habib alfla chart

7/31/2019 Habib Alfla Chart

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1.3 Companys introduction:

Introduction of Habib Bank of Pakistan:

Habib Bank Limited commonly referred to as "HBL" and head-quartered in Habib Bank Plaza, Karachi,

Pakistan, is the largest bank in Pakistan. HBL is a Banking Company, which is engaged in Commercial &

Retail Banking and related services domestically and overseas. HBL was incorporated on 25th August

1941 and operated in the private sector until its nationalization in 1974. HBL has been approved for

privatization and the privatization commission has selected a Financial Advisor to prepare a

comprehensive plan and assist in the sale process. The government has appointed a professional

management team to restructure the bank and to recover and clean its doubtful and classified portfolio.

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. 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. HBL is one of Pakistan's

premier banks in terms of deposits and advances with a huge domestic and international network. HBL

provides its customers a complete range of banking products and services including retail banking,

corporate and institutional banking, trade finance, consumer finance and credit cards. HBL is currently

rated AA (Long term) and A-1+ (Short term) and has a balance sheet size of over USD 11 billion. It is the

first Pakistani bank to raise Tier II Capital from external sources.

Vision:

Enabling people to advance with confidence and success

Mission:

To make our customer prosper, our staff excels and creates value for shareholders


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Introduction of Bank Al Falah:

Bank Alfalah Limited is a private bank in Pakistan owned by the Abu Dhabi Group. Bank

Alfalah Limited was incorporated on June 21st, 1992 as a public limited company under the

Companies Ordinance 1984. Its banking operations commenced from November 1st ,1997. The

bank is engaged in commercial banking and related services as defined in the Banking

companies ordinance, 1962. The Bank is currently operating through 195 branches in 74 cities,

with the registered office at B.A.Building, I.I.Chundrigar, Karachi. This facilitates the commitment

to a culture of innovation and seeks out synergies with clients and service providers to ensure

uninterrupted services to its customers. Bank Al-Falah is known to perceive the requirements of

customers and match them with quality products and service solutions. During the past five years, this

bank has emerged as one of the foremost financial institution in the region endeavoring to meet the

needs of tomorrow today. With a vision to be the premier organization operating locally &

internationality that provides the complete range of financial services to all segments under one roof,

Bank Al-Falah is one of the most important entities in banking sector of Pakistan with a strong credit

rating of AA for long term and A one plus for the short term. Since its inception, as the new identity of

H.C.E.B after the privatization in 1997, the management of the bank has implemented strategies and

policies to carve a distinct position for the bank in the market place. Since its inception, as the new

identity of H.C.E.B after the privatization in 1997, the management of the bank has implemented

strategies and policies to carve a distinct position for the bank in the market place.

Strengthened with the banking of the Abu Dhabi Group and driven by the strategic goals set out by its

board of management, the Bank has invested in revolutionary technology to have an extensive range of

products and services.

Vision:

To be the premier organization operating locally & internationality that provides the complete range of

financial services to all segments under one roof

Mission:

To develop & deliver the most innovative products, manage customer experience, deliver quality

services that contributes to brand strength, establishes a competitive advantage and enhances

profitability, thus providing value to the stakeholders of the bank


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1.4 List of competitors:

Standard Chartered Bank

National Banks

Allied Bank Limited

RATIO ANALYSIS:

Financial ratios are useful indicators of a firm's performance and financial situation.

Financial ratios can be used to analyze trends and to compare the firm's financials to

those of other firms.Ratio analysis is the calculation and comparison of ratios which are

derived from the information in a company's financial statements. Financial ratios are

usually expressed as a percent or as times per period. Ratio analysis is a widely used toolof financial analysis. It is defined as the systematic use of ratio to interpret the financial

statements so that the strength and weaknesses of a firm as well as its historical

performance and current financial condition can be determined. The term ratio refers to

the numerical or quantitative relationship between two variables. With the help of ratio

analysis conclusion can be drawn regarding several aspects such as financial health,

profitability and operational efficiency of the undertaking. Ratio points out the operating

efficiency of the firm i.e. whether the management has utilized the firms assets correctly,

to increase the investors wealth. It ensures a fair return to its owners and secures

optimum utilization of firms assets. Ratio analysis helps in inter-firm comparison by

providing necessary data. An inter firm comparison indicates relative position. It provides

the relevant data for the comparison of the performance of different departments. If

comparison shows a variance, the possible reasons of variations may be identified and if

results are negative, the action may be initiated immediately to bring them in line. Yet

another dimension of usefulness or ratio analysis, relevant from the View point of

management is that it throws light on the degree efficiency in the various activity ratios

measures this kind of operational efficiency.


