 42.5% of the shareholding is retained by the
Government of Pakistan (GOP), whilst 7.5% is owned by the general public i.e. over 170,000 shareholders following the public listing that
took place in July 2007.

With a presence in 25 countries, subsidiaries in Hong Kong and the UK, affiliates in Nepal, Nigeria, Kenya and Kyrgyzstan and rep offices in
Iran and China, HBL is also the largest domestic multinational. The Bank is expanding its presence in principal international markets
including the UK, UAE, South and Central Asia, Africa and the Far East.

Key areas of operations encompass product offerings and services in Retail and Consumer Banking. HBL has the largest Corporate Banking
portfolio in the country with an active Investment Banking arm. SME and Agriculture lending programs and banking services are offered in
urban and rural centers.

Rating:
HBL is currently rated AA (Long term) and A-1+ (short term) and has a balance sheet size of over USD 11 billion. It is the first Pakistani
bank to raise Tier II Capital from external sources.

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Vision

“Enabling people to advance with confidence and success”

Mission

“To make our customers prosper, our staff excel and create value for shareholders”

Values
Our values are the fundamental principles that define our culture and are brought to life in our attitude and behaviors. It is these values that
make us unique and unmistakable. Our values are defined below:

Excellence

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 This is at the core of everything we do. The markets in which we operate are becoming increasingly competitive, giving our
customers an abundance of choice. Only through being the very best - in terms of the service we offer, our products and
premises - can we hope to be successful and grow.

Integrity
We are the leading bank in Pakistan and our success depends upon trust. Our customers - and society in general - expect us
to possess and steadfastly adhere to high moral principles and professional standards.

Customer Focus
We understand fully the needs of our customers and adapt our products and services to meet these. We always strive to put
the satisfaction of our customers first.

Progressiveness
We believe in the advancement of society through the adoption of enlightened working practices, innovative new products
and processes, and a spirit of enterprise.

9 - Over view of organization:

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Brief History of Organization
HBL established operations in Pakistan in 1947 and moved its head office to Karachi. Our first international branch was established in
Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to commemorate the bank’s 25th Anniversary.

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

On December 29, 2003 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan
Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD
389 million). On February 26, 2004, management control was handed over to AKFED. The Board of Directors was reconstituted to have four
AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees.

At a time when this newly born country was at whirlwind of crises, it was HBL which fulfilled generously the financial needs of all its
sectors, paid salaries ot the employees of all Govt. departments, helped in the establishment of state bank of Pakistan which the Quaid-e-
Azam inaugurated on July 1st, 1948. HBL after partition opened its branches throughout Pakistan to provide finance and other facilities to the
business community. In association with HBL, the Govt. sponsored Pakistan Finance Corporation Limited for financing of cotton. The bank
helped handsomely in the construction of WARSAK DAM Project, WAPDA, & K.D.A. by provided finance and other facilities.

Another innovation introduced by HBL is the evening banking cash long after the crossing of normal banking hours. It was also the first in
making available such new facilities as gift cheques, Rupee Traveler’s Cheques, Credit Card System, short term and long term schemes for
small businessmen.

Nature of the organization

Habib Bank Limited is naturally a Financial Organization, which deals with lending, and borrowing and investing activities. The nature of
responsibilities of the Bank is different and unique from other Banks/financial institutions. It is the largest commercial bank operating in
Pakistan. Its balance sheet size surpasses that of any of the other banks functioning locally. It has redefined its role and has moved from a
public sector organization into a modern commercial bank.

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The Bank's services are available to individuals, corporate entities and government. While it continues to act as trustee of public funds and as
the agent to the State Bank of Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio and is today a
major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury
services and is showing growing interest in promoting and developing the country's small and medium enterprises and at the same time
fulfilling its social responsibilities, as a corporate citizen.
Habib Bank Limited is a Governmental Organization. As an agent of State Bank of Pakistan, it implements the policies of SBP. Its basic
objective was to extend credit to the agriculture sector.
It deals all Government Revenue, collection and payments of salaries, pensions and Govt. Treasury. It is a complete commercial, retail
and corporate bank as well.
The National Bank of Pakistan as a commercial bank generally makes advances for a period not exceeding one year, except in case of small
and medium industries for which advance may be made for a maximum period of five years. The bank makes not only against the security of
stocks and goods hypothecated or pledged to the bank, but also against documents of goods and propriety, shares are various joint stock
companies, Government securities, Insurance policies deposits receipts, etc. The margin and rate of interest are determined by several factors
including the type of security, the size of loan and the integrity of the party.

Business Volume
The Privatization Commission has done well to propose the disinvestment of 5% of the HBL shares with the green shoe option of 2.5%. As
detailed in the background material HBL is a blue chip company with excellent record and good growth potential. The offering will deepen
the market and bring new investors into its fold. The objective is laudable. It has our full support.

We submit with all humility that the divestment could be improved to ensure the greatest good of greatest number. We believe the proposal as
presently constituted has some inherent short comings:

(a)The issue price of Rs 235 is steep. Today on the 3rd July, 2007 the average price per listed share is Rs.63.82 (market capitalization of
rupees 4029.9 billion divided by listed capital of 63.14 billion). The proposed issue price is almost 3.68 times the average price. How can this
be justified when the proposal seeks to benefit the average Pakistani?

We may comment in passing on the strange coincidence that the price per share paid by Agha Khan Fund for economic development was Rs
63.68 which is very close to the average price prevailing on the Exchange today.

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We may also note the total consideration paid for 51% of HBL was 22.4 billion and the present offer for 5% is valued at Rs.12.16 billion. A
handsome premium is being paid to the management for excellent performance. Good luck to them. May the bank prosper even more under
their dynamic stewardship. But we are only asking for the issue price in the IPO to be per share rationalized.

(b) At the root of any long term investment is the objective of making capital gains. Normally investment in blue chip stocks results in
doubling the capital in four years. The success and popularity of our mutual fund industry is based on this level of return. 25% returns per
annum is not unknown. How ever given the price of Rs.235 a doubling in value seems to be a remote prospect. Why should an investor
commit funds to Habib Bank IPO when he can easily choose more than 25 companies which promise a 25% return or he could invest in one
of the leading mutual funds.

We strongly recommend the issue price should be brought down to at least the average price:

(c) As further evidence of the unrealistic price of the IPO, we may submit that never before has the Privatization Commission charged such
heavy premiums (see chart below). It seems that the Privatization Commission has a figure of $ 4 per share in mind when they have fixed the
price of Rs. 235. Their target seems to be the foreign investor and $ 4 is an eventual benchmark GDR price. It must be realized that our
institutions are flush with cash and the issue will be subscribed by the cash rich local and foreign institutions. The mere over-subscription of
the issue will not be evidence of success. The average Pakistani investor for whom this offer is designed will not benefit.

