department of business management sciences.docx

8/10/2019 DEPARTMENT OF BUSINESS MANAGEMENT SCIENCES.docx

1/51

DEPARTMENT OF BUSINESS MANAGEMENT SCIENCES

VIRTUALUNIVERSITYOFPAKISTAN

A REPORT SUBMITED IN PARTIAL FULFILLMENT OF THEREQUIREMENT FOR THE DEGREE OF

MASTER IN BUSINESS ADMINISTRATION (MBA)

LETTER OF UNDERTAKING:

LETTER OF I NTERNSHI P:

PermalinkReply by+ M.Tariq Malikon October 30, 2011 at 10:57am

5.EXECUTIVE SUMMARY

Every student of master has to practically work for six to eight weeks for more learning

of theoretical concept which he read during the session. It is very helpful during practicallife and awareness about the economy of the country. This purpose is to explain the

student with practical work that how to apply what they have learnt in practical work. It

is nice opportunity for the student to have shut relationship in theoretical concept and

practical work.

I got the chance to get my internship from one of the renowned bank of Pakistan The

Habib Bank Limited, Pakistan, it was a nice opportunity for me to apply my theoretical
http://vustudents.ning.com/xn/detail/3783342:Comment:917213http://vustudents.ning.com/xn/detail/3783342:Comment:917213http://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/xn/detail/3783342:Comment:917213


2/51

work and learn from seniors having years of experience. All the efforts on the way are

summarized in shape of this Internship Report. Internship Report contains the Short

History of Banking, Banking in Pakistan, Introduction of Habib Bank Limited,

Organization Breakdown structure, Organization Hierarchy Chart, Introduction of

different departments.


TABLE OF CONTENETS

ACKNOWLDGEMENT- 3

EXECUTIVE SUMMARY- 4

TABLE OF CONTENETS- 5

EVOLUTION OF BANKING: 6

BANKING IN PAKISTAN: 6

ABOUT HABIB BANK LIMITED: 7

BRIEF HISTORY: 7

ORGANIZATIONAL CHART: 8

BOARD OF DIRECTORS: 8

ORGANIZATIONAL STRUCTURE: 9

VISION, MISSION AND VALUES: 9

Vision: 9

Enabling people to advance with confidence and success. 9

Values: 9

Our values are the fundamental principles that define our culture and are brought to life

in our attitude and behaviors. It is these values that make us unique and unmistakable.

Our values are defined below: 9

DEPARTMENTS & RESPONSIBILITIES: 9

AWARDS: 10


3/51


6. EVOLUTION OF BANKING

This history of banking is traced to as early as 2000 B.C. The priests in Greece used to

keep money and valuables of the people in temples. The origin of banking is also traced

to early goldsmiths. They used to keep strong safes for storing the money and valuables

of the people. The goldsmiths used to issue receipts for the money and other valuable

assets deposited with them. These receipts could be used for settlement of transactions

because people had confidence in the integrity and solvency of goldsmiths. When it was

found that these receipts were fully accepted in payment of debts; then the receipts were

drawn in such a way that it entitled any holder to claim the specified amount of moneyfrom goldsmiths. A depositor who is to make the payments may now get the money in

cash from goldsmiths or pay over the receipt to the creditor. These receipts were the

earlier bank notes. The second stage in the development of banking thus was the issue of

bank notes.

BANKING IN PAKISTAN:

I observed during my internship was that I came to known the historical background of

Banking & Financial sector and its improvement and growth since the formation of

Pakistan.

At the time of partition there were only 631 bank branches in area which came under

Pakistani control. But due to blood shed and violence at large scale, most of the branches

were closed. At that time Bank of India was acting as central bank for both countries and

same currency notes were used in both territories. But Reserve Bank of India was biased

and Set down Pakistan on many occasions such as the issue of funds transfer etc.

Thus some drastic steps were taken in government sector for the improvement of overall

position. The private sector also responded positively. Some of the steps taken by the

government in this regard were as under:

Inauguration of State Bank of Pakistan (SBP) on 1st July, 1948.

Setting up of National Bank of Pakistan in November.

Banking Companies Ordinance 1962 for protection and guidance to banks.

Establishment of specialized banks, such as ADBP (1952);

o HBFC (Nov, 1952)

o P1CIC (Oct, 1957)

o IDBP (Aug. 1961)

o NDFC (Jan, 1973)


4/51

In 1990 the government decided to denationalize all the nationalized institutes. For this

purpose, amendments were made to Nationalization Act 1974 and two nationalized banks

were privatized. Along with this a permission to open banks in private sector was also

granted.

The- privatized banks are;

o MCB taken up by a private group in April, 1991

o ABL taken up by its own employees in September, 1991.

o UBL taken up by UAE party in 2002.

o December 29, 2003 HBL was taken by AKFED


ABOUT HABIB BANK LI MI TED:

BRIEF HISTORY:

HBL was the first commercial bank established in 1947. HBL is one of the largest

commercial bank of Pakistan. It accounts for a substantial share (20%) of the total

commercial banking market in Pakistan with a network of 1,705 domestic branches; 55

overseas branches in 26 countries spread over Europe, the Middle East, Far East, Asia,

Africa and the United States; 3 HBL wholly owned Subsidiaries namely Habib Bank

Financial Services (PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong)and Habib Finance Australia Ltd.Sydney; 2 Joint Ventures namely Habib Nigeria Bank

Ltd. (40%) and Himalayan Bank Ltd. (20%) and 2 representative offices in Iran and

Egypt. HBL is currently rated AA+ (Long term) and A1+ (Short term)*. It is the first

Pakistani bank to raise Tier II Capital from external sources.

Business Operations

1. Banking Sector Overview

2. HBls Performance Overview

3. Products and Services

Personal Banking

Corporate Banking

Online Services

. Virtual Banking

Islamic Banking


5/51

4. HBLs Competitive Strategies

ORGANIZATIONAL CHART

PRESIDENT

BOARD OF DIRECTOR

MEMBER EXECUTIVE BOARD

REGIONAL CHIEF

ZONAL CHIEF

BRANCH MANAGERS

BOARD OF DIRECTORS

Sultan Ali Allana

Chairman

Sajid Zahid

Director

Ahmed Jawad

Director

Sikandar Mustafa Khan

Director

Moez Jamal

Director


6/51

ORGANIZATIONAL STRUCTURE

HBL is organized along functional lines with eight core divisions namely Corporate &

International Banking, Retail Banking, International Banking, Audit & B.R.R., Credit

Policy, Asset Remedial Management (ARM), Information Technology Group andHuman Resources Group.

VISION, MISSION AND VALUES

Vision:

Enabling people to advance with confidence and

success.

Mission:

To make our customers prosper, our staff excel and create value for shareholders.

