ContentsCHAPTER 1.....................................................................................................................3

INTRODUCTION TO HBL..............................................................................................3

1.1 HISTORY...............................................................................................................3

1.1.1 PRE-PARTITION PHASE..............................................................................3

1.1.2 POST-PARTITION PHASE...........................................................................3

1.1.3 GROWTH PHASE..........................................................................................4

1.1.4 MODERNIZATION PHASE..........................................................................4

1.1.5 NATIONALIZATION PHASE.......................................................................4

1.2 HBL TODAY.......................................................................................................4

1.3 OBJECTIVES OF HABIB BANK LIMITED.......................................................5

1.4 FUNCTIONS..........................................................................................................5

1.4.1 BASIC FUNCTIONS......................................................................................5

1.4.2 AGENCY FUNCTIONS.................................................................................6

1.4.3 GENERAL UTILITY SERVICES..................................................................6

1.5 DEPARTMENTS OF HBL....................................................................................6

1.5.1 GENERAL BANKING DEPARTMENT.......................................................6

1.6 ACCOUNT OPENING SECTION......................................................................7

1.6.1 HOW TO OPEN AN ACCOUNT...................................................................7

1.6.2 WITH-DRAWL...............................................................................................8

1.6.3 INTEREST......................................................................................................8

1.6.4 CLOSING OF AN ACCOUNT.......................................................................8

1.6.5 SECRECY:......................................................................................................9

1.6.6 MONEY DEPOSITED OR DRAWN BY POST............................................9

1.6.7 TYPES OF BANK ACCOUNT......................................................................9

1.7 DEPOSITS SECTION..........................................................................................10

1.8 CLEARING SECTION........................................................................................11

1.8.1 TYPE OF CHEQUE’S COLLECTED BY CLEARING SECTION............12

1.8.2 FUNCTIONS OF CLEARING SECTION IN A BRANCH.........................13

1.8.3 PROCEDURE FOR CLEARANCE OF CHEQUE’S...................................13

1.9 REMITTANCE SECTION..................................................................................13

1.10 ACCOUNT SECTION.......................................................................................15

1.10.1 ACCOUNTS TERMS.................................................................................15

1.10.2 BOOKS AND STATIONERY....................................................................16

1.10.3 FUNCTIONS OF THE ACCOUNT SECTION..........................................16

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Chapter-2........................................................................................................................18

2.1 What i have WORKED..................................................................................18

2.2 DEPOSITS DEPARTMENT................................................................................18

2.2.1 Account Opening Procedure..........................................................................18

2.3 Bank’s Procedure and Internal Working After Opening an Account...................19

2.4 ADVANCES DEPARTMENT............................................................................21

2.5 ADVANCE OF HBL...........................................................................................22

2.6 JOB RESPONSIBILITY...............................................................................24

2.7 WHAT I HAVE LEARNED...........................................................................24

CHAPTER 3...................................................................................................................25

3.1 Financial Analysis................................................................................................25

3.2 Seven Years Performance of HBL at a Glance (Rs. In million)...........................25

3.2 RATIO ANALYSIS.............................................................................................31

CHAPTER 4...................................................................................................................37

CRITICAL ANALYSIS.............................................................................................37

4.1 MODREN INFORMATION TECHNOLOGY:..................................................37

4.2 EVENING BANKING:........................................................................................37

4.3 STAFF SHORTAGE............................................................................................37

4.4 TRANSFERS.......................................................................................................38

4.5 PROMOTION......................................................................................................38

CHAPTER 5...................................................................................................................39

5.1 SWOT ANALYSIS..............................................................................................39

5.2 INTERNAL ANALYSIS.....................................................................................39

5.2.1 STRENGTHS................................................................................................39

5.2.2 WEAKNESSES.............................................................................................40

5.3 EXTERNAL ANALYSIS.................................................................................40

5.3.1 OPPORTUNITIES....................................................................................41

5.3.2 THREATS.................................................................................................41

CHAPTER 6...................................................................................................................42

6.1 CONCLUSION...................................................................................................42

6.2 RECOMMENDATIONS.....................................................................................42

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CHAPTER 1

INTRODUCTION TO HBL

1.1 HISTORYHabib Bank is a commercial bank according to the definition given by Professor Dr.

Harts a bank can be defined as “A banker is one who, in the ordinary course of his

business, receives money which he repays by honoring Cheque’s’s of persons from

whom or on whose account he received it.”

Mr. Ahmad Habib, Dawood Habib, Muhammad Ali Habib and Ghulam Ali Habib the

four big Habibs of Subcontinent history formed Habib Bank Limited in 1941.

In 1941 the bank had only Rs.10.3 million in the form of advances and invested

Rs.12 lacs in government securities. But the revolution of clock and the efforts of

Habib brothers led Habib Bank Limited to grow to the size of Rs.24 million by the end

of 1942.

Due to certain difference between the Governments of India and Pakistan, when

India withheld the transfer of funds in 1945, Habib Bank readily came forward and

subscribed heavily to the Government of Pakistan, to overcome the crisis. The loan to

the Government was made at a very nominal rate of interest. The history of Habib Bank

can be divided into different phases.

1.1.1 PRE-PARTITION PHASEThe first phase in the history of Habib Bank Limited comprises seven years from 1941

to 1947 it was the most crucial time with a humble beginning, the bank mastered a

formidable challenge and overcame depredate prejudices against business talents of the

Muslims of South Asia.

1.1.2 POST-PARTITION PHASEThis was a new beginning when the bank shifted its head quarters in Bombay to

Karachi according to the wishes of founder of the nation in order to meet new

responsibilities and to face great challenges. This also included a supreme

responsibility which Habib bank served with full loyalty. In first year of independence

HBL worked as the State Bank of Pakistan.

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1.1.3 GROWTH PHASEThis phase in the history of the Bank is characterized by setting certain standards of

services such as increasing of facilities, extending banking hours and improving the

physical appearance of the branches. These steps popularized banking among people

from all walks of life. This also includes tremendous achievement of the construction

of bank’s first head office building at Habib square, Karachi along with continued solid

business and profitability.

1.1.4 MODERNIZATION PHASEIn this phase, the management of HBL worked closely to modernize the banking

facilities and branch lay out. This phase witnessed the consolidation and the beginning

of mechanization and modernization of branches.

