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Commercial Banking

Habib Bank Limited

Allied Bank Limited

5/13/2014

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Commercial Banking Final Project

Habib Bank Limited

Allied Bank Limited

Submitted to:

Mr. Khurram

Submitted by:

Sana Saleem (100814)

Anum Nadeem (100848)

Usman Raza (100852)

Malik Muhammad Haroon Awan (100820)

BBA 8-A

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Table of Contents

Banking --------------------------------------------------------------------------------------------------- 4

Introduction to HBL ------------------------------------------------------------------------------------ 5

Introduction to ABL ----------------------------------------------------------------------------------- 7

Branch Network ---------------------------------------------------------------------------------------- 12

Market Segmentation -------------------------------------------------------------------------------- 15

Strategies ------------------------------------------------------------------------------------------------ 16

Revenues and Expenses ------------------------------------------------------------------------------ 17

Products and Services of HBL ----------------------------------------------------------------------- 20

Products and Services of ABL ----------------------------------------------------------------------- 30

SWOT Analysis of HBL -------------------------------------------------------------------------------- 36

SWOT Analysis of ABL -------------------------------------------------------------------------------- 37

Financial Performance ------------------------------------------------------------------------------- 40

Financial Ratios ---------------------------------------------------------------------------------------- 41

Financial Statements of HBL and ABL ------------------------------------------------------------ 53

Problem Identification ------------------------------------------------------------------------------- 54

Findings -------------------------------------------------------------------------------------------------- 55

Conclusion ---------------------------------------------------------------------------------------------- 56

Recommendations ------------------------------------------------------------------------------------ 57

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Definition of Banking

The best definition of a bank is in terms of its functions. A banker is a dealer in credit, he borrows

from the public or people, and lends to merchants or manufacturers. He borrows by accepting deposits,

and lends by way of advance against goods or securities or by discounting bills.

Collins English Dictionary defines band as an institution offering certain financial services, such

as the safe keeping of money, conversion of domestic into and from foreign currencies lendingof money at interest.

A band is an organization or a business house, which deals with money, credit and other

financial transactions. In general banks attract surplus money from the people who are not

using it at the time and lend to those who are in a position to use for productive purposes. Thus

people who have spare money they deposit the same in the band where it can earn profit. On

the one hand bank receives deposits from the people and pays profit at a specified rate and on

the other hand it advances loans to the people in need at the specified interest rate of mark-up.

Origin Of Banking

The word Bank itself is derived from the words Banco Bancus or Banque which means a

bench. The early bankers, the Jews to Lambardy, transacted the business of money exchange on

benches in the market. Banking is an ancient institution. It is in fact as primitive as human society.

Modern banks have developed from very old system of banking. It has been growing side by

side with the human civilization. Historians are of the opinion that perhaps they were the

Babylonians who developed banking system as early as 2000 BC There is evidence to show that

the temples of Babylon were used as bands

This was all because of the prevailing respect and confidence in the Clergy. King Hammurabi

(1728 - 1686 BC) the founder of the Babylonian Empire drew up a code wherein he laid down

standard rules of procedure for banking operations. In Greece, such temples are those of Ephesus and

Delphi, were the most powerful and biggest band of their time where the people deposited

their money and other callable for safety and security. The private bankers of Greece broughtbanking to a high state of safety and security. The private bankers of Greece brought banking to

a high state of development thorough lending. Banking became so popular in the business life

of Athens that a special body of law was developed covering all financial transactions. The

Romans organized and regulated the conduct of private banks in such a way that utmost

confidence was created in them. They were familiar with the use of cheques and bills of exchange.

The Sub-continent society was also quite familiar with banking system right from the beginning.

Borrowing and lending of money existed in this area between2000 and 1400 BC and the banking

institution existed in one form or the other. G.Crowther in his book an out-line of Money suggests that

bankers has three ancestors. Firstly; Gold Smiths, Secondly; merchants and thirdly; money

lenders.In Europe, Eastern Bankers were moneychangers. At that time, these peopletook anadvantage of the process and started keeping deposits of valuables and jewelries on the basis

of their sound financial position in the community. The origin of banking, which started in the

12th century after the fall of Roman Empire subsequently, developed with the development of

trade. The Jewish merchants of Lombard developed baking system. Many of these Lombard

(Merchants) migrated to England in the 14thcentury, were the pioneers of Banking. The Bank of

Venice established in the year 1157 or 1171 AD is perhaps among the first public banking institutions.

Other bands such as Back of Barcelona in Spain was founded in 1401, the Bank of Geneva (Italy) in 1407,

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the bank of Amsterdam in Holland was established in 1609.In England development of bank took place in the

days of Elizabeth-1. In 1640 public banking started. The Bank of England was established in 1694. In 1935,

Reserve bank of India was established. Quaid-e-Azam Mohammad Ali Jinnah inaugurated the State

Bank of Pakistan on 1stJuly 1948.

BANKING IN PAKISTAN

At the time of independence, the areas, which now constitute Pakistan, were producing only

food grains and agricultural raw material for Indo-Pakistan Sub-Continent. There were

practically no industries, and whatever raw material was produced was being exported from

Pakistan. However Commercial banking facilities were provided fairly well here. There were 487

offices of scheduled banks in the territories now constituting Pakistan. Therefore, in accordance

with the provision of Indian Independence. Act of 1947 an Export Committee was appointed to

study the issue. The Committee recommended that the Reserve Bank of Indian should continue

to function in Pakistan until 30thSep. 1948, so that the problems of time and demand liability,

coinage, currencies, exchange etc. are settled between India and Pakistan

INTRODUCTION

Habib Bank Limited

Mohammed Ali Jinnah,Pakistan's founding father, realized the importance of financial

intermediation while he was campaigning for the creation of a separate homeland for the

Muslims ofIndia.He persuaded the Habib family to establish a commercial bank that could

serve theIndian Muslim community. His initiative resulted in the creation of Habib Bank in1941, inBombay (nowMumbai), and fixed capital of 25,000 rupees. The bank played an

important role in mobilizing funds from the Muslim community to finance theAll-India Muslim

League's campaign for the establishment of Pakistan. Habib Bank also played an important role

in channeling relief funds to Muslims hurt in the communal riots and violence that preceded

the departure of the British from India.

After the formation of Pakistan in 1947, Habib Bank moved its headquarters to Karachi,

Pakistan's first capital, at the urging of Governor-General Jinnah. This gave Karachi its first

commercial bank of the newly formed Pakistan. The Habib family would own and manage the

bank until the Pakistan government nationalized it on 1 January 1974.

In the 1950s, the HBL started its international expansion. In 1951 it opened the first of what

would become three branches inSri Lanka.The next year HBL established Habib Bank

(Overseas). Then in 1956 HBL opened the first of five branches inKenya.
http://en.wikipedia.org/wiki/Mohammed_Ali_Jinnahhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Indian_Muslimhttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/All-India_Muslim_Leaguehttp://en.wikipedia.org/wiki/All-India_Muslim_Leaguehttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/Kenyahttp://en.wikipedia.org/wiki/Kenyahttp://en.wikipedia.org/wiki/Sri_Lankahttp://en.wikipedia.org/wiki/All-India_Muslim_Leaguehttp://en.wikipedia.org/wiki/All-India_Muslim_Leaguehttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Indian_Muslimhttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Mohammed_Ali_Jinnah

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On 13 June 2002, Pakistan's Privatization Commission announced that the Government of

Pakistan would grant theAga Khan Fund for Economic Development (AKFED), a subsidiary of

theAga Khan Development Network,majority ownership of HBL against an AKFED's investment

in the bank.

