Internship Report

An Internship Report On Model Town A Branch, Bwp

Submitted To: Mr. Nazik Hussain Submitted By: Fatima Salam Roll#23 BBA 6th Morning Session 2007-2011 DEPARTMENT OF MANAGEMENT SCIENCES

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It is must for the students of Bachelors in Business Administration at The Islamia University of Bahawalpur to fulfill the requirement of Six to Eight weeks internship in some renowned organization. The purpose of internship is to actually give us the practical knowledge of what we read about business in the course books. It is the first step of experience that students face before entering practically into market. I have completed my internship at HABIB BANK LIMITED in Bahawalpur which was an incredibly good experience. During my internship I had a chance to work and observe different departments such as bills and remittances, cash, deposit etc. This provided me complete knowledge of the HBL working and the staff members explained each and every concept to make me clear. This knowledge helped me in completing the internship report. The report contains the introduction of banking structure in Pakistan, the introduction of Habib Bank Limited, its vision, mission, symbol, organizational structure, financial analysis of

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statements and in the end recommendations and suggestions with conclusion. In preparing this report, I have tried my level best to give my knowledge that I have gained. Despite of my all the efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.

It is a matter of honor for me to express my gratitude to those who directly and indirectly helped me in the completion of my report. Therefore this report is dedicated to my parents & teachers and my friends, who all supported me during my internship and without their guidance

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and prayers it wouldnt have been possible.

First of all I am thankful from the core of my heart to Allah (SWT) for his unlimited blessings and my humblest thanks to the Holy Prophet Hazrat Muhammad (SAW) who is
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forever a torch of guidance & knowledge for humanity as a whole. Our respected teachers Sir Nazik Hussain and Sir Taimoor who gave me support & knowledge to do this Internship. I am also very thankful to all employees of Habib Bank Limited who supported and cooperated with me. Due to their help and support I had gained a lot. I have gained practical knowledge from this Internship.

Fatima Salam

TABLE OF CONTENTS

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S# 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Contents Executive Summary Introduction & History of Banking Introduction of HBL VISSION & MISSION of HBL Symbol & organizational set-up Board of Directors Key Management Strategies Working of Departments Services of HBL Financial Analysis SWOT Analysis Suggestions & Recommendations Conclusion Annexure P# 06 08 10 13 14 15 16 18 19 38 41 62 67 69 77

Executive Summary
To fulfill the requirement of BBA degree I have done my internship in a well renowned bank HABIB BANK LIMITED which is the largest bank in Pakistan & is having a thoroughly established banking chain throughout the world. An extensive network of 1425

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branches in Pakistan and 55 international branches makes it one of the largest banks in Pakistan only. HBL consists of following departments

1. Deposit Department 2. Cash Department

3. 4. 5. 6. Advances Department Clearing Department Remittance Department Bancassurance

The function of deposit department is to collect cash from customers and to deposit it into the accounts, maintained by them. Also different types of accounts for new customers are opened here. The function of cash department is receipt and payment of cash. Utility bills are also paid in cash department. The function of advance department is to lend money in the form of consumer financing i.e. flexi loans & credit cards. Agriculture finance, cash finance, running finance. Fixed asset finance, letter of credit & letter of guarantee are also included in it. In clearing department bank exchanges cheques and other negotiable instruments drawn on each other within specified area and securing the payments for their clients through the clearinghouse. The Cheques and other negotiable instruments are sent to the Clearing Department / Collection Cell located at the Main Branch.

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The main function of bills and remittances department is to deal mainly in Outwards bills for collection (OBC) and Inward bills for collection (IBC). Remittance is a process to transfer money or send money through different procedures and ways. Through this bank earns a lot of income in form of service charges. HBL and New Jubilee Life Insurance Company Limited (NJI) introduce Amaan (Retirement Plan) and Tabeer (Child Education & Marriage). These products have been designed to provide life insurance along with an investment option. Habib bank has also introduced ATM (automated teller machine) for its customer. It is also known as HBL debit card and the banks head office in Karachi prepares it. HBL Master Card also known as Credit Card, allows you to pay for your purchases directly from your bank account. HBL also gives the service of Internet Banking and Phone Banking.

Introduction of BANK

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A bank is an institution which accepts deposits for the purpose of lending

History of Banking In Pakistan

(from independence till now) For studying the growth of this sector we can divide it into three stages, which are as follows:
a) b) c)

Pre-Nationalization Period Nationalization Period Period after Nationalization

Pre Nationalization period:

There were only two Muslim banks in Indo Pak before partition; they were Habib Bank Ltd. (est. in 1941 at Bombay) & Australia Bank Ltd. (EST. In 1944 at Lahore). All other banks, at that time, were either owned by Hindus or Foreigners. At the time of partition there were 631 bank branches in area which came under Pakistani control. But due to bloodshed and violence at large scale, mostly branches were closed. There was no central bank so Pakistan had to depend on Reserve Bank of India but it was biased. Some important steps in banking areas are: 1) Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.
2) Setting up of National Bank of Pakistan in November, 1949 and to act as agent

of SBP.

3) Larger powers were given to SBP through SBP Act (1956) for controlling

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purposes. 4) Establishment of specialized banks, such as ADBP (1952); a) HBFC (Nov, 1952); b) P1CIC (Oct, 1957) c) IDBP (Aug. 1961);
d) NDFC (national development finance corporation) (Jan, 1973).

These were the steps, which built a strong banking sector in Pakistan.

