EXECUTIVE SUMMARY

The report, which I prepare, is about the internship, and in this report I discuss about the work I did in the organization. I did internship for Six weeks in Habib Bank Limited D.K.K. Tench Bata Rawalpindi. It is the largest bank in Pakistan and a thoroughly established banking chain throughout the world. An extensive network of 1468 branches inside the country and 40 outside the country, and a customer base exceeding five million relationships HBL has been privatized and the privatization of Habib Bank Limited is a part of the Government's commitment to privatize a number of state owned enterprises in the financial, telecommunication and oil and gas sectors. HBL has recently entered into the world of electronic banking. All the branches have been inter-linked through a computerized system which has replaced the manual system of performing functions of banking. On one hand, this system has some fruitful consequences but on the other hand there are some problems in the new system. In this report I provide detail of products and services provided by HBL for comparative banking industry. HBL have many products and services to satisfied customers of Pakistan and out side of Pakistan financial services need. HBL has great range of products available. Departments of HBL will help the HBLs operations so smooth and fast. Financial analysis of HBL is showing that HBL has control proper its assets and liabilities. Some problems have financially those expenses of interest increasing for get HBL deposits more. My suggestion on HBL is on my observation in HBL D.K.K Tench branch. I also used my knowledge that I got my whole MBA and suggest some guidelines that HBL will apply for increase its revenue. As HBL goal should be leading in the banking industry as big branch network and mostly network will now online.

Background of HBL

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INTRODUCTION
Habib Bank Limited (commonly referred to as "HBL") (Arabic: ) is the largest bank in Pakistan and a thoroughly established banking chain throughout the world.HBL was the first commercial bank to be established in Pakistan in 1947. Over the years, HBL has grown its branch network and become the largest private sector bank with over 1,468 branches inside Pakistan and 40 branches outside the country and a customer base exceeding five million relationships. Habib Bank Plaza located in Karachi, is the formal headquarters of the bank. Key areas of operations encompass product offerings and services in Retail and Consumer Banking. HBL has the largest Corporate Banking portfolio in the country with an active Investment Banking arm. SME and Agriculture lending programs and banking services are offered in urban and rural centers. HBL is currently rated AA (Long term) and A-1+ (Short term) and has a balance sheet size of over USD 11 billion. It is the first Pakistani bank to raise Tier II Capital from external sources.

HISTORY OF HBL
HBL at its present state has a long and rich history of deeds and sacrifices. All this has been possible on the account of sustained efforts. On 25th of August 1941, Habib Bank inaugurated its operations with the banks first branch in Bombay. In 1947 Karachi saw its first commercial bank of the newly formed Islamic Republic of Pakistan, when the bank shifted its head office there. Throughout the decades, HBL has held the mantle of a dynamic leader, by adding value to the lives of its customers. With a domestic market share of over 40%, HBL was nationalized in 1974 and it continued to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. On June 13, 2002 Pakistan's Privatization Commission announced that the Government of Pakistan had formally granted the Aga Khan Fund for Economic Development (AKFED) rights to 51% of the shareholding in HBL, against an investment of PKR 22.409 billion (USD 389 million). On February 26, 2004, management control was handed over to AKFED. The Board of Directors was reconstituted to have four AKFED nominees, including the Chairman and the President/CEO and three Government of Pakistan nominees.

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

HBL VISION STATEMENT

Enabling people to advance with confidence and success

HBL MISSION STATEMENT

To make customers prosper, our staff excels and creates value for stakeholders

HBL OBJECTIVES
Following are some of the main objectives of HBL. To earn profit for the Bank itself and maximize its shareholders value. To provide solutions for multiple requirements of clients of diverse financial nature. To manage with the changing trends of the modern day financial market. To be a diversified bank by offering all basic consumer services along with specialized services. Honest and ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and professional relationship. To provide employment opportunities to people. To help in development and industrialization of the country.

HBL CORE VALUES

HBL is firmly grounded with a corporate philosophy that incorporates five solid values which each individual associated with the bank abides by. Excellence
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This is at the core of everything they do. The markets in which they operate are becoming increasingly competitive, giving their customers an abundance of choice. Only through being the very best - in terms of the service they offer, their products and premises - can they hope to be successful and grow. Integrity For them, integrity means a synergic approach towards abiding their core values. United with the force of shared values and integrity, they form a network of a well-integrated team. Meritocracy At every level, from selection to advancement, they have designed a consistent system of human resource practices, based on objective criteria throughout all the layers of the organization. HBL is therefore, able to achieve a specific level of performance at every layer of the organization. Customer Focus They understand fully the needs of their customers and adapt their products and services to meet these. They always strive to put the satisfaction of their customers first. Progressiveness They believe in the advancement of society through the adoption of enlightened working practices, innovative new products and processes, and a spirit of enterprise.

MAIN DEPARTMENTS OF HBL

HBL consists of following departments, Deposit department Accounts department Advances department
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Clearing department Bills and remittances department Foreign exchange department

DEPOSIT EPARTMENT The function of deposit department is to collect cash from the customers and to deposit it into the accounts, maintained by them. ACCOUNT EPARTMENT The function of accounts department is to maintain the accounts of customers. 3-AVANCES EPARTMENT The function of advances department is to lend money in the form of clean advances against promissory notes, as well as secured advances against tangible and marketable securities. CLEARING DEPARTMENT The main function of clearing department is to accept transfer delivery and clearing cheque, to arrange the payment of cheque and to collect amount of cheque drawn on members, sub members of the local clearing house, sent for collection by those HBL branches which are not represented at the local clearing house. BILLS AND REMITTANCES DEPARTMENT The main function of bills and remittances department is to deal mainly in Outward bills for collection (OBC) and Inward bill for collection (IBC)

FOREIGN EXCHANGE DEPARTMENT The main function of foreign exchange department is to facilitate the import and exports by opening up of letter of credit the banks provide.

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HBL PRODUCTS AND SERVICES

Individual customers:
HBL caters to all market segments, offering products that are as diverse as the people we service. We remain resolute in our commitment to provide products that are competitive and services that are exemplary. Whether establishing a new venture or expanding an existing business, our team understands your banking needs and works closely with you to realize your goals. HBL provides the following products and services to meet its individual customer requirements:

Term Accounts:
Offered in a variety of tenors with deposits as low as Rs. 10,000.

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Current Accounts:
Our Current Accounts offer features that meet your daily banking needs.

Saving Accounts:
HBLs Saving Accounts cater to individual saving habits.

Foreign Currency Accounts:

Offered in multiple currencies with interest paid on a quarterly basis.

Banc Assurance:
HBL and New Jubilee Life Insurance Company Limited (NJLI) introduce Amaan (Retirement Plan) and Tabeer (Child Education & Marriage). These products have been designed keeping HBLs customer base as the focus and will provide life insurance along with an investment option.

Amaan - Retirement Plan:

A pension plan that offers attractive investment returns. Tabeer Children Education: An insurance plan that enables parents to cover education and marriage costs.

Debit Card:
HBL Visa Debit Card allows you to pay for your purchases directly from your bank account. You dont have to carry cash and your monthly statement provides you with a complete record of all your transactions so you can manage your expenses with ease.