This was the year of silver jubilee celebrations. It has a tremendous impact on the

common man that the bank emerged throughout Pakistan and wherever its branches

operated abroad, with a new image of a “Best example of better service. On the

occasion of its 30th anniversary marked the shifting of head office from Habib Square to

Habib Bank Plaza.

1.1.5 NATIONALIZATION PHASEThis phase was generally characterized by heralded nationalization of Pakistani banks

on 1st January 1974. All management as wall as the operations of the banks were

aligned in such a way that the concept of commercial banking in Pakistan changed to

offer all the necessary help to small industrialists, traders and farmers etc. During this

50th year of its existence totaled Golden Jubilee year, it is the largest Pakistani bank

operating round the globe with a great futuristic outlook and planning recognized and

acclaimed both nationally and internationally at highest levels.

1.2 HBL TODAYDuring the rule of present government the policy of privatization led a step of

denationalizing HBL. In the bid of privatization Aga Khan Fund for Economic

Development got 51% of the HBL shares in 2004. The Denationalization process is still

under way as the government sold 10% more shares in August 2007. Recently the

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brand name of Habib bank has made changed to HBL bank. Today the HBL has

become not only the largest bank in terms of assets, branches and facilities but also

getting its position among the modernized and highly effective bank of the Pakistan.

1.3 OBJECTIVES OF HABIB BANK LIMITED“Objectives are the ends towards which organizational and individual activities are

directed”. Or it can be defined as the specific short-term target for which measurable

results can be obtained. The goal of every manager is to create a “surplus” and clear

and verifiable objectives facilitate the measurement of the effectiveness and efficiency

of managerial actions.

Following are some of the main objectives of Habib Bank Limited.

To make Habib Bank the most progressive and dynamic bank of the country.

1 To facilitate the general public to get benefited from efficient banking.

2 To earn profits for the bank itself and for its shareholders.

3 To support small business in Pakistan.

4 To promote and boost business sector inside the country.

5 To provide employment opportunities to people.

6 To help in development and industrialization of the country.

7 To provided loan and advances to help in self-employment schemes.

1.4 FUNCTIONS

1.4.1 BASIC FUNCTIONS1 Accepting of deposits

2 Current account

3 Saving account

4 Fixed deposit account

5 Advancing of loans:

6 Loans and advances

7 Cash credits

8 Provision of Qarze-e-Hasna

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1.4.2 AGENCY FUNCTIONS1 Collection of Cheque

2 Transfer of funds from one place to another

3 Handling of Salaries and Pensions of federal/provincial employees and defense

personnel

4 Assisting to Agriculture

5 Act as an agent or representative of his customers

6 Collection of Negotiable Instruments

7 Issuing Guarantees and Indemnities

8 Granting of letter of credit

1.4.3 GENERAL UTILITY SERVICES1 Utility Bills collection

2 Sale and encashment of Prize Bonds

3 Issue of travelers cheque’s

4 Supplying of Trade information

5 Act as a referee

6 Financing of Foreign Exchange

7 Preparation of feasibility reports for small industrial units

8 Collection of fees and money for people proceeding on “Haj” providing

Pilgrimage services

9 Acts as Income Tax adviser

1.5 DEPARTMENTS OF HBL

1.5.1 GENERAL BANKING DEPARTMENTThis department consists of the following sections:-

1. Account opening section.

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2. Deposit section.

3. Clearing section.

4. Remittance section.

5. Accounts section.

1.6 ACCOUNT OPENING SECTION

1.6.1 HOW TO OPEN AN ACCOUNTThere are certain formalities which are to be observed for opening of a current or

saving account with a Bank. These formalities in brief are as under

1. Formal application:

The customer is to fill "Account Opening Form. It is a formal request by a

customer to the bank to allow him to have and operate the current or saving account.

2. Obtaining introduction:-

The bank before opening, and account obtains introduction of the customer

from old customer, responsible person etc.

3. Specimen signature

When the Banker is satisfied about the integrity of the customer, he agrees to

open open the account. The Banker obtains the specimen signatures of the customer

on the signature book or on card.

4. Minimum initial deposit

In Pakistan the current account can be opened with a minimum of Rs. 500/- and

PLS Saving Account with a minimum of Rs 100/- These amounts are also the

minimum balances to be maintained by the account holders with the Bank.

5. Operating the account

When an account is opened in a Bank, the Banker gives to the customer.

1 Pay in slip book.

2 Cheque’s Book and pass book with a view to operate it.

6. Precautions in preparing the pass book

The Banker should be careful in preparing the pass book However, the

customer himself should.

Send the pass book for making entries and also periodically check up them.

7

He should also see that the entries are initialed by the accountant.

The customer should verify the entries with own books of account.

In order to safe guard the secrecy of the account; the customer should receive the pass

book in closed cover.

1.6.2 WITH-DRAWL.Withdrawal is made on cheque’s supplied by the Bank. A new cheque’s book is

issued only on receipts of the requisition slip attached to the cheque’s book issued

previously and this presented along with the depositor pass book for entire against

cheque’s book challan. Cheque’s book is issued on discretion of the branch manager.

1.6.3 INTERESTThe current rate of interest allowed on deposit in saving Bank account is ascertained at

the Bank. This rate is subject to change. The amount of interest is calculated for each

calendar month on the lowest balance at credit of an account between the close of the

sixth day of a month and the end of the month and only on every complete sum of ten

rupees.

Every account is made up half yearly to 30th June 31st December, and the interest

calculated as above is added to the balance of each account as on these dates.

Transfer of an account.

Account can be transferred to any other branches of N.B.P. free of charge. If a

depositor wants to transfer his account, he presents his pass book personally or sends it

to Bank and writes an application for the transfer of an account.

1.6.4 CLOSING OF AN ACCOUNTA depositor willing to do his account must present his pass book in order that with

drawls and the amount of interest due on the account is entered therein and final

balance stuck. This balance is then paid to the depositor and his receipt is taken, the

8

pass book is canceled, unused Cheque’s forms on hand are also surrendered at the same

time.

1.6.5 SECRECY:The secrecy of depositor’s account is the. Responsibility of every official engaged in

the Bank service.

1.6.6 MONEY DEPOSITED OR DRAWN BY POSTWhen money is sent by post for deposit, the pass book and a letter starting the amount

of the deposit and the number of the account accompany it.When a depositor wishes to

withdraw money by post he must forwards his pass book with a letter starting the

number of his account, the amount to be drawn and either the money is to be remitted

by money-order or in currency notes registered.