Values:

Our values are the fundamental principles that define

our culture and are brought to life in our attitude and

behaviors. It is these values that make us unique and

unmistakable. Our values are defined below:

Excellence

Integrity

Customer Focus

Meritocracy

Progressiveness


PRODUCTS AND SERVICES OFFERED BY HBL

PRODUCTS:


7/51

HBL Muhafiz Rupee Travellers Cheques

HBL Auto Finance

HBL Flexi Loans for salaried personnel

HBL LifeStyles Financing Scheme

HBL i-Card HBL House Financing Loans

HBL Easy Access

HBL Fast Transfer

Haryali Agricultural Loans

HBL E-Bank

DEPARTMENTS & RESPONSIBILITIES:

During my internship, I came to known about the following departments functioning in

my branch

1. Account opening department.

2. Cash department.

3. Credit department.

4. Lockers department.

5. Bill clearing department.

6. Foreign exchange department.

7. I.T department

Account opening department:

In this department customer open the account in the bank. This give facility to the

customer for opening new account with the bank that they allow him and operate this

account.

These require many document to open this account:

Copy of CNIC

Utility bill

Student card

Provisional receipt

Address of customer

Specimen Signature of the customer

Posting the account on the system

Cheque book issue to the customer

Secrecy of the customer


8/51

Types of the Account

1. 1. Individual account

2. 2. joint account

3. 3. Business account

4. 4. Current account

5.

5. Saving account

Individual account:

Bank opens this account by individually. It involves single person only. Bank

opens this account for one person.

Joint account:

Bank opens this account by one or two person. The two people use one

account in the bank. Bank considers one account by two people. The two people of joint

account show one account according to the law.

Business account:

In this account, bank only business transaction. It is opened by companies,

institution, organization and partnership business. It is purpose of deal with the

businessmen.

Current account:

Bank opens current account to every person. Usually, some current account have

to pay interest by the customer but its rate is low other accounts. Current account offers

any facilities to the customer which is mentioned below:

Debit card

Cheque book to the customer Automatic bill payments from account

Overdraft facility

Clearing services etc.

Reason for closing customer account:

Bank ay close this account due to some reason:

1. Death of a customer

2. Notice by a customer

3. Customer insanity

Death of a customer:

In the case death of the customer, bank may close the account and stop all

transaction related to the person. Bank stop further transaction such as cheque issue,

money transfer etc.

Notice by the customer:


9/51

Bank may close this account on the demand of the customer. Customer gives

application to the bank for closing this account.

Customersinsanity:

Bank terminates this account due to mental of the customer. Bank stop this

transaction with this customer. It is all too easy for the customers needs by the desires ofothers within a bank who interpret the customer needs through their own prism. His

insanity of the customer, to the knowledge of the bank, has the effect of revoking this

authority, and the bank would not be necessary in paying the acceptances. That the bank

has not been officially notified of the customer's insanity does not indicate

Cash department

Cash department has vital role in the banking sector. All cash transaction represent in this

account such as cash received fro customer, import and export transaction, bill payment

etc. It involves cash payment and receipt transaction in it.

These are following perform various function in this department: Acceptance of deposit

Cheque payment

Collection of funds

Remittances

Transfer of funds from one account to another

Verification of signature

Posting

Heading of prize bond

There are some functions of cash department in the bank:

Receipts and payments:

Cash will be received by the Receipts from the customers in the bank. In the receipts, the

name of the account holder, account number, name of the branch, dates etc are involved.

Customer must also make certain that the receipts are signed by the person which deposit

cash. In some cases, cash is received from receipt department.

Deposit cash in customer account:

When the customer wants to deposit amount in his account .The account in which the

cash will be deposited. Then customer will receive amount and credit the customersaccount that shows increase in customers bank accounts.

Cheque encashment procedure:

The cash is paid to the customer in the cash department such as:

Cheque is drawn on some branches

Cheque is not posted on date

It should be bearer cheque


10/51

Payment of cash:

After posting the cheque the operation manager cancelled the cheque and returned

back to cashier. The cashier enters the cheque in cash paid registered and pays against the

second signature of receiver on the back of the cheque.

Credit departmentA simple but practical definition of credit is "the ability to buy with a promise to pay," in

other words, to obtain present value for a promise to pay in the future. The word "credit"

is derived from the Latin "credo. The banker knows that he may be asked to expand

credit. He first satisfies himself that the ability is such as to defend assurance. This

information is obtained from personal knowledge of the borrower. Trade inquiries are

directed to people selling goods to and competitors of the borrower. If all this information

is satisfactory, the capital factor is studied in the borrower's financial statement which

balance sheet should be taken off at normal intervals. This ratio is often called the 2 to 1

ratio, but differs in business. In short, the distinguish between a safe risk and an unsafe

one that is the quality that marks the good banker.

This is including different latter issue in the credit department:

Establishment of letter of credit:

In case party enjoying regular limit, the L.C is established without adopting the procedure

mentioned above. However the amount of L.C should not exceed the regular limit. The

major non-fund based facilities that are considered as a part of regular credit facilities are

letter of Credit and Bank Guarantee. Banks charge commission for the services rendered

by them and commitments on the pact of the bank these are allowed after making out a

very careful and detailed assessment of borrowers requirement.

Types of credit

These are many types of credit of habib bank which are given below:

Demand finance:

Packing credit

Demand finance to student

Loan to staff

Loans are offered to the staff in various categories

1.

loan for purchasing vehicles

2. loan correspondent to months salary

3. mortgage loan

Running finance:

Itinclude old name overdraft which are meet requirements to the customer.

For example:


11/51


12/51

The applicant on two places should sign application.

TELEGRAPHIC TRANSFER:

Telegraphic transfer means the transfer of funds from one branch to another

branch of the same bank or upon other bank under special arrangements just like atelegram. Telegraphic transfer is not negotiable and the funds are not payable to bearer.

Minor cannot avail this facility. In telegraphic transfer the bankers use secret codes. One

code is with issuing person and the second is with an other person. When they combine

the codes its become an amount that is called check. The payment is made afterthe

confirmation of the check.

Following parties are involved in TT

Applicant

Drawing branch

Drawee branch

Beneficiary

Following important things should be included in TT:

Full name of the beneficiary or account number should be mentioned in the application

form.

Instruction regarding mode of payment should be obtained.

A record in the remittance outward register should be maintained.

All the remittance must be controlled through number or codes.

pay order:

Pay order is an instrument through which payment can be made from one bank to

another bank. Pay order is meant for bank own payment but in practice they are also

issued to customers.

Following parties are involved in pay order:

Applicant

issuing branch

Payee

MAIL TRANSFER:

Mail transfer is not negotiable and the procedure of it is same with the

procedure of DD.When a customer request the bank to transfer his money from this bank

to any other bank of the branch of same bank in the city, outside the city of outside the


13/51

country the first thing he has to do is to fill an application form. In which he states that I

want to transfer the money from this bank to that specific bank by mail. If the customer is

the account holder of this bank, the bank will debit his account and the concerned officer

will fill forms to make the mail transfer complete.