During 2002, HBL's UK operation came close to being shut down due to regulatory issues withthe Financial Services Authority. The issue was resolved by converting the operations to a

subsidiary. Then Habib Bank Limited andAllied Bank of Pakistan merged their operations (Habib

contributed its 6 branches and Allied its 4), into a new bank, called Habib-Allied International

Bank, in which Habib Bank has a 90.5% shareholding, while Allied Bank has 9.5%.

Simultaneously with the transfer of business to the new bank, both Allied and Habib Bank

closed down all independent operations in the UK. In 2003, HBL received permission to open a

branch inAfghanistan.

On 29 December 2003, Government of Pakistan granted AKFED rights to 51% of the

shareholding in the bank against an investment of PKR 22.409 billion (USD 389 million). The

next year, on 26 February, the government of Pakistan handed over management control of

Habib Bank to AKFED. The Board of Directors was reconstituted to have four AKFED nominees,

including the Chairman and the President/CEO and threeGovernment of Pakistan nominees.

The bank's owners now comprise the Aga Khan Fund for Economic Development (51%),

Government of Pakistan (42.5%), and the general public (7.5%).

Habib Bank Limited operates by the following Vision, Mission & Values:

Vision

"to be the premier organization operating locally and internationally that provides the

complete range of financial services to all segments under one roof"

Mission

"To develop and deliver the most innovative products, manage customer experience, deliver

quality service that contributes to brand strength, establishes a comparative advantage and

enhances profitability, thus providing value to the stakeholders of the bank"

Values

excellence

integrity

customer focus

meritocracy

progressiveness

social commitments
http://en.wikipedia.org/wiki/Aga_Khan_Fund_for_Economic_Developmenthttp://en.wikipedia.org/wiki/Aga_Khan_Development_Networkhttp://en.wikipedia.org/wiki/Allied_Bank_Limitedhttp://en.wikipedia.org/wiki/Afghanistanhttp://en.wikipedia.org/wiki/Government_of_Pakistanhttp://en.wikipedia.org/wiki/Government_of_Pakistanhttp://en.wikipedia.org/wiki/Afghanistanhttp://en.wikipedia.org/wiki/Allied_Bank_Limitedhttp://en.wikipedia.org/wiki/Aga_Khan_Development_Networkhttp://en.wikipedia.org/wiki/Aga_Khan_Fund_for_Economic_Development

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Allied bank limited

Allied Bank of Pakistan Limited is the first commercial bank established onPakistani soil. It has

emerged as an Australasia Bank on Dec. 3, 1942 at Lahore with paid up share capital of RS. 0.12

million in a motor garage under the chairmanship of Khwaja Bashir Bux with a staff of three.

Initially, it was little more than an agency for the collection of rents from the familyestate.Then, the tenants began to open accounts and the bank to make advancesagainst gold,

insurance policies, and merchandise. The Bank had attracted deposits, equivalent to RS. 0.431

million in its first eighteen months of business. Total assets then amounted to RS. 0.572 million.

Today, Allied Banks Authorized Capital is RS.5000 million, Paid up Capital & Reserves amount to

RS. 3012 million, Deposits come to RS. 93107 million and total assets equal to RS. 106926 million (as on

Dec. 31,1999). The Allied Banks story is one of dedication, commitment to professionalism,

adaptation to changing environment challenges resulting into an all round growth and stability,

envied and aspired by many. Later in 1973, Government of Pakistan decided to nationalize all banks

of the country and in the process, three smaller banks namely Sarhad Bank (Frontier

Based),Lahore Commercial Bank and Pakistan Bank were merged with a relatively bigger andstronger Australasia Bank. A joint force with fresh zeal and enthusiasm was emerged, named as

Allied Bank of Pakistan Limited. Being a National Bank, ABL kept moving forward steadily,

contributing towards economic growth of country. As time passed, our nation entered into the

phase of denationalization and privatization. During 1991,the Government of Pakistan decided

to privatize Allied Bank of Pakistan Limited. Prime Minister Mian Muhammad Nawaz Sharif

during his first regime handed over management of the bank to its own employees, as a unique

phenomenon in thecountry. At present the employees are acquiring 51% shares where as the

rest of 49%are held by Federal Government apart from holding 49% banks shares the

Government has also representation of 3 Directors in the total strength of 7 member of Board

of Directors of the bank who are fully and actively involved in the banksaffairs such as policy

making and other financial matters.

Today, with its existence of over 70 years, the Bank has built itself a foundation with a strong

equity, assets and deposit base. It offers universal banking services, while placing major

emphasis on retail banking. The Bank has a large network of over 900 online branches and 700

ATMs in Pakistan and offers various technology-based products and services to its diverse

clientele.

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Allied Bank Limited operates by the following Vision, Mission & Values:

Vision

"To become a dynamic and efficient bank providing integrated solutions in order to be the first

choice bank for the customers".

Mission

To provide value-added services to our customers.

To provide high-tech innovative solutions to meet customers requirements.

To create sustainable value through growth, efficiency and diversity for all stakeholders.

To provide a challenging work environment and reward dedicated team members according

to their abilities and performance.

To play a proactive role in contributing towards the society.

Values

Integrity

Excellence in Service

High Performance

Innovation and Growth

Business Volume

The business volume of bank comprises on deposits and advances of any bank so ABL Business

Volume Figures are as under for the year 2008 to 2010:

During 2010, the Group successfully embarked upon its strategy of increasing the proportion of

low cost deposits. Deposits grew by 13% to reach Rs. 371 billion as at December 31, 2010 over

the previous year with share of CASA improving on average volume basis from 53% during

2009 to 55% in 2010, there by managing. The cost of funds in contributing to improved

Profitability

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HabibBankLimited

Habib Bank Limited (HBL), Pakistans biggest IPO of Rs 12 billion in terms of value, will be

formally listed today at the Karachi Stock Exchange (KSE). This listing would further add Rs 162

bn to the banking sector market capitalization of nearly Rs 3,700 bn if we simply take the offer

price of Rs 235/share as a proxy. Pakistans banking.

Sector has already got the biggest share of 29% in the market capitalization of KSE and with this

listing it will increase up to 33%.

1. Our forecasted CY07 ROE of 27% which is also in line with high performing peer banks

viz. MCB Bank & United Bank (UBL)

2. Satiating 10% yield on earning assets

3. Presence of more than 80% low cost deposits and mere 4.2% weighted average cost on

remunerative deposits

4. Greater market share of fee-based income of 16% vis--vis peer banks

5. Management thrust on retail banking

6.

Strong brand equity.

On the flipside, recent draft circular by State Bank of Pakistan (SBP) regarding withdrawal of

forced sale value (FSV) facility on illiquid securities in taking provision coverage against non-

performing loans (NPLs) is a blow to HBL. HBL has relatively low provision coverage against

historical NPLs and we expect the bank to make more provisioning to the tune of Rs 5.2 bn that

could impair our CY07 EPS forecast of Rs 26.85/share.