Features:
No Interest Ease & Security No Liability International Recognition& Acceptability Spending Limits Free Account Statement 24 hour Customer Service Global Customer Assistance Service

Phone Banking:

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Your bank is just a phone call away. You can now call HBL PhoneBanking and save a trip to the branch. Your query will be resolved in a single telephone call from anywhere and at anytime

Business Customers:
HBL offers a wide range of products and services for its business customers. They are as follows:

Corporate banking:
HBL Corporate Banking Group comprises a seasoned team of Relationship Managers (RMs) to meet the demanding service standards of large corporations. A long history of financing and nurturing relationships in Pakistan has given HBL a unique insight, enabling us to provide timely and effective financial solutions for our customers to meet the growing challenges of a global economy. If you are a corporate customer, with a turnover of at least PKR 300 million, we have a range of solutions designed to help you with your banking needs. Our RMs has the expertise you need to create tailored financial solutions catering to the specific requirements of your business. Whether establishing a new venture or expanding an existing business, our team understands your banking needs and works closely with you to realize your goals.

Commercial Banking:
HBLs Commercial Banking Group targets medium sized companies with a turnover of at least PKR 50 million. Our business units are located in Karachi, Lahore, Faisalabad, Sialkot, Gujranwala and Peshawar. Each unit is dedicated to service business clusters located within these cities. We have the ability and the resources to meet the needs of your business with our proactive, responsive and experienced Relationship Managers who are committed to understanding your business. We cater to the needs of a broad spectrum of clients. To do this, the business-banking group is segregated by the size of the customer. For customers with an annual turnover between PKR 50 million to PKR 300 million, our Commercial Banking group provides a wide range of products that meet specific customer needs. Features:
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We offer financing for the following: Working Capital Procurement of Inventory Receivables Procurement of Machinery Expansion of production facilities Import of raw materials Exports Guarantees

Investment Banking:
HBL offers full-service Investment Banking capabilities to its clientele. This year alone, HBL has closed over thirty transactions with a cumulative worth of over USD 2 billion. This is a testament to the out-of-box thinking and the innovative products we bring to our customers. The Investment Banking Group functions in three specialist business areas: Project Finance, Debt Capital Markets & Syndications and Equity Capital Markets & Advisory.

Islamic Banking:
Islamic Banking is a growing market segment that offers attractive opportunities to potential and existing customers. At HBL, Islamic Banking offers Shariah compliant products and services to meet the short and long term requirements of business and trade. Islamic Banking provides Ijarah (leasing) for vehicles, plants and machinery to meet longterm customer resource requirements. Murabaha (local & import) facilities are provided to meet the short-term financial needs of mid-market and corporate customers. HBLs Islamic Banking products are fully Shariah compliant and duly certified by independent Shariah Advisors

Cash Management:
HBL offers a comprehensive platform for customers to avail Cash Management Services throughout Pakistan. Our Cash Management Services reduce the cash turn around of your company, thereby making it cost efficient Features:
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Centralized Collections / Funds Transfer Centralized Payments / Disbursements Customized MIS Reporting Centralized Customer Support through IT/Operations

E-Banking:
HBL is also providing unique and latest online services like online fund transfer, balance checking to its customers.

Rural Finance:
HBLs Agriculture loans are spread across the country and provide financing through over 800 branches. We have the largest private bank portfolio in the country with over PKR 18 billion in various agriculture sectors. HBLs presence in all agriculture belts of the country ensures easy access to farmers in rural areas. Features: Revolving Agri Scheme Haryali Farm Transport Scheme Agri Development Loan Agri Development Loan (Fish Farming) Agri Development Loan (Drip Irrigation) Agri Production Finance Haryali Livestock Loans

Asset Management:
HBL Asset Management Limited - A Wholly own subsidiary of Habib Bank Ltd. was incorporated on 17 February, 2006 as a public limited company under the Companies Ordinance 1984 and was licensed for Investment Advisory and Asset Management Services by Securities and Exchange Commission of Pakistan on 3rd April, 2006.

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Agency Services to Customers:

Collection of Cheques: HBL pays and collects cheques on behalf of their customers, and for this it receives commission form their account holders.

Collection of Dividends:
The Bank provides a very useful service by acting as an agent for its customers. It arranges the collection of dividends on shares and securities held by its customers. The customer is simply to inform the issuer of the securities that the interest on the securities is to be credited to his account in the Bank. Bank charges commission for the collection of the dividends on behalf of account holders.

Purchase and Sale of Securities:

HBL if authorized by the customers also makes purchase and sale of securities on the behalf of its customers. Bank charges commission for the purchase or sale made by its on behalf on the customers.

Execution of standing instruction:

HBL also executes the standing in case if it is ordered by the customers of the Bank to do so. These instructions are usually given in writing to Bank. The Bank debits and credits the accounts of its customer for the transactions carried out by the individual or firm.

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

Foreign exchange Business:

HBL transacts foreign exchange business by discounting foreign bills of exchange and thus provides facilities for financing in foreign trade.

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Acts as a referee:
HBL provides useful services to its customers by acting as a referee for its credit worthiness. The information is supplied in utmost secrecy and is based on financial standing of the customers.

Collection of Utility Bill:

Electricity, telephone and other such bills can also be deposited with HBL.

Locker Facility:
HBL also provides locker facility to its customers where valuables of customers can be kept.

HBL ORGANIZATIONAL STRUCTURE

DOMESTIC STRUCTURE

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With a domestic network of 1468 branches which are strategically located in all cities and towns of the country, the bank provides all banking services including consumer and corporate finances, leasing, investment and money market transactions etc. In addition, the bank, through Habib Bank Financial Services Limited, its wholly owned subsidiary, also manages one of the largest Modaraba Funds in Pakistan.

INTERNATIONAL STRUCTURE HBL operates 40 branches outside the country. The bank has international presence in 26 countries encompassing the United Kingdom, Continental Europe, the Middle East, Southeast and Far East Asia, Africa, Australia, and the United States.

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OPERATIONAL STRUCTURE 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 1468 branches within a country; 40 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. HUMAN RESOURCES The President is assisted by ten Senior Executive Vice-Presidents and a staff of 29 Executive Vice Presidents, 154 Senior Vice Presidents, 420 Vice Presidents, 831 Assistant Vice Presidents, 2350 officers Grade-I, 4108 officers Grade-II, 3364 officers Grade-III and 10658 Clerical/Non-Clerical employees. The total staffing as per 1999 balance sheet figures is 23022. OWNERSHIP STRUCTURE Habib Bank Ltd operated under state ownership between 1974-2004. After privatization in 2004, 51 percent of the Banks shares were purchased by the Aga Khan Fund for Economic Development, an agency of the Aga Khan Development Network. The Government of Pakistan is expected to gradually divest its remaining 49% shares in the Bank.