Description Present Plan Suggested Plan

Total No. Shares 690,000,000 2,760,000,000
5% of Total Shares 34,500,000 138,000,000
2.5% of Total Shares (Green 17,250,000 69,000,000
Shoe Option)
Total IPO 7.5% 51,750,000 207,000,000
No. of Shares Before / After 51,750,000 207,000,000
Stock split
Additional No. of shares after --- 155,250,000
stock split

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Expected No. of Investors @ 517,500 2,070,000
100share per investor
Additional No. of investors after --- 1,552,500
stock split
Face Value of Each Share PKR 10 PKR 2.50
Premium to be charged PKR 225 PKR 56.25
Total Cost of each share PKR 235 PKR 58.75
Lot of Shares 200 800
Total investment with each PKR 47,000 PKR 47,000
application
Proceeds of Privatization PKR 12,161,250,000 PKR 12,161,250,000

Products and Services Offered by HBL:

HBL Fast Transfer:

HBL Fast Transfer lets you received your remittance instantly and absolutely free. HBL - Pakistan’s largest banking network, provides
unmatched convenience and confirmation SMS to inform you that your money is ready for collection.

HBL Phone Banking:

Your bank is just a phone call away. You can now call HBL Phone Banking and save a trip to the branch. Your query will be resolved in a
single telephone call from anywhere and at anytime. For details on features and benefits please see below.

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HBL Debit Card:

HBL Visa Debit Card allows you to pay for your purchases directly from your bank account. You don’t have to carry cash and your monthly
statement provides you with a complete record of all your transactions so you can manage your expenses with ease.

HBL Credit Card:

Welcome to a world of convenience and flexibility. Accepted at over 29 million merchants

worldwide, HBL Credit Card makes shopping fun and paying simple. So make the most of your
shopping experience.

Car to Car loan:

HBL Car To Car is a revolutionary car financing offer. It makes the car of your choice affordable and practical with a buy back guarantee.
HBL Car To Car offers matchless features and unique options at the end of the lease. Now you can drive a new car at the end of every two
years.

Deposits Accounts:

HBL offers a wide range of accounts suited to meet individual customer needs. Main deposits accounts include, Current Account, Saving
accounts, Term accounts and Foreign Currency accounts etc.

Rupee Traveler’s Cheques

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It was introduced in 1957. Here the customers are provided the facility of encashment of their traveler’s cheques through any branch of the
Bank.
Small Factory Owner Scheme
In 1959 the Bank offered loans to small scale producers under the “small factory owner scheme” in order to boost the economy of Pakistan

Gift cheques schemes

It was launched in 1962. Under this scheme, the Bank provided customers with pre-printed cheques of various denominations which could be
used to send gifts to their loved one on various occasions.

School Banking
This scheme was introduced in 1962 to provide Banking services to children in a number of schools though out the country.

“Drive in” Banking

HBL established “Drive in” branches in 1962 at various major cities of the country where the customers could avail Banking services without
getting down from their vehicles.

Infant Saving Scheme

In 1968 the Bank offered infants to open saving accounts operated by their parents/ guardians.
Courtesy Card
It was launched in 1968 through which the customer could be introduced to other branches in the country.

Deposit growth certificate

This scheme was introduced in 1975 with increase rate of interest.
Special five years deposit certificate
This scheme was introduced in 1975 where the major emphasis is on increased rate of interest.
Competitors of HBL:

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The augmented in banking industry of Pakistan has directed to an increase in the number of bank both domestically and internationally to be
Chairman
established and create a competitive industry. Competitors of Habib Bank come in the form of domestic commercial bank established in
Pakistan.

Major Competitors are as follows;

President
1) United Bank Limited

2) Atlas Bank
Board of Directors
3) Allied Bank Limited

4) National Bank of Pakistan

5) Askari Commercial Bank Limited

SEVP SEVP Finance, Audit &
International Operations Administration
6) KASB Bank

7) Soneri Bank Limited

SEVP Corporate Banking SEVP Asset Remedial
8) Bank Al-Habib Limited & Treasury Management

9) Bank Al-Falah Limited.

10 - Organizational structure:
SEVP Retail Banking &
SEVP Credit Policy
Organization hierarchy chart:
Information Technology

SEVP Corporate Banking, financial

institute & Project Finance
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Number of Employees:

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24 employees are working in Habib Bank Limited College Road Branch

Main offices
Head Office
HBL Plaza
I. I. Chundrigar Road
Karachi-75650, Pakistan.
Tel : +92 (21) 2418000 [50 lines]
Fax : +92 (21) 9217511

Registered Office
4th Floor, Habib Bank Tower
Jinnah Avenue
Islamabad, Pakistan.
Tel: +92 (51) 2872203
Fax: +92 (51) 2872205

Registrars
THK Associates (Pvt.) Ltd.
Ground Floor, State Life Bldg No. 3
Dr. Ziauddin Ahmed Road
Karachi, Pakistan.
Tel: +92 (21) 111-000-322

Websites

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Corporate website:
www.hbl.com
Treasury website:
www.hblgtr.com.pk
E-bank (internet banking):
www.hblebank.com
Auditors
KPMG Taseer Hadi & Co.
Chartered Accountants

Introduction of all departments

Various departments are working in all the branches of Habib bank to facilitate the customers. Following are the banking departments
functioning in HBL College Road Sargodha.
 Account opening department.

 Cash department.

 Credit department.

 Lockers department.

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  Bill clearing department.

 Foreign exchange department.

 I.T department.

Accounts opening Department

Basic function of the accounts department is to open new account and facilitate the customer for the account opening purpose. There are
certain formalities which are to be observed for opening of an account with a Bank. These formalities in brief are as under:

FORMAL APPLICATION:
The customer is to fill "Account Opening Form. It is a formal request by a customer to the bank to allow him to have and operate the account.
Documents require for opening an account:
 Copy of CNIC
 Service certificate or student card.
 Utility bill
 Provisional receipt
 KYC (Know Your Customer)

SPECIMEN SIGNATURE:

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When the Banker is satisfied about the integrity of the customer, he agrees to open the account. The Banker obtains the specimen signatures
of the customer on the signature book or on card.
Posting the account on the system:
After that officer has to post the new account on computer system for further processing, during the process customer id and account number
is generated. New account remains active for one day after that it is blocked by the head office until CNIC of the customer is verified from
NADRA.
Cheque book issuing:
After the CNIC verification account opening officer has to issue a cheque book to customer so that he can be able to make withdrawal from
his account. Now a day in Habib bank cheque book issuing process is centralized that take 06 days to complete.
SECRECY:
The secrecy of depositor’s account is the. Responsibility of every official engaged in the Bank service.

