afm (hbl report student id 12584)

8/13/2019 AFM (HBL Report Student Id 12584)

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Analysis of Balance Sheetof Financial InstitutionAdvanced Financial Management Report

7/21/21!

Habib Bank LimitedValentine Fernandes (12584)


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Table of Contents

"a#le of $ontents%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%2

INTRODUCTION:

&B' (as the first commercial #an) to #e esta#lished in *a)istan in 1+,7% -ver the

years. &B' has gro(n its #ranch net(or) and #ecome the largest private sector

#an) (ith over 1. #ranches and 1. A"Ms across the country and a customer

#ase e0ceeding seven million relationships%

"he overnment of *a)istan privatied &B' in 2, through (hich A3F45ac6uired

1 of the Ban)8s shareholding and management control% ,1% of the

shareholding is retained #y the overnment of *a)istan 9-*:. (hilst 7% is o(ned

#y the general pu#lic i%e% over 1;.< 9as per 212 financial statements:

shareholders follo(ing the pu#lic listing that too) place in =uly 27%

>ith presence in 2, countries. su#sidiaries in &ong 3ong and the ?3. affiliates in

@epal. 3enya and 3yrgystan and rep offices in Iran and $hina. &B' is also the

largest domestic multinational% "he Ban) is e0panding its presence in principal

international mar)ets including the ?3. ?A4. South and $entral Asia. Africa and the

Far 4ast%

3ey areas of operations encompass product offerings and services in Retail.$ommercial and $orporate Ban)ing% &B' has one of the largest $orporate Ban)ing

portfolio in the country (ith an active Investment Ban)ing arm% SM4 and Agriculture

lending programs and #an)ing services are offered in ur#an and rural centers%

Most Notable Achievements:

2
http://www.akdn.org/akfedhttp://www.akdn.org/akfed


3/32

Best Foreign Exchange Provider

in Pakistan, Global Finance

Awards 2009

Best Bank in Pakistan, Global

Finance Awards 2008

Best Bank in Pakistan,Global

Finance Awards 2009

Best Trade Finance Provider inPakistan,Global Finance

Awards 2009

Bank o the !ear, TheBanker 2009 "#$blication

o Financial Ti%es&

Best Trade Finance

Provider , Global

Finance 'aga(ine 20)0

Best Bank,Global

Finance 'aga(ine

20)0

Best E%erging 'arket

Bank,Global Finance

'aga(ine 20)0

Best E%erging 'arket

Brand,Global Finance

'aga(ine 2009

*trongest Bank inPakistan,Asian Banker

'aga(ine 20)2

+eading Bank in o%e

-e%ittances in 20)),

Pakistan -e%ittance

.nitiative

Best -etail Bank inPakistan,Asian Banker

'aga(ine 20)/

Best F Bank in Pakistan,E$ro 'one1 Awards, 20)/

Vision:

4na#ling people to advance (ith confidence and success

Mission:

"o ma)e our customers prosper. our staff e0cel and create value for shareholders

Branch Network:

&B' has the largest domestic #ranch net(or) (ith over 1. #ranches and 1.

A"Ms and is present in 2, countries namely Bangladesh. Belguim. $hina. Sinagpore.

France etc%

Geora!hical sements:

"he Ban) operates in five geographic regions. #eingC

D *a)istan

D Asia *acific 9including South Asia:

D 4urope

D @orth America

D Middle 4ast

!


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D -thers

ItEs &ead -ffice is at &a#i# Ban) *laa I%I%$hundrigar Road. 3arachi. *a)istan%

"#bsi$iaries % Associates

"#bsi$iaries:

1% &a#i# Finance International 'imited. &ong 3ong (holly o(ned

2% &a#i# Ban) Financial Services 9*rivate: 'imited. *a)istan (holly o(ned

!% &B' $urrency 40change 9*rivate: 'imited. *a)istan (holly o(ned

,% &B' Asset Management 'imited. *a)istan (holly o(ned

% &a#i# Allied International Ban) *lc%. ?nited 3ingdom shareholding at+%

;% &a#i#sons Ban) 'imited. ?nited 3ingdom shareholding at +%

7% First &a#i# Ban) Modara#a. *a)istan

G% &B' Stoc) Fund. *a)istan shareholding G1%G

+% &B' Multi Asset Fund. *a)istan D shareholding G+%+;

