ItPREFACE:

HBL, Pakistan’s largest bank, was the first commercial bank to be established in Pakistan in
1947. Over the years, HBL has grown its branch network and maintained its position as the
largest private sector bank in Pakistan with over 1,650+ branches and 2,100+ ATMs globally,
serving 27 million customers worldwide. Their vision is “Enabling people to advance with
confidence and success” and their mission is “To make our customers prosper, our staff excel
and create value for shareholders”. The Bank is a leading full-service commercial bank. The key
areas of operation are Branch Banking, Corporate & Investment Banking, Treasury, SME &
Rural Banking, Financial Institutions & Global Trade Services, Transaction Banking and Islamic
Banking. The Branch Banking business is the mainstay of the Bank, positioning HBL as the
largest retail bank in Pakistan catering to all market segments. HBL Corporate & Investment
Banking Group is a leading provider of financial services to multinational and local corporate
clients across the country. The Bank also has the largest Treasury operations in Pakistan and
plays a key role in Pakistan’s domestic markets. HBL enjoys a significant international footprint
and is the largest domestic multinational. The Bank’s international footprint is important as it
provides opportunities to effectively serve its core customers across its network. China remains
the lynchpin of HBL’s international strategy and the Bank is the largest executor of CPEC
related financing in Pakistan. In November 2019, HBL created history when the HBL Urumqi
Branch formally commenced the RMB business by becoming the first and only bank from
Pakistan and one of the three banks from the South Asia and MENA region to offer end-to-end
RMB intermediation. In December 2019, HBL became the first Pakistani bank to be awarded the
much coveted branch license to offer financial services to clients in Beijing. As the leading
financial institution of Pakistan, HBL is at the forefront of all development initiatives which
includes growth of priority sectors and targeting the unbanked population in the country.
Bank Al Habib Limited is a Pakistani commercial bank owned by Dawood Habib & Family and
is based in Karachi, Pakistan. It is the sixth-largest bank in Pakistan. The bank has a branch
network of 1000 branches in 408 cities across Pakistan with six branches in countries across the
world. The number of employees are 18,202. The bank follows the internet banking code
Netbanking and security is entrusted by Verisign. This was launched with a contract made with
TPS Pakistan. The bank supports the MNET Switch as a result of MoU signed between MNET
and 1-Link. Bank AL Habib is one of the eleven partners of 1-Link system, an inter-bank ATM
sharing system which allows customers to transact on ATM of any partner bank. Bank AL Habib
is the third largest ATM service provider in Pakistan, having 196 ATMs while having the largest
number of ATMs in the city of Karachi. The bank has a major ownership stake in AL Habib
Capital Markets (Pvt) Ltd, a brokerage house working under the logo of Bank AL Habib. The
bank was selected as one of the top 200 Best Under A Billion companies by Forbes Asia in their
annual review of 2005. The Asian Banker "Strongest Bank Balance Sheet in Pakistan, 2013”.
Bank AL Habib deposits exceeded Rs. 1 trillion in 2020.
Meezan Bank, Pakistan’s best bank and the first and largest Islamic bank, is a publicly listed
company with a paid-up capital of Rs. 17.89 billion. It is one of the fastest growing financial
institutions in the banking sector of the country. With its Vision of establishing ‘Islamic banking
as banking of first choice the First Islamic Bank commenced operations in 2002, after being
issued the first-ever Islamic commercial banking licensee by the State Bank of Pakistan. The
Bank provides a comprehensive range of Islamic banking products and services through a retail
banking network of more than 900 branches in more than 250 cities of the country. Backed by a
state-of-the art T-24 core banking system, the branch network is supported by 24/7 banking
services that include over 950 ATMs, VISA and MasterCard Debit cards, a Call Center, Internet
Banking, Mobile Application and SMS Banking facility. The Bank operates strictly under the
principles of Islamic Shariah and is well-recognized for its product development capability,
Islamic banking research and advisory services. In order to ensure strict Shariah-compliance in
all its products and services, the Bank has established a dedicated Product Development and
Shariah Compliance department that operates under the supervision of the Bank’s in-house
Resident Shariah Board Member and a Shariah Board comprising of internationally renowned
Shariah scholars. Meezan Bank has been recognized as the ‘Best Bank in Pakistan’ by Pakistan
Banking Awards– the most prestigious awards in Pakistan’s Banking sector, which is a
testimony of the Bank’s commitment to excellence. The Bank has consistently been recognized
as the ‘Best Islamic Bank in Pakistan’ by numerous local and international institutions. Other
awarding institutions include Islamic Finance News – Malaysia, Global Finance magazine –
New York, Asset AAA – Hong Kong, Asia money – Hong Kong, The Banker – United
Kingdom, South Asian Federation of Accountants, Islamic Finance Forum of South Asian
Awards, Pakistan Banking Awards – Dawn & IBP Pakistan, Employers Federation of Pakistan
and CFA Association – Pakistan.
ACKNOWLEDGMENT:
I would like to express my special thanks to my teacher MA’AM POONAM who gave me the
golden opportunity to do this wonderful assignment on the topic “ FACTOR’S AFFECTING ON
PROFITABILITY IN BANKING SECTOR OF PAKISTAN” which also helped me in doing a
lot of Research and i came to know about so many new things I am really thankful .
Secondly I would also like to thank my group members who helped me a lot in finalizing this
project within the limited time frame .

