History of Habib Bank Limited

The history of Habib Bank can be divided into different phases.

FIRST PHASE
The 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.

SECOND PHASE
This phase in the history of Habib Bank 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.

THIRD PHASE
This 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.

FOURTH PHASE
This phase marked by the tremendous achievement of the construction of bank’s first
head office building at Habib square, Karachi along with continued solid business and
profitability.

FIFTH PHASE
This phase witnessed the consolidation and the beginning of mechanization and
modernization of branches.
SIXTH PHASE
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.

SEVENTH PHASE
On the occasion of its 30th anniversary marked the shifting of head office from Habib
Square to Habib Bank Plaza.

EIGHTH PHASE
This phase was generally characterized by heralded nationalization of Pakistani banks on
1st January 1974. The whole concept of commercial banking in Pakistan was changed to
offer all the necessary help to small industrialists, traders and farmers.

NINTH PHASE
This phase begins with the 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.

MISSION
Mission is the organization’s reason for existence. The mission describes the organization
values, aspirations, and reason for being. The formal mission statement is a broadly
stated definition of basic business scope and operations that distinguishes the
organization from others of similar type. The contact of mission statement often focuses
on the market and customers and identifies desired fields of endeavor. The mission of
Habib Bank Limited can be obvious from its engagement in the business in which it is
engaged.

OBJECTIVES
“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 facilitates the measurement of the effectiveness and efficiency of
managerial actions.
Objective state the end desired, and major objectives are supported by sub objectives.
Thus, objectives form Hierarchy as Ill as network.

OBJECTIVES OF HABIB BANK LIMITED

Following are some of the main objectives of Habib Bank Limited.
i. To Earn profit for the bank itself and for its shareholders.
ii. To promote and boost business sector inside the country.
iii. To provide employment opportunities to people.
iv. To help in development and industrialization of the country.
v. To provided loan and advances to help in self-employment schemes.

ORGANIZATIONAL CHART

Chief Executive Officer

SEVP SEVP SEVP SEVP

Corporate Retail International Asset Remedial

Banking Group Banking Group Banking Group Manager

SEVP SEVP

Audit and
Credit Policy
Finance
ORGANIZATIONAL HIERARCHY IN HABIB BANK
LIMITED

President

Senior Executive
Vice President

Executive Vice
President

Senior
Vice President

Vice
President

Assistant Vice
President

Officer Officer Officer

Grade-I Grade-II Grade-III
ORGANIZATIONAL CHANGES IN HABIB BANK
In 1997, the Bank’s Nationalization Act amended with a view to inculcates a
commercially oriented culture. In the nationalized commercial bank, two major changes
brought about by amendment Ire the introduction of an independent board of directors by
federal Government, with total representative from the private sector and of professional
senior management. This change was a break from the past and was carried out recognize
that the Government owned bank need to be run based on commercial and market driven
parameters, t improve the operations and to prepare the bank for privatization in the
shortest possible period of time.
In September 1997, the bank recognized its domestic and overseas operation on
functional line creating desecrate business groups, to focus against the customer profile
available to the bank. Through this process the following business groups have been
created;
i. Retail banking group
ii. Corporate banking group
iii. Asset remedial banking group
iv. International operation management group.
v. Finance and audit group.

i. Retail Banking Group

The creation of business group has alloId the bank to focus and develop products
within these business groups for its customers. In the retail, banking group the
bank successfully launched five different products which are:
a. Muhafiz Rupee Traveler Cheque
b. Crore Rupee Saving Account
c. Crore Pati Deposit Certificate
d. P. M Small Business Loan Scheme
e. New Foreign Currency Accounts
ii. Corporate Banking Group
The corporate and institutional banking group have been successful in
establishing significant relationship with some of the top ten industrial groups and
various multinationals, which includes Engro, Alkaram, Siddique Sons, Gul
Ahmad, Nestle, Level Brothers and ICI.