1%&B' Income Fund. *a)istan D shareholding ;1%7

Associates

1% &imalayan Ban) 'imited. @epal D &olding 2 9211C 2: D 'isted

2% 5iamond "rust Ban) 'imited. 3enya D &olding 11%;G 9211C 11%21: D 'isted

!% 3yrgy Investment and $redit Ban). 3yrgy Repu#lic D &olding 1G 9211C

1G: D ?nlisted

,% =u#ilee eneral Insurance $ompany 'imited D &olding 1;%2, 9211C 1,%27:D 'isted

% =u#ilee 'ife Insurance $ompany 'imited D &olding 17%+ 9211C 17%+: D

'isted

;% &B' Money Mar)et Fund D &olding 1%1 9211C 1% : D 'isted

,


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7% &B' Islamic Money Mar)et Fund D &olding 7!%1, 9211C ;,%G: D 'isted

G% &B' Islamic Stoc) Fund D &olding +7%; 9211C +;%1,: D 'isted

+% &B' *ension 46uity Su# Fund D &olding +2%! 9211C ++%2G: D ?nlisted

1%&B' *ension 5e#t Su# Fund D &olding ,,% 9211C +;%!,: D ?nlisted

11%&B' *ension Money Mar)et Su# Fund D &olding !+% 9211C +7%2;:

?nlisted

12%&B' Islamic *ension 46uity Su# Fund D &olding G!%,, 9211C ++%+!: D

?nlisted

1!%&B' Islamic *ension 5e#t Su# Fund D &olding ;%2 9211C ++%+!: D

?nlisted

1,%&B' Islamic *ension Money Mar)et Su# Fund D &olding ;1%,7 9211C

++%+7: ?nlisted

Cre$it Ratin:

=$R HIS $redit Rating Agency of *a)istan has upgraded the entity ratings of the

Ban) to AAA / AD1


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5e#it $ard

*hone Ban)ing

Fast"ransfer

Mutual Funds

Salary *lus

B#siness c#stomers have been tarete$ with the *ollowin schemes:

$orporate Ban)ing

$ommercial Ban)ing

SM4 Ban)ing

Investment Ban)ing

$ash Management

Jarai Ban)ing

lo#al "reasury

Asset Management

-ther than these specific individual and #usiness customer schemes and services

&B' also provides &B' e0press a mode oftransferring money any(here (ithin*a)istan is safe. 6uic) and simple and also the provision of having Islamic Ban)ing

accounts%

"+OC Anal,sis:

"trenths

'oo)ing at the training and development e0penditure from &B'Es financials

the staff of the #an) is definitely s)illed. (ell trained and competent%

&B' has centralied decision ma)ing%

&B' is the largest #an) in *a)istan. having 1< #ranches as (e can

confirm in audited Financial Statements for 212%

;


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&B' have an e0tensive #ranch net(or) throughout the country. around ;G

online #ranches in *a)istan%

By analying capital ade6uacy ratio (e see that they have one of the highest

in the #an)ing sector (hich fortifies their sta#ility

-ne of the #est I" infrastructure. the first #an) in *a)istan to have a core

#an)ing system. other have follo(ed suit. apart for the #ig none of the

small #an)s have it

&B' e0press #ranchless #an)ing%

!rdlargest credit card portfolio after ac6uisition of $iti#an) credit cards%

'argest deposit #ase%

Strong regional presence. can emerge as a strong regional player. they are

present in every country around *a)istan as (e can see in &B' 'ocations%

+eaknesses

Bad de#t rate is very high and they have poor system of recovery%

Sense of insecurity in employees due to do(nsiing%

&B' has #ecome victim of political. legal and socio cultural pressure%

4mployees are not satisfied due to unfair promotion system% "here is not

aright criterion for promotionK many vacancies are filled at approach #asis%

Advances of &B' are also very lo( (ith respect to its competitors as (e can

see from advance to deposit ratio%

O!!ort#nities

?tilie e0isting net(or) to enhance regional presence. offer product cross

sell. e0plore merging mar)et such as east Africa%

Although A"M and online #an)ing has started #ut it can #e made more

effective #y applying itEs o(n A"M net(or)K as there are t(o A"M s(itches

operational in the country. 1'I@3. hosted #y a consortium of #an)s. and

M@4". hosted #y M$B Ban) 'td. #y having their o(n net(or) they can not

only use it for themselves #ut also sell it as a service to other #an)s% A"M

transactions costs are much lesser than transactions via human tellers as

(ell%

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"hey have the largest deposit #ase. focus should #e on improving deposit

mi0 9$ASA current account / savings account:

&B' has also an opportunity to e0pand its retail #an)ing and internet #an)ing

facilities in order to serve the customer more efficiently%

-pportunity to invest in 6uality advances%

'everage e0isting net(or) to offer cash management and transaction

#an)ing%

40pand (ealth management #usiness%

-ffer more SM4 and rural advances 9)ind of syncs (ith *a)istanEs gro(th:%

"hey have recently introduced #ranchless #an)ing 9&B' e0press:. (e can use

that to attract more customers 9transaction #an)ing:

Challenes

*rofit is #ecoming lo( due to declining spreads%

Financial environment is changing day to day. ne( technologies are

introduced #y foreign #an)s that provide customer efficient and 6uic)

service%

5ue to lo( entry #arriers. there are more competitors. so the glo#alcompetition has increased

Because of unfair promotion system and a#sence of proper and recruitment

techni6ues competent persons may move to other #an)s%

'oss of confidence of overseas customers due to freeing of accounts%

?nsta#le government policies

ORGANOGRAM O- COM(AN.

G


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-INANC) ORGANOGRAM

+


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/OB D)"CRI(TION O- MA/OR -INANCIA' (O"ITION:

Chie* -inancial O**icer 0Mr1 A,a2 Ahme$3

"o monitor the performance of all Regional &eads placed dispersed over 2,countries%

"o assign the targets to all regions in respect of 5eposits. Advances. *rofitand other nonDfund #ased income generated through various services offeredto customers at #ranch level%

"o overn Financial *olicies

5evelop financial and ta0 strategies

"o attend the various meetings called #y the president or #y #oard ofdirectors%

Ma)e sure S%-%* are follo(ed

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Ma)e strategy and *olicies in formulating the company8s future direction

*erforms supervisory duties to other lo(er 5eputy 5epartment (ise $F-Es

95MEs: and Managers%

-versee the financial operations of su#sidiary and associate companies

operations%

Report financial results to the #oard of directors

R)(ORT" (R)(AR)D B. -INANCIA' D)(ARTM)NT:

Monthly for Ban)

5aily and >ee)ly for "reasury functions

Financial Reporting is done on 6uarterly #asis (hich comprises of ! 6uarterly

and one Annual Report

5aily monitoring of fi0ed assets

5aily maintenance of foreign currency accounts/ investments and e0ecution

of International payments and receipts%

11
http://www.accountingtools.com/definition-subsidiary-companyhttp://www.accountingtools.com/board-of-directors-definitionhttp://www.accountingtools.com/definition-subsidiary-companyhttp://www.accountingtools.com/board-of-directors-definition


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COM(ARATIV) ANA'."I" O- BA'ANC) "&))T:

Balance sheet

nal!sis2""8 2""# 2"1" 2"11 2"12

($%&ees in '""")

T

$ash and #alances (ith

treasury #an)s;.!!.1!,

7+.G!+.G!

;

G1.;,.2,

;

1!.!++.;2

!

17.22+.1

7

Balances (ith other #an)s !+.!;,.2+7,.!;;.;G

7

!7.,1!.1G

,7.!,+. ,7.+G.!2

'endings to financial

institutions;.1+!.7G7 .!2.G7!

!.!!+.!,

,,1.G1.2+ 2,.G2G.2

Investments12+.G!!.,,

;

21;.,;7.

!2

2,.++.1

1;

,1G.;,.1,

7

7+7.+,.,

G

Advances,;.!.

7

,,.;;2.,

++

,+.7.