INTRODUCTION:
ROA ON HBL BANK:
The following section summarizes insights on Habib Bank Limited’s Return on Assets:
Performance Summary
1. Habib Bank’s latest twelve months return on assets is 0.7%.
2. Habib Bank’s return on assets for fiscal years ending December 2017 to 2021 averaged
0.6%.
3. Habib Bank’s operated at median return on assets of 0.5% from fiscal years ending
December 2017 to 2021.
4. Looking back at the last five years, Habib Bank’s return on assets peaked in December
2020 at 0.9%.
5. Habib Bank’s return on assets hit its five-year low in December 2017 of 0.3%.
6. Habib Bank’s return on assets decreased in 2017 (0.3%, -76.5%) and 2021 (0.9%, -0.5%)
and increased in 2018 (0.4%, +27.8%), 2019 (0.5%, +14.0%) and 2020 (0.9%, +76.2%).

Habib Bank's Return on Assets benchmark against competitors:

We’ve identified the following companies as similar to Habib Bank Limited because they
operate in a related industry or sector. We also considered size, growth, and various financial
metrics to narrow down the list to the ones listed below.
The tables below summarizes the trend in Habib Bank’s return on assets over the last five years:
ROE ON HBL BANK:
The historical rank and industry rank for Habib Bank’s ROE % or its related term are showing as
below:

During the past 13 years, Habib Bank’s highest ROE % was 20.47%. The lowest was 4.49%.
And the median was 14.89%.
Competitive Comparison Data :
Ticker Company. Market Cap(M) ROE %

KAR:HBL Habib Bank Ltd $ 493.14 10.66

KAR:MCB MCB Bank Ltd $ 576.04 15.72
KAR:UBL United Bank Ltd $ 580.06 13.03
KAR:SCBPL Standard Chartered Bank (Pakistan) Ltd $ 321.45 19.11
KAR:ABL Allied Bank Ltd $ 302.01 11.87
KAR:BAHL Bank AL Habib Ltd. $ 245.43 21.79
KAR:BAFL Bank Alfalah Ltd $ 233.11 16.21
KAR:NBP National Bank of Pakistan $ 230.99 8.01
KAR:FABL Faysal Bank Ltd $ 164.53 13.09
KAR:MEBL Meezan Bank Ltd $ 837.87 . 36.72

ROI ON HBL BANK:

It seems that the fortunes of the banking sector have a blip in an otherwise rising interest rate
economy. And the market leader has borne the biggest brunt of the change in winds, as HBL’s
profit after tax has declined by almost half during 1HCY18.
Net mark-up income showed overall stability as interest earned on advances grew by 4.5 percent;
however, mark-up expensed shot by 14 percent during the same period, leading to a slight but
consequential decline in NII of 2.7 percent on year-on-year basis. The times ahead are good;
rising interest rates will boost mark-up income while the expense is largely sticky. However, it is
the non-fund-based income where the story takes a twist with a 35 percent decline. According to
market analysts, NFI nosedived on the back of losses in foreign currency dealings worth Rs385
million during the second quarter because of Pak rupee depreciation. Note that as per the
statement of financial position disclosed by the bank, investments declined by a mere 1.4
percent, which translates into Rs19.6 billion due to bank’s huge balance sheet. Industry insiders
note that currency depreciation also negatively impacted the foreign loan on bank’s books, which
was taken last year for settlement payments to Federal Reserve. At the same time, non-interest
expense increased by 27 percent on year-on-year basis, which further dented profitability. The
currency is likely to remain stable in coming months; the volatility may stabilize latest by fourth
quarter. However, it’s not all bad news from Pakistan’s largest bank: closer analysis of notes to
financial statements reveal that the bank continues to maintain a high share of low cost deposits
thanks to its 1,500+ branch network of which major chunk continues to be of current account
holders. While other domestic banks continue to aggressively expand their branch networks,
HBL maintained its growth trajectory with an 8 percent increase in domestic deposits since
December 2017. On the advances front, domestic advances also recorded a 13 percent up tick,
reflected in higher mark-up earned as discussed above.
ROA ON AL-HABIB BANK:
ROE ON AL-HABIB BANK LIMITED:
ROI ON AL-HABIB BANK LIMITED:
Roe Of Meezan bank:
The bank had one of the best asset qualities among its peers in Pakistan while maintaining strong capital and
liquidity levels. Its gross non-performing loan (NPL) ratio stood at 2.3%, compared to an industry-wide
average of 8.4%. In addition, it registered a higher return on assets (ROA) of 2% from 1.5% over the same
period a year earlier, and a lower cost to income ratio of 40% from 47%.
The bank ranked first in Pakistan and took the 36th spot in APAC while Allied Bank, its nearest competitor,
was trailing behind taking the 63rd place in the Strongest Bank by Balance Sheet ranking in APAC. The bank
achieved a higher score in indicators such as ROA, cost to income ratio and gross NPL ratio than Allied Bank,
while its non-interest income to total operating income was lower. Habib Bank and National Bank of Pakistan,
the top two largest banks by total assets in the country, recorded a higher gross NPL ratio at 6.8% and 15.5%,
respectively. The two banks also underperformed in areas such as capitalisation and profitability.
The following were especially considered in the evaluation of the banks’ balance sheet strength and resilience:
how accelerated digitalisation are enhancing bank balance sheet strength, the impact of debt moratoria,
rescheduling and financial aid measures introduced by regulators on bank asset quality, how banks are growing
alternative sources of income amid the record low interest rate, and the strategic economic relief and regulatory
support in response to the crisis and effect on the pace and scale of recovery.
ROA OF MEEZAN BANK:
ROI OF MEEZAN BANK:
HISTORICAL BACKGROUND:
HBK BANK:
Originally established in 1941, HBL moved its operations to Pakistan in 1947 at the request of
Muhammad Ali Jinnah, hence becoming the first commercial bank to lay its foundation in the country.
Embarking on a progressive journey, HBL continued to grow and expand in the successive years. The
Bank’s first international branch opened in Colombo, Sri Lanka in 1951, while the iconic HBL Plaza
building commenced its operations on 4 September 1971. With a sizeable domestic share, HBL was
nationalized in 1974. The Bank became a trend setter in the banking industry, acquiring the lion’s share
in inward foreign remittances and a major market share in loans to small industries, traders and farmers.
In February 2004, the Bank was privatized and management control was handed over to AKFED. By April
2015, the Government of Pakistan divested its entire shareholding of 41.5% through the Privatization
Commission of Pakistan, making HBL Pakistan’s largest private Bank. HBL has not just been a pioneer in
the banking industry, but has also been a platform that has enabled dreams for millions of people. It has
time and again, proven to be a catalyst for change by initiatives that have elevated Pakistan’s image and
reputation. From bringing back international cricket to Pakistan through HBLPSL, to helping strengthen
the economy of the country through historic initiatives such as the Ehsaas Emergency Cash Program,
HBL continues to enrich lives .Over the years HBL has won several major awards as a testament to its
exceptional performance as the largest bank in the county.