Cash Department

C
ash Department is very sensitive and risky part of the bank. Very causations and competent personnel are needed for the Job. HBL
has really such a diligent staff with appreciable competencies and will to do work. Main function of cash department is to deal with
cash payment and cash receipts.
Cash deposit procedure:
The customer fills the pay slip. The cashier receives the pay slip and cash. He counts the cash and makes the detail of the notes at the back of
the pay slip. Then he compares the detail with amount written on slip and signs the pay Slip. Then he credits the entries in the computer by
serial No, account type, Account number and amount. Puts the stamp of the “cash Received” on the payment slip, the first portion is for bank
record while other one is given to the customer.

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Cash payments procedure:
When a customer comes to withdraw a certain amount from his account, he brings a Cheque along with him. In this case the following steps
are taken.
The cashier receives the cheque and checks it whether it is post dated or predated. Cheque can be cashed within six months. A predated
cheque cannot be cashed. He takes two signatures at the back of the cheque from the bearer. He gives the cheque for posting at the computer.
The computer checks out whether there is balance in the account or not. Other instructions are also received e.g. blocked, frozen, Etc. the
posting is done in the computer and the cheque is stamped posted with the serial number and date. He gives the cash to bearer and the
respected account is debited.
Online fund transfer:
Another function of the cash department is of online transfer of funds.
Customer has give filled remittances form with cash or without cash (from account transfer) to the cashier in cash department who will then
credits the beneficiary account.
Balancing cash at the end and transferring excess cash:
At the day end cash department is responsible for balancing the cash. Physical cash should be balanced with the amount in the computer.
Jinnah Chowk branch’s limit for cash is 40 million which it can keep within the branch over the night excess cash is transferred to NBP.

Credit Department
1. Introduction
2. Securities.
3. Types of credits
INTRODUCTION

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The function of credit department is to lend money in the form of clean advances, against promissory notes, as well as secured advances
against tangible and marketable securities. The bankers prefer such securities that do not run the risk of general depreciation due to market
fluctuations.
Common Securities for the banker’s advances are as under:-

SECURITIES
1. Guarantees
When an application for advance cannot offer any tangible security, the banker may rely on personal guarantees to protect himself against loss
on advances or overdraft to the applicant.

2. Mortgage
A mortgage is the transfer of an interest in specific immovable property for the purpose of security the payment of money advanced or to be
advanced by way of loan, and existing or future debt, or the performance of an engagement which may rise to a pecuniary liability. The
transfer is called a mortgagor, the transferee a mortgage.

3. Hypothecation
When property in the shape of goods is charged as security for a loan form the bank the ownership and possession is left with the borrower,
the goods are said to be Hypothecated The essence of hypothecation is that neither the property in the goods not the possession of them are
possession is left with the borrower, the goods are said to be Hypothecated the essence of hypothecation is that neither the property in the
goods not the possession of them are possessed by the lender, but the security is granted by means of letter of hypothecation, which usually
provides for a banker’s charge on the hypothecation goods.

4. Pledge
In a pledge the ownership remains with pledge, but the pledge has the exclusive possession of property until the advance is repaid in full.

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5. Promissory Note
Sometimes promissory note is also accepted as a security, "A promissory note is an instruments in writing containing an unconditional
undertaking signed by the maker, to pay on demand or at a fixed or determinable future time a certain sum of money only, to or to the order of
certain persons, or to the bearer or the instrument."

TYPES OF ADVANCES
The advances which are given by Habib Bank Limited are as under:-

1. DEMAND FINANCE (Ordinary Loan)

Demand Finances are those advances which are allowed in lump sum for a fixed period and are repayable lump sum or gradually in
installments.

2. RUNNING FINANCE (Overdraft)

Running finance (old name overdrafts) are advances, which are generally, given to meet temporary requirements of the customers. A good
customer use the banks running finance limit as a mean of protecting his credit in the market and as a line of security defense to meet his
commitments.

3. FINANCE AGAINST THE FOREIGN BILLS (FAFB)

The advance facility is allowed both to local foreign bills and is classified as under:-
i. FAFB (Local) advance against Railway receipts and truck receipt, a company with bills of exchange and invoices, are given under this
head.

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 ii. FAFB (Foreign) advances against foreign bill, covering bills of exchange bills of lading airway bills of exchange bills of lading
airways bills etc.
4. AGRICULTURE LOANS
Loans to the farmers with holding up to 25 acres for meeting their short terms, medium and long terms Agricultural production requirements,
such as:

i. Agricultural inputs
ii. Tube wells
iii. Live Stock Framing
iv. Land improvement
5. INDUSTRIAL LOANS
Besides the short-term loans which play a part in working capital medium and long-term loans are also given to industrial sector for purchase
of machinery and other capital nature goods.

Bill Clearing Department

INTRODUCTION
Every bank acts in two way i.e.
i. Paying Bank
ii. Collecting Bank
Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. It is, however, an important
function of crossed cheques. A large part of this work is carried out through the N.I.F.T.

NIFT- National Institutional Facilitation Technologies (Pvt.) Limited:

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 NIFT is a joint venture between a consortium of six major banks and private sector. It is responsible for the establishment and
management of automated clearinghouse facilities in Pakistan. NIFT is proactively involved in the modernization of payment systems in
Pakistan.

FUNCTION OF CLEARING DEPARTMENT

The following are the main functions of clearing department.

4. To accept transfer deliveries and clearing cheques from the customer of the branch and to arrange for their collection.

5. To arrange the payment of cheque drawn on the branch and given for collection to any other branch of Habib Bank of Pakistan or any
other members, or sub-members of the local clearing area..

6. To collect amounts of cheques drawn on members, sub-members of the local clearing house, sent for collection by those Habib Bank
Limited, branches which are not represented a the local clearing area.

PROCEDURE OF DEPOSITING CHEQUES IN CLEARING DEPARTMENT

Whenever a customer wants to deposit cheque, etc, he fills a pay in slip and hands it over the counter along with the instruments he wants to
deposit with bank.

As far as possible, the customer desire that on of the staff member fill in a slip for him, he should be obliged promptly.

One portion of the perforated pay in slip is handed over to the depositor and the portion becomes the regular portion of a credit
voucher

Comments on Organizational structure

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The Habib Bank limited is one of the oldest banks of Pakistan. The bank has seen a lot of changed during last 65 years. However the
organizational structure is not so professionally developed and implemented. Organizational structure has not been changed so much since
many years. Although the departmentalization exists but in branches there is no rigid concept of departmentalization present. Sometimes the
chain of command is surpassed and no care is taken on authority and responsibility fixation.
However, overall situation is not so disappointing. System needs improvements
But currently serving its purposes in a very suitable way

MANAGER
MANAGEROG-I
OG-IADVANCE
ADVANCE

OG-II ADMIN

OG-II OG-II OG-II OG-III

SERVICES CASHIER ACCOUNTS

ASSISTANT ASSISTANT ASSISTANT ASSISTANT

GODOWN GODOWN GODOWN GODOWN

KEEPER KEEPER KEEPER KEEPER

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 HEAD MESSANGER

MESSANGER

11 - Plane of your internship program:

I planned by internship programs and goals carefully, and these programs and goals are measured by Bank management and other staff in
organization. Internship program provide me the tangible goals and objectives that enabled me to prove myself for understanding the work of
organization. My internship plan includes proposals, logistical information and ideas.
Many question raise during my internship plan mainly include.