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List of competitors:

Standard Chartered Bank

National Banks

MCB bank limited

UBL bank limited

Bank-al-Habib

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Branch Network:

Allied Bank Limited:

According to 2013 data of Allied bank 75 new branches and 176 ATMs were added at various

locations throughout the country that makes a total of 950 branches and ATM network to 794ATMs by end of 2013 and maintained a market share of 8.1% according to performance.

Branch Network

HBL BRANCHES

HBL has 1500 branches all over Pakistan.

ALLIED BRANCHES

Allied bank has 945 branches all over Pakistan.

Market Share of ABL according to performance:

ABL

8.10%

8%

Others in

industry

91.90%

92%

Market Share

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Market Share of HBL according to performance:

HBL is a market leader in all of the private scheduled banks in Pakistan with a market share of

40%

Strategic Planning

HBL

At HBL the significance of planning is not critical but also essential to its survival in the modern

day economy .In the light of economic conditions in Pakistan, HBL enlargement strategy aims at

preserving short and long-term deposits to minimize the rate of funds. HBL will continue to

make changes to the actions of their business, with a restructuring of the Consumer and Retail

Banking businesses already in progress. They will also continue to focus on reducing and

optimizing costs, making them a leaner organization that can accept to change much morerapidly.

HBL

40%

Others inindustry

60%

Market Share

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ABL

Bank continued the strategy of steady performance and growth to drive sustainable earnings by

further strengthening assets quality; through adoption of an effective risk management

approach; enhancing focus on introducing new customer centric, efficient and technologically

driven financial services while maintaining focus on quality of services; building Hi-tech on-linecommunication infrastructure; improving ambiance of branches and increasing foot print

through organic growth while controlling costs.

HBL Market Segmentation

With a customer base of 5 million and a network of more than 1,450 branches in Pakistan, HBL

is the largest private bank in the country. Their network means that they are geographically

closer to their customers than any other bank. This gives them the insights needed to provide avariety of products that directly reflects customers need. HBL caters to all market segments,

offering products that are as diverse as the people they service. They remain resolute in their

commitment to provide products that are competitive and services that are exemplary.

HBL MARKETING AND MANAGEMENT STRATEGIES

The all-embracing market presence sustained since 1947, provides HBL with a pragmatic

understanding of the regional monetary and fiscal dynamics. This complements the visionaryapproach pertaining to optimal monetary management. The proactive market assessment,

global alliance expansion, return maximization, and effective portfolio diversification has aided

HBL to set challenging standards for market players.

Committed to attain professional excellence, the initial monetary management strategy at HBL

pertained to operating as decentralized functional units. These specialized functions were

categorized as Investment Unit and Foreign Exchange Unit. Investment Unit focused on

managing the local currency portfolio while Foreign Exchange Unit specialized in managing

foreign currency portfolio.

ABL Marketing

Enhanced customer services and product offerings of Your Bank have been the driving force

behind strong growth in total assets which crossed Rs. 700 billion mark at the close of 2013.

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Wide range of alternate delivery channels, including 794 ATMs, internet banking, mobile

banking and call center services remained instrumental in providing quality services with

convenience to their valued customers. Accessibility to Your Banks products and geographical

outreach is growing as a result of continuously expanding branch network of over 950

branches.

Marketing Innovation

Banks Customer base continues to broadenthrough introduction of innovative products like

SMS Banking and extended banking hours at select branches nationwide. With the high growth

of mobile usage in the country, technology based products and service offerings shall continue

to be the key ingredient in Your Banks endeavors to create value added offerings for its

customers, also serving the broader objective of greater financial inclusion.

ABL SME Segmentation

ABL cater all market segments. Upper to lower income class with different product packages.

Youth and childrens are cater by saving accounts so that they can develop saving habits.

ABL has realigned its focus towards SME Business with a vision to capitalize on the banks

countrywide footprint and long-standing customer loyalty to become a preferred cum prudent

provider of a Total Banking Solution to the Small & Medium Market segment. With this

renewed focus and strategy, ABL offers its customers a wide range of products & services,

meeting the needs of various types of businesses. Having best available technology and a

branch network spread across the country, we are well positioned to cater to all sorts of

business specific requirements

Communication Channels

Advertising is a one way communication with customers. Both banks use the following

communication channels to address their customers with their products and services.

TV

News Paper

Radio

Emails

Telephone Calls

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Revenue& Expenses of HBL Bank:

HBLprofits surge 11% to Rs17.4 billion.Core earnings of the bank, the net interest income, grew

18% to Rs84.6 billion on the back of higher earning assets.

Increase in non-interest income to Rs11.5 billion also supported the bottom-line of the bank.

Resultantly, total income of HBL hit Rs96 billion in the period under review.

Provisioning expense was cut down 35% to Rs3.6 billion from Rs5.6 billion, reflective in the

banks earnings. The result was in line with market expectation as analysts expected net profit

to stand, on average, at Rs17.3 billion.

During the period, HBL became the first bank to cross the Rs1-trillion mark in deposits, a

remarkable feat. On the other hand, interest expense jumped 34% attributable to higher costs

of deposits.

Revenues and Expenses of Allied Bank:

Allied Bank earned after tax profit ofRs. 14,643 million during the year ended December 31,

2013 as compared to Rs. 11,641 million in the previous year, a YoY growth of 25.8%. EPS of your

Bank increased to Rs. 14.07 in 2013 compared to Rs. 11.18 in 2012. The ROA and ROE of the

Bank remained strong at 2.1% and 29.9% in 2013 compared to 2.03% and 28.4% in 2012,

respectively.

Further on account of retrospective adoption of the IAS -19 Employee Benefits, the Balance

Sheet footing of December 31, 2012 and December 31, 2011 has been restated upwards by Rs

1,460 million and Rs 221 million respectively. As a result of this retrospective impact, the un

appropriated profit/reserves for the year 2012 and 2011 has also been restated upwards by Rs

1,122 million and Rs 192 million respectively.

Habib Bank Limited Products And Services HBL:

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
http://tribune.com.pk/story/459043/hbl-profits-surge-11-to-rs17-4-billion/http://tribune.com.pk/story/459043/hbl-profits-surge-11-to-rs17-4-billion/http://tribune.com.pk/story/459043/hbl-profits-surge-11-to-rs17-4-billion/http://tribune.com.pk/story/459043/hbl-profits-surge-11-to-rs17-4-billion/

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Services:

Retail Banking

The Retail Banking network, with 1425 branches, is the core strength of

Habib Bank. The network provides HBL with the largest diversified low cost deposit base of

any bank in Pakistan, and forms the basis for many of our other business lines: corporate and

investment banking and treasury activities. The network provides HBL with the largest

diversified low cost deposit base of any bank in Pakistan, and forms the basis for many of our

other business lines: corporate and investment banking and treasury activities.

Commercial Banking

Enterprises operating in the middle market contribute significantly to the

economy of a country. During FY-2000 HBLs management decided to address this issue.

On November 1, 2000 Commercial Banking came into being.

The objective of setting-up Commercial Banking was two-fold:

1. First to stop the erosion of market share in the middle market;

2. Second, to regain the lost market share

Commercial Banking is making headway with improvement not only in terms of the business

figures but also in its ambiance. Renovation of is being carried out in order to give a

Professional look to all the Commercial Banking Centers.