12

,7.!;7.;

;

,++.G17.+

;

-perating fi0ed assets 1,.71.221;.7;;.;;

G

1;.1.2+

1+.1;7.;, 2!.;!2.!2,

5eferred ta0 asset 12.1G;.G,G + .2.+,,+ .

72.2!7.27.GGG ;.;.,G!

-ther assets !,.GG.,,, ,1.2;2.7,

!,.+2.7

,,.GG.7! !.;;+.7

7,+.G;.71

G;!.+2,.7

+!

+2,.;++.,

!

1.1!+.,.

2

1.;1.!G.

72

L*B*L*T*

Bills paya#le +.G2G.G21.,1.,

2

+ .

77.+!1!.G+,.2 1G.+,!.27

Borro(ings from financial

institutions,;.+;1.1;

2.,2.+7

G

,.,+.G;

!+.,7!.;7

1+;.G.,

G

5eposits and other accounts+7.+.,

;G2.7.

7+

7,7.!7,.7

++

+!!.;!1.2

1.21,.+;!.

7

Su#Dordinated loans !.+,.+2 ,.212.G, .

2G1.G!.!;.1 .,,.;,

12


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'ia#ilities against assets

su#Lect to finance leaseD D D D D

5eferred ta0 lia#ility D D D D D

-ther lia#ilities 2.;;!.,11!.G.!1

;

2;.7.,

!7.+!1.,2 ,1.!,2.7!

;G!.,+G.12

G

77+.,.+

+

G2G.,,G.;

!2

1.2+.+;7.

217

1.,77.27.

G12

+T T ;;.!G.G7G,.!;+.7+

G

+;.2.77

1

1+.G;.+G

G

1!!.!7.7;

hareholders' e,%it!

Share capital 7 .+. + .1G.1

.1G.G

11.2.;G 12.122.7,G

Reserves 2!.;;.,,27.27.!G

2+.!.

!2.1,.7 !+.!7+.!,

?nappropriated profit !1.+!!.17G!G.,+G.!!

,7.,;7.7

, ;.+G.;+7;7.2!.21

"otal e6uity attri#uta#le to the

e6uity holders of the Ban);!.17+.222

7.1!!.71

G;.G,2.

+

1.1,7.1!

2

11+.2.!1

7

Minority interest G+.++ 1.1,!.2,1 1.212.;; 1.2!;.2+ 1.227.27

Surplus on revaluation ofassets D net of deferred ta0 2.2!+.2;; G.+2.G,2 G.1+;.; G.2!.;; 12.7G.2!;

;;.!G.G7G,.!;+.7+

G

+;.2.77

1

1+.G;.+G

G

1!!.!7.7;

+ote- ll these amo%nts are re&resented as 0R#!ees in 45553

1!


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"he cash and #alance (ith treasury #an)s amount includes @ational *rie Bonds in

local and foreign currency. amount (ith State Ban) of *a)istan i%e% 'ocal currency

current account and foreign currency deposit account. amount (ith other $entral

Ban)s i%e% Foreign currency current account and Foreign currency deposit account

and amount (ith @ational Ban) of *a)istan in 'ocal currency current account% It also

includes remunerative accounts% It seems to increase over the years% "here has

#een an inconsistent increase in this amount over the years%

"he State Ban) of *a)istan local currency current account has increased #y a#out

! in 2+ and the $entral #an)s Foreign currency deposit account increased to

almost !% times as compared to the amount in 2G% "he overall increase in 2+

is appro0imately ,1%2% In 212 @ational *rie Bonds in 'ocal currency increased #y

!+%G and the $entral #an)sE Foreign currency current account has increased #y

more than t(ice of the amount in 211% "hus resulting in a drastic overall increase

of 2%1 in 212%

1,


15/32

"he #alances (ith the other #an)s included the #alance inside *a)istan and outside

*a)istan in the current and deposit accounts% "here seem to have relatively small

fluctuations throughout the year period almost remaining consistent%

In *a)istanEs current account has increased #y 12 and outside *a)istan deposit

account has increased #y appro0% 2!% "hus in 211 the overall increase in other

#an) #alances is 2;%;%

1


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'ending to financial institution in local currency include call money lendingEs.

repurchase agreement lendingEs 9reverse repo: and mar)et securities held as

collateral against lendingEs to financial institutions (hich include mar)et treasury

#ills% "here has #een drastic increase in the year 21 appro0imately a five times

increase since 2+ (hich seems to #e due to the repurchase agreement lendingEs

that increased #y nearly 1,% &o(ever there has #een a fall of ,%! in 212%

1;


17/32

Investments #y type include &eld for "rading Securities 9&F":. &eldDtoDMaturity

Securities 9&"M:. Availa#leDforDSale Securities 9AFS:. and Investment in Associates

and =oint Henture% Investment #y Segment includes Federal overnment Securities.