ORGANIZATIONAL SET-UP
Head office
Habib Bank Plaza I.I.Chundrigar Road Karachi-75650, Pakistan.
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Karachi

14

Provincial head quarters:

Punjab Sindh NWFP Balochistan Lahore Karachi Peshawar Quetta

Board of Director of HBL

Sultan Ali Allana

Chairman

R.Zakir Mahmood President & CEO

Ahmed Jawad Director

Sajid Zahid

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Director

Yasin Malik Director

Mushtaq Malik Director

Moez Jamal Director

Management of HBL:

R.Zakir Mahmood President & CEO

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Sohail Malik Chief Risk Officer

Sima Kamil Head-Corporate Banking

Nauman K.Dar Head-International Banking

Ayaz Ahmed Chief Financial Officer

Abid Sittar Head-Retail & Consumer Banking

Dr Razi Azmat Head-Human Resources

Mudassir H. Khan
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Head-Global Operations

Jamil Iqbal Chief Compliance Officer

Faizan Mitha Global Treasurer

Salim Almani Chief Internal Auditor

Aslam Gadit Head-Remedial Asset

Tulu Islam Chief Information Officer

Mirza Saleem Baig Head-Learning & Development

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Mubashar Maqbool Head-Commercial and Retail Lending

Nausheen Ahmed Company Secretary & Head Legal

President

Management Hierarchy
Board of Director

Member Executive Board

Regional Chief

Zonal Chief
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Branch Manager

President

Senior Executive Vice President

Consisting Consulting Board Of Directors

Organogramme

Executive Vice President

Senior Vice President

Assistant Vice President

Officers Grad I, II, III

Clerks
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Peons

FINANCIAL STATEMENT ANALYSIS

Balance Sheet 2004 ASSET:
Cash & balance with treasury banks Balance with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total: 31,970,302 33,419,120 3,755,039 134,522,944 259,089,466 11,919,594, 11,110,724 1,978,144 487,765,333 33,051,049 31,813,513 12.272,248 107,384,470 316,881,635 14,481,818 11,166,195 1,842,977 528,893,905 46,310,478 35,965,048 6,550,128 119,587,476 349,432,685 17,765,291 11,954,876 2,725,486 590,291,468 55,487,664 27,020,704 1,628,130 177,942,251 382,172,734 27,346,111 13,780,555 6,613,372 691,991,521 56,533,134 39,307,321 6,193,787 138,145,692 456,355,507 35,419,252 14,751,252 11,222,444 757,928,389

2005

2006

2007

2008

Liabilities:Bills payable 7,601,766 Borrowings from 29,346,284 financial institutions Deposits & other 404,629,059 accounts 5,776,325 34,904,352 432,545,165 5,737,457 56,392,270 459,140,198 15,418,230 58,994,609 531,298,127 9,944,257 46,844,990 597,090,545

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Sub-ordinate loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities Total liabilities: NET ASSETS: Shareholder equity: Share capital Reserves Unappropriated profit Total equity attributed to equity holder of bank:

14,162,888 455,739,997 32,025,336 6,900,000 2,645,730 13,559,089 23,104,819

1,490,213 487,716,055 41,177,850 6,900,000 15,912,277 9,908,920 32,721,197

15,578,177 536,848,102 53,443,366 6,900,000 17,802,584 20,475,080 45,177,664

3,100,000 19,943,126 628,754,092 63,237,429 6,900,000 19,821,455 28,341,670 55,063,125

3,954,925 24,913,236 682,747,953 75,180,436 7,590,000 24,243,254 39,447,648 71,280,902

Minority interest 835,390 Surplus on revaluation 8,085,127 of asset-net of deferred tax Total: 32,025,336

846,801 7,609,852

913,317 7,352,385

965,642 7,208,662

890,099 3,009,435

41,177,850

53,443,366

63,237,429

75,180,436

Income Statement
2004 Mark-up / return / interest 18,198,725 earned Mark-up / return / interest 4,472,138 expensed Net mark-up / interest 13,726,587 income Provisions: Provision against nonperforming loans and advances - net Charge / (reversal) against offbalance sheet obligations Charge / (reversal) of provision against diminution in the value of investments Bad debts written off directly Net Provision: 1,887,552 571,351 (151,218) 2005 32,343,206 7,327,603 25,015,603 2006 43,685,740 13,204,037 30,481,703 2007 50,481,021 19,153,957 31,327,064 2008 63,305,033 26,525,556 36,779,477

2,974,665 128,851 (82,568) 3,020,948 21,994,655

2,863,207 (45,438) (13,697) 2,804,072 27,677,631

8,238,227 (54,626) (84,310) 8,099,291 23,227,773

6,904,919 372,598 1,909,887 9,187,404 27,592,073

2,307,685

Net mark-up / interest 11,418,902 income after provisions: Non mark-up / interest

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income: Fee, commission and brokerage income Income / gain on investments Income from dealing in foreign currencies Gain on investments in associate Other income Total non-mark-up / interest income: Interest income: Non mark-up / interest expense: Administrative expenses Other provisions / write offs net Other charges Workers welfare fund Total non mark-up / interest expenses: Staff retrenchment cost Profit before taxation: Taxation: - current - prior years - deferred Total taxation:

2,510,433 4,235,574 1,095,789 2,020,506 9,862,302 21,281,204 13,781,291 244,950 7,523 14,033,764 7,247,440 398,152 15,341 1,070,543 1,484,036

2,938,000 1,726,336 1,402,521 1,787,443 7,854,300 29,848,955 14,095,063 249,033 68,483 14,412,579 1,602,401 13,833,975 4,076,848 (39,397) 149,975 4,187,426 9,646,549 13.86

3,931,710 1,219,623 1,102,358 2,235,805 8,489,496 36,167,127 15,425,461 122,510 54,898 15,602,869 1,723,771 18,840,487 7,144,846 (39,067) (965,607) 6,140,172 12,700,315 18.30

3,420,051 2,472,663 1,487,374 2,643,076 10,023,164 33,250,937 18,297,279 (276,111) 85,152 18,106,320 15,144,617 7,220,717 1,668,562 (3,828,699) 5,060,580 10,084,037 13.18

4,518,408 2,369,233 2,374,318 4,000,330 3,116,522 16,378,811 43,970,884 21,348,016 200,163 64,751 323,575 21,936,505 22,034,379 8,661,150 233,100 (2,473,891) 6,420,359 15,614,020 20.47

Profit after taxation: 5,763,404 Basic & diluted earning per 8.21 share

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HORIZONRTAL ANALYSIS Balance Sheet

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2004 ASSET: Cash & balance with treasury banks Balance with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total: Liabilities: Bills payable Borrowings 100% 100% 100% 100% 100% 100% 100% 100% 100%

2005 103.38% 95.20% 326.82% 79.83% 122.31% 121.50% 100.50% 93.17% 108.43%

2006 144.85% 107.62% 174.44% 88.90% 134.87% 149.04% 107.60% 137.78% 121.02%

2007 173.56% 80.85% 43.36% 132.28% 147.51% 229.42% 124.03% 334.32% 141.87%

2008 176.83% 117.62% 164.95% 102.69% 176.14% 297.15% 132.77% 567.32% 155.39%

from

100% financial 100%

75.99% 118.94% 106.90% 10.52% 107.02% 128.58%

75.48% 192.16% 113.47% 109.99% 117.80% 166.88%

202.82% 201.03% 131.30% 140.81% 137.96% 197.46%

130.82% 159.63% 147.56% 175.91% 149.81% 234.75%

institutions Deposits & other accounts 100% Sub-ordinate loans Liabilities against assets subject to finance lease Other liabilities 100% Deferred tax liabilities Total liabilities: 100% NET ASSETS: Shareholder equity: Share capital Reserves Unappropriated profit Total equity attributed to equity holder of bank: Minority interest 100% Surplus on revaluation of asset-net of 100% deferred tax Total: 100% 100%