1.6.7 TYPES OF BANK ACCOUNT1.Saving account

Saving Account is that account in which customer puts his surplus money which he

saves from his daily expenditure. The account can be operated by depositing a

minimum cash of Rs.10/-. Small percentage of interest is allowed on the balance of this

account.

2.Current account:

The current account is that one which the customer draws his daily cheque’s and is

normally operated by the Business-men. It can be operated by minimum amount of

Rs.500/- Any number of cheque’s amounting undue minimum balance limit can be

issued by the account holder for withdrawal or for payment. No interest is allowed on

this account.

3Joint account

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A joint account occurs when two or more then two customers have one account. The

parties to a joint account are considered in law as they are one person.

4.Profit and loss sharing account

This can be operated by a person, firm or organization by depositing Rs.100/- or above.

The holder of this account will get profit of his amount, or he will bear the loss as the

case may be. So an individual is equally participant in profit and loss.

The holder of account can withdraw up to Rs.15,000/- per month is eight withdrawals,

in case of higher withdrawal, seven day prior notice is necessary. This account is

operated under interest free system.

5. Fixed deposit account

In this account an amount is deposited into the Bank for a fixed period of time. The

fixed period may be three months, six months, one year, two years, five years and

more. The Bank allows a higher rate of interest for larger period.

At the time of operating on account the Bank issues deposit certificates for the period

and amount. The account holder can not withdraw his amount before the specified

period, but the same Bank will allow loan against that certificate. Bank is liable to give

interest on this account on maturity date.

1.7 DEPOSITS SECTIONThere are two types of deposits i.e. current and saving. There are different

forms present in the section of or deposits.

1. Current account form.

2 Saving account form.

3 Private or individual form

4 Private firm account form

In the above mentioned forms, the bank makes an agreement with his customers.

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1.8 CLEARING SECTIONEvery Bank performs the paying and receiving functions. Cheque’s are

collected which are drawn up to Banks for customers. Similarly the cheque’s drawn on

different Banks and deposited by Banks own customers for collection within the city is

known as clearing The functions of receiving and paying is mostly done through the

clearing house. A clearing house can be defined as "AA place where that

representatives of all Bank meet together to settle the receipts and payment of cheque’s

drawn on each other" Clearing House provides the facility which can hardly be

dispensed with especially, in case of crossed cheque’s. Now-a-days HBL played an

important role as leader.

There are two main types of clearing

1 Outward clearing

2 Inward clearing.

1. Outward clearing

It includes those cheque’s and other instruments which are sent by the Bank to

the Banks for payment on behalf of its own clients. Cheque’s are sent to clearing house

thorough local main branch.

A delivery message from the local main branch comes to every branch at a fixed time

to pick its outward clearing or outward returns as the case maybe .Outward Clearing At

Branch Account number of payee/endorsee is written on the back side of the cheque’s.

The instrument and the paying in slips are separated. The instruments are sorted I

Bank-wise and branch wise.

Schedules are prepared. Jotting of all the schedules are taken in the clearing House

statement. Amount of the cheque’s in written in the "Delivered" and to pay column

After balancing the outward clearing, the pay in slips are released to C.D. department.

After balancing, a transfer debit voucher is prepared. The instrument, schedule, etc. are

delivered to the messenger from the main branch.

2 Inward clearing

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The cheque’s drawn are called inward clearing drawn on Habib Bank through

its representatives on the Bank presented by other Banks for payment It includes those

cheque’s and other instruments of Pakistan branches which other Banks present at the

clearing house. Inward Clearing At The Drawn Branch Numbers of instruments noted

in the schedules are verified immediately on receipt.

The amount's of all the instruments are jotted down and totaled. If should be

equal to the amount mentioned in schedule from the local main branch. The amounts

are debarred to the relevant accounts if otherwise in order. The IBCO is prepared

crediting the amount of the main branch.

If there is any return, that is deducted from the total and IBCO prepared for the

remaining amount.

1.8.1 TYPE OF CHEQUE’S COLLECTED BY CLEARING SECTION1. Transfer cheque’s.

These are the cheque’s which are collected and paid by same branch of HBL For

example Mr. Ali is a customer of HBL of CITY branch and draws a cheque’s in favor

of Mr. Hussain who is also the customer of the same branch.

2. Transfer delivery cheque’s.

The cheque’s which are collected and paid by two different branches of a Bank

situated in the same city. For example a person draws a cheque’s on HBL main branch,

Mardan in favor of another person who maintains an account with HBL Rakh Mandra

branch, D.I.Khan.

3. Clearing cheque’s.

When the payee/endorse and the drawer of cheque’s maintains account with

different Banks, the collection Bank in any one of the following methods:-

It can collect cash by sending its representative with the cheque’s to each of the paying

Banks. It is not so much appropriate .The Bank maintains an account with the paying

Bank.

The cheque’s can be exchanged by representative of the various Banks who

meet at a fixed time and at a fixed place. This is the most efficient method of collection

and paying cheque’s.

12

1.8.2 FUNCTIONS OF CLEARING SECTION IN A BRANCHTo accept transfer, transfer delivery and clearing cheque’s from the customer of

the branch and to arrange for their collection.

To arrange payment of cheque’s drawn on the branch and gives for collection to

any other branch of H.B.L. or any other member or such member of local clearing

house.

To collect amounts of cheque’s drawn on members of the local clearing house

sent for collection by N.B.P. branches not represented at the local clearing house.

1.8.3 PROCEDURE FOR CLEARANCE OF CHEQUE’SThe customers are provided with the copes of pay In-slip, whenever the

customer wants to deposit any cheque’s, he fills in the pay in slip himself and hands it

over the counter along with the instrument.

1.9 REMITTANCE SECTIONRemittance means transfer of money from one place to another place. It is of

two kinds.

1 Inland remittance.

2 Home remittance.

1. Inland remittance

An inland remittance means a transfer of money payable at a certain place within the

country. Inland remittances can be classified as under:-

1 Within locality.

2 Out side locality.

2. Within locality

13

When a branch situated in Mardan is required to send drafts to any other branch

situated in the same city the process is know as within locality. For example HBL Main

Branch, Mardan sends any draft to HBL par hoti branch Mardan

3. Outside locality

Outside locality is an important type of inland remittances, which means the

transfer of money payable outside the city. For example, HBL. Main Branch Mardan

sends any draft to a Branch situated at LAHORE.