If the customer is not the account holder of the bank, then firstly he has to depositthe money and then rest of the procedure will be adopted to transfer his money.


SBP ERF Scheme

SBP had introduced this scheme to promote country s export and to earn

foreign exchange. This scheme is operated through authorized dealers under SBP control.

This scheme had been amended by time to time.

Features:

Concessions rate of markup as compare to commercial banks rate of markups.

Export refinance allow to exporters via authorized dealers.

In case of default, the SBP recover its principal loan amount, markup & penalty through

the bank to which exporter has submitted his refinance claim.

Refinance allows against value added products i.e. garments, print, dyed cloths, bed sets.

Proceeds repatriated through banking channels.

Allow credit loan amount within 248 hrs.

Misutilization of SBP funds has been prohibited, if any violation occurs SBP imposed

penalty.

Risk:

If the exporter has been / will be defaulted the laps of funds of authorized dealers. Cheating or misuse of funds, SBP may cause to impose not any penalty but also

termination of bank employee or change of management or authorized dealers reputation

may destroy.


14/51

How to operate this scheme?

SBP ERF scheme

Part I Part II

Post shipment EE EF


15/51

Preshipment Party request statement statement

Party request letter L/C sales contract total realization it include

L/C sales contract Under taking & negotiation total

Undertaking DP note SBP financed realization

DP note Form D Form E & not but on which

Form D Commercial invoice availed SBP finance Form E SBP

Proof of purchase Bill of Lading finance

of raw material Form E availed not

include.

PartA

This means after making a shipment the exporter prepare all relevant shipping

documents and evidence of shipment. The exporter contact his bank w.r.t to lodge the

documents and send a one set of shipping documents to export finances department to

allow him post shipment part I under SBP scheme.

Required documents at the time of finance allow to party

D/Pnote

Under taking on non judicial stamp paper

L/C

Party request letter

Form D

Commercial invoice

Penalties:

Non shipment 37 paisa/1000 per day

Short shipment

Delayed shipment

Late submission of documents to SBP

How to avoid from penalty of non shipment?


16/51

Provide proof of shipment against relevant sales contract or L/C on which finance obtain

Substituted the old L/C or contract with new one after assurance that against new L/C.

Restrictions/prohibitions

Evidence of shipment submit to SBP within 180 days or within time period fixed by SBP

In case of substitution against new L/C or sales contract make sure that the exporter has

not availed pre or post shipment finance through any other bank.

How to calculate penalty?

Non shipment

180 days *1000000* 0.37/1000=66600

Short shipment

Finance amount 1000000

Shipment 800000

Short shipment amount =200000

180 days *200000*0.37/1000=13320

In case of post shipment only late repayment of finance penalty is involved.

PartB

The authorized dealers provide this finance facility to exporters against their EE

statement. From the export earning during of one fiscal year the SBP sanction a limit of

50% for the a ailment of the ERF part II. In the EE statement all foreign bills realized and

negotiated during a period of 01-07-04 to 30-06-05 are included in this statement.

Documents required at the time of sanction of finance

D/P note

Under taking on non judicial paper

Party request letter

Short fall in EE statement penalty:

Days*amount of finance*rate(0.37)/day/1000


17/51

Short fall in EF:

SBP calculate case to case basis daily product and match this with his EF performance,

if he avail excess Refinance from SBP and Business performance is short the SBP

imposed a short fall penalty.Total short product*number of days*0.37/180


Demand F inance & Running F inance:

Demand finance:

This is common form of financing to commercial industrial concerns and is made

available either on pledge or hypothecation of goods, produce or merchandise. In demand

finance the party is finance up to certain limit either at once or as and when required.

The party due to facility of a paying mark prefers the financing up only on the amount it

actually utilizes.

Running Finance:

This form of financing was known as Overdraft when a bank customer requires

temporary accommodation, his banker allows withdrawals from his account and running

finance thus occurs. The accommodations generally allowed against collateral security.

The customer is in advantageous position in a running finance because he has to pay

mark up only on balance outstanding against him on daily products basis.

Pledge:

It is entitled to the exclusive possession of the property until the debt is charged.

Hypothecation:


18/51

When the property in the goods is charged as security of loan from the bank but the

ownership & possess

FAPC & FAFB

FAPC (finance against packing credit):

It is a type of banks own source finance provided to clients engaged in export

trade. As the term packing indicates that the credit line is granted to an exporter for the

purpose of packing merchandise for shipment to an importer abroad. An exporter should

give documentary proof to the bank consist of L/C in favor of exporter indicating thedescription of the merchandise, the purchase price, date of delivery along with other

terms.

FAFB(finance against foreign bills):

It is a post shipment finance facility which is provided by the banks to its clients

after providing the evidence of shipment, he contacts his bank to request him to lodge the

documents. He then provide the request letter with sale contract to grant him finance &

this department grant him finance (90% value of commercial invoice).

Importsand exports department

Exports:

Introduction and registration:

Imports and exports act 1950 have empowered the federal Govt to control the import

and export in Pakistan. Pakistan is developing country and like other developing

countries its imports exceeds than exports. To control this situation the registration of

import and export has been made obligatory under the registration order 1993. The

authority of registration has been given to export promotion bureau. No importer and

exporter who has no granted registration shall indent, import and export of any good into

or out of Pakistan. The requirements for getting registration are as under:


19/51

Application form.

Photocopy of I.D card.

Copy of memorandum and article of association (in case of limited company).

Ownership deed of office.

Fee payment.

Certificate of incorporation.

Applicant should regular taxpayer.

The major exports from Pakistan are surgical goods, sports goods hand noted goods,

leather goods, textile goods, etc.

Export procedure:

All the exports work under the imports and exports act that is changed by the state in

every year. When the importer send the L.C to bank in respect to import or when the L.C

comes to the advising bank from the issuing bank then the concerned officer allot the

number to the L.C and get registered. The concerned officer write down the name of

issuing bank and the party name in a register and intimate the party about L.C. the

exporter after receiving the L.C from bank will prepare the documents as per the L.C

usually the following documents have to be prepared by the exporter:

Bill of lading

Covering letter

E- Form

Bill of exchange

Packing list

Commercial invoice

Quota documents in case of quota country

Certificate of origin

Special custom invoice

The export form (E-FORM):

E-FORM means export form which is the first and foremost requirement for

the exports from Pakistan. It is control instrument by Govt of Pakistan by which it


20/51

monitors the receipts from exports and checks the goods that are transferred without

foreign exchange. all banks which are engaged with the foreign exchange are required to

print and maintained the E form that is checked by the state bank of Pakistan. For export

an e form is issued by the bank on the request letter of a company. Two separate registers

are maintained by the bank one for his use and the other one are for the requirement of

the SBP. On issuance of E forms the banker lists it in the register and makes sign from

the exporters. Banks record the name of party, amount, the goods description, port of

destination, importer name port of loading etc.