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a)Liquidity Ratios

b) Leverage Ratios

c) Profitability Ratios

a) Liquidity Ratios

Liquidity ratios measure a firms ability to meet its current obligations. These include:

Current Ratio:

Current Ratio = Current Assets / Current Liabilities

This ratio indicates the extent to which current liabilities are covered by those assets expected to be

converted to cash in the near future. Current assets normally include cash, marketable securities,

accounts receivables, and inventories. Current liabilities consist of accounts payable, short-term notes

payable, current maturities of long-term debt, accrued taxes, and other accrued expenses. Current

assets are important to businesses because they are the assets that are used to fund day-to-day

operations and pay ongoing expenses.

HABIB BANK

BANK AL FALAH

Year 2009 2010 2011Current Assets 575611106 671597594 731954693

Current Liabilities 480455832 566659483 631948038

Current ratio 1.20 1.19 1.16

Year 2009 2010 2011

Current Assets 265182551 316972828 335217471


Current ratio 1.06 1.10 1.06


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InterpretationHABIB BANK

The current ratio for the year 2009, 2010 & 2011 is 1.20, 1.19 & 1.16 respectively, compared to standard

ratio 2:1 this ratio is lower which shows low short term liquidity efficiency at the same time holding less

than sufficient current assets mean inefficient use of resources

BANK AL FALAH

The ratios for the last 3 years are 1.06, 1.10 & 1.06, shows below standard of 2:1 which means efficient

use of funds but at the risk of low liquidity.

Working Capital:

Working Capital = Current Assets Current Liabilities

A measure of both a company's efficiency and its short-term financial health. Positive working capital

means that the company is able to pay off its short-term liabilities. Negative working capital means that

a company currently is unable to meet its short-term liabilities with its current assets (cash, accounts

receivable and inventory).

Also known as "net working capital", or the "working capital ratio".

0.95

1

1.05

1.11.15

1.2

1.25

Bank al falah Habib Bank

Ratio

Years

Current Ratio

2009

2010

2011


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HABIB BANK

BANK AL FALAH

Interpretation:

HABIB BANK:

It is very clear from the above calculations that the working capital of the bank is gradually increasing

over the years, which shows good short term liquidity efficiency.

BANK AL FALAH:

This ratio increased to a great extent in 2010, almost double of the year 2009 but later on in the year

2011 it went down again.

0

20000000

40000000

60000000

80000000

100000000

120000000

Habib Bank Bank al falah

WorkingCapital

Year

Working Capital

2009

2010

2011

Year 2009 2010 2011

Current Assets 575611106 671597594 731954693


Working Capital 95155274 104938111 100006655

Year 2009 2010 2011

Current Assets 265182551 316972828 335217471


Working Capital 15276529 30128884 19741302


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b) Leverage Ratios:

By using a combination of assets, debt, equity, and interest payments, leverage ratio's are used to

understand a company's ability to meet it long term financial obligations. Leverage ratios measure the

degree of protection of suppliers of long term funds. The level of leverage depends on a lot of factorssuch as availability of collateral, strength of operating cash flow and tax treatments. Thus, investors

should be careful about comparing financial leverage between companies from different industries. For

example companies in the banking industry naturally operates with a high leverage as collateral their

assets are easily collateralized.

These include:

Time Interest Earned:

TIE Ratio = EBIT / Interest Charges

The interest coverage ratiotells us how easily a company is able to pay interest expenses associated tothe debt they currently have. The ratio is designed to understand the amount of interest due as a

function of companys earnings before interest and taxes (EBIT).This ratio measures the extent to which

operating income can decline before the firm is unable to meet its annual interest cost.

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

EBIT 32044524 34298574 48559935

Interest Charges 13204037 19153957 19153957

TIE ratio 2.43 1.79 1.83

Year 2011 2010 2009

EBIT 17798831 21156515 22125914

Interest charges 15232886 16620963 20331194

TIE ratio 1.16 1.27 1.08


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HABIB BANK

We can see from this ratio analysis that, this company has covered their interest expenses 2.43 times in

2011, 1.79 times in 2010 and 1.8 times in 2009. It means they have performed pretty much same in

2009 and 2010, but has taken a different look in 2011. As in 2011 they issued a little high number of

long-term loans and does not have good liquidity position, their EBIT became high thus making TIE a

little high as well

BANK AL FALAH

We can see that, this company has covered their interest expenses 1.16 times in 2011, 1.27 times in

2010 and 1.08 times in 2009. It means they havent improved in the past years.