Fully paidDup -rdinary Shares. 5e#entures and $orporate 5e#t Instruments%

Investments held for maintaining the li6uidity re6uirements of the SB* amounted to

Rs% 11%2, million as at 5ecem#er !1. 212 9211C Rs% 111%!+, million:%

Investments include Rs% ,!%11, million as at 5ecem#er !1. 212 9211C Rs%

1+%+G million: pledged (ith SB* and @ational Ban) of *a)istan against ""/55

discounting facilities and demand loan facilities% Investments include Rs% +%++2

million as at 5ecem#er !1. 212 9211C Rs% +%;7 million: pledged (ith the

$ontroller of Military Accounts in lieu of Regimental Fund Accounts #eing

maintained at various #ranches of the #an)%

"he increase in amounts of the investments per year is significantK from an increase

of ;;%7 in 2+ to a 17%G increase in 21% In 211 again (e see a ;,%2 of

increase% And finally in year 212 a + increase in investment%

17


18/32

Advances include loans. cash credits. running finances. etc% in and outside *a)istan.

net investment in finance lease D in *a)istan. #ills discounted and purchased (hich

are paya#le in and outside *a)istan%

"he amounts seem to remain fairly consistent in the period from 2G to 211

increasing and decreasing from %, to 1% "he increase in advance in the year

212 is almost +%

1G


19/32

-perating fi0ed assets include capital (or)DinDprogress. intangi#le assets and

tangi#le fi0ed assets% "he operating fi0ed assets has increased over the years

ranging from appro0imately 1, to 2! e0cept for 21 (here there (as a

decrease of !%

5eferred ta0 assets include deducti#le temporary differences and ta0a#le

temporary differences% "he deferred ta0 has #een decreasing over the years% "he

1+


20/32

decrease has #een very rapid and dropped to nearly half of the amount in the 212

as compared to 2G%

-ther assets include income / mar)Dup accrued in local currency . income / mar)Dup

accrued in foreign currency. advances. deposits. advance rent and other

prepayments. advance ta0ation 9payments less provisions:. receiva#le from defined

#enefit plans. stationery and stamps on hand. accrued fee income. due from

overnment of *a)istan. unnrealised gain on for(ard foreign e0change contract.

nonD#an)ing assets ac6uired in satisfaction of claims. receiva#le from @ational

Savings $entre / $learing in transit. dividend receiva#le and -thers%

"he other assets amount increased to 1+%! in 2+ and fell to 1%, in 21%

"hen in 211 it increase to 2G and in 212 a further increase of 1+%G%

2


21/32

"he #ills paya#le in and outside *a)istan have increased over the years e0cept for

21 (here there has #een a minor decline of only 2%7% "he increases in 211 and

212 have #een drastic from ,2 and !; respectively%

21


22/32

"he #orro(ings amount includes the transactions inside and outside *a)istan from

financial institutions in local and foreign currency in the form of secured and

unsecured #orro(ings%

"he increase / decrease in the #orro(ings have #een #et(een increases in 2+ of

11 to a decrease of 2! in 21% In 212. particulars of #orro(ings in local

currency increased #y 7% "he secured #orro(ings increased #y ;,G and

unsecured #orro(ings increased #y !+G% "he #orro(ings have increased

significantly in 212%It is almost , times the amount it has #een in 211%

5eposits and other accounts include customers and financial institution in local and

foreign currency% "he deposits and other accounts have increased from 1, in

2+ to +% in 21 to 2 in 211 to !%1 in 212%

22


23/32

"here has #een a gradual increase in su#Dordinated loan% "he highest increase (as

in year 211 the percentage increase (as 17%;% 5uring the year 21. &a#i#sons

Ban) 'imited has issued a su#ordinated loan of ?S ; million e6uivalent to pa)

rupees !G%G1 million% "his is repaya#le in the year 22 and carries interest at

'IB-R < 2%% "he loan is su#ordinated to the claims of depositors and other

creditors%

2!