B) NATIONALIZATION PERIOD
In January 1974, all Pakistani banks were nationalized through Nationalization Act 1974. After the passing of this act, all Pakistani banks became a public property. These banks were to control by Pakistan Banking Council. However in 1997, SBP was the sole regulatory and PBC was dissolved.

C)

PERIOD OF NATIONALIZATION

In 1990 the government decided to denationalize all the nationalized institutes. So, amendments were made to Nationalization Act 1974 and two nationalized banks were privatized. Along with this a permission to open banks in private sector was also granted. The- privatized banks are; a) MCB taken up by a private group in April, 1991

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b) ABL taken up by its own employees in September, 1991. c) UBL taken up by UAE party in 2002. d) December 29, 2003 HBL was taken by AKFED

Introduction and History Of

Habib Bank Limited is the largest bank in Pakistan and is having a thoroughly established banking chain throughout the world. An extensive network of 1400 branches in Pakistan & 71 international branches makes it one of the largest banks in Pakistan today. HBL is present in 25 countries.

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Habib Bank Limited was incorporated on 25th August 1941 by ISMAIL HABIB (LATE). Habib Bank inaugurated its operations with the banks first branch in Bombay. It was the first Muslim bank of the sub continent. It was established with a paid up capital of Rs.2500, 000. At an early stage the number of branches was only 12. HBL established operations in Pakistan in 1947 and moved its head office to Karachi. And build the largest private sector bank that controlled an estimated 27% of total bank deposits in the country. First international branch was established in Colombo, Sri Lanka in 1951 and Habib Bank Plaza was built in 1972 to honor the banks 25th Anniversary.

With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. International operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles and Maldives and the Netherlands. On December 29, 2003 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). On February 26, 2004, management control was handed over to AKFED.

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HABIB BANK IN TODAYS WORLD : Today, Habib Bank Plaza is the tallest building in Pakistan, is the proud symbol of HBLs leadership in Pakistans corporate arena. It has customer oriented philosophy, follows leadership through innovation. It has over 5 million customers. Owing to the strong brand appreciation due to historical presence, vast branch network and services offered HBL carries a special place in the economy of Pakistan.

Awards In 2009 it got following awards:

The Best Emerging Market Bank in Pakistan' HBL among Top 500 Global Financial Brands In 2008 it got following awards:
'Best Bank In Pakistan' 'Most Innovative Global Trade Finance' 'Busiest Brands'

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VISION AND MISSION OF HBL

VISION
Enabling people to advance with confidence & success.

Mission
To make customers prosper, our staff excels and creates
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value for stakeholders.

SYMBOL OF HBL Bismillah represents Islamic Values and culture

Sword representsPower Lion represents..Symbol of strength

ORGANIZATIONAL SET-UP Head office

Karachi Habib Bank Plaza I.I.Chundrigar Road Karachi-75650, Pakistan.

Provincial head quarters:

Punjab Lahore
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Sindh NWFP Baluchistan Karachi Peshawar Quetta

Board of Directors R. Zakir Mahmood .

CEO President &

Sultan Ali Allana .. Ahmed Jawad. Sajid Zahid .

Chairman Director Director Director Director Director

Sikandar Mustafa Khan . Mushtaq Malik

Moez Jamal .
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Key Management
R. Zakir Mahmood Sohail Malik Sima Kamil Nauman K. Dar Ayaz Ahmed Mudassir H. Khan Faizan Mitha Salim Amlani Aslam Gadit Mirza Saleem Baig Tulu Islam Aly Mustansir Nausheen Ahmed Mubashar Maqbool Dr. Razi Azmat Abdur Rashid Awan Aman Aziz Siddiqui President and CEO Chief Risk Officer Head-Corporate & Investment Banking Head-International Banking Chief Financial Officer Head-Global Operations Global Treasurer Chief Internal Auditor Head-Remedial Assets Head-Learning & Development Chief Information Officer Head-Marketing & Brand Management Company Secretary & Head Legal Head Commercial and retail lending Head-Human Resources Business Head-Semi Urban Areas General Manager-Gulf
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HIERARCHY OF HABIB BANK LIMITED:

PRESIDENT SENIOR VICE - PRESIDENT VICE- PRESIDENT VICE- PRESIDENT ASSISSTANT VICE PRESIDENT OFFICER GRADE I

OFFICER GRADE II

OFFICER GRADE III

CASHIER

CLERCK

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Strategies
Corporate level Strategies
To make a wide banking network Hire experienced staff Training & development of employees Introduce products and services for corporate consumer To design such policies that increases the effectiveness of the bank.

Business Level Strategies:

Enhance investment opportunities. To develop attractive products Enhance relationship with customers Enhance latest technology To cater the need of customers requiring different product To become market leader.

Departmental level strategies:

Employee recruitment and selection program

Adopting of new promotional strategies

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To increase the R&D in each department Paying rewards and incentives to motivate employees.

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Deposit Department
The function of deposit department is to collect cash from the customers and to deposit it into the accounts Their classification is based on duration and

purpose for which the account is maintained. Deposits are the life of a bank. For
this reason the bank offers different types of accounts. Some are interest based and some are non-interest based.

Types of Accounts
Following are the types of accounts which are maintained for the purpose of deposits. 1) Current Account 2) Saving account 3) Fixed Account

1). Current Account

A current account is an account which is countinously in operation, by the customers on all working days of the bank. The customers can withdraw the amount from the bank without prior notice. The bank

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usually do not pay any interest on these deposits as they can withdraw without notice.These accounts are operated normally by the individuals, business companies, institutions, public service bodies, industrialists etc.