iii. Asset Remedial Banking Group

As the bank was facing problems in addressing the recovery of classified
portfolio, an asset remedial management group was created (ARM). The total
classified portfolio has been consolidated under this group including these loans
which Ire incorrectly rescheduled or restructured in the past. This unit has been
staffed with some best executive within the bank and its primary goal is speedy
recovery and resolution of classified portfolio.

iv. International Operations Management Group

The overseas operations have been consolidated under international operation
group. During the year, local market in the larger operations, e.g. UK, Oman, and
U.A.E Ire revieId and the country specific strategies have been put in place, in
order to build these important franchises. In addition, emphasis has been placed in
improving the bank operation in important money centers, e.g. New York,
London, Hong Kong, Singapore, and Bahrain.
The finance and audit group is independents of business groups and looks after
the financial, regulatory and management reporting of the bank. The audit process
is being improved taking into consideration the nature, sophistication, and level of
risk within the business groups.
HUMAN RESOURSE MANAGEMNT

i. Managerial Policies
Affairs of Habib Bank Limited are controlled through president and members of
Executive Committee who are normally Senior Executive Vice President of the
bank based at head office. Each province has a provincial headquarter headed by
Provincial Chief and assisted by regional General Managers. Each provincial
headquarter controls branches in their area of their jurisdiction through circle
offices. Each circle office supervises various zones headed by Zonal Chief
comprising 25-40 branches in each zone.

ii. Requirement and Selection Policy

As the bank is nationalized, it advertises the vacancies available t be filled
through press under the Pakistan banking and finance services commission. The
requirement for the selection depends upon the post to be filled. The qualification
required and the age is specified in the advertisement.

SELECTION PROCESS

a. Short-Listing of the Applicants

The management of the bank scrutinized application of the candidates and the
candidates who fulfill the requirements are sent the test call. In the first step
thousands of candidates apply for the limited posts available. The head office
sends the calls to only those candidates who fulfill the requirements of the job
advertised.

b. Test and Interview

Test is conducted by the Pakistan Banking Council or by itself. In the tests the
applicants are further short-listed. For the interview only those candidates are
called who qualify the written test. Board judges the personality of the candidates
 including appearance and way of discussion, after the final result the successful
candidates are sent the appointment letters and they are asked to sign the
agreement with the bank in person.

iv. Promotion Policy

Person’s career is a highly personal and extremely important element of life. Both
productivity and morale are facilitated if these personal decisions are based on
objective assessments of present and potential capability. Promotion is a term
which covers a change calls for greater responsibilities and usually involves
higher pay and better terms and conditions of service and therefore, a higher
status or rank. The purposes of promotion is:
 To provide satisfaction to the employee who are working hard
 To improve training, skill and experience ability
 To provide organization with a competent worker
 To find out the most competent and suitable candidate
Promotion is based on personal performance of an individual, the evaluation of
overall performance comprises of the following elements.
Educational qualification
Professional qualification
 Service in grade
 Operating performance
 Experience in different disciplines
 Posting faraway placed

v.Training
The staff college curses receives junior most officers for further training in banking, the
courses lasting from six to nine Ieks with about tInty five candidates in each course. The
college is residential one and provides a measure of the collegiate atmosphere, which
helps to impart a sense of camaraderie, which is of great value. It is also of great interest
to record that the staff colleges receives trainees from abroad as Ill as helps to create
worthwhile reference to banking business.
The staff college courses are designed not to impart technical instructions, but to develop
qualities of judgement, decision, leadership and management. The college is one of the
most important institution setup by the bank, students are likely to be drawn those men
who may expect to rise to the senior most executive position the bank has to offer. It is
the business of the staff college to keep in touch with all that is going on in the world of
banking and finance and to raise its instructions as to keep pace with the developments in
Pakistan and with changes in the world outside. The methods, procedures, routines and
even outlook change so much in banking and the staff college must be able to turn out
men trained with up-to-date knowledge and thoroughly modern approach.

