hbl hrm internship

CONTENTS

Introduction of Habib Bank...........................................................................3History:.........................................................................................................3

FIRST MUSLIM BANK OF THE SUB-CONTINENT..........................................3Company Management.................................................................................4Management Hierarchy................................................................................6ORGANOGRAMME.........................................................................................6

DEPARTMENTS OF HABIB BANK.......................................................................7DEPOSIT DEPARTMENT.................................................................................7

i. Current deposit..........................................................................................7ii. Saving bank deposit..................................................................................7iii. Profit and loss saving account.................................................................7iv. Fixed deposit...........................................................................................7v. Call deposit................................................................................................7vi. Short notice term deposit.......................................................................7vii. Foreign currency deposit........................................................................7viii. Cumulative deposit certificate (other).................................................7

GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT.............................8i. Notice by a Customer................................................................................8ii. Death of a Customer.................................................................................8iii. Customer’s Insolvency............................................................................8iv. Customer’s Insanity................................................................................8v. By order of court.......................................................................................8vi. Unsatisfactory operation.........................................................................8

CLEARING DEPARTMENT...............................................................................8i. Paying Bank...............................................................................................8ii. Collecting Bank..........................................................................................8

ADVANCES DEPARTMENT.............................................................................91. Guarantees............................................................................................92. Mortgage...............................................................................................94. Pledge....................................................................................................9

FOREIGN EXCHANGE DEPARTMENT............................................................10BILLS DEPARTMENT....................................................................................10

a. Inward Bills for Collection (IBC)...............................................................10b. Outwards Bill for Collection (OBC)...........................................................10

INWARD BILLS FOR COLLECTION (IBC)....................................................10OUTWARDS BILL FOR COLLECTION (OBC)...............................................10

ACCOUNTS DEPARTMENT...........................................................................11a. Journal System........................................................................................11

Project report on Habib Bank Ltd

b. Vouchers System.....................................................................................11INCOME INCLUDES..................................................................................11

1. Brokerage (A bank sells and buys share, stocks, debentures, other securities and receives payment for these services).....................................112. Discount..................................................................................................113. Service Charges......................................................................................114. Rent (On building)...................................................................................115. Commission (from utility services)..........................................................11

EXPENDITURES INCLUDES.......................................................................111. Salaries, allowances and provident fund.................................................112. Rent, taxes, insurance, lighting etc.........................................................113. Profit paid on deposits and borrowings...................................................114. Postage, telegram and stamps................................................................115. Stationary, printing and advertisement charges etc...............................116. Auditor’s fee and legal charges...............................................................12

REMITTANCE DEPARTMENT........................................................................12i. Mail Transfer (MT)....................................................................................12ii. Telegraphic transfer (TT).........................................................................12iii. Demand Drafts (DD).............................................................................12WORK DONE AT THE BRANCH........................................................................12Financial Analysis..........................................................................................14

RATIO ANALYSIS.............................................................................................19Recommendations.........................................................................................26

2


Introduction of Habib Bank

History :

On 25th of August 1941, Habib Bank inaugurated its operations with the bank’s first branch in Bombay. In 1947 Karachi saw its first commercial bank of the newly formed Islamic Republic of Pakistan, when the bank shifted its head office there. Throughout the decades, HBL has held the mantle of a dynamic leader, by adding value to the lives of its customers.

It was HBL that introduced products such as Credit Cards, ATMs, Travellers Cheques, etc., to the Pakistani market. We at Habib Bank cater to the needs of millions with our quality products & services. Today, Habib Bank is truly the bank of the people, providing its customers convenience and satisfaction all over the world. Habib Bank Plaza, the tallest building in Pakistan, is the proud symbol of HBL’s leadership in Pakistan’s corporate arena.

Today, HBL has more than 1,700 branches all over Pakistan and presence in 26 countries across five continents. With a revamped customer oriented philosophy, we are pursuing new avenues of leadership through innovation, as we gear up to face the challenges of the new millennium.

FIRST MUSLIM BANK OF THE SUB-CONTINENT

Habib Bank Limited was established by Mr. Ismail Habib (Late) on August 25, 1942 at Bombay. It was the first Muslim Bank of the sub-continent. It was established with a paid up capital of Rs. 2.5 million. At an early stage, the number of its branches was only 12.