Which department I do work?

What work to be done?

How much time I spent on one department?

Does organization need an intern to perform supportive function?

Does bank give any pay to the interne?

If bank pay then how much?

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The advisor will work closely with interne and guide the interne that how to do the work. Due to this, the interne will get good work
experience to follow the instruction of the advisor.
Brief introduction of branch where I do internship
It was established in July 1991 at college road Sargodha. It works efficiently since 1991 to 2010. Its current chief manager is Raja Faiz
Muhammad Sahab. He is polite, hardworking delegated and innovator. This branch held annual meetings at the end financial year and point
out the problems that occurs in financial and any other matters. Its management and employees are working properly under the manners. They
are regular and hard working employees. There is no any large conflict between them.

Starting and ending dates of my internship

I did my internship from 20-05-2010 to 08-07-2010

Names of the departments in which I do internship

 Account opening department.
 Cash department
 Bill / Remittance
 Clearing department
 Finance Department
12 - Training Program:
Detailed description of the operation/activities of department’s I worked;
Working in HBL as interne is my first experience to work in any organization. During my training I apply all the knowledge that we gained
from studies. I explore my all abilities, skill, and knowledge during my work. I did my internship in HBL College road branch, for near about
six weeks. Everyone knows that knowledge without practice is sterile.
I shall be very thankful to the officers of Habib Bank Limited who helped me during my training, and provide me the proper
instruction that how to work. During my internship the main thing that I learned is how to build the good customer relationship, and how to
satisfy the customer.

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Following are the main departments in which I performed my duties;
 Finance department.
 Agriculture department.
 Human resource department.
 Administrative department
 Cash department

Finance department:
In the 1st week I started my training in the finance department. In the finance department mostly work was done by the Manager Finance and
regional professional finance. Accounts officer told me about the vouchers of the transactions. When I detained at the finance department
vouchers of the transactions are compiled by me. After compilation of the vouchers I have handed over to the Accounts officer who have
examined and then enter in the software after the permission or signature of the finance manager. All work was computerized with the help of
accounting software based on the Peachtree accounting. I have learned about the income and expenditure statement of the branch which is
prepared by the finance department on the basis of vouchers.
Agriculture Department
Next two weeks I spend on Agriculture department where the bank gives the agree loan to the customers. This is a seasonal loan on the
fertilization of crops to the farmers, normally returned to the bank after one3 year as a whole with 3 or 6 moths’ installments of the interest.
HBL has another kind of loan for cows and buffaloes. Banks have some conditions for the issuance of loans and pledge some property of the
loaned for security
• Farad of land for Agriculture loan.
• Pass book of land.
• Amount of Land in total pledged by the Customer.
• Insurance of the customer with insurance company.
• Period of Loan.

Human resource department:

One week of my training spend on human resource department. In HBL performance of the employees is evaluated on the basis of
what has been expected from them. During work I also learnt how to recruit and select employees for new job and how to assign work
according to their work. In human resource department I also learnt that on what reasons the employees are dismissed.

37
Cash department:
Remaining days of my training spend on cash department. I collected bills of LESCO, PTCL and SNGPL during period of my internship. I
also used to write scrolls, which are written to keep record of bills collected by the branch and one copy of them is sent to the concerned
organization.
After this I came under the supervision of the Cashier who got me to know, how the books of cash are balanced at the closing of each day. I
too learnt to prepare General Ledger which is called as the mother of all books used in the branch. It was really a tough and daunting task. I
consumed lot of my time in scrolling the Utility bills of WAPDA, TELEPHONE, and SUIGAS, the collection from these bills were to be
performed by me and after the proper vouchering of these bills, a copy of collections was sent to respective departments. After scrolling I was
deputed on the account opening.

13- Structure of the Finance Department

Department hierarchy

38
 Treasury

Finance Officer

Finance Manager

Assistance Manager

Accountant

Casher

39
14 - Function of Finance
Head department:
Following are the main functions Messenger
of finance department;

Compilation accounts
This is the duty of finance department to ensure the compilation of accounts. All the accounts are compiled in his supervision.

Accepting Deposits:
Accepting deposits is the main function of HBL. The first and main aim of HBL is to collect surplus money from public, and invest in
different places.

Difference in accounts:
The finance department makes sure that there is no difference in the accounts. It there is any difference, he reconciles the figures and is
responsible to remove the same.

PLS Accounts:
Profit and loss account is the account on which charge lower interest rate. This account is also included in Islamic era. This business is done
on the basis of sharing of profit and loss.

Window Dressing:
The finance department confirms that the accounts are free of window dressing. The practice of window dressing is adopted to conceal the
factual position. Thus he is responsible to show the true position of accounts.

40
Liaison with IT Department:
There is very close link between IT and finance departments because all the accounts are being maintained in the software maintained by the
IT department. Now it is the Finance Manager’s duty to resolve the issues and the problems arise in this regard.

Timely preparation:
This is very important role of the Finance department. The delay in preparation of accounts makes the accounts useless. Because its disables
the bank and other stakeholders to get the timely information.
BOD approval:
The accounts prepared but not approved are meaningless. The Finance department has to satisfy the Board of Directors that the accounts give
true and fair view of the bank activities.

Publication:
The bank’s BOD or staff is not only concerned with the financial statements. All the stakeholders including borrowers, depositors, State
Bank, government general public are also interested in the financial position of the bank. They can get this information only if the accounts
are published. And this role is to be performed by the finance department.

Accounting system of organization

Accounting system of the Habib bank limited is computerized and manual mostly branches are online. Where I complete my internship is also
online working.

Finance system of organization

Financial system of the bank where I complete my internship is mixed and complicated because being government bank, bank deal with all
kind of lending and investing activities and hold down the cash position of others financial institutions for example like, HBL, UBL etc

Use of electronic data in decision making

There is very good use of electronic data in decision making being a regional office of the bank all the decisions made in the light of receiving
of online reports and recommendations by the managers and the field staff and by the customers by the regional office and head office.

41
Generation of Funds
Generation of funds is a key task for any kind of institution and has much importance for financial institutions. Bank has much assets to
generate funds for the projects. Bank also holds the sufficient amount of funds for its requirement.