vi.Marketing Policy
“Marketing is a business function that identifies customer needs and wants, determines
which target market the organization can best serve, designs appropriate product, services
and programs to serve these markets and call upon everyone in the organization to “think
and serve customers”. From a social viewpoint market links a society’s material
requirements and its economic pattern of response. Thus, marketing is a key factor in
business success”.6
Habib bank also adopts certain marketing techniques to enhance the image of the bank.
Most of the marketing takes place through various mobilization of deposit schemes and
there is more emphasis on offering efficient service to the clients in order to better satisfy
them, so that they recommend the bank to their friends and relatives.

vi.Operational Policy
The Operational policies of Habib Bank Limited deal with the method of provision of
better services to its customers. Through the introduction of new schemes as means of
satisfaction for their customers. The operational policy of Habib Bank can be divided into
two sectors.
Domestic operations
International operations
a. Domestic Operations
“Habib bank is quite successfully operating its domestic business. Facilities at the door
step across the length and breadth of the country also in conformity with the
government’s socio-economic objectives. The number of domestic branches totaled
1350”.7

b. International Operations
Habib bank’s overseas branches are continuously rendering satisfactory services and are
also contributing to the channeling home remittances of Pakistanis working abroad.
HBL,s international network comprises of 60 offices in 26 countries, operating in USA,
Europe, UK, Middle Ease, Asian Pacific Region and Africa. It is also the largest banking
in financial services Provider in Pakistan.
“I concentrate on markets and business they understood. Through a global network, the
bank provide a comprehensive range of financial services., personal, commercial, trade
services, cash management, treasury /capital market services, and private banking. I
strive to provide high quality product through efficient delivery system and excellent
customer services. In this way, I will grow and achieve our stated objective of being a
premier emerging market bank”.8
In order to improve the operations, the bank has introduced various schemes and services.
Which are listed in the following.

MARKETING

PRODUCTS OF HABIB BANK LIMITED

Tele-printer Service
Introduced in 1952, this system helped the bank to improve its services

Rupee Traveler’s Cheque

It was introduced in 1957. Here the customers Ire provided the facility of
encashment of their traveler’s cheque through any branch of the bank.
Evening Banking Services
After launching evening banking service system in 1959 customers Ire enabled to
deposit their money at evening in specified branches of the bank.

Foreign Currency Accounts

It was introduced in 1973.

Deposit Growth Certificate

This scheme was introduced in 1975 with increase rate of interest

Special Five Years Deposit Certificate

This scheme was introduced in 1975 where the major emphasis is on increased
rate of interest.
Dollar Traveler Cheque
Introduced in 1976, the scheme was more helpful and safe for the travelers than
carrying foreign currency notes.

Haj Accidental Death Scheme

Introduced in 1983, according to this insurance scheme, if a Haji who has
submitted his Haj application through Habib Bank Limited died while he was
away for performing Haj, his family was to be provided a certain sum of money.

Auto Cash Teller Machine

Auto cash machine Ire installed in 1988 at various branches which allows
customers to withdraw cash round the clock and on all days of the Iek.

Transport Finance Scheme

In 1989 the bank in order to decrease unemployment in the country introduced
owner, driver taxi finance and scooter loans. According to this scheme they Ire
provided loans on soft terms.
Gold Card System
In 1991 HBL introduced the scheme with the features of offering card holders to
get upto Rs.10,000 at a time.

Muhafiz Rupee Traveler Cheque

It was introduced in 1998. A Cheque available in denomination of Rs.10,000,
25,000, 50,000 and 100,000, with the advantage of 100% free purchase and
encashment.

Distinct Properties of Muhafiz

a. It can be issued from more than 700 branches all over Pakistan.
b. Muhafiz provide the facility of payment in all branches of HBL
c. There is no commission and fee charge for purchase of Muhafiz. Habib
Bank keeps alive the tradition of ”Serve you better” charges nothing for the
purchase and sale of Muhafiz.