The functional utility of E-FORM:

The export form has four copies. The exporters and banks use it. Without it theexporter can not make export. These copies are used as:

Original copy is for SBP that is checked by the higher authority.

Duplicate copy is for the bank use that is upraised by the custom authorities.

Triplicate for the use to report of SBP at the time of payment received.

Quartiplacte is for the company used.

Usage of E- FORM:

E- FORM is an important document for export. It has its own importance such as

this form is used as a checker means it monitor that what things are going abroad and in

return what things we are getting. So it creates a check and balance on the foreign

exchange. It shows the total quantity and quality of the goods that is sending to another

country. An EForm shoe the party worth that is very helpful for the party and the bank.

Bank can create a party limit for the credit on the behalf of it and a party can arrange a

loan for its future requirements from the bank. It shows the terms of payment by the

importer and the delivery terms by the both parties that is helpful in case of any

discrepancy during the contact.

Short shipment notice:

A shipment may be cancelled by the importer or exporter due to many reasons.

The cancellation of the export letter is called short shipment notice. In this situation the

company has to inform the bank. Company has to give a written letter to the bank that he


21/51

is not the export so please cancelled their e form. On the other hand bank at the time of

receiving the letter will stop the e form and cancelled the all documents.


IMPORTS

Imports regulation:

Import is being regulated by the ministry of commerce and the government of

Pakistan under the import and export act:

Categories of imports:

Imports are classified into the following categories:

Commercial sector imports

Industrial sector imports

Public sector imports

Registration of importers:

A person who wants to approach the bank for importing goods from abroad, he

should have to get himself registered with the export promotion bureau under registration

of imports and exports act. He must fulfill the following conditions before getting himself

registered:

NIC NUMBER

NATIONAL TAX NUMBER

MEMBER OF REGISTERED ASSOSITATION

Documentary letter of credit:

A documentary letter of credit is an instrument or document issued by the bank on the

behalf of a customer, authorizing a beneficiary to draw a draft and drafts or sometimes

the requirement of a draft, which will be honored, on presentation by the bank if drawn

accordance with the te3rm and condition specified in the letter of credit.


22/51

It is the written undertaking by the bank (issuing bank) pay to the seller (beneficiary) at

the request or as per the instruction given by the opener (applicant) pay at sight or at the

future date, a stated sum of money against the required documents. The documents

include the commercial invoice, certificate of origin, insurance policy or certificate and

the documents of transport relating to the mode sending goods. L/C is therefore is an

arrangement of security for the parties. The conditional guarantee is related to the

documents only and not on the underlying

goods or services.

Establishmentof letter of credit

Procedure:

The person applying for the letter of credit must be registered with the EPB. The opening

bank verifies this registration or otherwise exemption. This is mentioned in the I form.

The importer also shows the valid certificate of an organization membership. A category

pass book is issued by the EPB for registered importer specifying his category. This book

is centralized by the centralized banks in the city. It is not necessary for the bank to hold

the original copy of the pass book of all the importers. But some times the importer gets

L.C from more than one bank so the bank have to hold the photo copy of this pass book.

The applicant can get the application from any branch of the Habib Bank Limited.

However only some branches are authorized to open L.C. That branches how are not

authorized have to contact with the authorized branches to open an L.C. The authorized

branches in such case require the certificate from the applicant branch that the required

formalities are fulfilled and the approval was obtained with required margin.For establishment of letter of credit, the importer requests the opening bank with the

following documents:

1) Application and agreement form IB-8:

Credit application form is an agreement between the bank and the customer on the basis

of which the letter of credit is opened. This form contains the undertaking of the importer


23/51

that get the documents from the bank at the mark up price. It contains the following

information:

Name and address of importer.

Name and address of exporter. Amount in foreign currency.

Terms of credit.

Description of goods.

Origin of goods.

Port of loading and discharge.

Last date of shipment.

Foreign bank charges.

Terms of shipment. (Partial shipment or transshipment)

Insurance cover note, policy no, and name of insurance company.

Forward booking.

Mode of transmission.

Import registration no.

Any other documents required.

Detailed documents.

2)Performa invoice/ purchase order:

A Performa invoice is quotation of seller containing the description and the

specification of the goods, price, and terms of the sale. Some times the exporter has their

agent in the country. The agent must be registered from the EPB.

3)Insurance cover note:


24/51

All the goods imported under the documentary credit must always be insured. In

accordance with our country import policy, insured must be issued by a Pakistani

insurance company or the foreign company operating in Pakistan and such company must

be approved by the bank. Insurance covered based on the following:

It is issued in the name of issuing bank A/C importer.

The rider should cover against war.

The port of shipment and the port of destination.

Amount of premium prepaid.

Shipment period.

The description of goods should be the same as per the form.

4) Appendix B:

This Performa replaces the import license and is submitted along with L.C application

form duly filled in triplicate. It is conditional undertaking that the imports goods are not

banned, not smuggled. It is also an undertaking that if the bank is unable to arrange the

said currency the importer have to purchase it from other banks or from any other place.

It includes the details and description of goods, codes, class, type, source of import,

country of import, Performa invoice no etc.

5) IFORM:

This form is used at the time of retirement of documents against L.C established

earlier for reporting to the transaction to SBP through the bill of entry deptt. It has four

copies that is used as follows:

Original is for the use of SBP.

Duplicate for the authorized dealer to be used for processing exchange control.

Triplicate for the authorized dealer record.

Quartiplacte is for the submission in SBP in the case of import where the documents are

not retired.

Approval f or establishment of l etter of credit

After scrutiny of the documents, IB-8 along with attached documents is put before the

corporate head for approval. If the amount of application exceeds the power of the


25/51

corporate head the branch concerned prepared the memorandum for the corporate

banking head for obtaining his approval.

In case party enjoying regular limit, the L.C is established without adopting the procedure

mentioned above. However the amount of L.C should not exceed the regular limit.

Types of letter of credit:

1) Revocable credit:

The letter of credit that can be cancel with the consent of importer, without

giving any prior information to the exporter.

2)Irrevocable letter of credit:

The letter of credit that can be cancelled by the mutual consent of the both

parties. Only one party cannot cancel it.

3) Irrevocable confirmed letter of credit:

When an issuing bank authorizes and or request to an other bank to confirm his

irrevocable credit and adds its confirmation. Such confirmation constitutes a definite

undertaking of such bank in addition to that of the issuing bank. There are following

other letter of credits:

1. Revolving Credit

2. Transferable Credit

3. Back to Back Credit

4. Green Clause Credit

5. Red Clause Credit

6. Clean Documentary Credit

7. Transit Credit

8. Stand by Credit

9. Sight Credit

Part ies to a credit:

The applicant:

The applicant of the letter of credit is called the importer or buyer. The buyer requests to

the bank to open a documentary letter of credit in favor of the seller.