Characteristics of Current Accounts The characteristics of current accounts are:

Minimum balance of Rs. 5,000 Unlimited transactions Non-profit bearing HBL Debit Card

Types of Current Account

I. HBL BusinessValueAccount II. Basic Banking Account (BBA) III. HBL Freedom Account

l. HBL BusinessValueAccount

Unique transactional account for Businessmen Up to 5.35% profit per annum* Profit calculated daily, paid every quarter Minimum balance of Rs. 20,000** HBL Debit Card and Inter Branch Transaction System (IBTS) facilities

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Funds can be transferred to any bank through phone banking.

Basic Banking Account (BBA)

Can be opened with only Rs. 1,000. No minimum balance requirement.

Up to 2 withdrawals and 2 deposit transactions free every month. Unlimited withdrawals through HBL Debit Card. Non profit bearing.

lll. Freedom Account

Free cash withdrawal & deposit transactions through any HBL branch Free online funds transfer transactions Free Bankers Cheque Free HBL cheque deposit transactions at any HBL branch Free cheque books Free duplicate account statements Free debit card issuance (for individuals and sole proprietors) Free ATM transactions through HBL network

Saving Accounts
This type of account is for those people who want to make small savings. The bank keeps a minimum balance to be used for investment by the bank. The bank pays interest on saving accounts according to the rates set by the central bank of the country.

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Types of Saving Accounts Following are the types of Saving Accounts.
i. HBL ValueAccount ii. PLS Savings Account iii. Daily Munafa Account iv. Daily Progressive Account i. HBL ValueAccount 7.19% profit per annum Profit calculated monthly, paid every quarter Deposit ranges from Rs. 10,000 to Rs. 1,000,000 Two withdrawals free every month

ii. PLS Savings Account 5.06% profit per annum Profit paid bi-annually Funds transfer to any bank through HBL PhoneBanking Minimum balance of Rs. 20,000 Unlimited transactions

iii. Daily Munafa Account Profit calculated daily, paid every month Up to 8.84% profit per annum* HBL DebitCard and Inter Branch Transaction System (IBTS) facilities Funds transfer to any bank through HBL PhoneBanking Minimum balance of Rs. 20,000

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iv. Daily Progressive Account Unique transactional account for Institutions Profit calculated daily, paid every month Up to 11.57% profit per annum Inter Branch Transaction System (IBTS) facility Funds transfer to any bank through HBL PhoneBanking Minimum balance of Rs. 20,000

Fixed or time deposit

In fixed or time deposit, people keep their money in bank for a fixed duration and earn profit on it. The rate of interest on fixed deposits is higher than that of saving deposits and it varies with time to time. The longer the duration for which the amount is kept, higher the rate of interest earned.

Types of Fixed or Time Deposit Accounts

i. ii.

HBL Advantage Account Investment Plus Deposit

HBL Advantage Account

Multiple options for tenure and profit payout Loan facility up to 90% of investment Minimum investment of Rs. 25,000

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Withdrawal at end of fixed term Investment plus Deposit Account for Institutions Profit paid at maturity Minimum investment of Rs. 20 million Withdrawal at end of fixed

Account Opening Department

The purpose of opening of the account
As people want to keep their belongings at some safe place they can keep their money in safe custody by opening accounts in a bank. The businessmen conduct transactions in thousands It is unsafe for them to keep abundant cash in hand. The other advantage is that they can draw cheques as transactions without involving cash.

Procedure for Account Opening

There are certain formalities which are to be observed for opening of a current account or saving a/c. With a bank, these formalities are as
1) Request of opening of an account.

2) Any utility bill of current residence 3) Specimen signatures 4) Minimum initial deposit

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5) Operating the account / cheque book

Things relating to customers:

Deposit slips
When money is to be deposited in the bank the deposit slip is to be filled, the objective of this book is to provide the customers with the banks acknowledgment for receipt of money to be credited his account.

Cheque book A cheque book contains the cheques (also called leaves) which
are given to a customer upon written request on requisition slip and after making payment for the cheque book. It enables to a customer to make withdrawals from his account.

Statement of the account It is a copy of customers account as it appears in

the books of the bank. If the customer wants to check his transactions then upon his request a copy is given to him for examination.

Elements of the account number

1655

79000254 01

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Branch Code

Account Serial #

savings account

If there is

03 at the end then it is a current account.

Cheque
A cheque is an unconditional order in writing drawn on a specified banker, signed by the drawer requiring the banker to pay in demand certain in money to a specified person or to the bearer of cheque. Types of cheques There are two main kinds of cheques. 1. Open cheque 2. Cross cheque

Open Cheque
Open cheques are those that anyone can get it cashed when presented at the counter. There are two types of open cheques: 1. Bearer Cheque 2. Order Cheque

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Bearer Cheque A bearer cheque is payable to any person who present it at the counter of bank for payment. The name of payee may or may not be stated. The phrase or bearer is printed on its face. Order Cheque An order cheque is payable to a certain person. The name of payee is stated. After crossing the phrase or bearer it becomes order cheque. The payment can be obtained after identification of payee. It is transferable by endorsement.

Cross Cheque
A cross cheque has two parallel lines on its face. The crossing is made to make cheque safer and is the safest mode of payment. Its payment cannot be made when presented at the counter.

Dishonor of cheque In the following cases the payment is not given to the customer:
When cheque presented at a branch where customer not held his account.

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When customers account is closed before presentation of cheque When a notice of customers insanity is given to bank. When notice of loss of cheque is given to bank. When signatures of drawer differ. When the cheque is undated or post dated. When balance of customers account is insufficient to meet the demand.

Cash Department
In cash department following three functions are performed. 1) Payment of Cash 2) Receipt of cash 3) Payment of utility bills.