24/32

Mar)Dup / return / interest paya#le in local currency. Mar)Dup / return / interest

paya#le in foreign currency. Accrued e0penses. *rovision for employees8

compensated a#sences. *rovision for post retirement medical #enefits. *rovision

against offD#alance sheet o#ligations. *rovision for contingencies. Branch

adLustment account. *rovision for staff retirement #enefits. *aya#le to defined

#enefit plan. Amounts due to minority investors in fund consolidated #y &B'.

*rovision for (or)ers (elfare fund. ?nearned commission. NaraDeD&asna Fund and

-thers%

"he other lia#ilities amount has increased over the years% &o(ever in 21 there

(as a decrease of 11% and in 211 there (as a significant increase in other

lia#ilities%

2,


25/32

Authorised capital (as of 1.!G. shares of rupees 1 each from 2G to 211

and then increased to !.. shares of rupees 1 each in 212%

Issued. su#scri#ed and paidDup capital over the year period the share capital

increased #y 2 in 2+ and thereafter there has #een a constant rise of 1 per

year%

2


26/32

"he amounts in the reserves account include 40change translation reserve and

statutory reserves% "hese amounts seem to increase each year% In 212 the

increase in the reserves has #een the greatest that is a#out 22%%

"he unappropiated profit has #een increasing consistently the increase percentage

has #een #et(een 1G% to 2!%!%

2;


27/32

"he minority interest increased drastically in 2+ #y 2G%, further increasing over

the years #y a relatively small percentage and finally in year 212 there (as a

decrease of %7%

In 2+ the percentage increase is 2;1%, and the increase percentage in 212 is

%G% "his sho(s a very high disparity (hereas the years #et(een 2+ D211

remains almost consistent (ith only a ma0imum of 1%! increase%

Concl#sion:

&ence (e can conclude that &B' is not only a fast gro(ing local financial institution

#ut also a (ell sta#ilied lo#al presence% "heir contri#utions in various su#sidiaries

and associates spread locally as (ell as internationally is testament to this%

27


28/32

Recommen$ation:

It can increase itEs revenues #y (or)ing on eradicating as much as #ad de#t as

possi#le and improving the situation of declining spreads% "heir recent innovation of

Branchless #an)ing gives them a competitive advantage and can not only save

costs #ut also improve profit #y having a fast and efficient streamlined process%

"hey could (or) on increasing their glo#al presence as profit earned in foreign

currency (ould #e of significant importance in terms of contri#ution to #ecoming

more successful%

Bibliora!h,:

httpC//(((%h#l%com

httpC//(((%investorguide%com/definition/advancedeclineDratioDad%html

httpC//(((%investopedia%com/university/mar)et#readth/mar)et#readth!%asp

httpC//(((%li)efore0%com/glossary/(/advanceDdeclineDspreadD1;+

httpC//en%(i)ipedia%org/(i)i/A"MOusageOfees

2G
http://www.hbl.com/http://www.investorguide.com/definition/advancedecline-ratio-ad.htmlhttp://www.investopedia.com/university/marketbreadth/marketbreadth3.asphttp://www.likeforex.com/glossary/w/advance-decline-spread-16905http://en.wikipedia.org/wiki/ATM_usage_feeshttp://www.hbl.com/http://www.investorguide.com/definition/advancedecline-ratio-ad.htmlhttp://www.investopedia.com/university/marketbreadth/marketbreadth3.asphttp://www.likeforex.com/glossary/w/advance-decline-spread-16905http://en.wikipedia.org/wiki/ATM_usage_fees


29/32

BA'ANC) "&))T":

Balance Sheet of 2+

2+


30/32

Balance Sheet of 21

!


31/32

Balance Sheet of 211

!1


32/32

Balance Sheet 212

afm (hbl report student id 12584)

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