26/51

Opening bank (issuing bank or importer bank):

At the request of the importer an issuing bank issues a credit under the

instructions in the favor of the seller.

Advising bank:An advising bank is a bank in the sellers country. The issuing bank forwards the advice

of the credit by mail or by any mode to the correspondent bank in the exporter country as

instructions of the opener.

Beneficiary (exporter):

The person or body receiving the letter of credit from the importer that is opened in

favor of him.

Confirming bank:

The bank that on the requests of the issuing bank adds confirmation to a credit. It is

definite undertaking of the confirming bank, in addition to the issuing bank.

Negotiating bank:

It May or may not be the advising bank. An authorized bank that gives the value to the

draft for processing and payments.

Reimbursing bank:

Reimbursing bank is the bank, which on the behalf of the opening bank, honors the

Reimbursing claim lodged by the negotiating bank.

Modes of payment:

Sight letter of credit:

The seller submit all the documents with draft in the importer country

Complying with the all terms and conditions. The payments are made on the presence of

the documents.

Usance letter of credit:

Under these circumstances it is agreed that the payment will be made after a

specified period. So the payment is made after or on the expiry of that date.


27/51

Risks for importer and exporter:

Importersrisks:

He does not know the seller.

He does not know that goods will be delivered in time.

He does not know how to check the goods.

Exportersrisks:

He does not know the buyer.

He does not know the credit worthiness of the buyer.

He does not wait for payment.

He does not wait for exchange control.

Buyers and sell ers obli gations:

The sellersobligations: Provision of goods as per contract.

License authorization and formalities.

Contract of carriage and insurance.

Delivery at time.

Transfer of risk.

Division of cost.

Notice to buyer.

Proof of delivery.

Good checking marking and packing. Other obligations.

Buyersobligations:


28/51

Payment of price.

License authorization and formalities.

Contract of carriage and insurance.

Taking Delivery at time.

Transfer of risk.

Division of cost.

Notice to seller.

Proof of delivery.

Inspection of goods.

Possible problems in international trade:

Non-payment.

Delay in delivery.

Financing, how and against what.

Currency restrictions.

Regulatory restrictions.

Documentation and mode of settlement.

ICC rules and INCO terms.


HUMAN RESOURCE DEPARTMENT

FUNCTIONAL RESPONSIBILITIES:

Right Now the responsibilities assigned to HR department at Corporate Center

can be categorized under three heads:

Staff matters / Basic HR Functions

Expenses control

Security matters

Now Ill discuss these one by one:


29/51

Background:

The banking council of Pakistan was responsible for the recruitment, selection

and allocation of human resources. After the dissolution of the Pakistan Banking Council,the Banking & Financial Services Commission of Pakistan is responsible for these

activities.

Procedure:

Staff requirements are met according to the changing needs of macro environment

scenario and particularly the arising needs of the bank itself. A need analysis is

conducted. After assessing the human resources requirements and screening of the

applications, most probably, the suspects are invited for a written test.

Short listed candidates are called for an interview for personality and social appraisal.

Interviews are a mix of direct and indirect interviewing techniques and information

required.

The selected candidates are sent for training of six months training from MDIs.

The training is through the lectures regarding banking procedural guidelines and other

behavioral aspects. After the completion of training employees are allocated to different

offices. The effective management of people in an organization requires an understanding

of motivation, job design, reward systems, and group influence.

Recruiting

Retention

Succession planning

Risk Management

Diversity in our workforce

Management information

Progressive compensation and benefits design and implementation

Employee communications and relations

Training needs analysis, program design and implementation

Performance evaluation Work-life initiatives


30/51


CREDIT & ADM INISTRATION DEPARTMENT

The responsibility of providing administrative support for the lending activities of

the Bank, and day-to-day monitoring of credit-exposure, is vested in the Credit

Administration Department (CAD).

FUNCTIONAL RESPONSIBILITIES:

The main responsibilities under this department are:

Implementation of credit facility and their maintenance according to terms of credit

approved.

Ensure that standard loan documentation for each credit facility is maintained and the

correctness & completeness of such documentation and also responsible for custody of all

credit files.

Maintain the safe custody of all collateral as per banks standard operating procedures;

undertake periodic evaluation and inspection of hypothecated/ pledged inventories in

accordance with the terms of credit.

Ensure compliance with

Institutional credit policies & procedures

Local regulatory requirements.

Prepare various portfolio composition reports and other documentation for submission to

GRMs & RMs.

CREDIT FACILITY IMPLEMENTATION PROCEDURE:

Upon approval of credit proposal, the credit proposal and approval are handed over to

CAD. Now CAD determines the nature of documentation required and on receipt of same

ensures that all legal documents are obtained and are legally enforceable. After all these

activities it can release the facility for utilization.


31/51


MARKETING DEPARTMENT

The marketing department in HABIB BANK LIMITED is very strong. It is the

main source of gaining and maintains the customers that can give a large profit to the

bank. There are five relationship managers in Habib bank and every person is responsible

for the credit of his party.

CUSTOMER DEALING:

HBL corporate center only deal with the following categories of business:

The organization that have minimum 250 million sales in a year.

The organization that have availed 80 million finance

Agri based industry.

HBL do not deal with the agriculture sector.

Read more:AN INTERNSHIP REPORT ON HABIB BANK LIMITED - Virtual

University ofPakistanhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/to

pics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHPROCEDUREFOR CREDIT APPROVAL:

It is the responsibility of the relationship manager to provide or fulfill the requirement of the

customer by checking his financial and position. The procedure of credit approval starts with

the credit proposal. First of all the customer request to the bank for credit and on the behalf of

him the RM check the memorandum. The

Memorandum includes:

The company information.

Purpose of credit.

Assessment of management.

Risks.

Financial analysis.

Third party or other bank information.
http://vustudents.ning.com/xn/detail/3783342:Comment:917421http://vustudents.ning.com/xn/detail/3783342:Comment:917421http://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topics/an-internship-report-on-habib-bank-limited#ixzz3EAMDVpwHhttp://vustudents.ning.com/group/fini619internshipreportfinance/forum/topic/listForContributor?user=0lrhnllrdvalvhttp://vustudents.ning.com/xn/detail/3783342:Comment:917421


32/51

Conclusion and recommendations.

Then the RM sends it to the authorities who accept or reject the proposal. If they accept the

proposal they announced a credit range for the party. At the end RM sends the proposal to

CAD deptt custody and check.

EXCESS FACILITY CREDIT BY RM:

Relationship manager is authorized to provide the excess facility to the customer

than the credit line. It may be up to

10 percent of excess amount

OR

12.5 million Whichever is less?

It is not more than 15 days if the customer wants to increase this facility he has to contact

with the head office.

TYPES OF CREDIT FACILITY:

1) fund based:

It is first type of credit facility. In this facility the bank actually provides fund to customers.