Corporate Banking

The Corporate Banking Group serves large institutional customers who

require sophisticated products in an environment of intense competition. HBL Corporate &

Investment Banking Group is now recognized as a market leader and regularly arranges and

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Participates in most large structured finance deals.

International Operations:

HBLs ability to operate successfully in diversified markets and cultures is

a function of a long history in international bankingwhen first international branch was

opened in 1951. The Banks branches in financial centers continue to provide efficient trade

settlement and reimbursement services to the entire network and business with other banks.

1.

Credit Cards

Welcome to a world of convenience, flexibility and opportunity. The HBL Credit Card will add

simplicity and excitement to your life. Accepted at over 24 million merchants worldwide, HBL

Credit Card makes shopping fun and paying simple. Make the most out of your shopping

experience with your very own HBL Credit Card.

Gold Card Green Card

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i. Convenience

ii.

Security

iii.

Affordability

iv.

Cash Advance

v.

Balance Transfer Facility

vi.

Internet shopping

i.

Convenience

Instead of paying with cash, simply present your HBL Credit Card to the shopkeeper and

pay for anything you want.

Bill Payments

We'll pay your bills on your behalf and charge the amount to your HBL Credit Card. You

can give one-time standing instructions to pay your monthly bills. Check the amount in

your monthly card statement and make the payment with your regular card payment.

SMS Alerts

For all transactions, an SMS alert will be sent to you on your mobile phone to confirm

that the transactions have been conducted by you. A nominal fee will be charged for

this service.

E-Statements

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You can enroll for an e-statement with a simple call. An e-statement with details of all

your transactions will be sent to your specified email address every month. You wont

have to wait for your paper statement any more or have to worry about storing it.

Statement by Fax

HBL Credit Card also offers the facility of receiving your card statement by fax. Just give

us a call and your last card statement will be faxed to you at the fax number specified by

you

ii.

Security.

HBL Credit Card ensures your money stays completely secure. You cannot lose cash if

you dont carry it. In the unlikely event that your card is stolen, call us at HBL Phone

Banking and your card will be blocked immediately.

iii.

Affordability

Buy Now, Pay Later

HBL Credit Card gives you the flexibility to buy what you want, when you want and pay

for it later. A credit card statement will be sent to you every month with details of all

your purchases. You will have 21 credit free days to make the payment from the

statement date. Please pay at least 3 days in advance if you make your payment by

cheques to allow enough time for clearance.

Pay As Much As You Want

You have the freedom to pay the entire outstanding amount on your card statement or

as little as 5% of the outstanding balance in your statement. The remaining amount will

be transferred to next months statement. A nominal service charge will be applied to

the unpaid amount each month.

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HBL Car Loan helps you get your preferred car through a simple and hassle-free process,

backed by superior service and support. Now you can drive a car you always wanted.

Car Showroom Car Navigator

Choice of either a new local/imported car or a reconditioned imported car.

Repayment options ranging unto 7 years.

Upton 85% of financing for the car of your choice.

Insurance at all times for complete peace of mind and security.

Round the clock support available through

3.

HBL Phone Banking;

PHONE BANKING
http://www.habibbankltd.com/individual-customers-phone-banking.php#2http://www.habibbankltd.com/individual-customers-phone-banking.php#2http://www.habibbankltd.com/individual-customers-phone-banking.php#2

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Your bank is just a phone call away. You can now call HBL Phone Banking and save a trip to the

branch. Your query will be resolved in a single telephone call from anywhere and at anytime.

You can place your requests and queries, track the status of your repayment/loan account

and avail other value-added services through HBL Phone Banking.

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Eligibility Criteria

Salaried Individuals

Self-Employed

Business persons/Professionals

Citizenship Pakistani Pakistani

Age 22-60 years 22-65 years

Minimummonthly income

Rs. 20,000 Rs. 25,000

Documentation

Salaried Individuals

Copy of CNIC

2 recent passport size photographs

Latest original salary slip and personal bank statement for last 3 months

Self-Employed Business persons/Professionals

Copy of CNIC

2 recent passport size photographs

Bank statement for last 6 months and bank letter confirming details of account

Proof of business

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Home Loan

HBL yet not offered home loan in the future the management of the HBL will

Offered Home loan also.

Types of accounts offered by the bank

Term Accounts

HBLs Term Accounts are offered in a variety

of tenure with deposits as low as Rs.10, 000.

HBL Advantage Account

Term Profit

10 year 18%

5 year 15%

3 year 14%

1 Year 12%

Multiple options for tenure and profit payout

Loan facility up to 90% of deposit

Minimum required investment as low as Rs. 25,000

Special Notice Time Deposit

7 days or 30 days (and over) notice

Minimum deposit of Rs. 10,000

Balances less than Rs. 1 million

Balances equal to and greater than Rs. 1 million

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Returns range from 0.75% to 4% depending on notice period and amount

Term Deposit Receipts

3 month term deposit

Minimum balance of Rs. 10 million

Returns range from 0.75% to 2.25%

IPDC

Minimum investment of Rs. 20 million except in the case of 1 month where

minimum investment is Rs. 100 million

Available in 1 month, 3 month, 6 month, 12 month and 3 year terms

Profit paid on maturity

Rates on IPD are conveyed on a daily basis by the Treasury Division

Remittance Munafa plus Deposit (Certificates)

Available in 1 year, 3 year and 5 year certificates

Profit disbursement is monthly, quarterly, bi-annually, annually and on maturity

Profit paid on maturity

Returns range from 7.8% to 11%

Current Account

Non-profit bearing

No transaction limits

Minimum balance of Rs. 10,000. If the average balance falls below this

amount, then service charges will be deducted

No restriction on anyone opening a Current Account (as long as regulatory

Guidelines are met)

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Basic Banking Account (BBA)

No minimum balance

No service charges

Savings Account

Profit paid bi-annually

Minimum average balance of Rs. 10,000

5% profit per annum

HBL Value Account

7% profit per annum*

Profit credited every 3 months

Deposit ranges from Rs. 10,000 to Rs. 100,000

Flexibility of withdrawals

HBL Supervalu Account

7.25% profit per annum*

Profit credited every 3 months

Deposit ranges from Rs. 100,000 to Rs. 500, 00

Flexibility of withdrawals

Remittance Munafa Plus Saving Account

Remittance Based (no credit allowed except remittance)

Daily Basis Product

Tiered

Monthly profit

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Minimum average balance of Rs. 10,000

Less than Rs. 20,000 earns 0.10% profit

Rs. 1 million and above earns 5% profit

Special Saving Bank Deposit Scheme

Daily Basis Product

Tiered

Monthly profit

Minimum balance of Rs. 20,000

Returns unto 8%

Daily Munafa plus Deposit Account

Daily Basis Product

Tiered

Monthly profit

Minimum balance of Rs. 50,000

Returns unto 8%

FC-SB

Savings Account offered in 3 currencies, USD (US dollar), EUR (Euros) and GBP (UK

pound)

Tiered product, with rates depending on choice of currency

To earn profit, minimum balance in USD, EUR and GBP is 1,000

Interest is payable on a quarterly basis

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Allied Bank Product and Services

Deposit Accounts Current Accounts

PLS Saving Accounts

Term Deposits

Short Term Deposits

Special Notice Deposits

Call Deposit Receipts

Money Transfer Services

Bank Drafts (DD)

Mail Transfers (MT) Allied Express Money Transfers

Letter of Authority to EncashCheques

Collections

Cheques

Bills

Drafts / Pay Orders And Other Instruments

Dealing in Foreign Exchange

Foreign Currency Accounts

Foreign Remittances

Trade Finance

Guarantees

Sale & Purchase of FC Notes / TCs.