100% 100% 100% 100%

100.00% 601.43% 73.08% 141.62%

100.00% 672.88% 151.01% 195.53%

100.00% 749.19% 209.02% 238.32%

110.00% 916.32% 290.93% 308.51%

101.37% 94.12%

109.33% 90.94%

115.59% 89.16%

106.55% 37.22%

128.58%

166.88%

197.46%

234.75%

Analysis: On the asset side

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Cash & balance with treasury banks showed a positive increase over the years after 2005 it increases from 103.38% to 176.83% in 2008 which is maximum as compared to previous years. Balance with other banks showed a small decrease in 2005 which is 95.20%, it increases after 2005 up to 117.62%. Lending to financial institutions is increases from 100% in 2004 to 174.44% in 2006, after 2006 it decreases up to 43.36% in 2007 and again increase of 164.95% in 2008 , being maximum in 2005 which is 326.82%. Investments showed a decrease of 79.83% &88.90% in 2005&2006 respectfully, increase after 2006 up to 102.69% in 2008,it is maximum in 2007 which is 132.28%. Advances showed positive increase from 100% in 2004 to 176.14% in 2008 being maximum. Other assets showed positive increase after 2004 being maximum in 2008 which is 297.15%. Operating fixed assets are positively and continuously increase over the years from 100% in 2004 to 132.77% in 2008 which is maximum. Deferred tax assets initially decreases in 2005 up to 93.17%, but increases positively after 2005 up to 567.32% which is maximum in 2008. And total asset also showed positive increase after 2004 being maximum in 2008 which is 115.39%. On liability and equity side, Bills payable were decreases from 100% in 2004 to 75.99%75.48% in 2005&2006 respectively, after 2006 it increases up to 202.82% which is a maximum point in 2007, but decreased again in 2008 up to 130.82% as compared to 2007. Borrowings from financial institutions were increased positively and continuously from 100% in 2004 to 201.03% in 2007, after 2007 it decreases up to 159.63% as compared to previous two years. Deposits & other accounts were showed a positive increase over the years. It increases from 100% in 2004 to 147.56% in 2008. Total liabilities were showed a positive increase over the years, and stood maximum in 2008 which is 149.81%. Shareholder equity also showed an increasing trend from year 2004 up to 2008

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Income Statement

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2004 Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provisions: Provision against 100% 100% 100%

2005 178% 164% 182%

2006 240.05% 295.25% 222.06%

2007 277.39% 428.30% 228.22%

2008 347.85% 593.13% 267.94%

non-performing

158% 23% 55%

151.69% -7.95% 9.06%

436.45% -9.56% 55.75%

365.81% 65.21% -1263.00%

loans and advances - net 100% Charge / (reversal) against offbalance sheet obligations 100% Charge / (reversal) of provision against diminution in the value of investments Bad debts written off directly Net Provision: Net mark-up / interest income after provisions: Non mark-up / interest income: Fee, commission and brokerage income Income / gain on investments Income from dealing in foreign 100% 100% 100% 100% 100%

131% 193%

121.51% 242.38%

350.97% 203.42%

398.12% 241.64%

117% 41% 128% 88% 80%

156.61% 28.79% 100.60% 110.66% 86.08%

136.23% 58.38% 135.74% 130.81% 101.63%

179.99% 55.94% 216.68% 154.24% 166.07%

currencies 100% Gain on investments in associate Other income 100% Total non-mark-up / interest income: Interest income: Non mark-up / interest expense: Administrative expenses Other provisions / write offs - net Other charges Total non mark-up / interest expenses: Profit before taxation: Taxation: - current - prior years - deferred Total taxation: Profit after taxation: 100% 100% 100% 100% 100% 100% 100%

140% 102% 102% 910% 103%

169.95% 111.93% 50.01% 729.74% 111.18%

156.25% 132.77% -112.72% 1131.89% 129.02%

206.62% 154.91% 81.72% 860.71% 156.31%

191%

259.96%

208.97%

304.03%

1024% 100% -257% 100% 14% 100% COMSATS WAH CANTT 282% 100% 28 100% 167%

1794.50% -254.66% -90.20% 413.75% 220.36%

1813.56% 10876.49% -357.64% 341.00% 174.97%

2175.34% 1519.46% -231.09% 432.63% 270.92%

Analysis: Interest earned showed an increasing trend over the years, only it decreases in 2007 as compared to 2006.It is maximum in 2008 which is 304.03%. Interest expense also showed a positively and continuously increase over the years. It increases from 100% in 2004 up to 593.13% in 2008. Profit before tax is maximum in 2008 which is 304.03%.It shows an increasing trend from 100% in 2004 to 304.03% in 2008, but a decrease of 50.99% in 2007 as compared to 2006.

VERTICAL ANALYSIS Balance sheet

2004 ASSET: Cash & balance with treasury banks Balance with other banks Lending to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets Total: Liabilities: Bills payable Borrowings from financial institutions Deposits & other accounts Sub-ordinate loans Liabilities against assets subject to finance lease Other liabilities 6.55% 6.85% 0.77% 27.58% 53.12% 2.44% 2.28% 0.41% 100% 1.56% 6.02% 82.96% 2.90% 2005 6.45% 6.02% 2.32% 20.30% 59.91% 2.78% 2.11% 0.35% 100% 1.09% 6.59% 81.78% 2.74% 2006 7.85% 6.1% 1.11% 20.26% 59.20% 3.01% 2.03% 0.46% 100% 0.97% 9.55% 77.78% 2.64% 2007 8.02% 3.9% 0.24% 25.71% 55.23% 3.95% 1.99% 1% 100% 2.23% 8.53% 76.78% 0.45% 2.88% 2008 7.46% 5.19% 0.82% 18.23% 60.21% 4.67% 1.95% 1.48% 100% 1.31% 6.18% 78.78% 0.52% 3.29%

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Deferred tax liabilities Total liabilities: NET ASSETS: Shareholder equity: Share capital Reserves Unappropriated profit Total equity attributed to equity

93.43% 6.57% 1.42% 0.54% 2.78% 4.74%

92.21% 7.79% 1.3% 3.01% 1.87% 6.19% 0.16% 1.43% 7.79%

90.95% 9.05% 1.17% 3.02% 3.47% 7.65% 0.15% 1.25% 9.05%

90.86% 9.14% 0.99% 2.86% 4.1% 7.96% 0.14% 1.04% 9.14%

90.08% 9.92% 1% 3.2% 5.2% 9.4% 0.12% 0.4% 9.92%

holder of bank: Minority interest 0.17% Surplus on revaluation of asset-net of 1.66% deferred tax Total: 6.57%