In 1973, all the commercial banks were nationalized under the Bank Nationalization Act 1974. Now Habib Bank Limited is the largest commercial bank of Pakistan comprising 9 Regional Head Quarters, 42 Zones, 1198 branches in the country on 31st December 1999. Overseas operations of Habib Bank Limited are comprising 65 branches, 2 affiliates, 2 representative offices and 2 subsidiaries. These branches are in U.S.A, U.K., Belgium, France, Netherlands, Turkey, Kuwait, Lebanon, Iran, Bangla Desh, Bahrain,

3


Egypt, U.A.E., Hong Kong, Oman, Y.A.R, Sudan, Nigeria, Malaysia, Sri Lanka, Singapore, Kenya, Seychelles, Maldives, Indonesia, Mauritius and Australia.

Company Management

Corporate Information:

Registered Office:-

Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi – 75650Pakistan.

Head Office:-

Habib Bank LimitedHabib Bank PlazaI.I. Chundrigar RoadKarachi – 75650Pakistan.Phones: 2418000Fax: 21-2411647Telex: 20086-20751 HBANK-PK

Board of Directors

Sultan Ali AllanaChairman

Iain Donald CheyneDirector

Mushtaq MalikDirector

Yasin MalikDirector

R. Zakir MahmoodPresident & CEO

Sajid ZahidDirector

Ahmed JawadDirector

4


Auditors:Taseer Hadi Khalid & Co.(a member firm of KPMG International)Sh. Sultan Trust Bldg. No. 2Beaumont RoadKarachi – 75530Pakistan.

A.F. Ferguson & Co.(a member firm of PriceWaterhouseCoopers)State Life Building 1 – CI.I. Chundrigar RoadKarachiPakistan.

Audit Syed Mazhar Abbas ChairmanCommittee Ali Raza D. Habib Member

Anwar Haji Karim MemberShameem Ahmed MemberMurtaza H. Habib Member

CompanySecretary A. Saeed Siddiqui

Statutory KPMG Taseer Hadi & Co.Auditors Chartered Accountants

Legal Liaquat Merchant AssociatesAdvisor Advocates and Corporate Legal Consultants

Registered 126-C, Old Bahawalpur Road,Office Multan

Principal 2nd Floor, Mackinnons Building,Office I.I. Chundrigar Road,

Karachi

Share M/s. Gangjees Registrar Services (Pvt) Ltd.

5


Registrar 516, Clifton Centre, Khayaban-e-Roomi,Block - 5, Clifton, Karachi-75600.

Management Hierarchy

PRESIDENT

BOARD OF DIRECTOR

MEMBER EXECUTIVE BOARD

REGIONAL CHIEF

ZONAL CHIEF

BRANCH MANAGERS

ORGANOGRAMMEPRESIDENT

SENIOR EXECUTIVE VICE PRESIDENT

CONSISTING CONSULTING BOARD OF DIRECTORS

EXECUTIVE VICE PRESIDENT

SENIOR VICE PRESIDENT

ASSISTANT VICE PRESIDENT

OFFICERS GRAD I, II, III

CLERKS

PEONS

6


DEPARTMENTS OF HABIB BANK

DEPOSIT DEPARTMENT

CLEARING DEPARTMENT

ADVANCES DEPARTMENT

FOREIGN EXCHANGE DEPARTMENT

DEPOSIT DEPARTMENT

The function of deposit department is to collect deposits from customers. Following type of deposits are offered by Habib Bank.

i. Current deposit

ii. Saving bank deposit

iii. Profit and loss saving account

iv. Fixed deposit

v. Call deposit

vi. Short notice term deposit

vii.Foreign currency deposit

viii. Cumulative deposit certificate (other)

7


GROUNDS FOR CLOSING THE CUSTOMER’S ACCOUNT

The banker may close the account of the customer due to following reasons:

i. Notice by a Customer

ii. Death of a Customer

iii. Customer’s Insolvency

iv. Customer’s Insanity

v. By order of court

vi. Unsatisfactory operation

CLEARING DEPARTMENT

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 bankers clearing house wherever it is established.

A clearing house is the place where representatives, of all the banks get together for the purpose of off setting the inter bank indebtedness arising from the transfer of deposits by a customer of a particular bank to another bank.

8


ADVANCES DEPARTMENT

The function of advances department is to lend money in the form of clean advances, against pr9omissory 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.

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. While in case of the default the pledge has the power of sale after giving due notice.

.

9


FOREIGN EXCHANGE DEPARTMENT

International trade is growing and with the development of international trade it has become more imperative.