Habib Bank Flexi Loan

HBL had introduced a unique loan system for the middle income-serving people
in various public sectors. It is basically meant for those in service people who
earn more than Rs. 5,000 per month. This loan meets the petty requirements of the
salaried class. Since the introduction of this scheme Rs. 6 billion is advanced
throughout the country. The maximum limit of this loan is Rs. 3,00,000.

AGENCY SERVICES TO CUSTOMER

Habib Bank also provides agency services to its customer. Some of which are as
follow.

i. Collection of Cheques
Habib bank pays and collects Cheques on behalf of their customers, and for this it
receives commission from their account holders.
ii. Collection of Dividends
The bank provides a very useful service by acting as an agent for its account
holders. It arranges for the collection of dividends on shares and securities held by
its account holders. The customer is simply to inform the issuer of the securities
that the interest on the securities is to be credited to his account in the bank. Bank
charges commission for the collection of the dividends on behalf of account
holders.

iii. Purchase and Sale of Securities

Habib bank if authorized by the customers, also make purchases and sale of
securities on the behalf of its account holders. Bank charges commission for the
purchase or sale made by it on behalf of its customers.

iv. Execution of Standing Instruction

The bank also executes the standing instructions in case if it is ordered by the
customers of the bank to do so. These instructions are usually given in writing to
bank. The bank debits and credits the accounts of its customer for the truncations
carried out by the individual or firm. The bank charges a commission of RS. 20
Rupees per transaction.

v. Transfer of Funds
HBL also transfer funds of the customers from one bank to another bank. If the
transfer is within one station. They don’t charge any commission and even if they
charge, they charge on reduced rates.

vi. Acts as an Agent

HBL also acts as an agent, correspondent or representative of his customers at
home and abroad.

General Utility Services

HBL also performs a number of generally utility services to his client which are
as follows:
1. Foreign Exchange Business
 HBL transacts foreign exchange business by discounting foreign bills of
exchange and thus provides facilities for financing the foreign trade.
2. Acts as a Referee

Habib bank provides a useful service to its customer by acting as a referee

for his credit worthiness. The information is supplied in atmost secrecy
and is based financial standing of the client.
3. Acceptance of Bills of Exchange
HBL also undertake acceptance business connection with bills of
exchange and thus enable its customers to obtain the desired credit.

4. Issue of Travelers Cheques

Habib Bank also issues traveler’s Cheques. These Cheques can be issued
to anyone whether an account holder or not and charges no commission on
issuance of such Cheques. Habib bank also recently introduced Muhafiz
Rupee traveler Cheques with enhanced features.
5. Collection of Utility Bills
Electricity, telephone and other such bills can also be deposited with HBL.

6. Locker
HBL also provides locker facility to its clients where valuables of peoples
can be kept.
FINANCIAL ANALYSIS OF HABIB BANK LIMITED

SWOT ANALYSIS OF HABIB BANK LIMITED

SWOT an acronym that stands for strengths, weaknesses, opportunities and threats.
SWOT analysis a careful evaluation of an organization’s internal strengths, weaknesses
as Ill as its environmental opportunities and threats. In SWOT analysis the best strategies
accomplish in organization’s mission by:
1. Exploiting opportunities and strengths.
2. Neutralizing its threats and
3. Avoiding its weaknesses.

Following is a list of SWOT of Habib Bank Limited.

i. Organizational Strengths
A skill or capability that enables an organization to conceive and implement its
strategies.
a. HBL is the larger commercial bank in Pakistan with the network of over
1350 domestic branches and 55 international branches.
b. Being the pioneer of banking in Pakistan, HBL is the oldest and is the
richest in experience.
c. HBL focuses on consumer banking by lucrative schemes, products and
services suiting best to the wants and demands of the customers.
d. The band is always on the look to improve its services both to the
domestic as Ill as overseas customers.
e. Attractive and competitive compensation package for employees.
f. Human resources development and introduction of new technology
towards modern banking.
g. 24 hours cash access and safe payment products for high value transaction.
h. HBL instant financing products for customers wanting instant loan
facilities at HBL branches.
i. Having potential to encounter the competitive environment in the market.
 j. Veteran and experience private management group also involved in other
interests like, textile and cement industry.
k. Customer enjoys the services at the residential localities.

