HABIB BANK LIMITED PAKISTAN

Project Report

STRATEGIC MANAGEMENT MBA (Evening) Spring-2012 Sunday 12:30 PM to 3:30 PM

Prepared by: Shoaib Ali Khan (3704)

Submitted to: Mr. Tariq Kaleem

Introduction
Habib Bank Limited commonly referred to as "HBL" and head-quartered in Habib Bank Plaza, Karachi, Pakistan, is the largest bank in Pakistan. The bank has a network of 1425 branches in Pakistan and 55 branches worldwide. It has a domestic market share of over 40%. It continues to dominate the commercial banking sector with a major market share in inward foreign remittances (55%) and loans to small industries, traders and farmers. Overseas, it has operations in the several countries.

History
Habib Bank Limited (HBL) was established on 25th August 1941. It was founded with the blessing of Quaid-e-Azam (Great Leader) Mohammad Ali Jinnah. HBL is proud of the fact that the Quaid-E-Azam demonstrated his faith and confidence in HBL by opening his personal account in our Bombay branch in the year 1946. The first prime minister of Pakistan Quaid-e-Millat Liaqat Ali Khan, on the independence day of Pakistan (August 14, 1947) appreciated the services of the bank. Impressed by its initial performance, Quaid-e-Azam Mohammad Ali Jinnah asked the bank to move its operations to Karachi after the creation of Pakistan. HBL established itself in the Quaids city in 1943 and became symbol of pride and progress for people of Pakistan.

Present Status Today

HBL plays a central role in Pakistans financial and economic development. It has come a long way from its modest beginnings in Bombay in 1941 when it commenced operations with a fixed capital of 25,000 rupees. On the occasion of the annual World Bank and IMF Meetings 2010 HBL wins two Global Finance Awards; Best Bank Pakistan and Best Trade Finance Provider Pakistan. These awards were conferred on HBL in recognition of its achievements in product delivery and service quality in the markets where it operates. HBL also wins Best Emerging Market Banks award in Pakistan for 2010 by Global Finance. This award was conferred on HBL in recognition of its superior performance, enhanced profitability, expanding asset base and innovative products and services.

Privatization
The year 2003 was marked by the implementation of the Government of Pakistans program for privatizing the Bank. Amongst the qualified bidders, the Agha khan Fund for Economic Development (AKFED) offered the highest bid, which was accepted by the Government of Pakistan in December.

Current Strategic Direction

Vision Statement
Enabling people to advance with confidence and success

Mission Statement
To make our Investor (s) prosper, our staff excel and to create value for our stakeholders.

Values
HBLs values are the fundamental principles that define its culture and are brought to life in its attitudes and behavior. It is companys values that make its unique. These values are as follows: Excellence This is at the core of everything HBL does. The markets in which HBL operates are becoming increasingly competitive, giving their customers an abundance of choice. Only through being the very best - in terms of the service HBL offers, its products and premises - can it hope to be successful and grow. Integrity For HBL, integrity means a synergic approach towards abiding our core values. United with the force of shared values and integrity, HBL employees form a network of a well-integrated team. Customer focus HBL understands fully the needs of its customers and adapts its products and services to meet these. HBL always strives to put the satisfaction of its customers first. Meritocracy At HBL on every level, from selection to advancement, leadership has designed a consistent system of human resource practices, based on objective criteria throughout all the layers of the organization. They are, therefore, able to achieve a specific level of performance at every layer of the organization Progressiveness HBL believes in the advancement of society through the adoption of enlightened working practices, innovative new products and processes, and a spirit of enterprise.

Objectives OF HBL
Financial
To earn maximum profit for the bank itself and for its shareholders. To earn growth in deposits. To earn growth in assets.

Strategic
From the very beginning the main focus of the management of HBL is the implementation of growth strategies especially market penetration, market development & related diversification. During the entire period of continuous struggle they adapted almost all types of strategies according to situation and market demand of that time except restructuring of defensive strategies. HBL never faced any type of liquidation, bankruptcy, sale or removal of any business unit. Their main strength is to avoid insecure financing. It is big organization that ever during their dark periods of struggle; they never lose their market share. They mainly emphasize on a growth strategy.

CORPORATE LEVEL STRATEGIES

HBL has following corporate level strategies

Focus Growth Market Penetration

HBL has adopted market penetration strategy by expanding its operations. HBL actually have different products and services for both individuals and business customers. HBL product and services for individual customers are credit cards, debit cards, and deposit accounts. HBL product and service for business customer are commercial banking, cash management and asset management.

Geographic expansion strategy

It takes the company abroad. Acting upon this strategy HBL has been expanded abroad. The abroad branches are 55 mentioned above in introduction section. HBL is planning to expand its business and branches in more countries.

Related Diversification
HBL has also adopted related diversification strategy, because at first function of HBL was only accepting deposit and advancing loans but now HBL has many related functions like flexi loans, ATM and credit cards.

BUSINESS LEVEL STRATEGIES Competitive Strategy Cost Leadership strategy

At business level HBL has adopted cost leadership strategy in a way that cost of advancing loans is less as compare to some other well reputed banks like Alfalfa, Bank Al Habib & MCB.

Differentiation Strategy
At business level, HBL has also adopted differentiation strategy by introducing some new products into the market earlier to other banks like debit cards.

Current Performance
2011 was another challenging year in the Global and the local economy; devastating floods for the second year along with an energy shortage and other adverse conditions impacted Pakistan. As a result, the Pakistan economy grew by 2.4% of GDP as against targeted 4.5%. Despite the economic challenges, HBL show a strong growth in all areas. HBL attained some significant milestones by becoming the first bank in Pakistan to reach Rs. 1 trillion in balance sheet size (excluding Interbank borrowings) as well as achieving record profitability with a Profit after tax of Rs. 22.3 billion, an increase of 31.1% over 2010, which translates into an earning per share of Rs. 20.13. The Bank announced a final cash dividend of Rs. 4 per share (40%) and 1 bonus shares for every 10 shares held (10%), which is in addition to the interim dividend of Rs. 3 per share. Deposit has registered remarkable growth of 25% and the net asset growth of the bank has been 14% over 2010. HBL has achieved growth of 23.2% over last year, which is an increase of Rs. 214.8 billion and has managed to control its administrative expenses effectively. The balance sheet growth and cost control measures have resulted in robust growth of profit after tax of 31.1% over last year.