Foreign Currency Loans

Correspondent Banking

Government Receipts / Payments

Tex Collection

Pension Payment

Safe custody & sage deposit services

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Safe Custody And Safe Deposits of Securities & Valuables

Safe Deposit Lockers

Utility Services

Collection of Utility Bills

OTHER SERVICES AT ALLIED BANK

Hajj Services

Hajj Service at Allied Bank is available to all pilgrims. The forms and other related services are

provided by the Bank. Hajj applications are available with all branches during Hajj season,

immediately after the Hajj policy is announced by the Government of Pakistan

Demand draft

Demand draft is a popular banking instrument in the trade circles to transfer funds from one

place to another. Allied Bank offers speedy issuance and payment of drafts at the branches.

PAY ORDER

Our customers can walk-in to any Allied Bank branch and make Pay Order to transact payment

to a named payee.

Allied BankersCheque

Allied BankersCheque (ABC) replaces traditional payment instruments like Demand Drafts and

Pay Orders. This instrument provides added assurance as its unlikely to be returned unpaid due

to lack of funds.

The bank provides its customer various products & services, to cater there need of investments,

and other social or business requirements. These Product & Services offered by the bank are as

follows:

LOAN FOR COMPUTER

Now a days ABL is also standing with the government of Pakistan in spreading the IT education

through financing in the purchase of computer. ABL provides computer to those professionals

who are interested to get computer related education.
https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/https://www.abl.com/services/other-services-at-allied-bank/allied-bankers-cheque/

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ABL finances 80% of total cost while,

The clients have to bear 20% of total cost.

Markup is 14%

And the repayment period is 5 years.

TRAVELER CHEQUES

Allied Bank issues Traveler Cheques both in foreign currency and in Pak

Rupees. The traveler Cheques issues in foreign currency are calledABL

TravelerChequeswhilethose issue in Pak Rupees are known as ABL Rupee Traveler Cheques.

DENOMINATION

ABL Rupee Traveler Cheques are issued in the denominations of Rs 1,000, Rs. 5,000, Rs 10,000

and Rs. 50,000.

SERVICE CHARGES

The bank charges Rs 20 on the issuance of traveler cheque of any denomination.

REQUIREMENT

The Bank requires Identity Card on the issuance of the Traveler Cheque.

VERIFICATION

Client makes one sign on the Traveler cheque when he is purchasing it and the other sign is

made when he will cash the cheque.

LOCKER FACILITY

The list of Lockers is maintained in the register. In this register the name of locker holder is

mentioned along with the locker number. The key is provided to the locker holder called the

Normal or Ordinary key. The Bank keeps himself one key himself. When the locker holder wants

to operate to the locker, then he will operate the locker firstly entering the name in the register

along with the initials. The date and time of the transaction will also be recorded in the register.

Then the leaving time will also be recorded in the register.

Criteria for Acquisition of Locker

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There are certain criteria for acquiring the locker facility.

OPENING FARM

There are opening farms, which are filled by the client to get the locker facility. In this form the

name is mentioned along with the signatures of the locker holder. In the locker number is also

mentioned on the farm.

SECURITY

Certain security is kept by the while providing the locker facility. This security is in shape of the

cash.

SIZES OF LOCKERS

There are four sizes of lockers, small, medium, large, or extra large, on which certain security ismade and the locker holder pays the following amount of rent annually.

Locker Size Security Rent

Small Rs. 1,500 Rs. 750

Medium Rs. 3,500 Rs. 1500

Large Rs. 5,000 Rs. 2500

The key, which is with the Bank, is called Master key and the key, which is kept by the holder, is

called normal key. A locker cannot be operated with one single key. Both the master and

normal keys are required for operating the lockers. If the key is lost from the locker holder,

then the locker holder will pay the entire recovery fee and the client launches FIR. If person

wants to operate the locker, he will operate it alone.

ALLIED BANK MASTERCARD

Types of MasterCard

Allied Bank issues two types of MasterCard.

Local MasterCard

International MasterCard

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The normal limit of local MasterCard is Rs. 25,000, but it can be extended uptoRs. 50,000 only

for creditworthy customers. The maximum limit of International MasterCard is Rs. 100,000. The

Bank charges 8 to 10 % commission on the used amount.

Its the anytime shopping card

Having the ABL MasterCard is likely having an account with hundreds of shops, restaurants, and

hotel outlets all over Pakistan and abroad. The client no longer waits for his bonus to start

shopping.

Lost card liability

If ABL MasterCard is lost or stolen, the cardholder will have to bear only the first Rs. 100 from

the amount misused, provided the Credit Card Division of the Bank is notified immediately.

Its Free Credit Card

If the total outstanding amount is settled by the due date, (approximately 15 days from the

statement date), no mark-up is charged. This means that you enjoy a maximum of 45 days of

frees credit from the date of transaction.

Free Personal Accident Insurance

As a holder of prestigious ABL MasterCard, the Bank covers the client with the personal

accident insurance value that Rs. 50,000/- in case of death or permanent disability.

Its an Instant Cash Card

ABL MasterCard enables the cardholder to obtain the cash advance from his MasterCard

account from any designation branch of ABL during banking hours, at a two percent service

charge.

Extra Cards. Supplementary +

As an ABL MasterCard holder, client can receive the extra cards with different names and

signatures for two other eligible persons of his immediate family nominated by the clienthimself may be his spouse. The two cards are absolutely free any membership fee.

Its the Invaluable Expense Planner

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The sales slip client receives any time, when he makes a purchase and his monthly statement

helps him to plan out his monthly expenses. Thus the client will never overshoot his Budget

while holding the ABL MasterCard.

RATE OF CHARGES

Local Card Rate of Charges

Membership fee Rs 500 (flat)

Annual fee Rs 1,000 (flat)

Supplementary card fee Rs 500 per card

Cash advance 2.5 % per transaction

Replacement fee Rs 350

International Card rate of Charges

Membership fee Rs 500 (flat)

Annual fee Rs 1,500 (flat)

Supplementary card Rs 750 per card

Cash advance 2.5 % per transaction

Forex markup 1.25 %

Replacement fee Rs 350

UTILITY SERVICES

The banks also provide its customers the non-banking services, such as Collection of Utility bills,

etc.

Utility bills can be paid through cash or cheques drawn on any branch of the branches at their

convenience under "Cheque Drop-in" system. The Bank mails the bills after payment to the

consumer.

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SWOT ANALYSIS OF HBL

STRENGTHS:

Goodwill & historical background Professional and well trained staff

Largest customer base

HBL is Pakistan's largest commercial bank

HBL has a domestic network of 1,425 branches with an international network of 48

branches in 26 countries

20% share of HBL in financial market

Large Balance sheet size

Decentralized authority

WEAKNESSES:

Unfavorable union activities and management conflicts

Checking System is at intra-department level

Weak marketing policies

Nepotism & Favoritism

Infected portfolio still exists as bad debts

Centralized management in particular areas

OPPORTUNITIES:

Opportunities for growth and expansion in cash management.