It is commonly done through the following three means:-

1 Telegraphic transfer (T.T)

2 Mail Transfer (M.T)

3 Demand Draft (D. D)

4. Telegraphic transfer

In telegraphic transfer, the Bank takes commission and telegram charges from

the sender. A receipt is issued to the sender for the value received.

The Bank itself transfer the funds to the drawee branch though a coded message in

telegram, confirmatory of which is also sent through routine date mentioning all details.

All bank Branches have been provided with their code books name Bank Keys Code

Book where from the coded message is agreed by the drawee branch. T.T. can

be sent open, which may be paid in cash in drawee branch, or may be direct y

creditable to relevant account.

1 Mail Transfer (M.T.)

The Money can be remitted through this means also. In this case the payable

amount at the drawer branch can only be transferred to an account; amount can not be

paid in cash. Other procedure is same as T. deposit of money at sending branch.

Difference is only of postage and. telegram charges. The M.T. which in its self is an

advice also is sent by registered post, while T.T. is sent through telegram.

2 Demand Draft (D.D)

Demand draft is a written order by a branch of a specified Bank, drawn on

another branch of the same Bank to pay a certain sum of money only to or to the order

14

of the Payee. Demand drafts are purchased by the clients and after receipt of money

Bank issues and delivers the D.D. to the purchaser, who himself sends it to the payee.

In D.D. the Banks do not recover postal charges as it is payable by the purchaser. The

Bank, after deliver of D.D. to the purchaser also sends its own advice called IBCO

(Inter Branch Credit Order) to the drawee branch mentioning therein all details of

issued draft.

1.10 ACCOUNT SECTION.Every Business organization deals in money matters. Bank also deals in money

and more over since the money belong to the depositors therefore, it is of utmost

importance to keep systematic and correct record.

Further-more, the Banks are commercial institutions and its main objective is to

earn profit, therefore, then record of all incomes and expenditures are kept correct and

systematically.

In H.B.L. the responsibility for maintaining necessary accounting data and to

keep up to date records In a systematic manner has been assigned to the Accounts

Department.

The Branches of Bank perform their daily routine work and deal in money that belongs

to depositors. Here account department hold great importance in banking, becaue it

keeps all the accounting records properly.

1.10.1 ACCOUNTS TERMS.The account department maintains all the accounting records properly there are

certain accounting terms which are defined into the following

1. Account

A summary of all debit and credit transaction pertaining to a similar nature or to

an individual or body of persons is called an account.

2. Vouchers

Written evidence recorded on a price of paper in respect of a money

transaction is called voucher.

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3. General ledger.

Main ledger is a book, where various accounts of different type are kept.

Generally this book is in bended form containing several sheets for several accounts.

4. Subsidiary ledger.

Where a main head has got different sub-head of it: subsidiary leader are

maintained. These subsidiary ledgers are maintained from the main ledger.

1.10.2 BOOKS AND STATIONERY1 The account department uses the following books and stationery

2. Cash book cum-general ledger.

3. Abstract book.

4 Income and expenditure ledger.

4. Register of vouchers

5. Transfer book.

6. Receiving cashier book.

7. Paying cashier book.

8. Supplementary sheets.

9. Different vouchers.

1.10.3 FUNCTIONS OF THE ACCOUNT SECTION.The main functions of the account section of a branch are as follows: -

1. Balancing and maintenance of books.

2. Preparation of statement.

During the course of daily business of the branch, a number of cheque’s are presented

by customer for cash payment, though transfer, delivery and clearing cheque’s at the

counter. Also a number of new accounts are opened and cash is deposited by the

customers. So in order to ensure that during the day all the transactions have properly

been recorded and they are complete in all respects and are recorded in proper books by

the branch this recording is done on daily basis and maintained by account section.

16

1. Balancing and maintaining of books.

Balancing the cash book means that all the transactions have properly been recorded

and there is no mistake in any of these vouchers.

1. Arrangement of voucher.

2. Preparation of supplementary.

3. Preparation of summary.

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

2. Preparation of statements.

To Judge the performance of branches, the Head Office requires periodic

statements from them. Through these statements the top management watches the

progress of the branches and they provide them necessary guidance, the top

management decisions depend upon these statements also. The following are the

important statements prepared by the account section: -

1. Balance sheet on daily basis.

2. Pak account on daily basis.

3. Provisional income and expenditure statement on monthly basis.

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Chapter-2JOB RESPONSIBILITY

2.1 What i have WORKED

Chapter two contain the job responsibility, work in departments and what I have

learned from these departments. In HBL Main Branch Mardan there are seven main

departments, which are Deposits, Remittances, Cash, Bills, Accounts, Credit and

Advances department.

I have worked in the following two departments.

1. Deposits Department

2. Advances Department

2.2 DEPOSITS DEPARTMENT

Deposits are the lifeblood of banking industry. Every bank performs two basic

functions one is accepting deposits and the other are lending of money, deposit

department performs the function of accepting deposits from the customers. In deposits

department I gain some information and personally works the following.

2.2.1 Account Opening Procedure

The applicant is provided an application form to open an account. The applicant in a

manner prescribed and duly signed by the applicant fills this form. An existing account

holder of the bank must introduce the applicant. A copy of Identity card is attached

with the specimen signature card.

The application is presented at the branch with the initial amount of deposit for credit

of his account. The amount is centered in the passbook and is singed by the responsible

officer of the bank; finally a checkbook is issued to the account holder, for withdrawal

of money.

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Documents Required for Account Opening

Following are the various kinds of documents that are required to open account. These

documents covers document requirement for individual, companies and partnership

accounts.

1. Attested photocopy of N.I.C/passport of Account holder(s), Proprietors, Partners,

Directors and Office Bearers as the case may be.

2. Certified true copy of the certificate of incorporation or registration (in case of

companies and registered bodies only).

3. Certified true copy of the certificate of commencement of business (in case of

public limited companies only).

4. Certified true copy of the memorandum and articles of association (in case of

limited companies).

5. Certified true copy of rules and regulations or By-laws (in case of association etc).

6. Certified true copy of the resolution of the board of Directors/Managing

Committee/Governing Body regarding conduct of the account.

7. List containing names and signatures of the Directors/office bearers duly certified

by CLA/Registration Authority.