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Payment of Cash
When customer presents cheques on the counter, the cashier verifies the signature, date and checks the amount in the account of customer and then makes the payment.

Receipt of Cash
Cash department receives cash when customer deposits cash into his account.

Payment of Utility Bills

It is the duty of cash department to receive payment of utility bills from customers i.e. payment of telephone bills, gas bills, electricity bills.

Clearing Department
Clearing:Clearing is the system by which banks exchange cheques and other instruments drawn on each other through the clearinghouse. The Cheques and other negotiable instruments are sent to the Clearing Department / Collection Cell located at the Main Branch.

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Clearinghouse:Clearing house is where representatives of all banks come for two times in a day. Here the representative receive cheques, bills drawn on each other and offset the differences.

NIFT:National Institutional Facilitation Technologies (Private) Limited i.e. NIFT performs clearing function through automated Clearing System. NIFT acts as a clearing house on the behalf of State Bank of Pakistan. In HBL clearing is done through NIFT.

Outward Clearing In outward clearing the bank accepts, transfers and clears cheques from customer of the bank and to arrange for their collection. The instrument collected bank wise and a schedule is prepared separately for each bank mentioning the total number of instruments and the amount of the instruments. Then these are recorded in a register called OUTWARD CLEARING REGISTER showing the total number of cheque and their aggregate amount being presented in the clearing.

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The clearing branch issues CREDIT ADVICE to the branch for passing credit to its customer immediately. The branch on receiving credit advice debits the clearing account and credits the respective customer accounts.

Inward Clearing
On receiving cheque/instruments from clearing branch, the in charge checks the number and amount of cheque received in clearing must tally with the main schedule received from central clearing branch. This cheque/instrument are entered in INWARD CLEARING REGISTER for the cheque/instrument passed in clearing is a credit advice for the total amount of cheque passed in clearing is prepared, drawn on central clearing branch.

Normal Clearing
Normal clearing is done within city. In this clearing bank has to give payment to other banks. In this clearing bank has to give or recieve a payment from other banks. When instrument is received bank checks signature, date, crossing etc and does the normal clearing in one and half hour. Then bank receives answer in 24 hours from clearing house. In normal clearing stamp, special crossing stamp and discharge stamp is affixed. Same Day Clearing

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As the name shows that same day clearing refers to the local banks i.e. within the city. NIFT is facilitating customers of all member banks through Same Day Clearing Service. Cheques / instruments for Same Day Clearing Service are accepted before the specific time. The branch puts Bundle in an envelope distinctly printed for Same Day Clearing, provided by and for onward delivery at NIFT Centre. Then at telephonic call the Courier of NIFT collects the envelope for onward delivery to NIFT Center for processing.

Inter City Clearing Service:

Intercity clearing is done in other branches of banks that are out of city. This facility is available for collection of outstation cheques drawn only on the HBL branches and other banks on NIFT network. The inter city cheques are sent to clearing house and bank receives answer from clearing house in 3 days.

Advances Department
Finances are the important part of banks assets and contribute to banks revenue in the shape of mark up. The advances department designs various schemes of advances/loans for the customers who desire to obtain finance from Bank.

Principles of Lending
Lending is a risky function therefore following principles shall be kept in mind to minimize the risk:

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1. 2. 3. 4. 5. 6. purpose Character Capacity Collateral Capital Conditions

Two types of financing are: General Consumer As the working of the Habib bank branch in which I have worked was related only to the consumer financing level therefore I have discussed that below:

Consumer Financing
Following finances come under consumer finances 1. Flexi Loan 2. Credit card

Flexi Loans: Habib Bank Flexi Loans scheme was launched in 2000. The
maximum limit of the loan is Rs.500000. Flexi loans are issued to those who are taking loan first time or have repaid any previous loans that the customer has taken before. It is given when a person has six salaries and his monthly salary must be more than Rs.12000. The interest rate in fresh transfer case is 25%. Requirements for Flexi Loans 1. Costumer request

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2. NIC copy 3. Latest Salary slip 4. Letter From employer 5. Two References
6. contact number of customer & references

Procedure
The application form is handed over to the eligible customer with list of documents required by the branch. After the customer submits application to the branch, processing fee as per schedule of charges is recovered. Eligibility criteria and documents checklist is completed by the branch. The application is forwarded to the Regional Manager in Regional Head Quarter for approval duly recommended by branch Manager within two days after receipt of application with complete documents, eligibility criteria, and documentation checklist. A copy of the application is retained at the branch for record and follow up purposes. At Regional Head Quarter Data of applicant is entered. There is a system that tells the report of the borrower and upon satisfaction, sanction advice on the application form is signed and forwarded to the branch. The customer is informed immediately about the acceptance / rejection of application. Then the Loan recovers through equal monthly installments.

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CREDIT CARDS
Credit Cards Scheme was launched in 2004. Credit card can be used anywhere in the world. Habib Bank offers a range of credit cards, accepted at many places in Pakistan. These cards facilitate the small financial, needs of customers like shopping of goods or any short term financing. One of the requirements to issues credit card is that the applicant should be the account holder of the bank.

Types of Credit Card

There are two types of credit cards. o Visa Green o Visa Gold

Visa Green
It is for those who have deposit from Rs12000 to Rs100000.

Visa Gold
It is for those who have deposit of more than 100000.

