HBL – Strategic Management Assignment – by Sohail (11837)
HBL BUSINESS MODEL
Business Summary
HBL provides banking and financial services.
It operates through the following business segments: Branch Banking, Corporate Banking,
Treasury, International Banking, Asset Management, and Head Office.
The Branch Banking segment consists of loans, deposits and other banking services to
agriculture, consumer, SME and commercial customers.
The Corporate Banking segment consists of lending for project finance, trade finance and
working capital to corporate customers.
The Treasury segment consists of proprietary trading, fixed income, equity, derivatives and
foreign exchange businesses.
It also includes credit, lending and funding activities with professional market counterparties
The International banking segment is considered as a separate segment for monitoring and
reporting purposes and consists of the group's operations outside of Pakistan.
The Head Office segment includes regulatory requirements or other operational reasons not
managed by other segments.
Sales per Businesses
2016 2017
Delta
PKR (in Million) % PKR (in Million) %
Branch Banking 54,599 32.4% 60,979 34.1% +11.69%
Treasury 23,913 14.2% 22,721 12.7% -4.98%
International Banking Group 14,391 8.5% 14,121 7.9% -1.88%
Head Office/Support Services 10,140 6% 8,553 4.8% -15.65%
Corporate Banking 9,069 5.4% 8,954 5% -1.27%
Asset Management 901.00 0.5% 628.00 0.4% -30.3%
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HBL – Strategic Management Assignment – by Sohail (11837)
Equities
Vote Quantity Float Company-owned shares Total Float
Share A 1 1,466,852,000 645,415,730 44.0% 0 0.0% 44.0%
Shareholders
Name Equities %
Aga Khan Fund for Economic Development SA 748,094,778 51.0%
CDC Capital Partners Ltd. 73,342,000 5.00%
Lazard Asset Management LLC 37,772,990 2.58%
Templeton Asset Management Ltd. 25,706,600 1.75%
The Vanguard Group, Inc. 24,957,543 1.70%
Habib Bank Ltd. 24,355,442 1.66%
Schroder Investment Management Ltd. 21,593,400 1.47%
Fidelity Management & Research Co. 18,312,930 1.25%
BlackRock Fund Advisors 11,698,435 0.80%
Jubilee Life Insurance Co. Ltd. 7,727,000 0.53%
Holdings
Name Equities % Valuation
Diamond Trust Bank Kenya Ltd (DTK) 45,159,849 16.2% 68,558,070 USD
Jubilee Life Ins (JLICL) 14,689,730 18.5% 63,253,243 USD
Habib Bank Limited (HBL) 24,355,442 1.66% 26,797,806 USD
Jubilee Gen.Ins (JGICL) 34,734,543 19.2% 17,084,532 USD
MASOOD TEXTILE MILLS LTD PFD 10,000,000 32.1% 7,770,700 USD
Saif Power Ltd (SAIP) 27,768,354 7.19% 5,510,630 USD
Pakistan Stock Exchange Ltd 40,073,830 5.00% 5,331,022 USD
Allied Bank Limited (ABL) 4,299,100 0.38% 3,434,422 USD
Kot Addu Power Company Ltd. (KAPCO) 1,387,500 0.16% 563,381 USD
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HBL – Strategic Management Assignment – by Sohail (11837)
STRATEGY EXECUTION PROCESS
HBL values are the main principles that define their culture and are brought to life in their
attitudes and behavior. Their values make them unique and unmistakable.
1. Progressiveness: HBL believe in the advancement of society through the adoption of
enlightened working practices, innovative products and processes, and a spirit of enterprise.
2. Customer Focus: HBL need to fully understand the needs of their customers and to adapt
products and services that meet customer requirements. HBL always endeavor for customer
satisfaction as their primary goal.
3. Excellence: This is at the core of everything HBL do. The markets in which HBL operate are
becoming increasingly competitive providing customers an abundance of choice. Only by
being the very best – in terms of the services HBL offer, their products and premises – HBL
become successful as HBL continue to grow.
4. Integrity: HBL is the leading bank in Pakistan, and our success depends upon building trust at
every level. Its customers – and society in general – expect them to possess and steadfastly
adhere to high moral principles and professional standards.
5. Meritocracy: HBL believe in giving opportunities and advantages to their employees on the
basis of their ability. HBL reward achievements and provide enriching career opportunities
for all.
The bank follows low price strategies, as there is a cut throat competition and not a lot to focus
or differentiate the solely market share depends upon the lowest cost and number of products
that any bank can offer along with the availability of branches.