8. Letter of partnership or certified copy of partnership deed (in case of partnership).

2.3 Bank’s Procedure and Internal Working After Opening an Account

Entry in Account Opened and Closed Register

Every current & saving account is numbered in numerical serial order. The account no.

allocated to the new account is written on the account opening form, specimen

signature card and cheque’s book requisition slip. Similarly when an account is closed

information is stored in the related registers.

Supply of Deposit Slip and Authentication

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The customer is supplied with pay in slip and requested to deposit the money with the

cashier, who put his signature on counter foil of the slip, which must be countersigned

by an authorized officer. This procedure also applies to all subsequent

deposit/withdrawals.

Issuance of Cheque’s Book

Cheque’s Book is issued only after the account opening form has been completed in all

respects. The excise duty is recovered from the account to whom cheque’s book is

issued. Cheque’s Book series is entered in the cheque’s book issuance register.

Send the Documents to Officer in Charge

The account opening form, specimen signature card remain in the custody of officer in

charge current/saving deposit. This officer sends “LETTER OF THANKS” to the new

account holder. Specimen signature cards and other documents are kept under the joint

custody of the manager and account/second officer.

Maintaining Record of Accounts

After opening a current account, issuing deposit slip and cheque’s book the staff

concerned is required to:

1. Send letter of thanks to the introducer of new account holder.

2. Send letter of thanks to new customer in order to verify his or her address.

3. Send customer’s particular to BGL computer center where records are kept.

4. Current account holder can get his or account statement on daily basis, weekly

basis or monthly according to his or her requirement.

Account Opening Forms File

This file contains all account opening form of the branch. Account opening forms of

the closed accounts are also retained in the file except that the word “COSED” is

written in hold letters across such forms. Memorandums & Articles of Association and

any particular document is filed with its account opening form. Forms are filed

according to serial number of accounts.

Specimen Signatures Card File

20

Cards are maintained for all operational accounts according to the serial no. of the

accounts. All operational cards are kept in special cabinets designed for the purpose.

Specimen signature cards of closed accounts are removed from the cabinet and are filed

along with the account opening forms.

Stop Payment Instructions File

Written stop-payment instructions from customers are filed in chronological order. The

officer concerned writes date and time of receipt on the instruction.

Standing Instructions Cards File

Based on customer’s standing instruction, a card is prepared for each instruction and

filed in the chronological order of the execution dates of the instructions. Every

morning, cards are referred to note instructions to be executed on that day.

Customer Correspondence File

These are the files, open for all those customers from whom frequent letters are

received. These files are containing files and don’t close.

2.4 ADVANCES DEPARTMENTThe function of this department is to finance the business and individuals. The

customers can get loans in a specific manner. Credit extension is one of main activity

for all financial institutions, because it is main source of earning .The difference

between the rates at which the bank borrows and at which the bank lends is the source

of revenue for the bank.

However it is very risk, for the minimization of risk the banker usually applies the five

criteria or Five C’s of credit. Which are given below:

Character

The reputation for honesty and integrity of the person/organization seeking credit is

known as its character. It is the most important of the five. Lenders assess character by

looking at a potential borrower’s history of loan repayments or if new borrower then

21

the lender may also ask for references (firms or banks with whom the borrower has

done business in the past).

Capacity

The measure of a borrower’s ability to live up to the terms of a credit agreement and to

pay off an obligation as promised is known as its capacity. Lender (banker) measures it

by evaluating the statements of assets and liabilities on the credit application of the

borrower.

Collateral

The security for the loan usually an asset with enough that it could be sold to satisfy the

obligation-is called collateral.

Capital

Capital means the financial resources that a borrower has available to assure the lender

that the credit is secure. For this, the creditor looks at a business’s financial statements

or an individual’s credit application.

Conditions

It refers to the current economic environment. It also affects the borrower’s ability to

repay the loan.

2.5 ADVANCE OF HBL

1. Over Draft

2. Cash Credit

3. Demand Loans

4. Agriculture financing

5. Staff Financing

22

1 Over draft

An overdraft is the right given by bank to its customer to draw in excess of his current

account up to a fixed limit. This facility is usually given to proven loyal customers. The

interest is charged only on the negative balance in the customer’s account. For this

facility, bank has prescribed forms and after filling by the customer the bank scrutinizes

the application and tÿÿ financial statement, positionÿÿÿÿdit worthiness of the client,

after that, bank sanctions overdraft. Over draft is advantageous to both banker and

customer such that bank earns profit or interest and the customer also gets the funds for

his business development.

2. Cash Credit

Cash Credit is advanced to commercial industrial concerns either against pledges or

hypothecation of goods and products etc. The bank allows the business firm to borrow

up to a certain limit either in lump sum or in installments.

3. Demand Loans

IT is a long-term loan, usually advance made to the borrower in lump sum, for meeting

the long-term capital requirements of the borrower. These are secured by pledging real

estates property, plants, machinery, stocks, and bonds etc. These are mostly

development loans for setting up and developing of industries etc.

4. Agricultural Finance

As Pakistan is an agro-based country and agriculture is the important sector of

economy. HBL also makes advances to this sector of economy in two ways:

Production Financing is made for the purchases of seeds, pesticides and chemicals etc.

Loans are paid in lump sum, but its duration is short one.

Development Financing is made for the purpose of purchasing farm machinery, and

development of barren lands. This is long-term facility and is paid in installments.

5. Staff Financing

HBL also provide financing facilities to its staff; help them to fulfill their needs. These

loans are given for different purpose. This financing facility of bank motivate Staff.23

2.6 JOB RESPONSIBILITY

My responsibility during internship is to handle the customer wanting to open an

account in which I took their I.D card and also filling the form on behalf of the

customer and then forward to manager for signing and verification. My other

responsibility is to settle the cheque’s and ordering those cheque’s and make it forward

to manager for further process. I also conduct the responsibility to manage the bank’s

branch environment and guiding the customer and forward them to correct place of

working.

2.7 WHAT I HAVE LEARNED

I read a lot during my student carrier but I did not know how to apply my knowledge

practically. Internship makes me able to apply my knowledge practically. First I

learned to face the customer and to interact with them and how to attract them.

According to my point of view, we should provide services in the best possible manner.

Second I learned how to work in a group and to interact with each other, for this ethical

standard is very much important we should win the heart of our colleague to make you

facilitative in a problem time .Group work provide opportunity of learning from

colleagues. I hope it will help me in future.