Analysis: On The Assets Side: The balance sheets show that over the time the major contribution in the total assets was of advances which showed an increasing trend. Advances were increased with the passage of time from 53.12% in 2004 to 60.12% in 2008.Only a small decrease of 3.97% in 2007 as compared to 2006. The second biggest contribution was from the investments which showed a negative trend. Investments were decreased over the years continuously from 27.58% in 2004 to 18.23% in 2008.Only a small increase in 2007 as compared to 2005 and 2006.Other items of balance sheet which contributed to total assets are Cash & balance with treasury banks which contribution shows an increasing trend over the years from 6.55% in 2004(which is minimum) to 7.46% in 2008. Balance with other banks shows a decreasing trend from 6.85% in 2004 to 5.19% in 2008, but it increases in 2008 as compared to 2007. Lending to financial institutions shows an increasing trend over the years, maximum contribution to total assets is 2.32% in 2005. Other assets shows an increasing trend over the years, maximum contribution to total assets is 4.67% in 2008.operating fixed assets shows a decreasing trend from 2.28% in 2004 to 1.95% in 2008.Deferred tax assets shows an increasing trend over the years, maximum contribution to total assets is 1.48% in 2008. On The Liabilities Side On the other hand the major contribution in the liabilities was by the Deposits & other accounts which are maximum in 2004 of 82.96% and after 2004 a small decrease in deposits

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up to 78.78% which is 2% increases as compared to 2007. The total liabilities decreased from almost 93.43% in 2004 of the value of total assets to 90% in 2008. On The Shareholder equity Side: Total equity attributed to equity holder of bank shows an increasing trend over the years from 4.74% in 2004 to 9.4% in 2008

Income statement
Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income 2004 85.52% 21.01% 64.50% 2005 108.36% 24.55% 83.81% 9.97% 0.43% (0.27%) 2006 120.79% 36.51% 84.28% 7.92% (0.13%) (0.04%) 2007 151.82% 57.60% 94.21% 24.78% (0.16%) (0.25%) 2008 143.97% 60.33% 83.65% 15.70% 0.85% 4.34%

Provisions: Provision against non-performing 8.87% loans and advances - net Charge / (reversal) against off- 2.68% balance sheet obligations Charge / (reversal) of provision (0.71%) against diminution in the value of investments Bad debts written off directly Net Provision: 10.84%

10.12% 73.69%

7.75% 76.53%

24.36% 69.86%

20.89% 62.75%

Net mark-up / interest income 53.66% after provisions: Non mark-up / interest income: Fee, commission and brokerage 11.80% income Income / gain on investments 19.90% Income from dealing in foreign 5.15% currencies Gain on investments in associate Other income 9.49% Total non-mark-up / interest 46.34% income: Interest income: Non mark-up / interest expense: Administrative expenses Other provisions / write offs - net Other charges Workers welfare fund Total non mark-up / interest 100% 64.76% 1.15% 0.04% 65.94%

9.84% 5.78% 4.69% 5.99% 26.31%

10.87% 3.37% 3.08% 6.18% 23.47%

10.29% 7.44% 4.47% 7.95% 30.14%

10.28% 5.38% 5.39% 9.1% 7.09% 37.25%

100% 47.22% 0.83% 0.22% 48.29%

100% 42.7% 0.34% 0.16% 43.14%

100% 55.03% (0.83%) 0.26% 54.45%

100% 48.55% 0.46% 0.15% 0.74% 49.89%

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expenses: Staff retrenchment cost Profit before taxation: Taxation: - current - prior years - deferred Total taxation: Profit after taxation: 34.06% 1.87% 0.07% 5.03% 6.97% 27.08% 5.37% 46.35% 13.66% (0.13%) 0.50% 14.03% 32.32% 4.8% 52.09% 19.76% (0.11%) (2.67%) 16.98% 35.12% 45.55% 21.72% 5.02% (11.51%) 15.22% 30.33% 50.11% 19.69% 0.53% (5.63%) 14.60% 35.51%

Analysis: As it is obvious from the above table that over the last five years, the main contribution in the revenues is from the Net Markup/Interest Income which shows an increasing trend over the years from 64.50% in 2004 to 83.65% in 2008. Net Markup/Interest Income is decreases in 2008 as compared to 2005, 2006 and 2007. Net Markup/Interest Income is contributed maximum of 94.21% in 2007.the second major source of earning revenues was income gain on investments and the least contribution is made ever by the income from dealing in foreign currencies. Total non-mark-up / interest income shows decreasing trend over the years from 46.34%in 2004 to 37.25% in 2008 which is increases as compared to previous three years. The Profit after taxation increased from 27.08% in 2004 to 35.12%in 2006 and decreased to 30.33% in 2007 as compared to 2005 & 2006 and again increases in 2008 up to 35.51%. The major reason for the decrease in 2007 is an increase in the Markup/Interest Expenses which increased from 36.51%in 2006 to 57.60% in 2007 and also increases up to 60.33% in 2008 which is a negative sign and therefore it has reduced the total income of HBL.

Financial Ratio Analysis

1-Gross Spread Ratios:

Gross Spread Ratio = (Net Mark-up Income) / (Net or Gross Mark-up income) 2004 2005 2006 2007 2008 Mark- 18,198,725 32,343,206 43,685,740 50,481,021 63,305,033

Net

up/Return/Interest

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Income Net

mark- 13,726,587 25,015,603 30,481,703 31,327,064 36,779,477 =1.3258 =1.2929 =1.4332 =1.6114 =1.7212

up/interest income

Gross Spread Ratio:

1.8 1.6 1.4 1.2 1 Change 0.8 0.6 0.4 0.2 0

Gross Spread Ratio

2004

2006 Years

2008

Interpretation: This ratio shows that how much the value of net markup income is compared to the value of the gross income which is showing a favorable increasing trend with the passage of time. It was 132.58% in 2004, 3.29% decrease in 2005 but after 2005 it continuously increases and remained maximum in 2008 which 172.12% is and is a favorable sign for the bank. 2-Earning Per Share Ratio: Earning per Share Ratio = (Net Income) / (Number of shares) 2004 Earning Per 8.21 Share 2005 13.86 2006 18.30 2007 13.18 2008 20.47

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Earning Per Share 25 20 Change 15 10 5 0 2004 2006 Years 2008 Earning Per Share

Interpretation: HBLs Earnings per share significantly increases over the years, which shows a positive sign for its shareholders and management. The firms Earnings per share generally of interest to present and prospective shareholders.

3-Return on Average Asset Ratio: Return on Average Asset = (Net Operating Income) / (Total Asset) 2004 7,247,440 2005 13,833,975 2006 18,840,487 2007 15,144,617 2008 22,034,379

Profit

Before Tax Total Assets 487,765,333 528,893,905 590,291,468 691,991,521 757,928,389 =0.0149 =0.0262 =0.0319 =0.0219 =0.0291

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Return on Average Asset

0.035 0.03 0.025 0.02 Change 0.015 0.01 0.005 0

Return on Average Asset

2004

2006 Years

2008

Interpretation: This ratio shows that how effectively the firm has used its assets to earn the profit. The HBLs financial statements show that it effectively uses the assets and earn profits. It was only 1.49% in 2004 but gradually showing a significant increase and stood maximum in 2006 being 3.19% then in 2007 and 2008 it decreased with the value of 2.19% & 2.91% respectively. This means that HBL is earning 2.91 paisa on every rupee of asset investment

4-Return on Equity: Return on Equity = (Net Profit after Tax) / (Shareholders Equity) => Share Holder Equity = Share Capital + Reserves + unappropriated Profit Net 2004 Profit 5,763,404 2005 9,646,549 2006 2007 2008 12,700,315 10,084,037 15,614,020

After Tax Shareholders Equity

23,104,819 32,721,197 45,177,664 55,063,125 71,280,902 =0.2494 =0.2948 =0.2811 =0.1831 =0.2190