For countries to devote more and more attention to the complicated mechanism of Foreign Exchange. It is more important in case of developing countries. It is need of time, that a country should conserve its foreign exchange resources.

I.

BILLS DEPARTMENT

Bills department performs the following functions.

a. Inward Bills for Collection (IBC)

b. Outwards Bill for Collection (OBC)

INWARD BILLS FOR COLLECTION (IBC)

These are bills or cheques etc. which are collected locally. They are received from outstation branches banks and parties.

DEMAND DRAFT:

If refers to the payments of money on demand of the holder of draft. Demand draft includes DD issues and DD payable.

OUTWARDS BILL FOR COLLECTION (OBC)

These are negotiable instruments, drawn on outstation branches, bills sent for collection on behalf of the customers i.e. cheques, drafts or treasury bills etc.

10


ACCOUNTS DEPARTMENT

Usually Accounts are maintained in two ways:

a. Journal System

b. Vouchers System

Journal system is adopted by some commercial industrial institutions. In journal system entries are reported in Journal Books and then posted to ledger.

Voucher system is used for every transaction. Voucher has to be prepared either in cash or in transfer or in clearing, the Sheet upon which these vouchers are summarized transactions-wise and consolidated into a figure is called supplementary.

INCOME INCLUDES

1. Brokerage (A bank sells and buys share, stocks, debentures, other securities and receives payment for these services).

2. Discount

3. Service Charges

4. Rent (On building)

5. Commission (from utility services)

EXPENDITURES INCLUDES

1. Salaries, allowances and provident fund

2. Rent, taxes, insurance, lighting etc.

3. Profit paid on deposits and borrowings

4. Postage, telegram and stamps

5. Stationary, printing and advertisement charges etc.

11


6. Auditor’s fee and legal charges.

REMITTANCE DEPARTMENT

Remittance department performs following functions:

i. Mail Transfer (MT)

ii. Telegraphic transfer (TT)

iii. Demand Drafts (DD)

WORK DONE AT THE BRANCH

As every body knows that "Knowledge without practice is sterile "In

order to give vent to this idea an Internship program of two months has been

arranged in different esteemed organizations during M. Com. In this regard

on 1th of July 2000, I was asked by my principal to go to Habib Bank to have

an internship of two months there. So as per standing order of my Zonal

Chief I was assigned to work under the supervision of AVP/Manager of Main

Branch, Daska. On my first day of Internship, Manager handed me over the

charge of Assistant to Accountant.

As three departments namely Accounts, Cash and Billing, and Clearing

were being managed by the Manager in this particular branch. I started my

practical training by tockening the cheques for withdrawals and entering

them into token book. This was the routine work that I had to daily and, at

12


the time of closing exact position of cash in hand, Receipts and Payments

was evaluated. The Manager and the Accountants duly signed this

evaluation.

Secondly I was advised by my Manager to be remained vigilant about

the fake cheques giving some instructions for the scrupulous examination of

cheques like signature verification from specimen card. Unfortunately the

branch where I got my Internship was not computerized, all the things were

to be done manually. Right after two weeks, the date of balancing came.

Here balancing means balancing of ledgers of Current Deposit and Saving

Deposits. The balancing of Current Deposit Ledgers was done on weekly

basis while Saving Deposits Ledgers were balanced on semi monthly basis.

Then 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 one month 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 Six Weeks My Manager tells me about the transfer book which

keeps the record of the transfer of funds between clients of bank.

13


Financial Analysis

14


Financial AnalysisHabib Bank Limited

Balance sheetAs on 31 December 2008

Assets 2008Rs.(000)

2001Rs.(000)

2000Rs.(000)

Cash and balances with treasury bank

27,449,292 27,669,276 12,869,044

Balances with other banks 26,870,767 25,087,525 24,474,658

Lending to financial institutions 10,001,123 22,843,841 766,674

Investments 142,877,930 57,592,325 72,525,352

Advances 167,523,299 167,225,401 173,822,905

Other Assets 18,137,931 21,256,518 30,246,684

Operating fixed assets 7,184,623 5,874,422 5,923,411

Deferred tax asset-net 2,967,570 6,001,297 -

Net Investment in finance lease - - 267,359

15


Capital work in progress - - 30,246,684

Total Assets 403,012,535 333,750,605 320,926,758

Habib Bank LimitedBalance sheet

As on 31 December 2008

Liabilities 2008Rs.(000)

2001Rs.(000)