Weaknesses
A skill in capability that does not enable an organization to choose and implement
strategies that supports its mission.
a. Slow down in advances growth in the short term as HBL focuses on
quality customers in the markets.
b. Discrimination in services to customers with large and small accounts.
c. Inconsistency in efficiency and working atmosphere due to the largest of
branches.
d. Sense of insecurity in the employees serving at low profitable branches
due to the right sizing.
e. Females feel uneasy in an environment among the male workers.
f. Victim of political, legal and socio-cultural pressures.

Opportunities
In area that, if exploited, may generate high performance.
a. 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.
b. Growing policies of government on business and commerce sector provide
HBL opportunities to take advantages of these policies to meet efficiently
with the business people to solve their problems with the instant cash and
financing facilities.
c. Customer feedback on different products and accounts has really
improved the bank performance and encourage the atmosphere for other
future policies.
d. HBL also has an opportunity to expand its new technological advancement
like; Tele bank and internet banking facilities
in order to serve the customers more efficiently, specially
E-banking facility is also a new opportunity which is a flourishing
 business in foreign countries and can also be here, if HBL takes the
initiatives.
e. Due to efficient and veteran management group, HBL can also improve Ill
and expand its foreign operation successfully.
f. Habib Bank Limited provide opportunity to utilize its skills and
efficiencies in leasing business.
Threats
An area in the environment that increases the difficulties the organization’s
achieving high performance.
a. Facing more competition by foreign banks in the market.
b. Also the increasing operation of private banks.
c. Highly attractive and advance services by foreign banks to their
customers.
d. The threat of inconsistency and government policy regarding to business
and economics sectors, specially political and regional situation which
makes the environment uncertain.
e. Growing global technological advancement.
f. Strict regulation by government over credit facilities to the customers as
Ill as to meet the prudential.
g. Loss of confidence of overseas customers due to freezing of accounts.
h. From SWOT analysis I can conclude that the management of the bank
should adopt systematic planning for the bank growth, introduced new
schemes HBL has more customers as compare to other banks, if they
given proper attention to every customer then if in few years it will be the
leading bank of the country.
BALANCE SHEET
Currency in As of Dec 31 Dec 31
Millions of Pakistan Rupees 2008 2009