HBL`s current strategies are diversified in 3 division which are:
1. Corporate Level Strategies
2. Business Level Strategies
3. Divisional Level Strategies
A. CORPORATE STRATEGIES
1. Strategic Path: From the very beginning the main focus of the management of HBL is the
implementation of growth strategies. During the entire period of continuous straggle,
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
straggle; they never lose their market share. If we talk about
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HBL – Strategic Management Assignment – by Sohail (11837)
2. Growth Strategies: HBL has adopted growth 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.
i. Incremental Growth: HBL’s key areas of operations encompass product offering and
services in retail and consumer banking. They introduce their products to expand
their client’s base by bringing innovation and improving the channels of distribution.
They put their all efforts to reduce the business and make their services accessible
for all customers.
ii. International Growth: With a presence in 25 countries subsidiaries in Hong Kong
and the UK, affiliates in Nepal, Nigeria, Kenya and Kyrgyzstan and representation
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.
Merger
HBL merged "Standard Bank" in earlier times
HBL acquired Barclays bank
3. 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.
B. BUSINESS LEVEL STRATEGY
1. Cost Leader Ship 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.
2. 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.
C. DIVISIONAL LEVEL STRATEGY:
Following are the main divisional level strategy fallowed by HBL
To establish sound relationships with top industrial groups and various multinationals.
To make the bank customer focused
To increase the no of online branches
To increase the ATM network to further improve the bank market shares.
To implement the performance appraisal process to provide motivation and merit-
oriented culture in the bank
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HBL – Strategic Management Assignment – by Sohail (11837)
To improve extensive tanning to the employees in the process, products, marketing
and selling skills.
HBL CURRENT STRATEGIES
HBL has worked on all three levels at their best and want to incorporate strategies at all the three
levels. HBL current strategies are towards innovations and advancement of technology.
At HBL, they are conscious that as the nation’s bank of choice we cater to a wide spectrum of
customers. For those who prefer to bank with HBL at one of our branches, we are modernizing
our network to improve efficiencies and shorten transaction time, thereby enhancing our
customers’ banking experience
HBL has always focused towards adoption of change in culture and environment as to be with
the modern era in banking industry. The way to implement any change in the bank/ organization
takes decades to adopt, due to which behavior have to be cultivated as a pyramid of unique
feature is hard to change and if changes that do not change the particular, it diverts itself to the
other factors and it is a chain of changes towards the betterment of Bank.
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HBL – Strategic Management Assignment – by Sohail (11837)
EXTERNAL FACTOR EVALUATION
A. EXTERNAL FACTOR EVALUATION (EFE) MATRIX
Key External Factors Weight Rating Weighted
Score
OPPORTUNITIES
1. Government reforms to uplift economy 0.08 3 0.32
2.Fast cash transfer as compare other local markets 0.07 2 0.21
3. Diversification towards Islamic Banking Services 0.06 3 0.18
4. Providing premium and priority Banking services 0.07 2 0.14
5. Agriculture finance and Micro Finance Facility to farmers 0.07 2 0.14
and households
6. SME financing 0.05 2 0.10
7. Personal Loans and Consumer Banking 0.04 2 0.08
8. Expansion in Rural areas 0.06 3 0.18
9. International Expansion Plans 0.07 2 0.14
THREATS
10. Political interference in Banking Activities 0.07 1 0.07
11. Economic Downfall 0.08 2 0.16
12. High discount rates by SBP 0.05 1 0.05
13. Law and order situation affecting economic activities 0.07 2 0.14
14. High interest rates and strict monetary policy 0.06 2 0.12
15. High Inflation rate due to deficit financing by Government 0.04 1 0.04
16. Power shortage affecting industries overall performance 0.06 2 0.12
Total 1.00 2.19
Total weighted score is 1.0. The average total weighted score is 2.1 which means that organization is
responding well to the opportunities and threats in its industry. Keeping in consideration there are
elements which can boost the progress of organization and can ultimately flourish the
organization. This will be the resultant that firm`s strategies take advantage of existing
opportunities and minimize the adverse risk arise from the external forces.
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HBL – Strategic Management Assignment – by Sohail (11837)
COMPETITIVE PROFILE MATRIX
Competitive Profile Matrix of company assess on its general strength rating. It identifies firm
major competitors and its particular strengths and weaknesses in relation to its competitors so that
the company can identify the improvement needed key factors that are valuable for their target
market but the company unable to capture.
We have taken top 3 banks of Pakistan to run the CPM Analysis over HBL. It includes 1 national
government bank and rest top tier private banks. Upon discovering the critical success factors, we
identified 10 factors that influence the sector. After analysis we can conclude that HBL is rated
the highest rank earning total of 3.25 points overall and runner-up was UBL scoring 3.2. While
HBL is still at top but the competitors are very close and the company needs to take steps in terms
of technology and or do something unique to avoid this cut throat competition.
Recommendation: In baking industry product, Service Quality & advertisement are the three key
& crucial elements HBL score is 3.00 which is good as compare to other banks but they need to focus
in to these factors to make it better.
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