Procedure

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Firstly application for credit card is filled by customer. Then copy of CNIC and latest salary slip is attached with it. When this application is approved and documents are verified credit card is issued.
Gold Card Rupees 50,000 180,000 Rupees 150,000 500,000 Green Card Rupees 12,000 25,000 Rupees 20,000

Minimum gross salary requirements Salaried individuals Self-employed business persons/professionals Credit limit range Minimum Maximum

Remittance Department
Remittance is a process to transfer money or send money through different procedures and ways. Some service charges are also charged by the bank. HBL deals with following modes of remittances o Demand Draft o Local funds transfer

Demand Draft
Demand draft is a written order given by one branch of a bank on behalf of customer to another branch of the same bank to a certain amount to the certain person.

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Bankers Cheques
In HBL now pay order and demand draft have been converted into bankers cheques. In other words bankers cheque is the modified form of pay order and demand draft.

Local Funds Transfer (LFT)

LFT is online transfer of money. In is done within HBL. When a person wants to send money within or out of city but within HBL then local funds transfer is done online.

TECHNOLOGY
HBL uses the MISYS system to perform online functions. It is used by cashiers and clearance department.

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Automated teller machine

Habib bank has introduced ATM (automated teller machine) in Pakistan for its customer. Through ATMs not only people can withdraw cash but also can avail the Funds Transfer, Utility bill Payment, Generate Mini Statement facility. To get ATM, person must be account holder of HBL. To use ATM, ATM card is being made by bank. It is also known as HBL debit card.You dont have to carry cash and your monthly statement provides you with a complete record of all your

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transactions so a customer can manage his/her expenses with ease. It has following characteristics. Interest No Ease & Security No Liability International Recognition& Acceptability Spending Limits Free Account Statement 24 hour Customer Service

Procedure for getting ATM card

Customer should be an account holder Application from is filled Application is forwarded to the head office .Within to 10-15 days bank receive the ATM card and pin codes and hand it over to the respective customer after verification.

Internet Banking
HBL provides you the service of Internet Banking through which you can avail the following facilities. Account information Funds transfer View statements Mobile prepaid cards

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Utility bill payment Cheque Book request

Phone Banking
HBL provides also you the service of Phone Banking through which you can avail the following facilities. Request for Banker's Cheque, Account Statement, Cheque Book HBL CreditCard bill payment Funds Transfer Balance Inquiry

Mobile prepaid cards

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Financial Ratios
Ratios are important and helpful in the reference that they simplify the understanding of financial statement and tell us the changes in the financial situation of the business. They provide data that help in knowing the factors linked with successful and unsuccessful firms also reveal strong and weak firms.

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Return on Assets =

Net profit after tax Total assets

2007 0.01457 2008 0.014499 2009 0.01551

Years ROA

2005 0.01823

2006 0.02138

Interpretation
The calculation and graph show that there has been a remarkable change in the year 2006 in comparison with 2005, but in the year 2007 a sudden fall in the graph

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can be seen it means that the firm has not utilized its assets properly therefore the assets value is greater against the total income. From 2008 to 2009 the graph is again upwards and there is an improvement in the utilization of assets.

Years Current ratio

2005 1.8962

2006 1.3479

2007 1.1307

2008 1.7977

2009 2.006

Interpretation:
The ratio is used to give idea of the company's ability to pay back its short-term liabilities with its short-term assets. The higher the current ratio, the more capable the company is of paying its obligations, therefore, the bank in year 2009 is in a very good position to pay its obligations as they come due. In 2006 and 2007 the

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firm had a low ratio so may be due to short term financing a great improvement can be seen from 2008 to 2009.

Years F.A. Turnover

2005 1.9059

2006 3.0253

2007 2.4129

2008 2.6402

2009 2.6684

Fixed Asset Turnover =

annual sales

Avrg total assets

Interpretation:
As we know that the higher this ratio, the better, A declining ratio may indicate that the business is over-invested in plant, equipment or other fixed assets. Moving from 2005 to 2009, the most favourable is the year 2006 as the value is highest.

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The year 2007 shows the lowest value in comparison and the value increases in the next two years showing the banks efficiency in investment in fixed assets to generate revenue. Years N.P. Margin 2005 45.329% 2006 35.116% 2007 30.327% 2008 27.896% 2009 29.952%

Net Profit Margin =

Net profit Sales

Interpretation:

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This is an indication of how effective a company is at cost control. In other words, net profit margin refers to that which is left for the owners from a dollar of sales after all expenses have been paid. From year 2005 to 2008 there has been a decline Years 2005 2006 2007 2008 2009 Debt-Equity ratio 27.269% 22.570% 26.707% 30.876% 28.76% but in the year 2009 the value increases again. The management has been effective in reduces its expenses in the year 2009 in comparison with other years.

Debt-Equity ratio =

long-term debt Total capitalization

Interpretation:
If the liabilities exceed the net worth then in that case the creditors have more stake than the shareowners. Debt-equity ratio, if higher, is thought to be risky

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because the firm has more liability. There is a fluctuation in the values. There is a downward trend in 2006 and then 2006 onwards there is an upward trend in 2008 and again a downward trend in 2009. So debt ratio is fluctuating every year in Years 2005 ROI 2.993% comparison with the equity. 2006 3.701% 2007 2.512% 2008 2.639% 2009 2.912%

Return on Investment=

operating profit * 100 Avg. operating assets

Interpretation: It measures the efficiency of the investments. It is about how a firm uses its capital to generate profits. The year 2006 has the highest peak which shows that the bank generated remarkable returns from its investments whereas 2007 is a downfall and the graph becomes upward The Islamia University of Bahawalpur
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gradually in the next two years. As 2007 is seen to be a depressing year for the bank, it seems that the management made serious good decisions in diversified businesses.
Years ROD 2005 0.223% 2006 0.277% 2007 0.190% 2008 0.1895% 2009 0.196%