24

CHAPTER 3

FINANCIAL ANALYSIS

3.1 Financial AnalysisFinancial analysis is an evaluation of a firm’s performance. The source of financial

analysis is the financial statements & Director reports. The main purpose of the

financial analysis is to give a clear picture of the financial position by studying the

relationship & comparison between the items in the statement.

The financial statements are the balance sheet and income statement. The

balance sheet summarizes the assets, liabilities and owners equity of a business at a

point of time, and the income statement summarizes revenues and expenses of the over

a particular period of time.

3.2 Seven Years Performance of HBL at a Glance (Rs. In million)Year 2013 2012 2011 2010 2009 2008 2007

Items

Total assets 762,193 635,133 577,719 553,231 468,972 432,803 415,089

Deposits 591,907 501,872 463,427 465,572 395,492 362,866 349,617

Advances 340,677 316,110 268,839 220,794 161,266 140,547 170,319

Investments 210,787 139,947 156,985 149,350 166,196 143,525 71,759

Shareholders equity 70,907 53,045 37,636 24,900 18,134 14,279 11,959

Pre-tax profit 28,060 26,311 19,056 11,978 9,009 6,045 3,016

After-tax profit 19,033 17,022 12,709 6,195 4,198 2,253 1,149

Earning per share

(EPS)

23.34 20.88 17.92 10.48 8.53 5.49 3.08

Return on assets

(ROA)

2.49% 4.3% 3.4% 2.4% 2.0% 1.4% 0.8%

No of Branches 1,243 1,250 1,242 1,226 1,199 1,204 1,245

No of employees 14,079 14,019 13,824 13,745 13,272 12,195 15,163

25

On the basis of the view of financial experts I also study and explain the financial

performance of the HBL of the last seven years. (2007 to 2013)

The above table shows the performance of HBL in the last seven years.

The total assets in 2007 are 415,089millions and that increase to 553,231millions in

2010 and also show increasing trend in 2013 is become 762,193 millions.

Similarly the deposits increase up to 2008 and then slightly decline in 2009 and then

start increasing later from 2012 to 2013

The advances are decrease from 2008 to 2009 and then start increasing up to 2013.The

investment is fluctuating in the seven years period.

The shareholder equity is increasing through the period from 2007 11,959millions to

2013 70,907millions. The pre-tax profit and after- tax profit is increasing through the

period. The earnings per share is move upward from2007 to 2013.The return on assets

is also increase up to 2012 and then decline in 2013.The number of branches and the

number of employees is decrease from 2007 to 2008 start increasing up to 2013.

26

HABIB BANK LIMITED

BALANCE SHEET

AS AT 31STDECEMBER, 2013and 2012

2013

(Rupees in 000’s)

2012

(Rupees in 000’s)

ASSETS

Cash &Balance with other Banks 94,873,249 78,625,227

Lending to Financial Institution 37,472,832 40,641,679

Investment 210,787,868 139,946,995

Advance 340,677,100 316,110,406

Operating Fixed Assets 25,922,979 9,681,974

Deferred tax assets

- -

Other Assets 30,994,965 27,113,698

TOTAL ASSETS 762,193,593 635,132,711

LIABILITIES

Bills Payables 7,061,902 10,605,663

10,605,663

Borrowings 10,886,063 11,704,079

Deposits & other accounts 591,907,435 501,872,243

Sub-ordinated loans - -

Liabilities against assets 33,554 13,235

subject to finance lease 5,097,831 2,387,073

27

Deferred tax liabilities-net

Other liabilities 30,869,154 26,596,300

TOATAL LIAILITIES 645,855,939 553,178,593

NET ASSETS 116,337,654 81,954,118

Share capital 8,154.319 7,090,712

Reserves 15,772,124 13,879,260

Unappropriated profit 45,344,188 32,074,677

69,270,631 53,044,649

Surplus on revaluation o f 47,067,023 28,909,669

Assets 116,337,654 81,954,118

28

HABIB BANK LIMITED

PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED 31st DECENBER 2013 and 2012

2013

Rupees in

000's

2012

Rupees in

000's

Mark-up /return/interest earned 50,569,481 44,100,934

Mark-up return/interest expensed 16,940,011

13,947,218

Net mark-up/interest income 33,629,470 30,153,716

Provision against non-performing loans and

advance

4,723,084 30,075,723

Reversal of provision for diminution in the

value of investments

(40,084) (709,461)

Bad debts written off directly 39,899 5,284

  4,722,735 2,371,546

Net mark-up/ interest income after

provision 28,906,735 27,782,170

NON-MARK-UP/INTEREST INCOME

Fee, Commission and brokerage income 6,781.683 6,144,628

Dividend income 3,263,246 2,891,755

Income from dealing in foreign currencies 1,042,827 1,333,840

Gain on sale and redemption of securities 2,341,690 1,169,515

29

Unrealized loss on revaluation of investment

classified as held-for-trading (31,964) (4,464)

Other income 147,363 627,618

Total non-markup/interest income 13,544,845 12,162,892

  42,544,845 39,945,062

NON- MARK-UP/INTEREST EXPENSES

Administrative Expenses 14,205,911

13,443,441

Other provision/write offs 168,027 (17,283)

Other charges 17,141208,327

Total non mark-up/interest expenses 14,391,079 13,634,485

Extra ordinary items - -

Profit before taxation 28,060,501 26,310,577

Taxation-Current 8,311,500 8,695,598

-Prior years 391,497 530,652

-Deferred 323,731

61,981

  9,026,728 9,288,231

Profit after taxation 19,033,728 17,022,346

Inappropriate profit brought forward 32,074,677 19,372,523

Transfer from surplus on revaluation of

fixed assets on account of incremental

depreciation

39,007 41,060

Profit available for appropriation 51,147,457 36,435,929

Basic earning per share 23.34

20.88

Diluted earning per share 23.34 20.88

30

3.2 RATIO ANALYSISFinancial analysis is the process of identifying the financial strengths and weakness of

the firm by properly establishing relationship between the items of balance sheet and

profit and loss statement, in order to make rational decision in keeping with the

objective of the organization, for that purpose the management use analytical tools. To

evaluate the financial condition and performance of the business entity. The financial

ratio is a number that expresses the value of one financial variable relative to another.

Put more simply, a financial ratio is the result you get when you divide one financial

number by another. Calculating an individual ratio is simple, but each ratio must be

analyzed carefully to effectively measure a firm’s performance.