Sources of fund:
Getting loans from state bank of Pakistan, customer etc.
15 - Analysis of organizational structure:
The structure of every organization shows that what rules are established? How to establish? What tasks are performed? Etc. Organizational
structure helps in creating an environment for human performance. Following are the main elements are contained in an organizational
structure;
Decision Making:
This is considered the critical part of the organization, because the total decisions are made by the top management. This type of decision
making is also known as centralized decision making. All decision taken by the top management is not prove more beneficial for the
organization and cause rigidity in the structure of HBL.
Communication:
It is the process by which information is transferred from one person to the other. Normally there are two types of communication, downward
communication and upward communication. The downward communication is the communication in which the message is delivered from
tope management to the subordinates. Like the senior management is communicated with manager and then managers communicated with
employees. An in upward the massage is sent to top management from the lower management. But in HBL normally the downward
communication is used which create many problems; also the employees are not clearly understand the massage of the top management.
Chain of command:
It is the line of authority that connects all the employees of an organization and also explains that which person reported to whom. Like
employees reported to supervisor, supervisor reported to manager, manager reported to senior manager and so on. By analyzing it is found
that every employee knows that to whom he is reported.
Responsibilities and Authorities:

42
In chain of command the complete authorities and responsibilities are explained. Every person knows that what are his/her responsibilities
and authorities. By authorities we mean the right to make decisions, issue orders and allocate resources. In HBL college road branch everyone
knows what are there responsibilities and authorities.
Delegation:
A manager alone cannot perform all the tasks assigned to him. In order to meet the manager should delegate authority. Delegation of
authorities means division of authority and powers downward to the subordinate. By working in HBL I found that no such system is followed
due to the fear of misuse of authorities.

43
Habib Bank Limited
Balance sheet
As on 31 December 2009

44
Habib Bank Limited
Profit & loss Account
As on 31 December 2009

45
46
Habib Bank Limited
Income Statement

47
For the year ended December 31, 2009

48
Habib Bank Limited
Cash Flow Statement
As on 31 December 2009

49
50
Ratio Analysis
Ratio analysis is the calculation and comparison of ratios which are derived from,
the information in a company's financial statements. Financial ratios are usually
expressed as a percent or as times per period.

A. Current Ratio
This ratio indicates that what amounts of current assets are available to meet the current liabilities, the higher the current ratio the greater the
“cushion” between current obligations and a firm’s ability to pay them.
Formula,
Current ratio = current Assets / Current Liabilities

51
1) Current ratio for 2007
= 650864855 / 608810966 = 1.06: 1

2) Current ratio for 2008

= 700467019 / 657834717 = 1.6:1

3) Current ratio for 2009

= 805895371 / 749546679 = 1.07:1

Average=1.06:1

Comparison

Years HBL Industry Average

2007 1.06 1.08
2008 1.06 1.066
2009 1.07 1.052
AVERA
GE 1.06 1.066

Interpretation

52
 The average of HBL’s current ratio is compared with the industry average current ratio. The average of HBL’s current ratio is
1.062 and the 1.072 is the industry’s average current ratio which shows that banking industry 2 is not a preferable position. HBL’s
current ratio of HBL is acceptable.

YEARS CURRENT RATIO

BANK
UBL MCB BOP ALFALAH NBP
2007 1.06 1.09 1.09 1.02 1.14
2008 1.05 1.11 1.06 1.01 1.1
2009 1.07 1.1 0.99 1 1.1
AVERA
GE 1.06 1.1 1.046 1.01 1.11

B. Working Capital:

Working capital measures how much liquid assets a company has available to build its business. It is a measure of both a company’s
efficiency and its short-term financial health. Positive working capital means that the company is able to pay off its short term liabilities.
Negative working capital means that currently, company is unable to meet its short term liabilities with its current assets

Formula,

Working Capital = Current Assets – Current Liabilities

4) Working Capital For the year 2007:

53
 = 650864855 – 608810966 = 42053889 Rs

5) Working Capital For the year 2008:

= 700467019 – 657834717 = 42632302 Rs

6) Working Capital For the year 2009:

= 805895371 – 749546679 = 56348692 Rs
Average=47011628 Rs

Comparison
INDUSTRY
YEARS HBL AVERAGE
420538
2007 89 36049225
426323
2008 02 32433698
563486
2009 92 32346669
AVERA 470116
GE 28 33609864
Interpretation

54
 There is continuous increase in the working capital of the bank from the year 2005 to year 2009. But the average amount of
HBL’s working capital is very less as compared to
YEARS WORKING CAPITAL
the average of industry. It shows that HBL should
BANK
UBL MCB BOP ALFALAH NBP increase its working capital.
2985695 3894928 1326385 9035975
2007 2 4 4 7816283 1
2843153 4270762 1294792 7334804
C. Cash Ratio:
2008 7 6 2 4733359 7
4077215 4450407 - 7473206
2009 9 7 1273593 2998632 9
It indicates the extent to which the readily available
AVERA 3302021 4205366 7947995
GE 6 2 8312738 5182758 6 funds can pay off the current liabilities. Potential
creditors use this ratio in determining whether or not to make short-term loans.
Formula,
Cash Ratio = (Cash + Marketable Securities) / Current Liabilities

7) Cash ratio for the year 2007,

55487664
= 0.09 :1
608810966
8) Cash ratio for the year 2008,
56533134
= 0.08 :1
657834717
9) Cash ratio for the year 2009

55
 79869836
= 0.10 :1
749546679
Average=0.09:1
Comparison

YEARS HBL INDUSTRY AVERAGE

2007 0.09 0.11
2008 0.08 0.1
2009 0.1 0.102
AVERA
GE 0.09 0.104

Interpretation
There is variations in the cash ratio of the bank from year 2005 to year 2009. The average of HBL’s cash ratio is 0.082 while
the industry’s average cash ratio is 0.1364. It shows that the cash ratio of HBL is not very good. HBL should increase its cash to pay its
current liabilities.

YEARS CASH RATIO

BANK
UBL MCB BOP ALFALAH NBP
2007 0.11 0.11 0.09 0.09 0.15
2008 0.09 0.1 0.06 0.1 0.15
2009 0.1 0.09 0.06 0.09 0.17

56
AVEAR
GE 0.10 0.10 0.07 0.093 0.16

D. Time Interest Earned Ratio:

It reflects the capability of the borrower to meet financing obligations. It is used to determine how easily a company can pay interest expense
on outstanding debt. The lower the ratio, the more the company is burdened by debt expense.
Formula,
N etIncom+eInterest+ Tax
Time Interest Earned Ratio = InterestEx
pense

10) Time interest earned ratio for the year 2007,

10084037 +19153957 + 5060580

19153957
34298574
= = 1.79Times
19153957
11) Time interest earned ratio for the year 2008,
10864112 + 26525556 + 6067820
26525556
43457488
= = 1.63Times
26525556

57
12) Time interest earned ratio for the year 2009,

13400749 + 33405813 + 7980887

33405813
54787449
= 1.64Times
3340581
Average=1.68 Times

Comparison
YEARS HBL INDUSTRY AVERAGE
2007 1.79 2.208
2008 1.63 1.77
2009 1.64 1.978
AVERA
GE 1.68 1.94

Interpretation
There is decrease in the time interest earned ratio of the bank every year. The average of HBL’s time interest ratio is 2.072
while the industry average is 2.3592. HBL is near to industry average but still HBL should work to increase it because lower time interest
armed ratio will create a difficulty for the bank to pay its interest expense on outstanding debt.