0

0.5

1

1.5

2

2.5

3


TIERatio

Years

TIE Ratio

2011

2010

2009


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Debt Ratio:

Debt Ratio = Total Debt / Total Assets

The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of funds

provided by the creditors. The proportion of a firm's total assets that are being financed with borrowed

funds. The debt ratio is calculated by dividing total long-term and short-term liabilities by total assets.

The higher the ratio, the more leverage the company is using and the more risk it is assuming. Assets

and liabilities are found on a company's balance sheet.

HABIB BANK

BANK AL FALAH

0.87

0.88

0.89

0.9

0.91

0.92

0.93

0.94

0.95

0.96


DebtRatio

Years

Debt Ratio

2011

2010

2009

Year 2011 2010 2009

Total debt 536848102 628754092 682747953

Total Assets 590291468 691991521 757928,89

Debt Ratio 0.91 0.91 0.9

Year 2011 2010 2009

Total debt 263443596 312675308 331946025

Total Assets 275685541 328895152 348990764

Debt Ratio 0.95 0.95 0.95


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Interpretation:

HABIB BANK

Calculating the debt ratio, we came to see that this company is highly leveraged one

BANK AL FALAH

Calculating the debt ratio, we came to see that this company is highly leveraged one.

Debt to Equity Ratio:

Debt to Equity Ratio = Total debt / Total Equity

The debt to equity ratio is the most popular leverage ratio and it provides detail around the amount of

leverage (liabilities assumed) that a company has in relation to the monies provided by shareholders. As

you can see through the formula below, the lower the number, the less leverage that a company is

using. It is a common measure of the long-term viability of a company's business and, along with current

ratio, a measure of its liquidity, or its ability to cover its expenses. As a result, debt to equity calculations

often only includes long-term debt rather than a company's total liabilities. A high debt to equity ratio

implies that the company has been aggressively financing its activities through debt and therefore must

pay interest on this financing.

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

Total debt 536848102 628754092 682747953

Total Equity 45177664 55063125 71280902

Debt To Equity Ratio 11.88 11.42 9.58

Year 2011 2010 2009

Total debt 263443596 312675308 331946025

Total Equity 10572605 13766673 14608523

Debt To Equity Ratio 24.91 22.71 22.72


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Interpretation

HABIB BANK

We can see from the above calculations that this ratios continuously decreasing in the last three years.

BANK AL FALAH

Calculating this debt ratio we can see that it was 24.91, 22.71 & 22.72 in the year 2011, 2010 & 2009

respectively. This shows a decline in the ratio over the years.

Current Worth / Net worth Ratio:

Current Worth to Net worth Ratio= Current Worth / Net worth Ratio

We can calculate current worth and net worth by using following formulas:

Current Worth = Total Current Assets Total Current Liabilities

Net Worth = Total Assets - Total Liabilities

0

5

10

15

20

25

30


DebttoEquityRatio

Years

Debt to Equity Ratio

2011

2010

2009


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HABIB BANK

BANK AL FALAH

Interpretation

HABIB BANK

We can see from the above calculations that this ratios continuously decreasing in the last three years.

In 2011 it was 1.78, in 2010 it was 1.66 and in 2009 it was 1.33.

BANK AL FALAH

Analysis shows that this ratio was as high as 1.2 among three years. However, it declined to 1.15 in the

year 2009. In 2010 the ratio somewhat increased to 1.85.

0

0.5

1

1.5

2


NetWorth

Years

Net Worth Ratio

2011

2010

2009

Year 2011 2010 2009

Current Worth 95155274 104938111 100006655

Net Worth 53443366 63237429 75180436

Current Worth to Net 1.78 1.66 1.33

Year 2011 2010 2009

Current Worth 15276529 30128884 19741302

Net Worth 12241945 16219844 17044739

Current Worth to Net 1.247 1.85 1.15


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Total Capitalization Ratio:

Total Capitalization Ratio = Long-term debt / long-term debt + shareholders' equity

The capitalization ratio measures the debt component of a company's capital structure, or

capitalization (i.e., the sum of long-term debt liabilities and shareholders' equity) to support a

company's operations and growth. Long-term debt is divided by the sum of long-term

debt and shareholders' equity. This ratio is considered to be one of the more meaningful

of the "debt" ratios - it delivers the key insight into a company's use of leverage.