Faster market growth represents opportunity to grow and diversify

Restoration of investor's confidence and pick up in private sector investment flows.

Large deposit base and funds flow can help to avail related market opportunities

THREATS:

Adverse & unstable government policies

Political instability

Advance technology

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Competition from other banks

SWOT ANALYSIS OF ABL

STRENGTHS

Allied bank has maximum number of branches in all over Pakistan.

Allied Bank has many products for almost all type of customers.. ATM and Credit cards,

online transfer, DD, TT, Rupee Traveler cheques are the main products available for customers.

Allied bank is providing the facility of online banking.

The online banking feature provides less chances of fraud. Because whenever some

transactions take place, they can be checked any time and their receipts are receipts are

given to the customers. Moreover, to prevent illegal acts, the person who transfers anyamount submits his copy of NIC to the bank.

Allied bank is the only bank that provides the lockers facility to their customers at their all branches.

Allied bank has customer care center for its customers.

Allied bank provides the facility of foreign exchange to its customer. The customers may also open their

accounts in foreign currency.

At Allied bank the customers the person who has more than one account can have the

facility of the same account number only the suffix is changed.

For employees the relaxation is that the employees may get the 36 medical leaves and1-

month vacation in one year with their pay in case of some emergency.

Cameras are installed in all the branches of the bank to ensure security of its customers and employees.

Allied bank offers loans to its customers on very low rates. This thing invites the customers to do a business

with ABL.

The staff of the ABL is very much cooperative. This thing enhances its performance very much by facilitating

its customers and also by helping colleagues and sharing workload.

WEAKNESSES

There are mostly no annual increments to employeessalary.

Late promotions

Low product credibility.

OPPORTUNITIES

The Allied Bank is having a great opportunity to emerge as the best bank of the country by

giving best possible services to its customers. The banking sector is improving day by day

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and consumer banking is making great revolutions in the banking sector. Allied Bank is still

working in the corporate sector and its missing a big market share ofconsumer

banking. If it enters this market then this bank can become the biggest and the most efficient

bank of Pakistan.

THREATS Allied Bank has the threats from their competitors in the banking sector, from the

Government policies and from the current economic conditions of the country: The main competitors

in the banking sector are the Bank-Alfalah, Faysal Bank, Muslim Commercial Bank, Prime

Commercial Bank etc

Government policies

Political circumstances.

Trade and industry conditions.

Financial Ratio

Liquidity Ratios

Liquidity ratios measure a firmsability to meet its current obligations. These include:

Current Ratio: Current Ratio = Current Assets / Current Liabilities

This ratio indicates the extent to which current liabilities are covered by those

assets expected to be converted to cash in the near future. Current assets normally includecash, marketable securities, accounts receivables, and inventories. Current liabilities consist

of accounts payable, short-term notes payable, current maturities of long-term debt, accrued

taxes, and other accrued expenses. Current assets are important to businesses

because they are the assets that are used to fund day-to-day operations and pay

ongoing expenses.

HABIB BANK

Year 2006 2007 2008Current Assets 575611106 671597594 731954693

Current Liabilities 480455832 566659483 631948038

Current ratio 1.20 1.19 1.16

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ALLIED BANK

Year 2006 2007 2008

Current Assets 265182551 316972828 335217471


Current ratio 1.06 1.10 1.06

Interpretation

HABIB BANK

The current ratio for the year 2006, 2007 & 2008 is 1.20, 1.19 & 1.16 respectively, compared to

standard ratio 2:1 this ratio is lower which shows low short term liquidity efficiency at the same

time holding less than sufficient current assets mean inefficient use of resources

ALLIED BANK

The ratios for the last 3 years are 1.06, 1.10 & 1.06, shows below standard of which means

efficient use of funds but at the risk of low liquidity.

Sales to Working Capital:

Sales to Working Capital = Sales / Working Capital

Sales to working capital give an indication of the turnover in working capital per year. Alow

working capital indicates an unprofitable use of working capital.

HABIB BANK

Year 2006 2007 2008Sales 43685740 43685740 63305033

Working Capital 95155274 104938111 100006655

Sales to working 0.5times 0.5times 0.6times

ALLIED BANK

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Year 2006 2007 2008

Sales 21191470 25783871 31046583

Working Capital 15276529 30128884 19741302

Sales to working 1.38 0.85 1.57

.

Interpretation

HABIB BANK

This liquidity ratio for the years 2006, 2007 & 2008 is 0.5, 0.5& 0.6 times respectively,

Compared to standard ratio 2:1 this ratio is lower which shows low short term liquidity

efficiency at the same time holding less than sufficient current assets mean inefficient use of

resources

ALLIED BANK

The ratios for the last 3 years are 1.06, 1.10 & 1.06, shows below standard of 2:1 which means

efficient use of funds but at the risk of low liquidity

Working Capital

Current AssetsCurrent Liabilities

A measure of both a company's efficiency and its short-term financial health. Positive

working capital means that the company is able to pay off its shortterm liabilities.

Negative working capital means that a company currently is unable to meet itsshort-

term liabilities with its current assets (cash, accounts receivable and inventory).Also known as

"net working capital", or the "working capital ratio".

HABIB BANK

Year 2006 2007 2008Current Assets 575611106 671597594 731954693


Working Capital 95155274 104938111 100006655

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ALLIED BANK

Year 2006 2007 2008

Current Assets 265182551 316972828 335217471


Working Capital 15276529 30128884 19741302

Interpretation

HABIB BANK:

It is very clear from the above calculations that the working capital of the bank is gradually

increasing over the years, which shows good short term liquidity efficiency.

ALLIED BANK:

This ratio increased to a great extent in 2007, almost double of the year 2006 but later on

In the year 2008 it went down again.

Leverage Ratios:

By using a combination of assets, debt, equity, and interest payments, leverage ratios are

used to understand a company's ability to meet it long term financial obligations.

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

leverage depends on a lot of factors such as availability of collateral, strength

of operating cash flow and tax treatments. Thus, investors should be careful aboutcomparing

financial leverage between companies from different industries. For example companies in the

banking industry naturally operates with a high leverage as collateral their assets are easily

collateralized.

These include:

Time Interest Earned:

TIE Ratio = EBIT / Interest Charges

The interest coverage ratio tells us how easily a company is able to pay interest expenses

a s s o c i a t e d t o t h e d e b t t h e y c u r r e n t l y h a v e . T h e r a t i o i s d e s i g n e d

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to un de rs ta nd th e amount of interest due as a function of companys earnings

before interest and taxes (EBIT).This ratio measures the extent to which operating income

can decline before the firm is unable to meet its annual interest cost.

Interpretation

HABIB BANK

Ratio analysis shows that, this company has covered their interest expenses 2 . 4 3 t i m e s i n

2 0 0 6 , 1 . 7 9 t i m e s i n 2 0 0 7 a n d 1 . 8 t i m e s i n 2 0 0 8 . I t m e a n s t h e y

h a v e performed pretty much same in 2007 and 2008, but has taken a different

look in 2006.As in 2006 they issued a little high number of long-term loans and

does not have good liquidity position, their EBIT became high thus making TIE a little high as

well

ALLIED BANK

We can see that, this company has covered their interest expenses 1.16 times in

2006, 1.27 times in 2007 and 1.08 times in 2008. It means they havent improved

in the past years.