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Return on Equity

0.3 0.25 0.2 Change 0.15 0.1 0.05 0 2004 2006 Years 2008 Return on Equity

Interpretation: This ratio shows that how effectively the firm has used its shareholders equity to earn the profit. The HBLs financial statements show that it has decreased over the years which are a negative sign for the company. It was only 24.94% in 2004 but gradually showing a decrease and stood minimum in 2007 being 18.31%.In 2008 it increases as compared to 2007 which is 21.90%.This means that HBL is earning 21.90 paisa on every rupee of shareholders equity 5-Debt to Equity Ratio: Debt to Equity Ratio = (Total Debt) / (Share Holder Equity) => Share Holder Equity = Share Capital + Reserves + unappropriated Profits Total Debt Share Holder Equity =19.7249 =14.9052 =11.8830 =11.4188 =9.5783 2004 2005 2006 455,739,997 487,716,055 536,848,102 23,104,819 32,721,197 45,177,664 2007 2008 628,754,092 682,747,953 55,063,125 71,280,902

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Debt To Equity Ratio

20 15 Change 10 5 0 2004 2006 Years 2008 Debt To Equity Ratio

Interpretation: HBL is relying too much on the debt and its value is greater as compared to the shareholders equity over the years. After 2004, it decreased in terms of proportion and was minimum in 2008.

6-Debt To Total Asset Ratio: Debt to Total Asset Ratio = (Total Debt) / (Total Asset) 2004 455,739,997 487,765,333 =0.9343 2005 487,716,055 528,893,905 =0.9221 2006 536,848,102 590,291,468 =0.9095 2007 628,754,092 691,991,521 =0.9086 2008 682,747,953 757,928,389 =0.9008

Total Debt Total Asset

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Debt to Total Asset Ratio

0.94 0.93 0.92 Change 0.91 0.9 0.89 0.88 2004 2006 Years 2008 Debt to Total Asset Ratio

Interpretation: This ratio shows the extent to which the firm is financing its assets through debt. In 2004, 93.43% of the assets were financed through debt which is maximum in these five years. In 2008, it remained minimum to the extent of 90.08% in 2008.HBLs financial statements show that it decreases the financial leverages. . 7-Interest Coverage Ratio: Interest Coverage Ratio = (EBIT) / (Interest Expense) 2004 2005 2006 2007 2008 21,281,204 29,848,955 36,167,127 33,250,937 43,970,884 4,472,138 7,327,603 13,204,037 19,153,957 26,525,556 =4.7586 =4.0735 =2.7391 =1.7359 =1.6577

EBIT Interest Expense

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Interest Coverage Ratio

5 4.5 4 3.5 3 Change 2.5 2 1.5 1 0.5 0

Interest Coverage Ratio

2004

2006 Years

2008

Interpretation: This ratio shows the proportion of Earnings before interest and taxes relative to the expense on Interest. It was 4.7586 times or the value of EBIT in 2004 was 475.86% of the value of interest charges and it started to decrease in the next four years which is a negative sign for the company. In 2008 it stood minimum to 165.77% which is a negative sign although EBIT was maximum in this particular year but the problem is that there was a significant increase this year in the Interest charges causing an unfavorable decrease in the ratio. 8-Advances to Deposit Ratio:

Advances to Deposit Ratio = (Advances) / (Deposits) 2004 259,089,466 404,629,059 =0.6403 2005 316,881,635 432,545,165 =0.7326 2006 349,432,685 459,140,198 =0.7611 2007 382,172,734 531,298,127 =0.7193 2008 456,355,507 597,090,545 =0.7643

Advances Deposits

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Advances to Deposit Ratio

0.78 0.76 0.74 0.72 0.7 Change 0.68 0.66 0.64 0.62 0.6 0.58 0.56

Advances to Deposit Ratio

2004

2006 Years

2008

Interpretation: This ratio increase an unfavorable sign for the banks and that is what happened with the HBL. It was 64.03% in 2004 means that the value of advances was 64.03% of the value of deposits but started to increase in the next four years and was maximum in the years 2006 & 2008 being 76.11% and 76.43% respectfully but decreased to 71.93% in 2007. Still it is very much high as compared with year 2004. 9-Profit before Tax Ratio: Profit before Tax Ratio = (Profit before Tax) / (Net or Gross Markup Income) 2004 2005 2006 2007 2008 7,247,440 13,833,975 18,840,487 15,144,617 22,034,379 mark- 13,726,587 25,015,603 30,481,703 31,327,064 36,779,477

PBT Net income

up/interest =0.5280 =0.5530 =0.6181 =0.4834 =0.5991

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Profit before Tax Ratio

0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 Profit before Tax Ratio

Change

2004

2006 Years

2008

Interpretation: This ratio shows that profit before tax is increased over the years. The gross markup income also shows significant increase over the years. In 2004 profit before tax is 52.80%, it stood maximum in 2006 that is 61.81%, in 2008 the profit before tax is 59.91% of the net income. 1o-Loan to Deposit Ratio: Loan to Deposit Ratio = (Loan) / (Deposit) 2004 259,089,466 404,629,059 =0.6403 2005 316,881,635 432,545,165 =0.7326 2006 349,432,685 459,140,198 =0.7611 2007 382,172,734 531,298,127 =0.7193 2008 456,355,507 597,090,545 =0.7643

Loan Deposit

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Loan To Deposit Ratio

0.78 0.76 0.74 0.72 0.7 0.68 Change 0.66 0.64 0.62 0.6 0.58 0.56

Loan To Deposit Ratio

2004

2006 Years

2008

Interpretation: This ratio shows an increasing trend which is negative sign for the company. Increase in loans shows that the company has reduced the investments in the company. In 2004 it is 64.03% and it stood maximum in 2008 is 76.43%.

11-Deposit Times Capital Ratio: Deposit Times Capital Ratio = (Deposit) / (Shareholder Equity) 2004 404,629,059 23,104,819 =17.5128 2005 432,545,165 32,721,197 =13.2191 2006 459,140,198 45,177,664 =10.1629 2007 531,298,127 55,063,125 =9.6489 2008 597,090,545 71,280,902 =8.3766

Deposit Equity

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Deposit Times Capital Ratio

18 16 14 12 10 Change 8 6 4 2 0

Deposit Times Capital Ratio

2004

2006 Years

2008

Interpretation: Deposit times capital ratio shows a decreasing trend. Deposit times capital ratio decreased over the years. Deposit times capital ratio is maximum at 1751.28% in 2004 and after 2004 it decreases continuously. In 2008 deposit times capital was at minimum level of 837.66%. 12-Interest Margin to Average Earning Ratio: Average Earning Asset Ratio = (Interest Margin) / (Earning Asset) => Earning Asset = Advances + Investment + Lending To Financial Institution 2004 18,198,725 2005 32,343,206 2006 43,685,740 2007 50,481,021 2008 63.305,033 600,694,986 =0.1054

Interest Margin Earning Asset

397,367,449 436,538,353 475,570,289 561,743,115 =0.0458 =0.0741 =0.0919 =0.0899

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Average Earning Asset Ratio

0.12 0.1 0.08 Change 0.06 0.04 0.02 0 2004 2006 Years 2008 Average Earning Asset Ratio

Interpretation: Average Earning Asset Ratio shows an increasing trend. It gradually increases over the years but a small decrease of 0.2% in 2007 as compared to 2006. In 2004 Average Earning Asset Ratio was on a minimum level of 4.58% but after 2004 it increases and reached at a maximum level of 10.54% in 2008.