It is important way to state meaningful relationship between two components of a

financial statement. Ratios are guides or shortcuts that are useful in evaluating a

company’s financial position and operations and making comparisons with results in

previous years or with other companies. The primary purpose of ratios is to point out

areas needing further investigation.

Therefore in my report I include some of the ratio to show the financial position of the

HBL.

MARGIN OF PROFIT = NET PROFIT / MARKUP OR INTEREST

EARNED X100

Year Net profit Markup or Interest

Earned

Margin Of

Profit

2013 19,033,773000 / 50,569,481,000 X 100 37.93%

2012 17,022,346000 / 44,100,934000 X 100 38.59%

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COMMENTS:

The margin profit ratio show the profitability of bank is not satisfactory.

RETURN ON TOTAL ASSETS (ROA) = NET PROFIT AFTER TAX/ TOTAL

ASSETS X 100

Year Net profit Total Assets Return On

Total Assets

(ROA)

2013 19,033,773000 / 762,193,593000 X 100 2.49%

2012 17,022,346000 / 635,132,711,000 X 100 2.68%

COMMENTS:

The return on total assets is also not satisfactory as compare to the 2010.

RETURN ON EQUITY (ROE) = NET PROFIT/ SHAREHOLDER’S

EQUITY X 100

Year Net profit Shareholder’s

Equity

Return On

Equity (ROE)

2013 19,033,773000 / 69,270,631,000 X 100 27.47%

2012 17,022,346000 / 53,044,649,000 X 100 32.09%

32

COMMENTS:

The ROE (return on equity) is also not show the satisfactory result because the net

profit is increased but on the other hand the holder equity is also increase and that is

way the result cannot show favorable sign.

DEBT TO EQUITY RATIO = TOTAL DEBT/ SHAREHOLDERS

EQUITY X 100

Year Total Debt Shareholders

Equity

Debt to

Equity Ratio

2013 645,855,939,000 / 69,270,631,000 X 100 932.36%

2012 553,178,593,000 / 53,044,649,000 X 100 1042.85%

COMMENTS:

The total debt is increased and on the other side the share holder equity is also

increased also that is the ratio is decrease show favorable trend for share holders.

LONG TERM DEBT TO FIXED ASSETS RATIO = LONG TERM DEBT/

FIXED ASSETS X 100

Year Long term debt Fixed assets Long term

debt to fixed

assets ratio

2013 10,886,063,000 / 25,922,979,000 X 100 41.99%

33

2012 11,704,079,000 / 9,681,974,000 X 100 120.88%

COMMENTS:

The long term debt is decreasing from 2010 fixed assets are increased more then debts

that are good symbol.

DEBT RATIO: = TOTAL LIABILITIES / TOTAL ASSETS X 100

Year Total liabilities Total assets Debt ratio

2013 645,855,939,000 / 762,193,593,000 X 100 84.73%

2012 553,178,593,000 / 635,132,711,000 X 100 87.09%

COMMENTS:

The debt ratio is show that the liabilities are increased at the slow rate then total assets

and that is favorable for HBL.

STOCK HOLDER EQUITY TO TOTAL LIABILITIES= STOCK HOLDER’S

EQYITY / TOTAL LIABILITIES X 100

Year Stock holder’s

equity

Total liabilities Stock holder

equity to total

liabilities

34

2013 69,270,631,000 / 645,855,939,000 X 100 10.72%

2012 53,044,649,000 / 553,178,593,000 X 100 9.58%

COMMENTS:The stock holder equity is show favorable trend from 2011.

INVESTMENT TO TOTAL ASSETS = INVESTMENT / TOTAL ASSETS X

100

Year Investment Total assets Investment to

total assets

2013 210,787,868,000 / 762,193,593,000 X 100 27.65%

2012 139,946,995,000 / 635,132,711,000 X 100 27.65%

COMMENTS: The investment ratio also increase that show the growth of HBL.

35

EARNING PER SHARE: = NET PROFIT / NUMBER OF SHARES

Year Net profit Number of shares Earning per

share

2013 19,033,773000 / 69,270,631,000 27.47%

2012 815,432 / 709,071 32.09%

COMMENTS:

The earning per share is decreasing from 2010 and 2011 that shows unfavorable news

or share holders.

36

CHAPTER 4

CRITICAL ANALYSIS

During my internship period at Habib Bank Of Pakistan .I found out certain problems,

which are written below along with their solutions, which need proper attention of the

top management. These are given below:

4.1 MODREN INFORMATION TECHNOLOGY:This age is the age of information technology. Today the world has become a global village

and the fastest mediums of communication are adopted all over the world. And it is a fact

that more the latest technology and methods of work are adopted more will be the

productivity.

In the Habib Bank Of Pakistan Modern technology should be adopted for the better

performance.

I suggest that every counter of the bank should be Modernlycomputerized and they should

be interlinked together (NETWORKING) so that various services provided by the bank can

be provided in a more efficient and fast way.

4.2 EVENING BANKING:I observed that the bank is closed for public dealing after 12:30PM and then the staff do

their own banking jobs. I suggest that at least one counter should be specified for the

customer services till evening. In this way, the people having jobs in other offices can get

benefit from this counter.

4.3 STAFF SHORTAGEI discussed with bank personnel and they gave their views about staff shortage. They told

me that staff is very short and all the staff is overloaded with work. That’s why the staff

posted in the branch has to face many problems to finish its daily work.I suggest that

37

number of staff in the branch should be increased so that they can meet their customers’

requirements quickly and efficiently.

4.4 TRANSFERSI observed that staff members of the Bank are frequently transferred not only from one

branch to another but from one city to another and sometimes from one province to

another.

I suggest that no one is to be transferred to another city or province without the consent and

will of the employee and if transferred, the facilities like residence etc should be provided

to them.

4.5 PROMOTIONI observed that employees, particularly officers are not satisfied with promotion policies.

There is no clear-cut promotion policy of National Bank.

I suggest that there should be a clear-cut policy about the promotion of employees,

particularly for the officers and they must aware of it that is polices must be

communicated. When policies are communicated to the employees then they can perform

their task more efficiently and will utilize their full efforts.