Debt Ratio:

Debt Ratio = Total Debt / Total Assets

T h e r a t i o o f t o t a l d e b t t o t o t a l a s s e t s , g e n e r a l l y c a l l e d t h e d e b t r a t i o ,

m e a sur e s t he percentage of funds provided by the creditors. The proportion of a firm's total

assets that are being financed with borrowed funds. The debt ratio is calculated by

dividing tota l long-term and short-term liabilities by total assets. The higher the ratio,

the more leverage the company is using and the more risk it is assuming. Assets and liabilities

are found on a company's balance sheet.

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HABIB BANK

Year 2006 2007 2008

Total debt 536848102 628754092 682747953

Total Assets 590291468 691991521 757928,89

Debt Ratio 0.91 0.91 0.9

ALLIED BANK

Year 2006 2007 2008

Total debt 263443596 312675308 331946025

Total Assets 275685541 328895152 348990764

Debt Ratio 0.95 0.95 0.95

Interpretation:

HABIB BANK

Calculating the debt ratio, we came to see that this company is highly leveraged one

ALLIED BANK

Calculating the debt ratio, we came to see that this company is highly leveraged one

Current Worth / Net worth Ratio:

Current Worth to Net worth Ratio= Current Worth / Net worth Ratio

We can calculate current worth and net worth by using following formulas:

Current Worth

= Total Current AssetsTotal Current Liabilities

Net Worth

= Total Assets - Total Liabilities

Interpretation

HABIB BANK

This ratios continuously decreasing in the last three years. In 2006 it was 1.78, in 2007 it was

1.66 and in 2008 it was 1.33.

ALLIED BANK

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This ratio was as high as 1.2 among three years. However, it declined to 1.15 in the year 2008.

In 2007 the ratio somewhat increased to 1.85.

Total Capitalization Ratio:

Total Capitalization Ratio = Long-term debt / long-term debt + shareholders' equity

The capitalization ratio measures the debt component of a company'scapital structure,

or capitalization (i.e., the sum of long-term debtliabilitiesandshareholders' equity)tosupport a

company's operations and growth. Long-term debt is divided by the sum of long-term debt and

shareholders' equity. This ratio is considered to be one of the more meaningful of the "debt"ratios - it delivers the key insight into a company's use ofleverage.

HABIB BANK

Year 2006 2007 2008

Long Term debt 56392270 62094609 50799915

Long term debt + Equity 101569934 117157734 122080817

Capitalization Ratio 0.56 0.53 0.42

ALLIED BANK

Year 2006 2007 2008

Long Term debt 13537574 25831364 16469856

Long term debt + Equity 24110179 39598037 31078379

Capitalization Ratio 0.56 0.65 0.52

HABIB BANK

It is obvious from the above calculations that there is a gradual fall in this ratio over the years.

ALLIED BANK

The ratios for the last 3 years are 0.56, 0.65 and 0.52. Shows below standard of 2:1
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Net Profit Margin:

Net Profit margin = Net Profit / Sales x 100

Net Profit Margin gives us the net profit that the business is earning per dollar of sales. This

margin indicates the profit after all the costs have been incurred it shows that what% of

turnover is represented by the net profit. An increase in the ratios indicates that a firm is

producing higher net profit of sales than before

HABIB BANK

Year 2006 2007 2008

Net Profit 1762691 3130229 1301301

Sales 21191470 25783871 31046583

Net Profit Margin 8.31% 12.1% 4%

BANK ALLIED

Year 2006 2007 2008

Net Profit 12700315 10084037 15614020

Sales 43685740 50481021 63305033Net Profit Margin 29.07% 19.97% 24.66%

Interpretation

HABIBBANK

Therefore, the Net Profit Margin was 8.31% in 2006, increase to 12.1% in 2007 and then

decrease to 4% in 2008

BANK ALLIED

Therefore, the Net Profit Margin was 29.07% in 2006, decrease to 19.97% in 2007 and then

again increased to 24.66% in 2008

Return on Assets:

Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100

ROA, Ameasure of acompany's profitability,equal to afiscal year'searnings divided by its

total assets,expressed as apercentage.This is an important ratio for companies deciding

whether or not to initiate a new project. The basis of this ratio is that if a company is going to
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The Return on Equity was maximum in 2006 but decreased in 2007 and went down more i n

2008. This again may have happened due to the issue of more long-term debt in

2007and 2008.

ALLIED BANK

The Return on Equity was maximum in 2007 but decreased to an extent in the following years

2007 and 2008. This again may have happened due to the issue of more long-term debt in 2007and 2008.

Detail of Operating Assets of Habib Bank Limited

2008

Operating Assets:

Cash and balances with treasury banks 56533134

Balances with other banks 39307321

Operating fixed assets 14751252110591707

2007

Operating Assets:




97259620

2006Operating Assets:




94,230,402

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ALLIED BANK

Detail of Operating Assets of ALLIED BANK LIMITED





51094302





59739440

2006

Operating Assets:




68041671

HABIB BANK

Year 2006 2007 2008

Net Profit 12700315 10084037 15614020

Operating Assets 94230402 97259620 110591707

Return on Operating Assets 13.48% 10.37% 11.19%

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ALLIED BANK

Year 2006 2007 2008

Net Profit 1762691 3130229 1301301

Operating Assets 51094302 59739440 68041671

Return on Operating Assets 0.034 0.052 0.019

Market Ratio:

Market Value Ratios relate an observable market value, the stock price, to book values

obtained from the firm's financial statements.

Dividend per ShareDPS:

Dividend per Share = Total amount of Dividend Number of outstanding shares

Per share capital = 10 per share

Or

No. of shares outstanding = share capital / 10

HABIB BANK

Year 2006 2007 2008

Total amount of Dividend 691350 1381000 2730251

Number of Shares 690000 690000 759000

Dividend per Share 1.0019 2.0014 3.597

ALLIED BANK

Year 2006 2007 2008

Total amount of Dividend 00 00 975000

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Number of Shares 500000 650000 799500

Dividend per Share 00 00 1.21

Note: There is no dividend paid by the bank in the year 2006 and 2007

Earnings per Share- EPS:

Earnings per Share = Profit after Taxation

Number of Shares

The portion of a company's profit allocated to each outstanding share of common stock.

Earnings per share serve as an indicator of a company's profitability. Earnings per share are

generally considered to be the single most important variable in determining ashare's price. It is also a major component used to calculate the price-to-earnings valuation

ratio.

HABIB BANK

Year 2006 2007 2008

Profit after Taxation 12700315 10084037 15614020

Number of Shares 690000 690000 759000

Earnings Per Share 18.41 14.61 20.57

BANK ALLIED

Year 2006 2007 2008

Profit after Taxation 1762691 3130229 1301301

Number of Shares 500000 650000 799500

Earnings Per Share 3.525 4.815 1.627

Price / Earnings Ratio:

Price / Earnings Ratio = Stock Price Per Share Earning Per SharesThe Price-Earnings Ratio is calculated by dividing the current market price per

share of the stock by earnings per share (EPS). (Earnings per share are calculated by dividing

net income by the number of shares outstanding.)Th e P/ E Ra t i o in d i c a t e s ho w mu c h

in ve st or s ar e wi l l in g to pa y pe r do ll ar of cu rr en t earnings. As such, high P/E

Ratios are associated with growth stocks. (Investors who are willing to pay a high price for a

dollar of current earnings obviously expect high earnings in the future.) In this manner,

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the P/E Ratio also indicates how expensive a particular stock is. This ratio is not

meaningful, however, if the firm has very little or negative earnings. The Price-

Earnings Ratio is calculated by dividing the current market price per share. Of the stock by

earnings per share (EPS). (Earnings per share are calculat ed by dividing net income by

the number of shares outstanding.) The P/E Ratio indicates how much investors are willing to

pay per dollar of current earnings. As such, high P/E Ratios are associated with growthstocks. (Investors who are willing to pay a high price for a dollar of current

earnings obviously expect high earnings in the future.) In this manner, the

P / E R a t i o a l s o i n d i c a t e s h o w e x p e n s i v e a p a r t i c u l a r s t o c k i s . T h i s r a t i o

i s n ot meaningful, however, if the firm has very little or negative earnings.