Return on deposits = Profit after taxation Total deposits

Interpretation: The ratio shows the profits in comparison with the deposits. There is a peak in the year 2006 which shows a good return on deposits. As we can see from the above calculations that the trend of the ratio is decreasing from next year onwards in 2007 and 2008 while there in The Islamia University of Bahawalpur
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2009 we can see that HBL has again started gaining profits and the ratio is 0.196%.
Years Inv.to total assets 2005 0.20304 2006 0.20130 2007 0.25715 2008 0.17316 2009 0.25061

Investment to total Assets= Investments Total assets

Interpretation:
A fluctuation is seen in the graph of this ratio. Again in the year 2007 there is the highest peak which means that the bank did excellent investments in this year. 2005 and 2006 are at the same investment level but in the year 2008 the

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investment declined to a great extent and an upward movement of investments in comparison with assets in the year 2009. Years Dep. To Total Liabilities 2005 88.5% 2006 84.9% 2007 84.5% 2008 87.36% 2009 87.60%

Deposits to total liabilities= deposits Total liabilities

Interpretation:
This ratio is showing good position in 2005 which means that bank is maintaining numerous deposits. But from 2005 to 2007 there is much decreasing trend which means that there is a reduction in deposits as compared to liabilities. From 2008 to

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2009 it is increasing due opening of new branches and introducing new & different schemes that benefit the customer. The deposits are increasing which shows the good performance of bank.

Years Equity to Asset ratio

2005 0.0976

2006 0.08843

2007 0.09138

2008 0.08996

2009 0.07655

Equity to asset ratio= total shareholders equity Total assets

Interpretation:
This ratio shows the relationship between the equity and the total assets. It shows the capital adequacy of any organization. It is showing an increasing trend from

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2004 to 2006 which means that shareholders equity is increasing. In 2007 it is showing decreasing trend means shareholders equity is decreasing as compared to assets. But again in 2008 it is increasing means increase in shareholders equity Years Advances to 2005 0.7326 2006 0.76106 2007 0.71932 2008 0.76430 2009 0.66539

deposit which is showing good position of company.

Advances to Deposit ratio=

Advances Deposit

Interpretation:
This shows advances of the bank as compared to the deposits i.e. relationship between advances & deposits. There is an increasing trend in from 2005 to 2006 which shows that bank has increased its advances which is a good sign for bank. In 2007 this ratio is decreasing because advances are decreasing and deposits are

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increasing. In 2008 it is again increasing means the bank is giving more advances. This shows that advances are increasing than deposits which are good for bank. In 2009 it decreases again. Years ROE 2005 23.620% 2006 23.764% 2007 15.94% 2008 16.384% 2009 15.883%

Return on Equity= Net income Total equity

* 100

Interpretation:
Return On Equity ratio tells how much profit a company earns with the money shareholders have invested. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors. In

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2005 and 2006 there is a great extent of profits generated for the shareholders. Years 2005 2006 2007 2008 2009 Op. Profit Margin 46.347% 52.093% 45.546% 43.476% 47.7904% From 2007 to 2009 there is a fluctuation. At first in the year 2007 the ROE percentage is 15.94% in 2008 it is 16.384% and in 2009 the ROE is again showimg a downward trend.

Operating Income

Profit

Margin=

Operating

Total income

Interpretation:
Operating profit margin tells how effective a company is at controlling the costs and expenses linked with the normal business

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operations. The higher the ratio, the better a company is. There is a fluctuation in the percentage values. 2006 has the highest peak which means that the company has lower fixed cost and a better or increasing sales faster than costs. 2006 year onwards there is a decreasing trend and again in the year 2009 the percentage has improved.

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Strengths
HBL is the oldest Bank established in 1947 having 62 years of experiences. HBL has largest net-work mode and customer base in Pakistan with 1469 branches in Pakistan. The HBL employees interact with their clients with friendliness and discuss about their problems as their own. It has now 680 online branches in Pakistan. HBL has a qualified and excellent management. HBL is in dominating position in Pakistan in terms of deposits, advances and assets. HBL provides a complete range of banking products and services including flexi loans, car finance, home finance, finance, consumer finance, credit cards and lease finance, credit cards, debit card, online banking and phone banking. It has strong recognition in domestic and foreign market. It advertises through billboards and other media. It has a good security system. The Islamia University of Bahawalpur
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The RHQ inspection officers check the branches once in a month so the employees are always vigilant.

Weaknesses
Employees are not satisfied because the pays of employees are less and there is no clear criterion for promotion. Lack of job security due to the pressure on employees to bring more and more customers to the bank. There are old employees having lack of information technology and cannot use latest banking software effectively. Lack of professionalism. Employees at branch level are not properly motivated to work by heart. They take the all routine activities as a boring job. During salary days too much customers gather in the branch but there is no proper place where they can sit and wait therefore the bank should be spacious. Some employees are given the job on personal relation with some senior employee which is not justifiable for the other people applying for the same job.

Opportunities
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Products and services can be enhanced for customers. Due to privatization management can make its own decision for the benefit of firm. HBL can bring more technological advancement in its operations. It can get a good opportunity in consumer banking. By increasing technical and professional staff, progress of firm can be increased. Establishing more foreign branches. HBL should provide attractive rate of return to attract more customers and make the feedback effective.

Threats

Different Schemes launched by other banks have increased competition for HBL.

Products and services introduced by HBL in the past have been copied and followed by other commercial banks. Employees are leaving because of low salaries and no promotions.

As there are low barriers to entry competition is increasing not domestically but also globally.

