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1998-2011

Report by:

Shumaila Firdous Ali (2006

01-65-6411 Mudassir Raza

Hemani (2006-1656734)

Course: Strategic Financial

Management

HBL Turnaround strategy

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Course: Strategic Financial Management | Term Report 2

CONTENTS

LETTER OF TRANSMITTAL ...................................................................................................... 3

ACKNOWLEDGMENT ................................................................................................................ 4

PURPOSE OF WRITING THIS REPORT ................................................................................... 5

LEARNINGS FROM THE COURSE ........................................................................................... 6

EXECUTIVE SUMMARY ............................................................................................................ 7

Company Introduction ................................................................................................................. 8

Company Description: ............................................................................................................. 8

History of the Company: .......................................................................................................... 9

Company Portfolio ................................................................................................................... 9

Retail Banking ................................................................................................................... 10

CORPORATE BANKING ................................................................................................... 10

International Banking ......................................................................................................... 10

Size of Company: ..................................................................................................................... 11

Domestic and International Network ...................................................................................... 11

Companys Profitability: ............................................................................................................ 13

Comparison of performance between pre-privatization and post privatization: .......................... 14

TOTAL DEPOSITS ............................................................................................................... 14

Total Assets......................................................................................................................... 14

Loans and Advances .......................................................................................................... 15

Liquid Assets....................................................................................................................... 15Net Income........................................................................................................................... 15

Total Expenditure ................................................................................................................ 15

Non-Performing-Loans (NPLs) ........................................................................................... 15

Number of branches ........................................................................................................... 16

Reasons for decline: ................................................................................................................. 16

Political Pressure............................................................................................................. 16

Non-performing loans: ....................................................................................................... 17

Lack of efficient banking system: ....................................................................................... 17

Lack of customer focus: ..................................................................................................... 17

Turn Around Strategy:............................................................................................................... 17

Conclusion: ............................................................................................................................... 20

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LETTER OF TRANSMITTAL

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ACKNOWLEDGMENT

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Turn-around Strategy of HBL

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PURPOSE OF WRITING THIS REPORT

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LEARNINGS FROM THE COURSE

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Course: Strategic Financial Management | Term Report 7

EXECUTIVE SUMMARY

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Turn-around Strategy of HBL

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COMPANY INTRODUCTION

COMPANY DESCRIPTION:

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 1,450 branches across the country and a customer base

exceeding five million relationships.

The Government of Pakistan privatized HBL in 2004 through which AKFEDacquired 51% of the Bank's shareholding and management control. HBL is

majority owned (51%) by the Aga Khan Fund for Economic Development, 42.5%

of the shareholding is retained by the Government of Pakistan (GOP), whilst

7.5% is owned by the general public i.e. over 170,000 shareholders following the

public listing that took place in July 2007.

With a presence in 25 countries, subsidiaries in Hong Kong and the UK, affiliates

in Nepal, Nigeria, Kenya and Kyrgyzstan and rep offices in Iran and China, HBL

is also the largest domestic multinational. The Bank is expanding its presence in

principal international markets including the UK, UAE, South and Central Asia,

Africa and the Far East.

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.

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HISTORY OF THE COMPANY:

HBL established operations in Pakistan in 1947 and moved its head office to

Karachi. Our first international branch was established in Colombo, Sri Lanka in

1951 and Habib Bank Plaza was built in 1972 to commemorate the banks 25th

Anniversary.

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. International operations were expanded to include the USA, Singapore,

Oman, Belgium, Seychelles and Maldives and the Netherlands.

On December 29, 2003 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.

COMPANY PORTFOLIO

As any commercial, bank HBL is also performing same functions and providing

services to customers and society. Its major banking services include;

y Rental banking

y Corporate banking

y International banking

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SIZE OF COMPANY:

HBL is one of the largest commercial bank of Pakistan. It accounts for a

substantial share (20%) of the total commercial banking market in Pakistan with

a network of 1,705 domestic branches; 55 overseas branches in 26 countries

spread over Europe, the Middle East, Far East, Asia, Africa and the United

States; 3 HBL wholly owned Subsidiaries namely Habib Bank Financial Services

(PVT) LTD. Karachi, Habib Finance International LTD (Hong Kong) and Habib

Finance Australia Ltd. Sydney; 2 Joint Ventures namely Habib Nigeria Bank

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

and Egypt.

DOMESTIC AND INTERNATIONAL NETWORK

HBL is one of Pakistan's premier banks in terms of deposits and advances with a

huge domestic and international network. Its salient features are;

Major Local Market Presence: HBL is one of the largest commercial banks in

Pakistan representing approximately 20% of the assets and deposits of