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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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    Turn-around Strategy of HBL

    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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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 3

    LETTER OF TRANSMITTAL

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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 4

    ACKNOWLEDGMENT

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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 5

    PURPOSE OF WRITING THIS REPORT

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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 6

    LEARNINGS FROM THE COURSE

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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 7

    EXECUTIVE SUMMARY

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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 8

    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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    Turn-around Strategy of HBL

    Course: Strategic Financial Management | Term Report 9

    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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    Turn-around Strategy of HBL

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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