For the last of 2 to 3 years, Pakistan is facing economic and political instability which is a big threat. The Islamia University of Bahawalpur
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Many foreign banks are attracting customers with attractive rate of return offers and other innovative ways which is also a threat for HBL.

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SUGGESTIONS
Internship Report

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Training should be given to the staff in marketing, selling, and finance to sharpen their abilities and skills. Bank should emphasize on using latest banking software and hire proper experts in that field. Some branches are still batch and so they should also be switched to online ones. Proper salaries & incentives to the employees so that they are motivated. Proper training programs should be started for new and old workforce. The website contains insufficient information, needs improvement.

Interior of bank must be changed. Needs spacious branches to prevent customers from botheration in salary days. HBL should increase its deposits and advances and attract more and more customers. HBL should focus on research and development to improve the functioning of the bank.

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Conclusion
In the history of banking in Pakistan we see three eras d)
e)

Pre-Nationalization Period Nationalization Period Period after Nationalization

f)

This report is about the bank in which I have done my internship. Habib Bank Limited is the largest bank in Pakistan and is having a thoroughly established banking chain throughout the world. An extensive network of 1400 branches in Pakistan & 71 international branches makes it one of the largest banks in Pakistan today. HBL is present in 25 countries. Habib Bank Limited was incorporated on 25th August 1941 by ISMAIL HABIB (LATE). Habib Bank inaugurated its operations with the banks first branch in Bombay. It was the first Muslim bank of the sub continent. It was established with a paid up capital of Rs.2500, 000. At an early stage the number of branches was only 12. Habib Bank Ltd operated under state ownership between 1974-2004. After privatization in 2004, 51 percent of the Banks shares were purchased by the Aga Khan Fund for Economic Development, an agency of the Aga Khan Development Network.

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Today, Habib Bank Plaza is the tallest building in Pakistan, is the proud symbol of HBLs leadership in Pakistans corporate arena. It has customer oriented philosophy, follows leadership through innovation. It has over 5 million customers. Owing to the strong brand appreciation due to historical presence, vast branch network and services offered HBL carries a special place in the economy of Pakistan. With a revamped customer oriented philosophy, it is pursuing new avenues of leadership through innovation, as it gear up to face the challenges of the new millennium. It has over 5 million customers. It has strong brand recognition due to historical presence, vast branch network and services offered. To fulfill the requirement of BBA degree I have done my internship in a well renowned bank HABIB BANK LIMITED. I worked in the following departments: 1. Deposit Department 2. Cash Department 3. Advances Department 4. Clearing Department 5. Remittance Department 6. Bancassurance

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The function of deposit department is to collect cash from customers and to deposit it into the accounts, maintained by them. Also different types of accounts for new customers are opened here. The function of cash department is receipt and payment of cash. Utility bills are also paid in cash department. The function of advance department is to lend money in the form of consumer financing i.e. flexi loans & credit cards. Agriculture finance, cash finance, running finance. Fixed asset finance, letter of credit & letter of guarantee are also included in it. . HBL is earning by giving advances mostly in the form of flexi loans because middle income level consumers can also avail this facility. In clearing department bank exchanges cheques and other negotiable instruments drawn on each other within specified area and securing the payments for their clients through the clearinghouse. The Cheques and other negotiable instruments are sent to the Clearing Department / Collection Cell located at the Main Branch. The main function of bills and remittances department is to deal mainly in Outwards bills for collection (OBC) and Inward bills for collection (IBC). Remittance is a process to transfer money or send money through different procedures and ways. Through this bank earns a lot of income in form of service charges HBL and New Jubilee Life Insurance Company Limited (NJI) introduce Amaan (Retirement Plan) and Tabeer (Child Education & Marriage). These products have been

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designed keeping HBLs customer base as the focus and will provide life insurance along with an investment option. Habib bank has also introduced ATM (automated teller machine) for its customer. It is also known as HBL debit card and the banks head office in Karachi prepares it. HBL Master Card also known as Credit Card, allows you to pay for your purchases directly from your bank account. HBL also gives the service of Internet Banking and Phone Banking. HBL provides the service of Internet Banking through which we can avail the facilities such as Account information, Funds transferView statements, Mobile prepaid cards, Utility bill payment, Cheque Book request. HBL also provides the service of Phone Banking through which we can avail the facilities of Request for Banker's Cheque, Account Statement, and Cheque Book, HBL CreditCard bill payment. HBL uses the MISYS system to perform online functions. It is used by cashiers and clearance department.

Ratios are important and helpful in the reference that they simplify the understanding of financial statement and tell us the changes in the financial situation of the business. They provide data that help in knowing the factors linked with successful and unsuccessful firms also reveal strong and weak firms.

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According to my financial analysis of Return on assets there has been a remarkable change in the year 2006 in comparison with 2005, but in the year 2007 a sudden fall in the graph can be seen it means that the firm has not utilized its assets properly therefore the assets value is greater against the total income. From 2008 to 2009 the graph is again upwards and there is an improvement in the utilization of assets. Then coming on the financial analysis of the current ratio, the ratio is used to give idea of the company's ability to pay back its short-term liabilities with its short-term assets. The higher the current ratio, the more capable the company is of paying its obligations, therefore, the bank in year 2009 is in a very good position to pay its obligations as they come due. In 2006 and 2007 the firm had a low ratio so may be due to short term financing a great improvement can be seen from 2008 to 2009. Net profit Margin is an indication of how effective a company is at cost control. In other words, net profit margin refers to that which is left for the owners from a dollar of sales after all expenses have been paid. From year 2005 to 2008 there has been a decline but in the year 2009 the value increases again. The management has been effective in reduces its expenses in the year 2009 in comparison with other years. The ratio measures how the company is leveraging its debt against the capital employed by its owners. If the liabilities exceed the net worth then in that case the creditors have more stake than the shareowners. Debt-equity ratio, if higher, is thought to be risky because the firm has more liability. There is a fluctuation in the values. There is a downward trend in 2006 and then 2006 onwards there is an upward trend in 2008 and again a downward trend in 2009. So debt ratio is fluctuating every year in comparison with the equity. It measures the efficiency of the investments. Return on investment is

