Executive Summary: Bank Al Habib Limited
Executive Summary: Bank Al Habib Limited
Executive Summary
This report has focused on the Management Style and working of the Bank Al Habib Limited.
Aspects like corporate philosophy, organizational structure, training and development and
role of technologies in company’s activities have been highlighted.
From management point Bank Al Habib is an organization following centralized planning and
controlling. Planning is the responsibilities of the senior management group more particularly
the board of directors, and to check any deviation from the prescribed plan, there is head
office under them.
Organizational structure has been established in such a way, which has enabled it to
decentralize its operations and day-to-day management activities. Delegation of authority
and establishment of zones, regions, and branches have helped to manage day-to-day
activities. To effectively maintain and develop its human resources Bank Al Habib invest
considerable time and finance to polish the skills of its employees.
Company Overview
DAWOOD HABIB GROUP, which is the sponsor of Bank AL Habib Limited, has a very long
track record of banking which dates back to 1920s. They were among the founder members
of Habib Bank Limited , which played a major role in meeting the financial, and banking
needs of Pakistan, and which was nationalized along with other Banks in Pakistan on
December 31, 1973.
Under the privatization policy of Government of Pakistan, the DAWOOD HABIB GROUP was
granted permission to set up a commercial bank. Bank AL Habib was incorporated as a Public
Limited Company in October 1991 and started banking operations in 1992.
Board of Directors
Credit Rating
The Bank has been rated as "AA" for long-term rating and "A1+" for short-term rating by
the Pakistan Credit Rating Agency (Private) Limited (PACRA).
Consumer Banking
Bank AL Habib Limited offer Consumer Loan facilities to its eligible customers. These facilities
are tailored to suit customer requirements with competitive rates and an easy means of
payment. We have the solution whether it may be for personal needs, a brand new car or a
house (building/renovating a house).
Personal Loan.
Auto Loan.
Home Loan.
Services
Bank AL Habib Limited offers a wide range of services to the customers and recognizes the
importance for efficient business delivery and providing timely solutions to them.
Online Banking.
Safe Deposit Lockers.
ATM Card.
Debit Card.
Tele Banking.
Remittances.
Cash Management.
The bank also maintains correspondent relations with leading international banks.
These include American Express Bank, USA; Banco Di Roma, Italy; Commerzbank and
Dresdner Bank, Germany; Midland Bank, PLC U.K.; The Royal Bank of Canada, Canada; Hong
Kong and Shanghai Banking Corporation Ltd., Hong Kong.
Vision Statement
Mission Statement
“To be a strong and stable financial institution offering innovative products and
services while contributing towards the National economic and social development.”
Customers. No.
Product/Services. Yes.
Markets. No.
Technology. No.
Concern for Survival, Growth, and Profitability Yes.
Philosophy. Yes.
Self Concept. Yes.
Concern for Public Image. No.
Concern for Employee. No.
Strengths
1. Strong brand recognition in the domestic market and niche foreign markets.
2. Bank Al Habib provides a complete range of banking products and services including
retail banking, corporate banking, trade finance, consumer finance, debit cards, online
banking, tele banking, etc.
3. Focused business strategy supported by appropriate organization structure, operating
procedures, and qualified human resource.
4. Strong distribution capability through the 104 branches all over Pakistan.
Weaknesses
1. No massive advertising.
2. Up gradation of technology in all branches not yet complete.
3. The potential of overseas branches is not being fully exploited.
4. Shortage of trained and specialized staff at lower and officer levels for consumer and
retail banking.
5. Communication among the functional areas are some how lacking.
Weighted
S. No. Key External Factors Weight Rating
Score
Strengths
1 Strong brand recognition in the domestic market 0.15 4 0.60
and niche foreign markets.
2 Bank Al Habib provides a complete range of 0.15 4 0.60
banking products and services including retail
banking, corporate banking, trade finance,
consumer finance, debit cards, online banking,
tele banking, etc.
3 Focused business strategy supported by 0.10 4 0.40
appropriate organization structure, operating
procedures, and qualified human resource.
4 Strong distribution capability through the 104 0.10 3 0.30
branches all over Pakistan.
Weaknesses
The total weighted score of 3.55 shows that Bank Al Habib is above average in its efforts to
pursue strategies that enhance internal strengths and minimize weaknesses.
Opportunities
1. Develop value added services combined with corporate banking relationships, cash
management services to large and medium sized corporate clients.
2. Large international network, which principally focuses on trade finance with Pakistan,
can be utilized to tap trade activities in other markets.
3. Reduction in intermediation costs from 5% to 10% is possible, with improving
technology.
4. Profit may increase by 10% to 15% through e-banking operations.
5. A wide product portfolio, along with increasing greater hedging of business risks also
significantly increases cross selling opportunities.
Threats
Weighted
S. No. Key External Factors Weight Rating
Score
Opportunities
1 Develop value added services combined with 0.15 4 0.60
corporate banking relationships, cash
management services to large and medium sized
corporate clients.
The total weighted score of 3.25 shows that Bank Al Habib is above average in its efforts to
pursue strategies that capitalize on external opportunities and avoid threats.
As indicated by the total weighted score of 2.75, Bank Al Habib is stronger than Saudi Pak
Bank having score of 2.30 but weaker than Bank Al Falah having score of 3.35.