2) non fund base:

Second type of credit facility that does not provides fun but only give the guarantee. If the

customer is unable to make the payment at maturity date then bank will be responsible to

make the payment.


1.

1. PLAN OF INTERNSHIP PROGRAMME


33/51

Every body knows that knowledge does not increase without practice .practice is an important

mean to improve the knowledge. Therefore university provides internship programmed of six

to eight week in different organization during MBA so that we could able to apply in theoretical

concepts to practical.

I started internship on 5thmay to 25thJune in water works road branch of habib bank.

Work done by me in HBL in different departments:

1. 1. Account opening department.

2.

2. Data punching department.

3. 3. Public dealing department.

ACCONTS OPENING DEPARTMENT

In this account department I gain the particle knowledge about opening. This department

deals with opening account and saving account for its customer and all matters regarding

there off. The customer opening account/saving accounts can be categorized as following:

1) individual

2) firm

3) company

4) trust

5) staff

6) others

OPENING AN ACOOUNT:

In order to open an account first of all the customer has to fill a form prescribed by the bank.

The person is required to bring some reference or introduction for opening the account.

Introducer may be a person who has an account with HBL.

Some important information regarding introducer e.g. the name and account number

of the introducer is written on the space provided on the specimen signature cards. Then in

order to find out whether he is a true introducer or not a letter is sent to him thanking him for

this introduction, so that any thing wrong may come into notice.

There are different requirement for different types of accounts and account holders. An

important thing is that the customer should have a corporate customer. The corporate

customer limit is 40 million and this branch always deals the corporate customer.

General rules for opening an account:

One person can open only one account in the same branch with the same category.

In the event of death of an account holder the credit balance will be transfer to the

heirs of the diseased individual account.

Services charges will be deducted periodically as prescribed from time to time on the

accounts that are under the limit of specific account.


34/51

Services charges are not applicable on that accounts that are prescribed as exempted.

A distinctive number will be allotted to the each account.

The bank can close those accounts that are under the minimum limit of the bank.

Any sum to be deposited in the account should be accompanied by paying in slip

showing the party account number and the name.

Account holder can only withdraw the sum of money by his own account by cheque.

Cheque should be signed by the account holder by the specimen given by the bank.

Post dated and defective cheque is not accepted.

If statement of account spoiled a new will be issued on cost.

Any change in the address should immediately communicate to the bank.

The account holder wishing to close the account must surrender the cheque book.

Account may be transfer from one branch to another same branch without any charges

etc.

Data punching

Data punching means feeding of data collected into the computer daily or weekly. We punch

data daily which include in the account. First, we enter transaction of customer on the basis of

buying and selling daily in the customer account then we punch customer data one by one

according to dates and sequence. Through data punching, we can easily transfer the data andmoney to another account and determine the account information. After debt and credit

amount, we punch data according to their account in the computer so that we could check

data easily. We make cash debit vouchers.cash credit vouchers,sundry debtor and sudry credit

vouchers,transfer vouchers,internal account vouchers ,cross branch vouchers. We give detail

in the system .these all

Public dealing

Public dealing means have good behavior with the public for increasing efficiency and growth.

Bank deals with the customer and provides information of accounts and others which relates

to the accounts. Bank guides that how to open account and forms fill to open new account.

Bank issues cheque to the customer for opening new accounts. Bank asks to the customer

about their needs and requirements and fulfill on time.Following are includes in public dealing: Accounts Opening, Check book issuance, Standing

instructions, Marking stock payments, Debit Credit card issuance, Activation of dormant

accounts, Making inoperative account into operation, Recovering of multiple charges availing

bank facilities, issuance of bank account statements

Open new accounts to the customer.

Issuance cheque to the customer.

Provides information for opening new account to the customer.

Establish good behavior with the customer to increase our product and services.

To solve their problems which create open accounts etc.


13 .Financial Analyses

Balance Sheet 2010 2009 2008


35/51

As atDecember 31, 2007 (Rupees in '000)

Assets

Cash & Balances with Treasury Banks 81,516,883 79,527,191 5 6,533,134Balances with other Banks 35,990,301 29,560,309 39,364,297

Landings to Financial Institutions 30,339,344 5,352,873 6,193,787

Investments 245,016,986 209,421,147 129,833,446Advances 434,998,560 432,283,588 456,355,507

Other Assets 15,876,545 16,475,939 34,588,444

Operating Fixed Assets 8,835,326 8,172,590 14,751,252

Deferred Tax Asset 34,478,466 40,333,882 12,186,848

887,052,411 821,127,519 749,806,715

Liabilities

Bills Payable 9,774,749 10,041,203 9,828,082

Borrowings From Financial Institutions 37,430,333 48,121,649 46,961,165

Deposits and other Accounts 721,069,137 653,452,460 597,090,545

Subordinated Loans 4,281,835 4,212,080 3,954,925Liabilities against assets subject to finance lease

Other Liabilities 24,971,618 26,204,580 2 5,663,411

Deferred Tax Liability

797,527,672 742,031,972 683,498,128

Net Assets 8 9,524,739 79,095,547 6 6,308,587

Represented By:

Shareholder's Equity

Share Capital 10,018,800 9,108,000 7 ,590,000

Reserves 27,671,813 25,801,889 23,656,044Un appropriate Profit 4 4,121,103 36,325,458 3 1,933,178

Total equity attributable to the equity holders of the

Bank 8 1,811,716 71,235,347 6 3,179,222

Minority Interest 7,713,023 7,860,200 8 90,099

Surplus on revaluation of assets - net of tax

8 9,524,739 79,095,547 6 6,308,587


Profit and Loss Account 2010 2009 20For the year endedDecember 31, 2007 (Rupees in '000)

Mark-up/return/interest earned 7 9,999,85274,751,375 63,376,0Mark-up/return/interest expensed 3 4,090,36833,088,536 26,525,5

Net Mark-up/interest income 4 5,909,48441,662,839 36,850,4


36/51

Provision against Non-performing loans and advance-net 7 ,559,458 8,276,180 6,904,9

Reversal/provision against off-balance sheet obligations 3 0,895 (51,396) 3 72,5

Reversal of provision against diminution in value of investments 3 89,273 1 ,387,354 1,909,8Bad debts written off directly

7 ,979,626 9,612,138 9,187,4

Net mark-up/interest income after provisions 3 7,929,85832,050,701 27,663,0

Non-market/interest income

Fee,commision and brokerage income 4 ,928,705 4,620,148 4,518,4

Income/gain on investments 6 07,440 452,823 1 ,300,9Income from dealing in foreign currencies 2 ,893,454 1,692,776 2 ,374,3

other income 2 ,619,905 3,176,865 3 ,088,9

Total non-mark-up/interest income 1 1,049,504 9,942,612 1 1,282,6

4 8,979,36241,993,313 3 8,945,7Non-market/interest expense

administrative expenses 2 3,053,86021,733,407 21,425,3

other provision offs-net 1 78,148 372,957 2 00,1other charges 1 78,700 3 ,540 64,7

