Research Analyst
May 26 - June 01, 2008

Habib Bank Limited was incorporated on August 25, 1941 in Bombay with a paid up capital of PKR 2.5 million. At the time of independence of Pakistan, the head office of the bank was shifted to Karachi. HBL is Pakistan's second largest commercial bank, having national and international branch network. It has a full license covering commercial banking, retail banking, consumer banking and investment banking activities in Pakistan and overseas. On December 29, 2003 Agha Khan Fund for Economic Development (AKFED) by virtue of being the highest bidder at Rs.22.409 billion acquired 51% share and management control of HBL. The government holding has been reduced to 49%. On February 2004, HBL was handed over to the new management. .Through the defined process, 51% shares of HBL were acquired by the Agha Khan fund for economic development (AKFED) for a price of PKR 63.68 per share and the management of the bank was transferred on February 28, 2004. Currently in FY07, HBL has 1,489 branches running in Pakistan & 14,552 employees working in HBL.
















Total Income


Bed Debts Written off Directly


. Net Profit After Tax:




Total assets of HBL increased by 16.4 % from Rs 594,062 m recorded in FY06 to Rs 691,992 m in FY07. HBL advances in FY07 are Rs 382,173 m. They increased by 9.36 % as compared to Rs 349,433 m in FY06 .HBL's investments totaled to Rs 177,942 m in FY07, with an increase of Rs 48.8 % in comparison to Rs 119,587 m in 2006. Deposits have increased from Rs 459,140 m in FY06 to Rs 531,298 m in FY07 indicating by 15.71 %. Borrowings stood at Rs 58, 994 m in FY07 and increased by 4.61% from Rs.56, 392 m in FY06 indicating a slight increase in borrowings or return of loan amount. The authorized capital has been unchanged. It remained Rs13, 800,000 in FY07 same as in previous year. Paid up capital has also remained same to Rs 6,900,000 in FY07 .Total income remained high this year to Rs 41,350 m as compared to Rs 3 8,971 m in the FY06 with an increase of 6.1%. Bed debt increased to almost 189% Rs 809, 9291 compared to Rs2, 804,072. For the year ending Dec, 31, 2006 the profit earned by HBL amounted to Rs 1, 270, 0315 as compared to Rs 10,084,037 earned in this period of 2007 indicating a decrease in growth rate of 20.60%. EPS has gone down considerably. ADR is also decreasing because, the declining is trend due to cut short in lending of non performing loans.


After the privatization there is a marked change in the performance of HBL on year to year which is quite visible in reduction in the overhead expenses of the bank and improvement in the financial services and products. Habib bank's business operations spread over major areas of banking products like corporate banking, consumer banking, commercial banking group, investment banking, global treasury group, local branch operations and international operations. HBL branches also provide Islamic banking. There has been tremendous improvement in key indicators like total assets, investments, advances and deposits. However, the bank has shown reduction in Earning after tax (EAT), advance to deposits ratio (ADR) & EPS because SBP has completely withdrawn the benefits relating to security held, other than certain specific liquid securities in respect of non performing loans and advances. The current situation in Pakistan is not good because of both political and economic situation. For the last 1 year there has been a record rise in inflation due to which SBP have tightened its monetary policy and investors are finding it difficult to invest in businesses because of increase in interest rates. All above situations are making negative impact on the performance of bank and we may not expect Habib bank to perform outstandingly in the near future.