HABIB BANK

BANK AL FALAH

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7


CapitalizationRatioworth

Years

Total Capitalization Ratio

2011

2010

2009

Year 2011 2010 2009

Long Term debt 56392270 62094609 50799915

Long term debt + Equity 101569934 117157734 122080817

Capitalization Ratio worth 0.56 0.53 0.42

Year 2011 2010 2009

Long Term debt 13537574 25831364 16469856

Long term debt + Equity 24110179 39598037 31078379

Capitalization Ratio worth 0.56 0.65 0.52


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Interpretation

HABIB BANK

It is obvious from the above calculations that there is a gradual fall in this ratio over the years.

BANK AL FALAH

The ratios for the last 3 years are 0.56, 0.65 and 0.52. Shows below standard of 2:1

Long term Assets versus Long term Debt:

Long term Assets versus Long term Debt= Long Term Assets/ Long Term Debts

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

Long Term Assets 14680362 20393927 25973696

Long term debt 56392270 62094609 50799915

L.T Assets /L.T Debts 0.26 0.33 0.51

Year 2011 2010 2009

Long Term Assets 13773293 11922324 10502990

Long term debt 13537574 25831364 16469856

L.T Assets /L.T Debts 1.01 0.46 0.63


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Debt Coverage Ratio:

Debt Coverage Ratio = Net Operating Income / Total Debt

HABIB BANK

BANK AL FALAH

Profitability Ratios:

Profitability is the net result of a number of policies and decisions. This section of the discusses the

different measures of corporate profitability and financial performance. These ratios, much like the

operational performance ratios, give users a good understanding of how well the company utilized its

resources in generating profit and shareholder value. The long-term profitability of a company is vital for

0

0.01

0.02

0.03

0.04

0.05

0.06


DebtCoverageRatio

Years

Debt Coverage Ratio

2011

2010

2009

Year 2011 2010 2009

Net Operating Income 12074762 5121453 5655568

Total Debt 536848102 628754092 682747953

Debt Coverage Ratio 0.02 0.008 0.0083

Year 2011 2010 2009

Net Operating Income 14574192 15118049 16880487

Total Debt 263443596 312675308 331946025

Debt Coverage Ratio 0.055321869 0.048350633 0.0508531


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both the survivability of the company as well as the benefit received by shareholders. It is these ratios

that can give insight into the all-important "profit". Profitability ratios show the combined effects of

liquidity, asset management and debt on operating results. These ratios examine the profit made by the

firm and compare these figures with the size of the firm, the assets employed by the firm or its level of

sales. There are four important profitability ratios that I am going to analyze:

Net Profit Margin:

Net Profit margin = Net Profit / Sales x 100

Net Profit Margin gives us the net profit that the business is earning per dollar of sales.

This margin indicates the profit after all the costs have been incurred it shows that what % of

turnover is represented by the net profit. An increase in the ratios indicates that a firm is

producing higher net profit of sales than before.

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

Net Profit 12700315 10084037 15614020

Sales 43685740 50481021 63305033

Net Profit Margin 29.07% 19.97% 24.66%

Year 2011 2010 2009

Net Profit 1762691 3130229 1301301

Sales 21191470 25783871 31046583

Net Profit Margin 8.31% 12.1% 4%


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Interpretation

Bank al falah

Therefore, the Net Profit Margin was 8.31% in 2011, increase to 12.1% in 2010 and then

decrease to 4% in 2009

HABIB BANK

Therefore, the Net Profit Margin was 29.07% in 2011, decrease to 19.97% in 2010 and then

again increased to 24.66% in 2009

Operating Income Margin:

Operating Income Margin = Operating Income x 100

Net Sales

Operating Income Margin =

Net mark-up / interest income after provisions + Mark-up / return / interest expensed - Total non-mark-

up / interest expenses

0

5

10

15

2025

30

35


NetProfitMarg

in

Years

Net Profit Margin

2011

2010

2009


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HABIB BANK

BANK AL FALAH

0

10

20

30

40

50

60

70

80


OperatingIncomeMargin

Years

Operating Income Margin

2011

2010

2009

Year 2011 2010 2009

Operating Income 25278799 24275410 37738818

Net Sales 43685740 50481021 63305033

Operating Income Margin 57.9% 48% 59.6%

Year 2011 2010 2009

Operating Income 14574192 15118049 16880487

Net Sales 21191470 25783871 31046583

Operating Income Margin 0.687738604 0.586337443 0.5437148


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Return on Assets:

Return on Assets (ROA) = Profit after Taxation / Average Total assets x 100

ROA, A measure of a company's profitability, equal to a fiscal year's earnings divided by its total assets,

expressed as a percentage. This is an important ratio for companies deciding whether or not to initiate a

new project. The basis of this ratio is that if a company is going to start a project they expect to earn a

return on it, ROA is the return they would receive. Simply put, if ROA is above the rate that the company

borrows at then the project should be accepted, if not then it is rejected.

HABIB BANK

BANK AL FALAH

0

0.5

1

1.5

2

2.5


ROA

years

Return on Assets

2011

2010

2009

Year 2011 2010 2009

Net income 12700315 10084037 15614020

Total Average assets 559592686.5 641141494.5 724959955

ROA 2.27% 1.57% 2.15%

Year 2011 2010 2009

Net income 1762691 3130229 1301301

Total Average assets 137966927.5 302290346.5 338942958

ROA 1.27% 1.01% 0.038%


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Interpretation

HABIB BANK

Return on assets decreased in 2009 and 2010 and it was maximum in year 2011. This may have

occurred because Square used more debt financing in 2011 compared to 2009 and 2010 which

resulted in more interest cost and brought the Net income down.

. BANK AL FALAH

Return on assets decreased gradually throughout the years.

Return on Equity (ROE):

Return on Total Equity = Profit after taxation x 100

Total Equity

Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total common

equity. It is the most important of the Bottom line ratio. By this, we can find out how much the

shareholders are going to get for their shares. This ratio indicates how profitable a company is by

comparing its net income to its average shareholders' equity. The return on equity ratio (ROE) measures

how much the shareholders earned for their investment in the company. The higher the ratio

percentage, the more efficient management is in utilizing its equity base and the better return is to

investors.

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

Net income 12700315 10084037 15614020

Total Equity 45177664 55063125 71280902

ROE 28.11% 18.31% 21.9%

Year 2011 2010 2009

Net income 1762691 3130229 1301301

Total Equity 10572605 13766673 14608523

ROE 16.6% 22.5% 8.9%


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Interpretation

HABIB BANK

The Return on Equity was maximum in 2011 but decreased in 2010. This again may have

happened due to the issue of more long-term debt..

BANK AL FALAH

The Return on Equity was maximum in 2010 but decreased to an extent in the following years 2011 and

2009. This again may have happened due to the issue of more long-term debt.

0

5

10

15

20

25

30


ROE

Years

Return on Total Equity

2011

2010

2009


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Detail of Operating Assets of Habib Bank Limited

2011

Operating Assets:

Cash and balances with treasury banks 56533134

Balances with other banks 39307321

Operating fixed assets 14751252

110591707

2010

Operating Assets:




97259620

2009

Operating Assets:




94,230,402


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Detail of Operating Assets of Bank Al Falah Limited

2011

Operating Assets:




51094302

2010

Operating Assets:




59739440

2009

Operating Assets:




68041671


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Return on Operating Assets:

Return on Operating Assets = Profit after Taxation x 100

Operating assets

HABIB BANK

BANK AL FALAH

Sales to Fixed Assets:

This ratio is indicates that how much sales are contributed by investment in fixed Assets.

Sales to Fixed Assets = Net Sales / Fixed Assets

HABIB BANK

BANK AL FALAH

Year 2011 2010 2009

Net Profit 12700315 10084037 15614020

Operating Assets 94230402 97259620 110591707

Return on Operating Assets 13.48% 10.37% 11.19%

Year 2011 2010 2009

Net Profit 1762691 3130229 1301301

Operating Assets 51094302 59739440 68041671

Return on Operating Assets 0.034 0.052 0.019

Year 2011 2010 2009

Net Sales 43685740 50481021 63305033

Fixed Assets 11954876 13780555 14751252

Sales to Fixed Assets 3.65 times 3.66 times 3.66 times


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Year 2011 2010 2009

Net Sales 21191470 25783871 31046583

Fixed Assets 10502990 11922324 13773293

Sales to Fixed Assets 2.017 times 2.16 times 2.25 times

habib alfla chart

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