38

CHAPTER 5SWOT ANALYSIS

5.1 SWOT ANALYSIS

The acronym SWOT stands for a firm’s internal Strengths and Weaknesses and its

external Opportunities and Threats. The purpose of such analysis is to build on

company’s strengths in order to exploit opportunities and counter threats and to correct

company’s weaknesses. SWOT analysis is based on the assumption that if managers

carefully review such strengths, weaknesses, opportunities, and threats, a useful

strategy for ensuring organizational success will become evident Strengths and

weaknesses typically relate to the internal environment of an organization, whereas

opportunities and threats are brought about by the external environment of an

organization. In the following section, both internal and external analyses of HABIB

BANK LMITED are outlined:

5.2 INTERNAL ANALYSISInternal analysis of a firm is the analysis of its strengths and weaknesses. Unless a firm

has internal strengths and controls its weaknesses, it cannot take advantage of

opportunities and escape threats which the external environment presents. Following

are the main strength and weaknesses of HBL.

5.2.1 STRENGTHS1. The internal capabilities which can facilitate the organization to have

competitive edge over its rivals are called as the opportunities of the

organization.

2. HBL is the larger commercial bank in Pakistan with the network of over 1400

domestic branches and 55 international branches.

3. Being the pioneer of banking in Pakistan, HBL is the oldest and is the richest in

experience.

39

4. HBL focuses on consumer banking by lucrative schemes, products and services

suiting best to the wants and demands of the customers.

5. Human resources development and introduction of new technology towards

modern banking.

6. 24 hours cash access and safe payment products for high value transaction.

7. HBL instant financing products for customers wanting instant loan facilities at

HBL branches.

5.2.2 WEAKNESSES1. The internal in capabilities which accumulatively add up and get some of the

disadvantages to the bank are called the weakness of the bank. Here are some of

the weaknesses which HBL faces in the market.

2. Non efficient working staff.

3. Slow down in advances growth in the short term as HBL focuses on quality

customers in the markets.

4. Discrimination in services to customers with large and small accounts.

5. Inconsistency in efficiency and working atmosphere due to the largest of

branches.

6. Victim of political, legal and socio-cultural pressures.

5.3 EXTERNAL ANALYSISAn organization has to monitor its environment constantly to keep up with new

developments and changes in the environment. A change in the external environment

may be either an opportunity or threat. In either case, the organization has to properly

use it strengths to avail the opportunities and avoid or minimize the negative effects of

threats. Following are the main opportunities and threats of HBL.

40

5.3.1 OPPORTUNITIES1. The external factors favoring the organization’s success are called the

opportunities. Here are some of the opportunities of the HBL in the

competitive environment.

2 Economy at the boost

1 In opportunity exist, in form of opening of ladies banking section within

the branch which is entirely a new idea and it will attract customer.

2 Customer feedback on different products and accounts has really

improved the bank performance and encourage the atmosphere for other

future policies.

3 Due to efficient and veteran management group, HBL can also improve

Ill and expand its foreign operation successfully.

4 Habib Bank Limited provides opportunity to utilize its skills and

efficiencies in leasing business.

5.3.2 THREATS1. An area in the environment that increases the difficulties the

organization’s achieving high performance.

2. Political situation in the country.

3. Facing more competition by foreign banks in the market.

4. Also the increasing operation of private banks.

5. Highly attractive and advance services by foreign banks to their

customers.

6. Growing global technological advancement.

41

CHAPTER 6

CONCLUSION AND RECOMMENDATION

6.1 CONCLUSIONThe operational efficiency of the bank is not stable. Sometimes it goes up and

sometimes it goes down. There is fluctuation in the performance trend. But in the year

2007, profit has increasing trend. The main reason of rising trend is that Habib Bank

starts various services for their customers and improving its packages and other internet

related services for the convenience of its customers.

6.2 RECOMMENDATIONS

Our students face many problems, which have not been included in here. These are

ones that I faced alone .where as many of the problem that we have discussed in our

sittings include irrelevance of the work taken from us such as photocopying making

tea, getting copies . Here I would like to make recommendation that the department can

on its own start a small duration project that would have multiple benefits to the

students as well as the university can be benefited this project can be designed by the

specific teacher and students may be required to work under the supervision of the

teacher dividing the students on the basis of their specialization and assigning them

tasks which may enable them to get a more relevant experience.

1. Bank should try increase profit after taxation to strengthen its return on equity

ratio.

2. The management should make the innovative plans and schemes to utilize the

investment wisely.

3. There is an increasing trend of assets, but just the increase does not benefit the

bank until and unless these are utilized effectively.

4. The difference between markup rate of advances and deposits should be

reduced to gain confidence of customers and income should be increased by

increasing the number of customers, giving better facilities and offers to them.

42

5. The bank management should try to, at least, equalize the non-interest revenues

& expenses and reduce their gap.

6. In order to improve the net bank operating margin, the gap between the

operating revenues and expenses should be increased.

7. Efforts should be made to increase the earning per share to regain the

confidence of the customers.

8. The increased amount of equity capital should be utilized by launching the new

profitable projects.

9. The management should try to find other ways of generating income from new

services to reduce the earnings spread.

10. There should be strick monitoring over the expenses and should be incurred

according to the requirements. There should be a positive relationship between

expenses and revenues

11. Too much dependence on the outsiders (loans/ liabilities) goes against the bank.

The bank should strengthn its equity and decrease the portion of liability, and

resultantly decrease the equity multiplier ratio.

12. The appriciation should be encouraged by management of Habib bank.

13. Promotions should also made for better output.

14. Work burden should be reduced because with fresh mind employees can

perform their duties easily and effectively.

43

BIBLIOGRAPHY

1. Annual reports of HBL

2. Discussions and Interview with the bank staff especially with the manager of

the main branch Mardan.

3. www.google.com

4. www.netmba.com

5. www.spireframe.com

6. www.businessrecorder.com

7. www.sbp.org.pk

8. www.scribed.com

9. www.slideworld.com

10. www.studentassing.com

44

GLOSSARY

HBL Habib Bank Limited

D.D: Demand Draft

T.T: Telegraphic transfer

A/C: account

O.B: Other Bank

O.B.D: other Bank Draft

P.L.S: Profit and Loss Account

Dr: debit

Cr: Credit

C.A: Current Account

F.L: Flexi loan

L.G: Letter of Grantee

D.F: Demand Finance

L.C: Letter of Credit

R.F: Running Finance

F.A.P.C: Finance against Packing Credit

F.A.T.R: Finance against Trust Receipt

SWOT : Strength weaknesses Opportunities threats

45