YEARS TIME INTEREST EARNED

UBL MCB BOP BANK NBP

58
 ALFALAH
2007 1.8 3.7 1.62 1.27 2.65
2008 1.57 2.89 1.34 1.08 1.97
2009 4.52 2.46 -0.01 1.04 1.88
AVERA
GE 2.63 3.016 0.98 1.13 2.16

E. Debt Ratio: -

The debt ratio shows the proportion of a bank’s assets which are financed through debt. If the ratio is less than one most of the bank’s assets
are financed through equity. If the ratio is greater than one, most of the bank’s assets are financed through debt. Companies with high debt
ratios are said to be highly leveraged and could be in danger if creditors start to demand repayment of debt.
Formula,
TotalLiabi lities
Debt Ratio =
TotalAsset s

13) Debt ratio for the year 2007

628754092
= 0.90 : 1
691991521
14) Debt ratio for the year 2008

59
 683498128
= 0.91 : 1
749806715
15) Debt ratio for the year 2009,
779408823
= 0.90 : 1
863778621
Average=0.30:1
Comparison
YEARS HBL INDUSTRY AVERAGE
2007 0.9 0.73
2008 0.91 0.902
2009 0.9 0.904
AVERA
GE 0.30 0.8453

Interpretation
Debt ratio for all five years is less than one. It shows that the HBL’s assets are financial through equity not debt. The average
of this ratio for HBL is 0.906 and industry average is 0.8368. This shows that in order to compete with industry, HBL should decrease its debt
ratio.

YEARS DEBT RATIO

BANK
UBL MCB BOP ALFALAH NBP
2007 0.91 0.86 0.09 0.95 0.84
2008 0.92 0.86 0.91 0.95 0.87

60
 2009 0.89 0.86 0.97 0.94 0.86
AVERA
GE 0.906 0.86 0.65 0.9466 0.8566

F. Return on Assets: -
This is a measure of bank’s profitability. Its percentage shows how profitable a company’s assets are used in generating revenue.
Formula,
NetIncome ×100
Return on Assets: Aug .Totalasset s

16) Return on assets for the year 2007,

10084037
×100 = 1.56 %
643026585
17) Return on assets for the year 2008,
10864112
×100 = 2.65 %
409502934
18) Return on assets for the year 2009
13400749
×100 = 1.66 %
806792668
Average=1.9566%

Comparison
YEARS HBL INDUSTRY AVERAGE

61
 2007 1.56% 2.52%
2008 2.65% 1.92%
2009 1.66% 0.43%
AVERA
GE 1.9566% 1.623%

Interpretation
The average of return on assets of HBL is 2% and industry average is 1.84%. It shows that as compare to industry, HBL has
better efficiency of using its assets to generate income.

YEARS RETURN ON ASSETS

BANK
UBL MCB BOP ALFALAH NBP
2007 1.80% 4.00% 2.75% 1.03% 3%
2008 1.40% 3.60% 2.22% 0.38% 2%
2009 1.50% 3.20% -4.78% 0.24% 2%
AVERA
GE 1.56% 3.6% 0.063% 0.55% 2.33%

G. Return on equity: -

Return on equity measures the rate of return on the ownership interest (Share holder’s equity) of the common stock owners. In short, this ratio
tells the owner whether or not all the effort put into the business has been worth wile.

62
Return on equity for the year 2007,
Formula,
NetIncome
Return on equity: ×100
Stockholde r ' sequity

19) Return on equity for the year 2007,

10084037
×100 = 16 %
63237429
20) Return on equity for the year 2008,
10864112
×100 = 16 %
66308587
21) Return on equity for the year 2009,
13400749
×100 = 15 .8%
84369798
Average=15.93%

Comparison

YEARS HBL INDUSTRY AVERAGE

2007 16% 21%
2008 16% 18%

63
 15.80
2009 % -7%
AVERA 15.93
GE % 10.66%

Interpretation
The average of HBL’s return on equity is 18.78% and the industry average is 15.76%. It shows that HBL is offering more
return to its shareholders as compare to competitors or industry.

YEARS RETURN ON EQUITY

BANK
UBL MCB BOP ALFALAH NBP
2007 19% 28% 24% 19% 16%
2008 17% 26% 23% 8% 15%
2009 14% 22% -88% 4% 15%
AVERA 16.66
GE % 25.33% -13.66% 10.33% 15.33%

H. Earnings Per Share: -

EPS are the earnings returned on the initial investment amount. The EPS formula does not include preferred dividends for categories outside
of continuous operations and net income.
Formula,
EarningAva ilableforC ommonsStoc kHolders
EPS = TotalOutst adingShare s

64
22) Earning per share for the year 2007

10084037
= 14 .49 Rs
696000
23) Earning per share for the year 2008,

10864112
=11 .83 Rs
918353
24) Earning per share for the year 2009,

13400749
= 14 .70 Rs
911616

Average= 13.67 Rs

YEARS HBL INDUSTRY AVERAGE

2007 14.49 14.908
2008 11.83 11.782
2009 14.7 6.14
AVERA
GE 13.67 10.943

65
Interpretation
The average of HBL’s earning per share is 14.636. it shows that the shareholders of HBL are earning more revenue against
each share compare to industry. This is good sign of HBL.

YEARS EARNING PER SHARE

BANK
UBL MCB BOP ALFALAH NBP
2007 11.09 24.3 13.11 4.82 21.22
2008 7.51 22.25 10.51 1.41 17.23
2009 8.56 22.42 -19.02 0.71 18.03
AVERA
GE 9.053 22.99 1.53 2.31 18.82

I. Debt to Equity Ratio: -

It is the ratio between the funds provided by the lender and the capital invested by the owner. It is the comparison of how much of the
business was financed through debt and how much was financed through equity. The higher the ratio, the greater the risk.
Formula,

Debt-Equity Ratio = Total Liabilities / Stock Holder’s Equity

.

25) Debt-equity ratio for the year 2007,

66
 628754092
= 9.94 :1
63237429
26) Debt-equity ratio for the year 2008,

683498128
= 10 .30 :1
66308587
27) Debt-equity ratio for the year 2009,

779408823
= 9.23 :1
84369798

Average=9.82:1
Comparison

YEARS HBL INDUSTRY AVERAGE

2007 9.94 10.168
2008 10.3 11.176
2009 9.23 17.328
AVERA
GE 9.82 12.89

Interpretation

67
 The average of debt equity ratio of HBL is 10.324 and industry average is 12.8032. It shows that HBL’s most of the business is
financed through equity.