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Learning and Experience

Internship duration
I have done internship from HBL D.K.K.Tench Bata branch which is located in RAWALPINDI. My internship duration is 27th July 2009 to 12th September 2009. It is my first experience to do the job in any organization. This branch is supervised by Mr. Ch. Muhammad Ashraf who is Branch Manager. He is very intelligent and corporative person. The working environment of the bank is good. All the staff members have good relation with each other. They corporate new comer internee and also make good communication with the customers. The branch is located within the city. The major departments in the branch are remittance, accounts, bills, advances and clearing.

Details of training in various departments

There are following in which I spent my 6 weeks internship.

Accounts Opening Remittances and Bills Clearing

Account Opening My internships duration started with opening the account in the bank. I spent one and half weeks in this department. Account opening procedure makes the good relationship between the bankers and customers. By opening an account at a bank, a person becomes a customer of a bank. During this period, I learnt to open different types of accounts. There are following good points when we are going to open a account. It is a basic contract between banker and customer. There are some terms and condition that customer has to accept for open a account Both parties (banker and customer) have rights and obligations. Any party can file a suit in a court of law for breach of contract. Account opening is the most sensitive portfolio. It should be handled with due diligence. Careful analysis of new customer is required to prevent all possible chances of fraud and forgery.
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Banker should establish true identity by way of obtaining proper introduction of the customer.

Introduction of customers Before opening the account, it is important to know about the customer and get the basic information. Like the other banks, HBL is also wants to get the information about its customers whether it is a desirable customer or not. Then HBL determine the prospective customers integrity, respectability, occupation and the nature of business by the introductory references given at the time of account opening. Account opening form HBL open the account into following three categories. Individual customer Business customer Additional customer

How to open the account Before open the account in HBL, there are following point that I observed to keep in mind. The customer who has already account in the bank should properly introduce the new customer The new customer should make the signature in the presence of bank officer that should be duly verified Two copies of CNIC of the customer is required Two Passport size photographs for Shaky Signatures/Thumb Impression Against submission of the Banks prescribed application form, duly introduced in the manner provided and on supplying such document, as may be required and account may be opened. The Bank reserves to itself the right to refuse to open and account without assigning any reason. A unique account number is allotted to customer that is to be quoted in all correspondence with the bank relation to the account. Minimum amount to open an account is required regarding the nature of account.
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Account opening Procedure Obtaining account opening form. Copy of CNIC Introduction on AOF. Obtaining signatures on specimen signature card. Allot a unique account number. Admittance of signature. Depositing cash on counter.

MYSIS system The D.K.K.T branch is an online branch and it is connected to the Head office in Karachi through MYSIS which is HBL software. Through this system the HBL branches are connected each other. It helps to get the information about the customer and quickly transfer of funding. By using this software, there is following procedure that we adopt for opening a account. In first step, computer prompt customers name and father name and head office give a particular number against that customer which is called customer number.

On the bases of customer number, the request is send to the Head office. The account number of the customer is start with the branch code like 0487 (HBL D.K.K.T Bata code).

In the next step, the information related to customers like CNIC number, marital status, profession, qualification etc.

Further type the nature of account (current, saving) and type of customer (individual, business)

Requirement to fulfill account opening form

When a customer comes in bank to open an account, the bank officer gives him an application form. In this application form, all the information which is necessary to be known by the bank are mentioned. The bank also requires the essential documents to be attached by the customer. Basically following information is required to open an account.
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 Eligibility

Title of Account Full Name of Applicant CNIC number Occupation Address Telephone No. Currency of account Nature of Business Introducers Name, Address & Signatures Special instruction regarding the account Initial Amount of the Deposit Signature of the applicant All Pakistanis Resident/Non-Resident, Individuals (Single-Jointly)

Companies/Firms etc. can open and operate the Account. Any Foreign National Individuals (Single-Jointly) having valid Resident Pakistan VISA/Work Permit can open and operate the Account. Features Account can be opened with Minimum Balance Rs.1000/- and no maximum limit. Checking account No profit is paid. SERVICE CHARGES Rs.50/- if balance is less than Rs.20000/- during the month. Statement of Account dispatched on quarterly basis or as requested. There is no restriction for withdrawals of amount and number of cheques.

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Remittances and bill department In this department I learnt the following terms.

Local Fund Transfer (LFT) Pay Order (PO) Demand Drafts (DD) Inward Bills for Collection (IBC) Outward Bills for Collection (OBC)
Local Fund Transfer (LFT): An individual may transfer funds through LFT. For issuance of LFT, client fills the application form. Commission and courier charges are calculated and written in the specified place. Receipt of cash for LFT is same as DD. Entry is made in LFT Issue Register. LFT is more convenient way of sending the amount to another account of HBL anywhere in Pakistan. It is a kind of online transfer. Pay order It is a written order by a branch, drawn upon and payable to itself to pay a specified amount of money to or order of a specified person. Parties to PO are same as DD except the issuing branch and drawee branch are the same. A pay order is written authorization for payment made in a receipt form issued and payable by the bank to the person named and address. The following are the parties Purchaser Issuing branch Payee Charges must be recovered at prescribed rate. Pay order should be prepared like demand draft. A record of all issued and paid should be maintained. Credit voucher should be prepared Pay order is used to remit the money within the city.

Demand Draft (DD):

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It is a written order drawn by one branch upon another branch in another city to pay a certain amount to or the order of a specified person. In this case there is less chances of theft. The parties which are involved in Demand Draft are purchaser, issuing branch, drawee branch and payee. Issuance of demand draft
There are following particulars which are required to fulfill the demand draft.

Name of beneficiary Amount Mode of payment The place where DD is drawn Signature Name and address of the beneficiary

For issuance of DD, purchaser fills the application form. Commission is calculated and written in the specified place. Purchaser deposits amount and commission on the cash counter and the application is stamped. If the purchaser presents the cheque, the application form and cheque are sent to CD Department (deposits) that verifies the cheque and payment. Entry is made in DD issued Register. DD leaf is written neatly and DD block is used serially. It is signed by two attorneys and handed over to purchaser after obtaining acknowledgement. Payment of DD When a person brings DD (which have been drawn on you), you will check it from your DD payable record and ask the customer to sign twice at the back of the DD so that it could be confirmed that he is the eligible person for receiving the benefit, along with this you obtain the ID of that person verify it and then make the payment. After making the payment, entry is made in the register that this DD has been paid. Inward Bills for Collection (IBC) These are bills or cheques etc. which are collected locally. They are received from outstation branches banks and parties. The collection of instruments drawn on other banks located in same city is done through LBC. Outward Bill for Collection (OBC)

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

I learnt that every bank acts in two ways, Paying Bank Collecting Bank Here in theory no legal obligation on a banker to collect cheques, drawn up to other banks for a customer. However, it is an important function of crossed cheques. A large part of this work is carried out through the bankers clearing house wherever it is established.
Clearing House:

A clearing house is the place where representatives of all the banks get together for the purpose of offsetting the inter bank indebtedness arising from the transfer of deposits by a customer of a particular bank to another bank.
Functions of Clearing Department:

The following are the main functions of clearing department. To accept transfer deliveries and clearing cheques from the customer of the branch and to arrange for their collection.