Total non-mark-up/interest expenses 5 11,373 397,668 3 23,5

Profit Before Taxation 2 3,922,08122,507,572 22,013,8

2 5,057,281 19,485,74116,931,932

Taxation

current 9 ,331,828 7 ,827,137 8 ,308,6prior years 6 94,898(1,079,473) 2 33,1

deferred (582,499) 4 39,434 (2,473,89

9 ,444,227 7 ,187,098 6,067,8Profit after taxation 1 5,613,05412,298,643 10,864,1

Attributable to:

Equity holders of the Bank

Minority Interest

Basic and diluted earnings per share 1 5.58 1 2.28 1 1


h Flow Statement 2010 2009he year endedDecember 31, 2007 (Rupees in '000)

H FLOWS FROM OPERATING ACTIVITIESit before taxation 25,057,281 19,485,741 16,

: Dividend income and share of profit of associated and

venture companies (318,539) (281,152) ( 1,1


37/51

on sale of investments - net (288,836) (171,403) (1

(607,375) (452,555) (1,3

24,449,906 19,033,186 15,ustment for:

reciation/amortization/adjustments 1,666,058 1,670,958 1 ,

rsal against diminution in the value of investments 389,273 1,387,354 1 ,ision against Non-performing loans and advances-net of

rsals 7,559,458 8,276,180 6 ,

rtization of premium on investments (65) (268)

on sale of property and equipment-net 69,755 257,155 8ellaneous provisions (16,993) (29,386) (

209,043 321,561 5

9,876,529 11,883,554 11,

34,326,435 30,916,740 27,ease/decrease in operating assets

ernment securities

dings to financial institutions (24,986,471) 840,914 (4,5ns and advances (10,274,430) (4,851,108) ( 81

r assets-net 5,859,907 (1,951,264) (6,3

(29,400,994) (5,961,458) ( 92ease/decrease in operating liabilities

osits and other accounts 67,616,677 81,053,273 6 5,

owings from financial institutions (10,691,316) 4,098,973 ( 12,0

payable (266,454) 260,126 (5,5r liabilities-net (1,350,947) 4,083,696 5 ,

55,307,960 89,496,068 53,

60,233,401114,451,350 (10,7me tax paid-net (10,137,565)(12,265,104) (11,6

cash flows from operating activities 50,095,836102,186,246 ( 22,3

H FLOWS FROM INVESTING ACTIVITIES

nvestments in securities, associated and joint venture

panies (35,957,034)(78,588,907) 37,

dend income received 319,465 624,628 2d capital expenditure (948,433) (1,835,161) ( 2,

eeds from sale of fixed assets 51,667 104,288

ct of translation of net investment in foreign branches 308,619 1,689,707 3 ,037,018

idiaries and joint ventures

cash flows from investing activities (36,225,716)(78,005,445) 38,

H FLOWS FROM FINANCING ACTIVITIES

ordinate Loans (58,868)dend Paid (5,450,436) (4,173,059) ( 2,

cash flows from (used in )financing activities (5,450,436) (4,173,059) (2,7


38/51

ease in cash and cash equivalents during the year 8,419,684 20,007,742 1 3,048,2

h and cash equivalents at beginning of the year 108,541,351 84,639,657 7 5,

cts of exchange rate changes on cash and cashvalents 546,149 4,440,101 7,

109,087,500 89,079,758 82,

h and cash equivalents at end of the year 117,507,184109,087,500 9 5,


Liquidity Ratios

In graphs 2008 should be near origin. Round the figures upto 2 decimal

places

You need to provide complete working of the ratios.You are required to carefully

study the table regarding maturitiesof assets and liabilities.Where you can easilyfind the current and long term part of assets and liabilities. Assets and liabilities

having upto 1 year maturity are considered as current assets and current liabilities.

This table is given in the annual report of the selected bank. You need to re-calculate

the current and long-term parts of assets and liabilities according to this table.

The liquidity of a firm is measured by its ability to satisfy its short term obligations as they

come due.

These are includes:

Current Ratio:

Current ratio =current asset/current liabilities

2010

Rs. In 000

2009

Rs. In 000

2008

Rs. In 000843738619/770745837 772621047/737819892 666335481/679543203

1.0947041 1.0471675 0.9805638

Comments:

The current ratio of 2010 and 2009 is quite acceptable as compare to 2008.


39/51

It means that its current ratio is less liquid. There is small increase in industrys ratio which

can meet the short term obligations of 2010 and 2009 as compare to 2008.

Acid Test Ratio:

Acid test ratio =current asset inventories prepaid expanses/current liabilities.

PermalinkReply by+ M.Tariq Malikon October 30, 2011 at 11:05am Leverage Ratios

The leverage ratio may be defined as financial ratio which is magnification of risk and return

introduced through the use of fixed cost financing such as debt and preferred stock

Leverage ratios measure the degree of protection of suppliers of long term funds.

These include:

Times Interest Earned=Earning Before Interest and Taxes (EBIT)

Interest Expenses

2010

Rs. In 000

2009

Rs. In 000

2008

Rs. In 0002 3,922,081[a1] /34090368 22,507,572/33088536 22,013,850/26525556

0.7017255 0.6802227 0.829911

Comments:

The time interest ratio shows the lower value. Firm is not able to fulfill its

interest obligations. It is also called interest coverage ratio.

Debt Ratio:

Debt Ratio= Total liabilities/ total assets.

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

843738619-434998560

/770745837

772621047-432283588

/737819892

666335481-45635507

/679543203

0.5303176 0.4612744 0.9134077


40/51

797,527,672/887,052,411 742,031,972/821,127,519 683,498,128/749,806,715

0.8990762 0.9036745 0.9115658

Comments:

These values indicate that the firm has financed close to total of its assets with

debt. The higher this ratio, the greater the firms degree of indebtedness and the more

financial leverage it has.

[a1]= 2 5,057,281+ 3 4,090,368


Debt-Equity Ratio:

Debt-equity ratio = total liabilities / total share holder equity.

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

797,527,672/81811716 742,031,972/71235347 683,498,128/63179222

9.7483308 10.416626 10.818401

Comments:

It is a ratio of amount invested by outsiders to the amount invested by the owners

of the business. This ratio indicates the low margin of safety to the creditors.2009 and 2008

has high ratio as compare to 2010. The firm would not be able to meet the creditors claim

because of low assets or shareholder equity.

Debt to Tangible Net worth Ratio:

Tangible Net worth Ratio:

Tangible net worth ratio =total assets- intangible asset-total liabilities.

Debt to tangible net worth ratio= Total Debt / Tangible Net worth Ratio.

working of Tangible net worth required

2010 2009 2008


41/51

Rs. In 000 Rs. In 000 Rs. In 000

9.7483308 [a1] /80689413 10.416626/70922957 10.818401 /51557334

1.2081 1.4687 2.0983

[a1]797,527,672

PermalinkReply by+ M.Tariq Malikon October 30, 2011 at 11:06am Total Capitalization Ratio:

Debt to total capital ratio =long term debt/ (long term debt -+shareholder equity).