YEARS DEBT-EQUITY RATIO

BANK
UBL MCB BOP ALFALAH NBP
2007 10.41 6.44 9.22 19.27 5.5
2008 11.56 6.59 11.36 19.47 6.9
2009 8.51 6.3 48.66 16.57 6.6
AVERA
GE 10.16 6.44 23.08 18.43 6.33

J. Fixed Assets/Net worth Ratio: -

This ratio measures the extent to which owner’s equity has been invested in plant, equipment (fixed assets). A lower ratio indicates a
proportionately smaller investment in fix assets in relation to net worth and a better “cushion” for creditors in case of liquidation. Similarly a
high ratio would indicate the opposite situation capital is frozen in the form of machinery and the margin for operating funds become too
narrow for day to day operations.
Formula,
Fixed Assets/Net worth Ratio = Fixed Assets
Net Worth

28) Fixed Assets/Net worth Ratio for the year 2007,

68
 41126666
= 0.65 :1
63237429

29) Fixed Assets/Net worth Ratio for the year 2008,

49339696
= 0.74 :1
66308587
30) Fixed Assets/Net worth Ratio for the year 2009,
75883250
= 0.68 :1
84369798
Average=0.69:1

Comparison

YEARS HBL INDUSTRY AVERAGE

2007 0.65 0.636
2008 0.74 0.784
2009 0.68 0.746
AVERA
GE 0.69 0.722

Interpretation
The average of fix Asset / Net worth ratio of HBL is very close to industry average so it is acceptable.

69
YEARS FIXED ASSETS/NET WORTH RATIO
BANK
UBL MCB BOP ALFALAH NBP
2007 0.64 0.61 0.35 1.1 0.48
2008 0.77 0.63 0.47 1.38 0.67
2009 0.61 0.58 0.58 1.31 0.65
AVERA
GE 0.67 0.60 0.47 1.26 0.6

K. Return on Deposits: -
It measures the rate of return on the deposits of the bank. It shows how much return ,bank is offering on the deposits.
Formula,
Return on Deposit = Net Income . x 100
Total Deposits

31) Return on Deposit for the year 2007,

10084037
×100 = 1.89 %
531298127
32) Return on Deposit for the year 2008,
10864112
×100 = 1.81 %
597090545

70
33) Return on Deposit for the year 2009,
13400749
×100 = 1.96 %
682750079

Average=1.88%

Comparison
YEARS HBL INDUSTRY AVERAGE
2007 1.89% 2.90%
2008 1.81% 2.29%
2009 1.96% 0.55%
AVERA
GE 1.88% 1.91%
Interpretation
The average of return on deposit for HBL is 2.07%, which is very close to the industry average that is 2.19%. This shows that
bank is offering same return on deposits as the industry is offering. So this ratio is acceptable for the HBL.

YEARS RETURN ON DEPOSITS

BANK
UBL MCB BOP ALFALAH NBP
2007 2.24% 5.20% 2.70% 1.14% 3.20%
2008 1.70% 4.60% 2.30% 0.43% 2.40%
2009 1.80% 4.20% -6.10% 0.27% 2.60%
AVERA
GE 1.91% 4.66% -0.36% 0.61% 2.73%

71
 L. Interest expenses /Total Expense Ratio: -
This is a ratio between the interest expense and total expenses of the bank.
Formula,
Interest Expense /Total Expense Ratio = Interest Expense
Total Expense

34) Interest Expense /Total Expense Ratio for the year 2007,

19153957
= 0.51 :1
37260277
35) Interest Expense /Total Expense Ratio for the year 2008

26525556
= 0.92 :1
28832126
36) Interest Expense /Total Expense Ratio for the year 2009,

33405813
= 0.58 :1
56764628
Average=0.67:1

72
 Comparison
YEARS HBL INDUSTRY AVERAGE
2007 0.51 0.624
2008 0.92 0.642
2009 0.58 0.724
AVERA
GE 0.67 0.66

Interpretation

The average of this ratio of HBL is close to the average of industry which shows that the average of 0.584 is acceptable for the HBL.

YEARS INTEREST EXPENSE/TOTAL EXPENSE RATIO

BANK
UBL MCB BOP ALFALAH NBP
2007 0.54 0.58 0.8 0.66 0.54
2008 0.57 0.57 0.85 0.67 0.55
2009 0.59 0.59 0.85 0.69 0.9
AVERA
GE 0.566 0.58 0.83 0.67 0.66

M.Interest Income /Total Income Ratio: -

73
This is the ratio between the interest earned by the bank and total income of the back low ratio means bank is earning less interest income.
Formula,

Interest Income/Total Income Ratio = Interest Income / Total Income

37) Interest Income/Total Income Ratio for the year 2007,

= 50481021 / 60504185 = 0.83:1

38) Interest Income/Total Income Ratio for the year 2008,

= 63376047 / 74628742 = 0.84: 1

39) Interest Income/Total Income Ratio for the year 2009,

= 76076346 / 87235958 =0.87: 1
Average=0.846:1
Comparison

YEARS HBL INDUSTRY AVERAGE

2007 0.83 0.808
2008 0.84 0.818
2009 0.87 0.838
AVERA
GE 0.846 0.821

74
Interpretation
The average of this ratio of HBL is 0.752 and industry average is 0.8116. This shows that HBL is earning low interest income
as compare to industry.

YEARS INTEREST INCOME/TOTAL INCOME RATIO

Bank AL-
UBL MCB BOP Falah NBP
2007 0.81 0.84 0.79 0.81 0.79
2008 0.82 0.87 0.76 0.86 0.78
2009 0.83 0.9 0.81 0.87 0.78
AVERA
GE 0.82 0.87 0.78 0.84 0.783

N. Earning Spread Ratio: -

A traditional measure of the earning’s efficiency with which a back is managed is called the earning spread or simply the spread. The spread
measures the effectiveness of the bank’s intermediation functions in borrowing and lending money and also the intensity of the competition in
the bank’s market area.
Formula,

Earning spread
= (total Interest Income / Total Earning Assets) –
(Total Interest Expenses / Total Interest Bearing Bank Liabilities)

75
40) Earning spread for the year 2007,
= (50481021 / 691991521) – (19153957 / 628754092)
= 0.072-0.030 = 0.042 or 4.2%
41) Earning spread for the year 2008,
= (63376047 / 749806715) – (26525556 / 683498128)
= 0.084-0.038 = 0.046 or 4.6%
42) Earning spread for the year 2009,
= (76076347 / 863778621) – (33405813 / 779408823)
= 0.088-0.042 = 0.046 or 4.6%
Average=0.046 or 4.46%
Comparison
YEARS HBL INDUSTRY AVERAGE
2007 0.042 0.0364
2008 0.046 0.0362
2009 0.046 0.0348
AVERA
GE 0.046 0.302

Interpretation
The average of earning spread ratio of HBL is close to industry average so the average of 0.0458 is acceptable for the HBL.