Assets

Cash and Equivalents 82,334.6 91,460.5

Short-Term Investments 4,343.8 4,792.9

Trading Asset Securities 13.6 642.8

TOTAL CASH AND SHORT TERM INVESTMENTS 86,692.0 96,896.2

Other Receivables 14,752.7 12,734.8

TOTAL RECEIVABLES 14,752.7 12,734.8

Inventory 30.0 2,475.6

Restricted Cash 13,562.8 28,746.0

Other Current Assets 16,835.4 24,334.2

TOTAL CURRENT ASSETS 131,872.8 165,186.7

Gross Property Plant and Equipment 20,497.0 23,055.6

Accumulated Depreciation -6,193.7 -6,524.1

NET PROPERTY PLANT AND EQUIPMENT 14,303.4 16,531.5

Long-Term Investments 121,048.4 212,250.2

Loans Receivable, Long Term 460,066.0 456,345.4

Deferred Tax Assets, Long Term 12,186.8 9,205.9

Deferred Charges, Long Term 447.9 --

Other Long-Term Assets 9,881.4 4,023.6

TOTAL ASSETS 749,806.7 863,778.6

LIABILITIES & EQUITY

Accounts Payable 597,090.5 682,750.1

Accrued Expenses 13,296.1 17,059.8

Short-Term Borrowings 9,896.4 11,373.9

Current Portion of Long-Term Debt/Capital Lease 31,730.9 35,324.4

Current Income Taxes Payable -- --

Other Current Liabilities, Total 9,873.1 10,086.5

TOTAL CURRENT LIABILITIES 661,887.0 756,594.6

Long-Term Debt 9,288.8 10,056.8

Minority Interest 890.1 1,143.2

Unearned Revenue, Non-Current 120.9 203.2

Pension & Other Post-Retirement Benefits 3,187.7 3,454.2

Other Non-Current Liabilities 9,013.7 9,100.0

TOTAL LIABILITIES 684,388.2 780,552.1

Common Stock 7,590.0 9,108.0

Retained Earnings 49,215.3 57,042.9

Comprehensive Income and Other 8,613.2 17,075.6

TOTAL COMMON EQUITY 65,418.5 83,226.6

TOTAL EQUITY 65,418.5 83,226.6

TOTAL LIABILITIES AND EQUITY 749,806.7 863,778.6

INCOME STATEMENT

Currency in As of: Dec 31 Dec 31

Millions of Pakistan Rupees 2008 2009

Revenues 9,000.2 10,864.5

Other Revenues -6,904.9 -8,794.6

TOTAL REVENUES 38,945.8 44,740.5

Cost of Goods Sold 728.7 891.1

GROSS PROFIT 38,217.1 43,849.3

Selling General & Admin Expenses, Total 21,020.2 22,254.0

Other Operating Expenses 264.9 213.7

OTHER OPERATING EXPENSES, TOTAL 21,285.1 22,467.7

OPERATING INCOME 16,931.9 21,381.6

EBT, EXCLUDING UNUSUAL ITEMS 16,931.9 21,381.6

EBT, INCLUDING UNUSUAL ITEMS 16,931.9 21,381.6

Income Tax Expense 6,067.8 7,980.9

Minority Interest in Earnings -89.5 -11.3

Earnings from Continuing Operations 10,774.6 13,389.5

NET INCOME 10,774.6 13,389.5

NET INCOME TO COMMON INCLUDING EXTRA ITEMS 10,774.6 13,389.5

NET INCOME TO COMMON EXCLUDING EXTRA ITEMS 10,774.6 13,389.5

CASH FLOW
Currency in As of: Dec 31 Dec 31
Millions of Pakistan Rupees 2008 2009

NET INCOME 10,774.6 13,389.5

Depreciation & Amortization 1,259.0 1,497.8

DEPRECIATION & AMORTIZATION, TOTAL 1,259.0 1,497.8

Amortization of Deferred Charges 367.0 238.9

(Gain) Loss from Sale of Asset -41.8 -29.4

(Gain) Loss on Sale of Investment 1,720.7 501.1

Other Operating Activities -4,284.0 -4,859.0

Provision for Credit Losses 6,904.9 8,794.6

(Income) Loss on Equity Investments -843.5 -487.5

Change in Other Working Capital -103,975.8 3,047.7

CASH FROM OPERATIONS -88,119.0 22,093.6

Capital Expenditure -2,662.8 -1,948.4

Sale of Property, Plant, and Equipment 108.0 105.1

Investments in Marketable & Equity Securities 37,444.5 -80,372.8

CASH FROM INVESTING 38,164.0 -79,338.0

Long-Term Debt Issued -- --

TOTAL DEBT ISSUED -- --

Common Dividends Paid -2,730.3 -4,174.6

TOTAL DIVIDEND PAID -2,730.3 -4,174.6

Other Financing Activities 65,733.6 85,728.1

CASH FROM FINANCING 63,003.3 81,553.5

Foreign Exchange Rate Adjustments 7,330.3 6,445.5

NET CHANGE IN CASH 20,378.6 30,754.6