HABIB BANK

Year 2006 2007 2008Stock price per share 10 10 10

EPS 18.41 14.61 20.57

Price / Earning Ratio 0.54 0.68 0.49

ALLIED BANK

Year 2006 2007 2008

Stock price per share 10 10 10

EPS 3.525 4.815 1.627

Price / Earning Ratio 2.83 2.07 6.14

Interpretation

HABIB BANK

The P/E ratio was 0.54 times in 2006 and increased further to as high as 0.68 times in the

following year. However, in 2008 it declined to 0.49 times which is an alarmingsign al for the potential investors.

ALLIED BANK

The P/E ratio was 2.83 times in 2006 and decreased a little bit in 2007. However, in

2008 It increased as much higher than before to 6.14 times.

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Dividend Payout Ratio:

Dividend Payout Ratio = Dividend per Share/ Earning per Share

The percentage of earnings paid to shareholders in dividends. The payout ratio

providesan idea of how well earnings support the dividend payments. More maturecompanies

tend to have a higher payout ratio. This ratio identifies the percentageof earnings (net income) per common share allocated to paying cash dividends toshareholders.

The dividend payout ratio is an indicator of how well earnings support the dividend payment.

HABIB BANK

Year 2006 2007 2008

DPS 1.0019 2.0014 3.597

EPS 18.41 14.61 20.57

Dividend Payout Ratio 0.0544 0.137 0.175

ALLIED BANK

Year 2006 2007 2008

DPS 00 00 1.21

EPS 3.525 4.815 1.627

Dividend Payout Ratio 00 00 0.74

Statement of cash flow:

Cash flow ratios indicate liquidity, borrowing capacity or profitability. This section of the

financial ratio looks at cash flow indicators, which focus on the cash

being generated in terms of how much is being generated and the safety net that it provides

to the company. These ratios can gi ve users another loo k at t he f inancial health and

performance of a company.

Allied Bank

Balance Sheet 2008 2007

Assets Rs (millions) Rs (millions)

Cash and balances with

treasury banks

6 23,653,754 29,739,857

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Balances with other banks 7 2,096,779 668,449

Lendings to financial

institutions

15,793,183 18,419,241

Investments 82,631,118 83,958,463

Advances 212,972,008 168,407,280

Operating fixed 11,134,436 7,548,628

Deferred tax assets 1,029,223 662,431

Other Assets 17,369,691 10,705,374

366,680,192 320,109,723

Liabilities

Bills payable

2,952,490 3,494,384

Borrowings 27778151 22933656

Deposits and other accounts 297475321 263972382Sub-ordinated loans 2498000 2499000

Liabilities against assets

subject to finance lease

- -

Deferred tax liabilities - -

Other Liabilities 13620616 7332059

344324578 300231481

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Net Assets 22355614 19878242

Share Capital 6463644 5386370

Reserves 5804776 6050713

Unappropriated Profit 8536697 6971308

20805117 184083911550497 1469851

Surplus on revaluation of

assets-net of tax

22355614 19878242

Habib Bank

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Main problems in HBL

There is noticeable communication gap between upper level management

and operational staff.

There is also over staffing in HBL moreover inefficient individuals are in credit card

department.

There is huge difference in approaches of experienced staff & young staff

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Imported upper level management

Experienced staff is frustrated mainly because of two reasons

Salaries have not been revised from last 10 years

Experienced Habibians are neither satisfied by the privatization of bank nor they were

taken into confidence at that times

Main Problems of ABL

Most Branches has good staff combination on the basis of experience, but their training capabilities are

not up to the requirements of the fast changing banking environment.

ThecustomersLong-term contacts are not maintained with customers

The discretionary powers of manger are very low to offer more incentives and value added services to

its customers.

There is a lack of commitment and professionalism on part of the employees. The staff is always in a

hurry to leave the bank as soon as possible. They were also observed to starting their operations

comparatively late. The organizational culture is not cooperative

Nepotism was observed on part of the manger as well as the top management towards some staff

members.

Conclusion / Findings

We compare and analysis the financial stateme nts of Habib Bank Limited and Bank

ALLIED Limited.

Liquidity position of both companies is not up to standard, both are below

industry average, but the liquidity position of Habib Bank is better from Bank AL Fa lah

Limited. Working capital of Habib Bank is better than Bank ALLIED, but both

companies must improve their liquidity position.

Leverage ratios indicate the high risk associated with both the

companies.Generally leverage ratios, measures the percentage of funds

provided by thecreditors. The proportion of a firms total assets is being

finan ced with high percentage of borrowed funds.

Profitability ratios of Habib Bank Limited are be tter than Bank ALLIED

Limited. Net profit of ALLIED Limited is low due to heavy financial charges.

Habib Bank has a good market perception due to continuous declaration

of dividends but on the other hand ALLIED BANK limited has not announced individend

in the year 2006 and 2007.

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B o o k v a l u e p e r s h a r e o f H a b i b B a n k L i m i t e d i s m u c h h i g h e r t h a n t h e

A L L I E D Bank. It is the Indication of the net worth of the corporation. Somewhat similar

to the earnings per share, but it relates thestockholder's equityto thenumber of shares

outstanding, giving the shares a raw value. So the net worth of Habib Bank is better than

ALLIED Bank.

Earnings per Share and Operating cash f low of Habib Bank Limited is

also better than Bank ALLIED Limited

Habib Bank limited was rated among first 500 banks of the world but now it is in among 1000

banks in the world, H.B.L. is not progressing due to political influence, in efficient management

& corruption. If these draw backs have removed then bank will not only join its previous

position rather we hope it will be rated among world top ten bank.

Recommendations

The management should provide better arrangement for the employees.

The daily newspapers and journals should be provided to the employees and customers

visiting there.

A separate ladies counter should be there.

The Bank management should be very careful while granting the loans.

Personal interests should not be given importance and customers Personal credit

worthiness must be carefully scrutinized public relation desk should be established in
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each and every branch for guidance as well as redresses of grievance of customers at

the spot.

Online Banking should be introduced in all the branches.

Aggressive publicity campaign must be introduced through press and Electronic media

for new products and scheme by initiating vigorous marketing policy.

New talent / professionals should be hired to cope with the competitive demand in the

industry.

The financial statement should be made more transparent and reliable.

Consumer financing should be initiated to capture the market share.

Employees induction promotion and transfer should always be made on merit.

To motivate the employees their remuneration / salaries should be made at par with

top tier Banks.

Documents

cb report (1)