76
Years Earning Spared Ratio
Bank AL-
UBL MCB BOP Falah NBP
2007 0.042 0.055 0.02 0.025 0.04
2008 0.043 0.06 0.01 0.027 0.041
2009 0.047 0.065 0.004 0.024 0.034
AVERA
GE 0.044 0.06 0.011 0.025 0.038

O. Net Profit Margin: -

It is the measure of profitability. It shows how mud profit comes from every dollar of sales or operating revenue. This ratio is compared to
other business in the same industry to see if your business is operating as profitability as it should be.
Formula,

Net Profit Margin = (Net Income / Total Operating Revenue) X 100

43) Net Profit Margin for the year 2007

= (1004037 / 605044185) X 100 = 17%

77
44) Net Profit Margin for the year 2008
= (10864112 / 74658742) X 100 = 15%

45) Net Profit Margin for the year 2009,

= (13400749 / 87235959) X 100 = 15%
Average=15.66%

Comparison

YEARS HBL INDUSTRY AVERAGE

2007 17% 25%
2008 15% 18%
2009 15% 4%
AVERA 15.66
GE % 15.66%

Interpretation
There is decrease in the not profit margin of the bank from the year 2005 to 2009. But the average of this ratio is close to
industry average so this ratio is acceptable for HBL.

YEARS NET PROFIT MARGIN

UBL MCB BOP BANK NBP

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 ALFALAH
2007 18% 40% 26% 10% 30%
2008 13% 34% 19% 3.60% 20%
2009 13% 27% -46% 2.20% 22%
AVERA
GE 14.66% 33.66% -0.33% 5.26% 24%

16 - SWOT Analysis:
An analysis indicating towards the organizational strength, weakness, opportunities and threats are known as SWOT analysis. During six
week of my training in HBL (college road branch), I have come across the following SWOT analysis;

Strength:
Following are the main strengths of HBL;
 HBL is very old organization in Pakistan, due to which it gain numbers of loyal customers.
 The HBL provide the numbers of benefits to their employees like; timely salaries, bonuses, allowances, and medical facilities etc.
 HBL provide more facilities as compared to the other banks.
 As the HBL is very old organization, so customers are very loyal with it and deposits more without any hesitation.
 Highly skilled and highly educated employees are hired by the HBL so that the workings of the employees are too good. And they are
easily satisfied their customer by their good communication skill.

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  Also due to good skilled and education the employees will easily understand the functions of the bank, and perform these functions in
proper manners.
 HBL set the rules and regulations for employees and employees are strictly followed these rules, which create the discipline in the
bank and enhance the image of the bank.
 The working environment of the bank is very good and favorable.

Weaknesses:
 The total power to promote the employees and also give bonuses, rewards, allowances, etc have the senior management. It means it
totally depend upon the will of the senior management that which employees to promote and which to demote. This adds the negative
values in mind of the employees.
 HBL have very less channels of marketing, which is know the most important part of every organization. Due to less marketing
channels the HBL might be lose their customers.
 HBL provide less financial products as compared to the other banks, which may decrease the number of customers. This is the major
weakness of the bank.
 Numbers of counters are less particularly during rush hours, because when the number of peoples increases the staff is unable to
control the situation.
 Old and out of date software are used by the bank, which may create error in calculation of financial statements.
 The network system of HBL is not favorable. If the bank upgrades their system then this weakness may be converted to strength.

Opportunities:
 As we know that today the word becomes a global village, due to the number of technologies and new developments. HBL have a
chance to adopt these new technologies and expand their business all over the word, And should have to provide the 24 hour online
banking facilities to the customers.
 The branches of HBL are near about in a remote area, which provide the great opportunity to attract the number of customers.
 The great opportunity that HBL provide is leasing business. Lease financing is proving a great opportunity for the HBL.

Threats:

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Following are the main threats that are faced by the HBL;
 The main purpose of every organization is to satisfy their customer. But in HBL the complaints of customer are ignored which effect
badly.
 Now a day the political changes are prove unbeneficial for the HBL. The politicians use their power in an illegal way, and the loan
that gives to the political person have less chance to pay back.
 Another threat that is faced by the HBL is the number of new competitors, particularly the foreign banks. Because the foreign banks
build up with huge capital and with updated technologies. In this situation the bank should have to take an initiative action.

17 - Conclusion:
According to my point of view the HBL is very good organization. There are many reasons to call it a good organization. The overall
environment is comfortable and the management considered their employees as an asset of the bank. Proper salaries and bonuses are provided
to the employees. The top management properly guide the employees so that the employees work performance increase and learn more and
quickly. Also the attitude and behavior of senior staff with joiner employees is very polite.
As the requirements like; timely pay, good management and working environment etc. of employees are properly fulfill so they become loyal
with their organization. and fulfill their responsibility in a good manner.
The management of the bank behave equally with their customers, also the management provide the facility to the customers to give the
suggestion to improve the system of the bank.
Last thing I want to say that all staff of the bank are too good and so much cooperative, and I feel much pleasure to work and gain so much
knowledge during my training.
18 - Recommendation:
During my training in HBL I observed some areas that required some attentions of management. My main observations are as follows;
 In a competitive word every bank want to market and realize there services as much as possible, to increase their profit and good will,
but in that competitive word HBL marketing channels are very less as compared to others.
 Second there is no equal distribution of work among employees, due to which some of the employees have to work more and they are
over burdened, and some of the employees most of the time are free.
 Next recommendation is that the information provided on the website of HBL are so less. More and updated information related to
financial performance and services should be provided.
 HBL should have to upgrade their system. Bank should have to use the new and updated and software, and also these software should
be error free.

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  HBL should have to improve their customer relation.
 HBL should have to provide the opportunity to woman to apply and do jobs, because the women currently working are very less in
numbers.
 The work of employees should not be stable but rotating, because when the employee were rotating in different departments they learn
near about everything about bank, and able to work in a good manner.
 HBL have to improve their aggressive management strategy, and also to increase their number of branches.
 Bank should have to tight up their expenditure, so that saving increases and more investments are done by the bank and more profit.
Borrow at low cost and given at higher interest rate.
 Most of the branches of HBL are not used the computerized system, which create so much problems for customer and clients. So bank
should have to use the computerized system in all branches.
 Whenever a new product or services introduced by the bank, it should be advertized in public.

19 - Reference & Sources used:

Material on these books, articles and websites has helped me a lot in preparation this report
1. www.habibbankltd.com/
2. www.hbl.com
3. BANKING SECTOR REFORMS IN PAKISTAN:
www.ishrathusain.iba.edu.pk/speaches/BANKING_SECTOR_REFORMS.pdf
4. www.wikipidia.cpm
5. www.google.com
6. HBL Annual Reports 2008 and 2009 first Quarter

20 - Annexes:

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I download the financial statements from the following source;

http://www.habibbankltd.com/investor-relations-annual-reports-2009.php

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