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about how a firm uses its capital to generate profits. The year 2006 has the highest peak which shows that the bank generated remarkable returns from its investments whereas 2007 is a downfall and the graph becomes upward gradually in the next two years. As 2007 is seen to be a depressing year for the bank, it seems that the management made serious good decisions in diversified businesses. Return on deposit ratio shows the profits in comparison with the deposits. There is a peak in the year 2006 which shows a good return on deposits. As we can see from the above calculations that the trend of the ratio is decreasing from next year onwards in 2007 and 2008 while there in 2009 we can see that HBL has again started gaining profits and the ratio is 0.196%. Investments to total assets show a fluctuation. Again in the year 2007 there is the highest peak which means that the bank did excellent investments in this year. 2005 and 2006 are at the same investment level but in the year 2008 the investment declined to a great extent and an upward movement of investments in comparison with assets in the year 2009. Deposits to total liabilities is showing good position in 2005 which means that bank is maintaining numerous deposits. But from 2005 to 2007 there is much decreasing trend which means that there is a reduction in deposits as compared to liabilities. From 2008 to 2009 it is increasing due opening of new branches and introducing new & different schemes that benefit the customer. The deposits are increasing which shows the good performance of bank. Equity to asset ratio shows the relationship between the equity and the total assets. It shows the capital adequacy of any organization. It is showing an increasing trend from 2004 to 2006 which means that shareholders equity is increasing.

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In 2007 it is showing decreasing trend means shareholders equity is decreasing as compared to assets. But again in 2008 it is increasing means increase in shareholders equity which is showing good position of company. Advances of the bank as compared to the deposits, there is an increasing trend in from 2005 to 2006 which shows that bank has increased its advances which is a good sign for bank. In 2007 this ratio is decreasing because advances are decreasing and deposits are increasing. In 2008 it is again increasing means the bank is giving more advances. This shows that advances are increasing than deposits which are good for bank. In 2009 it decreases again. Return on Equity ratio tells how much profit a company earns with the money shareholders have invested. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors. In 2005 and 2006 there is a great extent of profits generated for the shareholders. From 2007 to 2009 there is a fluctuation. At first in the year 2007 the ROE percentage is 15.94% in 2008 it is 16.384% and in 2009 the ROE is again showing a downward trend. Operating profit margin tells how effective a company is at controlling the costs and expenses linked with the normal business operations. The higher the ratio, the better a company is. There is a fluctuation in the percentage values. 2006 has the highest peak which means that the company has lower fixed cost and a better or increasing sales faster than costs. 2006 year onwards there is a decreasing trend and again in the year 2009 the percentage has improved. So, according to me overall performance of HBL is seen to be good in the years 2006 and 2009. While, there are also some ratios that are seen to be giving good

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values in the year 2007 and 2008. So the values of ratio calculations fluctuate in every year. In SWOT analysis I concluded that HBL is the oldest Bank established in 1947 having 62 years of experiences. HBL has largest net-work mode and customer base in Pakistan with 1469 branches in Pakistan. It has now 680 online branches in Pakistan. HBL has a qualified and excellent management. It has strong recognition in domestic and foreign market. It advertises through billboards and other media. It has a good security system. The RHQ inspection officers check the branches once in a month so the employees are always vigilant. But its Employees are not satisfied because the pays of employees are less and there is no clear criterion for promotion. Also there is shortage of trained and specialized staff. There are old employees having lack of information technology and cannot use latest banking software. There is no specialist person who can train employees in IT. These things are showing weakness. HBL has also opportunities i.e. due to privatization management can make its own decision for the benefit of firm. Products and services can be enhanced for customers .By increasing technical and professional staff, progress of firm can be increased. There are also threats to HBL. Different Schemes launched by other banks have increased competition for HBL. Products and services introduced by HBL in the past have been copied and followed by other commercial banks. Employees are leaving because of low salaries and no promotions. As there are low barriers to entry competition is increasing not domestically but also

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Internship Report
globally. For the last of 2 to 3 years, Pakistan is facing economic and political instability which is a big threat.

In the end my recommendation for the bank is that HBL should increase its deposits and advances and attract more and more customers by winning their confidence. Staff should be provided with professional training in marketing, selling, and finance in order to sharpen their abilities and developing skills. Bank should emphasize on hiring of business graduates and computer experts who can use latest banking software. Proper salaries & incentives should be given to the employees so that they are motivated. Proper training programs should be started for new as well as old employees. The website contains insufficient information, needs improvement. Operating expenses of the bank should be brought down to increase profitability. Interior of the bank must be changed. HBL needs to focus on spacious branches to prevent customers from botheration in salary days. Some branches are still batch and so they should also be switched to online ones. Working for a bank is a good experience specially from the point of view of learning something and to have broad understanding of practical work. I spent almost 6 to 7 weeks in the bank and came to know about HBL as an institution very closely, The Islamia University of Bahawalpur
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the job is really challenging one because its all about satisfying the customers and to offer them something unique.

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ANNEXUR ES

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