To arrange the payment of these cheques drawn on the branch and given for collection to any other branch of Habib Bank of Pakistan or any other members, or sub-members of the local clearing house.

To collect amounts of cheques drawn on members, sub-members of the local clearing house sent for collection by those Habib Bank Limited branches which are not represented of the local clearing house.

Procedure of Depositing Cheques in Clearing Department: Whenever a customer wants to deposit cheque for clearing purpose, he fills a pay in slip and hands it over the counter along with the instruments he wants to deposit with bank. As far as possible, the customer desire that on of the staff member fill in a slip for him, he should be obliged promptly. The smaller portion of the perforated pay in slip is

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handed over to the depositor and the portion becomes the regular portion of a credit voucher. Clearing Cheques:

Clearing cheques are those cheques in which the payee (Person who deposit cheques for collection) and the drawer of a cheque maintain the account with different banks. When the cashier receives the cheques, which are to be deposited for clearing purpose, the following points must be verified. The instruments should be neither stale nor post dated. The amount in words and figures should be the same. The instruments should be drawn on a member or any of local branches. If the cheque is crossed "Account payees" "Account payee only" or "Payees Account", it should only be accepted for collection for the payees account. The cheques or drafts should not be crossed specially to any other bank. A cheque payable to one of the joint account holder should not be collected for the joint account without the payees endorsement, or consent. A cheque payable to a firm should not be accepted for credit to a partners account. A cheque drawn by a customer in the capacity of an agent, Attorney or Manager of his company or firm, should not be collected for credit to his personal account. Mail transfer Receipts pay ships and treasury receipt should not be collected for persons other than the payee. If an account is new, or the balance or operation of the account is not satisfactory, satisfy yourself about the titles of the customer to the instruments before the titles of the customer to the instrument before accepting the deposit.

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SWOT analysis of HBL

Strengths
HBL is the leading private sector bank in the banking network in Pakistan

HBL has achieved marked success in its strategy of expanding and diversifying its customer base and launching new and innovative financial products. HBL has very strong management (AKFED), which is working efficiently towards the Banks success. Salaries are very reasonable, so the employees are not financially disturbed and they provide their services effectively and efficiently to achieve organizational goals.

The operations performed by the bank are highly automated that result in assurance for the customers that their transactions are completed reliably, efficiently and securely.

The officers of HBL are considered as one of the most able professionals in the banking world. HBL has the potential to encounter the competitive environment in the market. One can avail the benefit of the services provided at the bank till 5:00 P.m. which is highly useful for those customers who find it difficult to leave their officers in the morning

The management of the bank believes in customer focused banking rather than the product oriented banking. The products and services designed by the bank are specifically tailored to the individual needs of its customers.

The revolution in the banking in the form of electronic banking operations have opened avenues of excellent, efficient and quick

Weaknesses To generate earning growth the bank is not utilizing investment rupees very well as its return is not accordingly.

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Branches of HBL are not well furnished as compared to the its other competitors so it may be the prime reason for the customers to switch over from the bank towards other.

On the increase of competition and decrease in earning spread the bank market share comparatively has not found the new ways to generate income from other services.

Although the bank has computerized accounting system but still the bankers use to make their entries in the accounting register. The bank has still some of the traditional ways of operations in this advanced technological environment. The employees are constantly rotated from one job to another job of totally different characteristic in the view of giving them the know-how of the working in all the departments.

Presently there is no specific training program arranged for the new recruiters. They have to learn based on their observations and also their mistakes. There is pressure not only on the new learner but also on the person placed upon with this responsibility. HBL is lacking of customer feed back.

Opportunities

Since HBL has wide area network in all over the Pakistan, if it can make it possible the fast delivery of fund from abroad through online banking, it can cover the major market of Pakistan.

Competition in the field of consumer banking has been increasing as large consumer banks continued to play a significant role in terms of products and services. HBL has an opportunity to introduce new product and services to facilitate more and more customer.

A large amount of foreign investment is attracted. Strong potential for growth

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Opportunity for developing value added services combined with corporate banking relationships, cash management services to large and medium sized corporate clients.

Habib Bank Limited provides opportunity to utilize its skills and efficiencies in leasing business. E-banking facility is also a new opportunity which is a flourishing business in foreign countries and can also be here, if HBL takes the initiatives. Govt. is taking very bold steps to promote IT in Pakistan, so HBL has an opportunity to improve in technology.

Threats

Current economic recession is big threat for HBL to survive in the competitive environment.
Employee management is also major threat for the HBL and it can result to increase the turnover ratio of HBL employees

Innovative services provided by the other banks are also a problem for the bank to consider, and must provide improved or compatible services to retain customer. The schedules of charges indicate that the fees charged by the bank on the various services it provides are extremely high. It may result in decrease in the number of its exiting customers.

Shortage of trained and specialized staff at lower executive and officer levels Facing more competition by foreign banks in the market. Loss of confidence of overseas customers due to freezing of accounts. Highly attractive and advance services by foreign banks to their customers.

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CONCLUSION:
To sum up, internship is like The First Flight for a young business graduate who is to enter his professional life very soon. It provides a gateway to youngsters and an insight of corporate world. It helps them in the orientation phase of their first job as well and if we talk about internship decision in banking sector, HBL is clearly the first choice of every one who believes in qualitative approach of banking an environment of highly responsible people. Bank is enjoying a healthy market share and taste of good status in terms of its operative features and customer support. HBL is clearly the best bank operating in Pakistan. HBL has more customers as compare to other banks, if they given proper attention to every customer then in few years it will be the leading bank of the country.

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RECOMMENDATIONS
I spent six weeks of my internship in HBL, D.K.K. Tench Bata Branch, Rwp. During these weeks, I felt myself to be a part of HBL. Even, this was my first experience of working in a banking organization. Before this I know a little about the banks, its working system and environment, so I learned a lot from this experience. Based on my experience & observation regarding the operations and policies of HBL, there are some recommendations which include short term as well as long term issues for the improvement. Habib Bank Limited although providing the customer service in better way but there is a lot of work to do in a routine banking due to which employees work for long time. Management should gave relaxation to the employees by hiring new professionals and reduce the working hours. Attitude & Behavior of Branch Manager should be cooperative & friendly in order to entertain the problem faced by the employees.
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Division of work must be definite and certain. A person should do only such job for which he is appointed. Work sharing is also important for greater productivity. Every one in the organization must know the computerized system, for this management should hire professionals to train them. More and more facilities of loans should be provided to individuals for enhancing the business, studies etc on easy terms and conditions For financing activities the process should be easy to the customer. Training program should be started for internees and newly appointed employees. Their should be more marketing activities for the auto financing and other loans. Habib Bank Limited needs to use more marketing channels to make the public aware of its products and services.

The number of women hired by Habib Bank Limited is less as compared to male staff, so it should employ more women. The bank charges high service charges as compared to the other banks, so these should be lowered down. Quick response to customer queries is necessary to maintain a healthy relationship with the customer Surveys must be conducted regarding customer satisfaction level and all employees of this department should look forward to get feedback whenever possible.

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