Strengths-S Weaknesses-W
Rs. In ‘000
Net Income 1,483,165
Total Asset 91,501,541
Rs. in ‘000
Net Income 1,483,165
Total Stockholder’s Equity 4,745,795
Rs. in ‘000
Earning before interest and taxes 2,022,008
Sales 5,971,690
Working Capital
ROIs 0.329 5
Operating profit Margin 0.34 4
Working Capital 938,776,516 4
Cash Flow (in ‘000) 8,671,552 5
Net Income (in ‘000) 1,483,165 5
Revenue (in ‘000) 5,971,690 5
Total 28
Market Share -2
Product and service quality -2
Customer loyalty -2
Technological know how -3
Total -9
Technological Change -3
Rate of Inflation -4
Demand Variability -3
Price change of competing products -3
Competitive pressure -3
Total -16
Computation
FS
(2.50, 1.47)
CA IS
-6 -1 1 6
-6
ES
(Rs In ‘000)
Percent Percent
Percent Percent
Divisions Revenues Profits/Loss Market Growth
Revenue Profits/Loss
Share Rate
1 Mark-up/ 4,935,626 82.65 2,716,786 134.36 80 +15
Return/
Interest
Earned
2 Fee, 508,744 8.51 (341136) (18.03) 70 +08
Commission
and
Brokerage
Income.
3 Dividend 38,820 0.65 (1436.34) (0.08) 60 +05
Income
4 Income 300,795 5.04 (201485.62) (10.00) 65 -10
from
dealing in
foreign
currencies.
5 Other 187,705 3.15 (126449.6) (6.25) 40 +13
Income.
Total 5,971,690 100 2,022,008 100
High
1) 134.36% 5) (6.25%)
+20
2) (18.03%)
Industry Sales Growth Rate (%)
3) (0.08%)
Medium
0
4) (10.00%)
Low
-20
(Rs In ‘000)
Percent Percent IFE EFE
Divisions Revenues Profits/Loss
Revenue Profits/Loss Score Score
1 Mark-up/ 4,935,626 82.65 2,716,786 134.36 3.70 3.60
Return/
Interest
Earned
2 Fee, 508,744 8.51 (341136) (18.03) 3.20 3.30
Commission
and
Brokerage
Income.
3 Dividend 38,820 0.65 (1436.34) (0.08) 2.65 3.10
Income
4 Income from 300,795 5.04 (201485.62) (10.00) 3.10 1.85
dealing in
foreign
currencies.
5 Other 187,705 3.15 (126449.6) (6.25) 2.50 2.25
Income.
Total 5,971,690 100 2,022,008 100
High
2) (18.03%)
3.0 to
The EFE Total weighted Scores
4.0 3) (0.08%)
3.0
5) (6.25%)
Medium
2.0 to
2.99
2.0
4) (10.00%)
Low
1.0 to
1.99
1.0
1. Market Penetration
2. Market Development
3. Product development
4. Concentric Diversification
5. Horizontal Diversification
STRONG
WEAK COMPETITIVE
COMPETITIVE POSITION
POSITION
PRODUCT
S. No CRITICAL SUCCESS FACTORS MARKET DEVELOPMENT
DEVELOPMENT
WEIGHT AS TAS AS TAS
OPPORTUNITIES
1 Develop value added services. 0.15 4 0.60 4 0.60
2 Large international network. 0.10 3 0.30 3 0.30
3 Reduction in intermediation costs. 0.05 2 0.10 3 0.15
4 E-banking operations. 0.10 4 0.40 4 0.40
5 A wide product portfolio, along
with increasing greater hedging of
business risks also significantly 0.10 3 0.30 4 0.40
increases cross selling
opportunities.
THREATS
1 Intense industry competition. 0.15 4 0.60 4 0.60
2 Economic instability. 0.10 2 0.20 1 0.10
3 Political changes. 0.05 1 0.05 1 0.05
4 Brain drain. 0.10 2 0.20 2 0.20
Cost of service and support of
5 technology increases 0.05 3 0.15 2 0.10
exponentially.
6 Technology is constantly changing. 0.05 2 0.10 3 0.15
STRENGTH
1 Strong brand recognition. 0.05 3 0.15 3 0.15
Complete range of banking
2 0.15 4 0.60 4 0.60
products and services.
Focused business strategy
supported by appropriate
3 organization structure, operating 0.15 3 0.45 4 0.60
procedures, and qualified human
resource.
4 Strong distribution capability. 0.10 3 0.30 3 0.30
WEAKNESSES
1 No massive advertising. 0.15 4 0.60 4 0.60
Up gradation of technology in all
2 0.10 3 0.30 3 0.30
branches not yet complete.
The potential of overseas branches
3 0.15 3 0.45 2 0.30
is not being fully exploited.
Shortage of trained and specialized
4 0.10 2 0.20 3 0.30
staff.
Communication among the
5 functional areas are some how 0.05 2 0.10 3 0.15
lacking.
Sum Total Attractiveness Score 6.15 6.35
Conclusion
After conducting the comparative study of Bank Al Habib Limited, we concluded that keeping
the two strategies of expand the branch network and developing new and innovative
products is important for the company on one hand it increases its presence in the market
and on the other increase its customer base. For this purpose it is important to understand
the organization structure and try to modify according to the requirement.
Economic condition during the year 2005-2006 continued to be influenced by national socio-
political developments as well as the state of uncertainty in the peace process particularly in
last quarter of the year. Keeping the view customers needs, company launched a number of
new products.
After brief discussion with company representatives, analyzing the matrixes and considering
opinion of group members Bank Al Habib grew in most of its businesses. Bank Al Habib
growth philosophy should also concentrate on these key areas i.e. organic growth through
branch expansions, launching new products and services for existing as well as for new
customers. It is now functional in almost every major cities of the country and their vision is
similar as they are acting means they working.