2000Rs.(000)

Deposits and other accounts 328,182,054 283,444,680 265,751,324

Borrowings from financial Institutions

38,045,541 23,443,322 23,923,589

Bills payable 5,834,673 5,419,260 5,376,924

Other liabilities 11,243,342 8,629,175 13,340,485

Deferred tax liabilities - - -

Subordinated loans - - -

Minority Interest 208,665 203,520 -

Share Holder Equity

Share Capital 12,178,495 12,178,495 12,178,495

Other tier1 capital 8,000,000 8,000,000 8,000,000

Capital Reserves 1,027,348 985,942 6,468,385

Accumulated loss and other reserves

(8,931,643) (11,662,155) (17,876,069)

16


Surplus on revaluation of fixed assets

7,224,050 3,108,366 3,763,625

Total Liabilities and Owner equity

403,012,535 333,750,605

320,926,758

Habib Bank Limited Profit and Loss Account

For the year Ended Dec 31-2008

Description2008

Rs.(000)2001

Rs.(000)2000

Rs.(000)Mark-up\revenue\Interest earnedMark-up\Return\Interest expensed

Net mark-up interest IncomeProvision against non performing loans and advancesProvision against Diminution in value of investmentsBad Debts written off directly

Net mark-up\Interest Income after provision

Non mark up Interest Income

Fee, Commission and brokerage IncomeIncome\Gain on InvestmentsIncome from dealing in foreign currenciesOther IncomesJoint Venture

Total Non mark up and Interest Income

23,956,11411, 580,431

12,375,683

2,512,207

9,863,476

6,188,357

16,051,833

26,738,44615,434,544

11,303,902

2,636,707

8,667,195

5,483,999

14,151,194

24,271,79217, 385,761

6,886,031

1,364,722

5,521,309

7,699,684

13,220,993

17

2,656,361

(144,154)

-

2,096,8711,795,3851,144,3501,151,751

-

2,632,960

3,747

-

1,827,6851,099,9471,453,5221,102,845

-

1,222,172

142,550

-

1,855,324385,912

1,135,3432,813,8421,509,213


Non markup\ Interest ExpensesAdministrative expensesOther provision\write off-NetOther Charges

Total Non mark up and Interest expenses

Staff Welfare Fund

Profit before taxation

Taxation – current – Deferred

Profit after taxationShare of Loss attributable to minority Interest

Profit attributable to share holder

Basic earning per share

11,748,6484,303,185(215,159)

4,088,026

2,054,0662,033,960

9,449

2,043,409

1.68

11,809,7202,341,474(117,244)

2,224,230

1,111,888 1,112,342

3,410

1,115,752

0.92

12,146,4681,074,525

-

1,074,525

465,000609,525

(121,905)

487,620

0.50

18

842,6311,211,435

11,724,44372,89612,381

1,111,82662

12,071,5316,013

68,924

465,000-

11,807,129(62,542)

4,061


RATIO ANALYSIS

2000 2001 2008

current Ratio

1.2742 1.3218

1.0205

Liquid Ratio -

-

Loan to Deposits Ratio 51.0458

58.9975

65.408

1

Loans to Assets Ratio 41.5678

50.1049

54.162

8

Return on Assets

0.5046 0.3333

0.1899

Return on Shareholder's Fund 10.3210

8.6806

4.8667

Return on Equity Capital 16.7012

9.1337

5.0049

Earning per Share

1.6800 0.9200

0.5000

Rate of Return on loans 14.3002

15.9895

13.963

5

Net Profit Ratio

8.4904 4.1601

2.5112

19


Return on Equity Ratio

2008 2001 2000

Net Profit after tax X 100Owner EquityNet Profit after tax 2,033,960 1,112,342 609,525

Owner Equity 19,706,925 12,814,168 12,534,436

Return on equity 10.32 8.68 4.86

Return on Equity Ratio

The past three years data shows an

improvement in the return on equity

which is a positive sign. The Bank should

have to continue its policies. By

observing the audited account we find

that the this improvement is due to

increase in the Net profit which is good

sign.

Return on equity capital

-

2.0000

4.0000

6.0000

8.0000

10.0000

12.0000

2002 2001 2000

years

%ag

e

20


Return on Assets

2008 2001 2000

Net Profit after tax X 100Total AssetsNet Profit after tax 2,033,960 1,112,342 609,525

Total Assets 403,012,535 333,750,605 320.926.758

Return on Assets 0.50 0.33 0.19

Return on Assets

Return on assets ratio shows

an improving trend. This ratio shows that

the both the Net profit and Total Assets

has improved in the previous years.