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

750322590/(750322590-+8

1,811,716)

683869120/(683869120-

71,235,347)

856678881/(856678881-6

3,179,222)750322590/668510874 683869120/612633773 856678881/793499659

1.122379 1.1162772 1.079621Comments:

This ratio is relating the long-term debt to the permanent capital of the bank. Itshows that the fixed assets decrease than previous years which show a good sign. This ratio is

considered to be satisfactory.

Profitability Ratios

Profitability measures enable the analyst to evaluate the bank or firms profits with respect to

a given level of sales, a certain level of assets or the owners investment. Without profits, a

bank or firm could not attract outside capital

Net Profit Margin:

Net profit margin = (Net income/ Net sale) * 100

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

(15,613,054/79,999,852)*100 (12,298,643/74,751,375)*100 (10,864,112/63,376,047)*10

19.52% 16.45 % 17.14%


42/51

PermalinkReply by+ M.Tariq Malikon October 30, 2011 at 11:06am Return on Assets:

Return on Asset = Profit before Tax / Total Assets *100

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

(23,922,081[a1] /887,052,411)*100(22,507,572/821,127,519)*100(22,013,850/749,806,715)*10

2.69681 2.74106 2.93594

Comments:

This ratio shows that the returns on assets are decreasing as compare to

previous years but overall profit with its available assets is increasing.

DuPont Return on Assets:DuPont return on assets = (Net income/sale)*(sale/total asset) *100

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

(15,613,054/79,999,852)*(

79,999,852/887,052,411)*100

(12,298,643/74,751,375)*

(74,751,375/821,127,519)*100

(10,864,112/63,376,047)*

(63,376,047/749,806,715)*100

1.7604 1.4975 1.4487

Operating Income Margin:

Operating income margin = (EBIT/ Net sale) *100

Return on Operating Assets:

Return on operating assets = (EBIT/operating asset)*100

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000


43/51

( 2 3,922,081[a2]

/887,052,411)*100 (22,507,572/821,127,519)*100 (22,013,850/749,806,715)*100

2.69681 2.74106 2.93594

[a1]25,057,281

[a2]= 2 5,057,281+ 3 4,090,368


Comments:This ratio indicates that banks growth is not good. It can notcover all assets or

expenses through net profit before tax easily. Its not able because its ratio is decreasing than

previous years.

Return on Total Equity:

Return on total equity = (Net income/ total equity)*100

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

(15,613,054/81,811,716)*100 (12,298,643/71,235,347)*100 (10,864,112/63,179,222)*100

19.08% 17.26% 17.19%

Comments:

Return on equity indicates the net income by the total equity of the owners. In

the year of 2010, the total equity is increasing than previous years and net income is also

increasing. In the year of 2010, the total equity is grater than net income. It means that

generally, the bank has high return, the better off are the owners.

Gross Profit Margin:Gross profit margin = (Gross Profit/ Net sales)*100

2010

Rs. In 000

2009

Rs. In 000

2008

Rs. In 000

(45,909,484/79,999,852)*100 (41,662,839/74,751,375)*100 (36,850,491/63,376,047)*1057.39% 55.73% 58.14%


44/51


Activity Ratios

Activity ratios measure the speed with which various accounts are converted into sales or cash

such as inflows or outflows.

These include:

Total Assets Turnover

Total assets turnover = Net sales/ total asset

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

7 9,999,852 /887,052,411 74,751,375/821,127,519 63,376,047/749,806,715

0.0902 0.0910 0.0845

Fixed Assets Turnover:

Fixed assets turnover = Net sales/ fixed asset

Market Ratios

Market ratio relates a firms market value, as measured by its current shares price to certain

accounting values.

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

7 9,999,852 /739,205,903 74,751,375/706,687,146 63,376,047/647,715,497

0.1082 0.1057 0.0978


45/51

These include:

Dividend per share

Dividend per share =Total dividend/ no of share outstanding

Earning per Share:

Earning per share = Net income/ no of share outstanding.

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

15,613,054/10,018,80 12,298,643/9,108,000 10,864,112/7 ,590,000

1.56 1.35 1.43

Comments:

This ratio is decreasing as compare to previous years. In these ratios, net

income is greater than no of shares outstanding. Thats why, the earning per share is

decreasing and growth rate as well as. It shows low profitability between the shareholders.

AWARDS:

2010

'HBL wins Best Emerging Market Banks award in Pakistan 2010'

2009

'The Best Emerging Market Bank in Pakistan'

HBL among Top 500 Global Financial Brands

2008

'Best Bank In Pakistan'

'Most Innovative Global Trade Finance'

'Buzziest Brands'

15.Conclusion/Recommendation:

2010Rs. In 000

2009Rs. In 000

2008Rs. In 000

5,450,436/10,018,80 4,173,059/9,108,000 2,730,251/7 ,590,000

0.5440 0.4582 0.3597


46/51

RAFIQ has become a creditable name in the textile industry of Faisalabad. In a bid to prepare

itself for the challenges / opportunities of the barrier free trade Textile Vision 2005, their

planned spinning unit will help them reap the benefits with competitive edge of cost effective,

quality products. The company has already started exporting quality yarn to various buyers in

the region. We may improve net return on funded facilities from the relationship by

rationalizing the credit portfolio in accordance with their financial requirements as proposed.

In view of the above, we recommend the proposal for approval.


Recommendations:

Being a finance student, your main focus should be on finance related issues based

on your training experience and ratio analysis

During my internship, I have realized that habib bank is vast system and spread its

networking all over the world and performing very well. It is difficult to give suggestion aboutimproving condition of habib bank.

So, I will few suggestions to habib bank which are given below:

v Bank must introduce online system all over the world.

v Bank has different schemes which should express to the required customer so that

They are introduced reasonable shares in the market.

v Bank should provide interest free loan to the scholar students for their encouragement.

v Habib bank should introduced computerize system in all branches. Through it, bank canincrease more efficiency in the work than without it.

v Habib bank should create plan for opening a customer account with bank where he could

easily know about the procedure of filling forms or cheque of new accounts. It saves a lot of

times of banks and staff who perform it.

v Habib bank should increase communication with customer so that they could more

establish public relation and expand its growth.

v Habib bank must introduce marketing programs for the clients so that they could easilyknow about the market development of bank because it is problem for clients that he has no

idea for usage of new marketing term.

v Bank should have same behavior with the customer. Bank should not adopt such a

behavior which creates problems between the customer and banker. For example, bank show

good behavior with very close person and bad behavior show with other person. It is not good

position for the banking growth.


47/51

Hbl pakistanPresentation Transcript

1. To provide employment opportunities