Return on assets

-

0.1000

0.2000

0.30000.4000

0.5000

0.6000

2002 2001 2000

years

%ag

e

21


current Ratio 2008 2001 2000

Current AssetsCurrent LiabilitiesCurrent Assets 395,827,912 327,876,183 314,705,317

Current Liabilities 310,646,613

248,053,807

308,392,322

current Ratio 1.2742

1.3218

1.0205

Current Ratio

Current ratio has decreased in

comparison to 2001 but it is still above

than 1.1 . The data shows that this is due

to both increase in current assets and

current liabilities but the current liabilities

raises more rapidly than current Assets.

2008 2001 2000

current Ratio

-0.20000.40000.60000.80001.00001.20001.4000

2002 2001 2000

22


Loan to Assets ratio

LoansAssets

Advances 167,523,2

99 167,225,40

1 173,822,90

5

Assets 403,012,535 333,750,605 320.926.758

Loan to Assets ratio 41.5678 50.1049 54.1628

Net Profit Ratio

2008 2001 2000

Net profit / Interest Income X 100

Net profit 19,706,9

25 12,814,16

8 12,534,43

6

Interest Income 23,956,1

14 26,738,44

6 24,271,79

2

Net profit ratio 8.4904

4.1601

2.5112

Loan to Asset Ratio

23


Loan to Asset Ratio is

continuously decreasing in the previous

years. The figures reveals that this trend

was due to decrease in Advances of the

bank but on the other hand the Asset of

the Bank increases rapidly.

Net Profit Ratio

Net profit Ratio is giving upward

trend. This trend is observed due to

increase in Net profit but on the other

hand the expenses decreases which

shows a efficient management.

Loan to Deposit Ratio

Loans to Assets Ratio

-

10.0000

20.0000

30.0000

40.0000

50.0000

60.0000

2002 2001 2000

Net Prof it Ratio

-

2.0000

4.0000

6.0000

8.0000

10.0000

2002 2001 2000

24


Loans to deposit ratio show a

decreasing trend in the previous years.

This trend is observed as The advances

of the bank decreases but on the other

hand total Deposits of the bank increases

which result in decrease in this ratio.

Rate of Return on loans

2008 2001 2000

Net profit / Loans

Net profit 19,706,925

12,814,168

12,534,436

Loans 167,523,299

167,225,401

173,822,905

Rate of Return on loans 14.3002

15.9895

13.9635

Recommendations

As we seen from the previous analysis of the financial statements we have realized that that Habib Bank is performing very well since its inception. It is quite difficult to give suggestion to improve the banking conditions Habib Bank Limited. As we know that nothing is perfect, there is always a room for

Loan to Deposti Ratio

-10.000020.000030.000040.000050.000060.000070.0000

2002 2001 2000

25


improvement, so I have found during my internship can be made up taking into account the following suggestions.

HBL is in the process of providing the services of Automated Teller Machine. In order to complete with the other banks ATM services must be provided throughout the country as this service is becoming very popular in bank customers. The bank is also in process of computerizing its records which is good sign but it is going on with small progress Computerization must be done on early basis. This will help in increasing efficiency of work don, customers satisfaction decrease the stationary cost and resultantly it will increase profits. In Past Habib Bank Limited has always being suffered from bad Government policies. Government intervention should avoided completely.

Employees Training programme must be introduced on continuous basis so that Employees have understanding with the latest developments especially with the customers.

Bank should introduced incentive plans for employees on regular basis so that if employees may work whole heartedly for the welfare of their organization. While giving incentives qualification, work, experience, hard work and such other factors must be considered.

Mismanagement of resources must be avoided as much as possible as it decreases profit but also discourage hard worker and honest employees.

Fresh graduates must be recruited. As the combination of Experienced and fresh can produce better results and it will improve the efficiency of management.

Habib Bank is going towards mobile banking but the problem is that a common client has no idea of its usage due to lack of marketing. I think that a proper marketing programme must be launched for client’s awareness.

26


Banks different schemes must be conveyed to the targeted customers so that to have a reasonable share in market.

Bank should help the society by providing interest free loans to the Talented Students.

27

hbl hrm internship

Documents

habib bank limited

current assets

previous years

net profit

habib bank

muslim bank

outwards bill

good sign