1. Best Mobile Banking & Payment Initiative of the year – HBL Mobile –Asian Banking & Finance
Retail Banking Awards 2021.
2. Best Customer Franchise – Pakistan Banking Awards 2020 .
3. Best Investment Bank – Pakistan Banking Awards 2020.
4. Best Bank for Small and Medium Businesses – Pakistan Banking Awards 2020.
5. Best Domestic Bank – Asiamoney Awards 2021.
6. Best Bank in Pakistan – Euromoney Awards.
7. Best Influencer Marketing Campaign – HBLPSL6 – Effie Awards.
8. Best Website of the year – Pakistan Digital Awards.
9. Best Mobile Banking Application – HBL Mobile – Pakistan Digital Awards.
10. Web Series of the Year – HBLPSL6 Jeet ki Jang – Pakistan Digital Awards.
11. Best Digital Payment Processor – Pakistan Digital Awards.

MEEZAN BANK:
Meezan Bank’s growth has been the fastest in the financial industry of Pakistan – rising from the
32nd to one of the largest banks in Pakistan in just 18 years! Our branch network of 815
branches in 248 cities makes Islamic Banking available to Pakistanis across the country and our
recognition by the Prime Minister, for being the leading bank in generating deposits in the
Roshan Digital Account, reflects the confidence that overseas Pakistanis Have in Meezan Bank
Meezan Bank’s Consumer financing products such as Home Finance and Car Finance continue
to be among industry leaders. The Bank also has Excellent rapport in the corporate sector of the
country and is one of the Leading Trade Finance banks in Pakistan. With an expansive
nationwide Branch network, elaborate bouquet of products and services, coupled with
Exemplary branch banking services, Meezan Bank is truly the Best Bank for Customers. Meezan
Bank has always been at the forefront of . Digitizing its banking services. With our consistent
focus On improving the banking experience delivered through Our digital channels,
Alhamdulillah, we have achieved Market leadership in our various digital offerings. Meezan
Bank is the largest bank in terms of number of Transactions that pass through the country’s main
switch And the second largest in digital transfers and bill Payments through this switch. We also
process the Largest volume of ecommerce transactions among Pakistani banks through our debit
cards portfolio and Our Mobile Banking App has been consistently rated as The No. 1 App in
Pakistan.At Meezan Bank, we maintain a continuous focus on Broadening the gamut of our
digital products and Services by investing heavily in strengthening its Technology platforms and
acquiring the best of human Resources to continue to be the Bank of choice for our Customers.

Awards and recognition:

In 2020 Pakistan Banking Awards Best Bank – 2020 State Bank of Pakistan Highest amount of Deposits
through Roshan Digital Account Highest amount of Investment in Islamic Naya Pakistan Certificates In
2019 Islamic Finance News (IFN) – Malaysia Structured Finance Deal of the Year – Avari Hotels
Transaction Pakistan Deal of the Year – Nasda Green Energy Transaction Cross Border Deal of the Year –
Nasda Green Energy transaction Best Islamic Bank in Pakistan Asset Triple A Country Awards Best
secondary offering, Pakistan – US$100 million Placement.
Bank Al Habib Limited :
Habib Group's involvement in banking services dates back to the 1930s. The original Habib
Bank began modestly in Bombay in 1941 when it commenced operations with a fixed capital of
25,000 rupees. Impressed by its initial performance, Muhammad Ali Jinnah asked the Habib
Bank to move its operations to Karachi after the independence of Pakistan.
After the privatization scheme was announced in 1991 by the Pakistani Government, Habib
Group was the first to be granted permission to start a private bank, the Bank AL Habib Limited.
In 2002, HBL has been jointly owned by the government and the Aga Khan Fund for Economic
Development. It was nationalized in 1974.
Under the privatization policy of the 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. (Late) Hamid D.
Habib, grandson of the founder a Habib Group, was the first Chairman of Bank AL Habib
Limited. He was a Director in Habib Bank Limited from 1954 and its chairman from 1971 until
nationalization. After the death of Hamid D. Habib in May 2000, Ali Raza D. Habib, who was
Director on the Board, was appointed the Chairman of the Bank.
Rashid D. Habib, who was the managing director of Habib Bank Limited from 1953 till its
nationalization, was appointed as the managing director and chief executive of Bank AL Habib
Limited until he died in 1994. After his death, Abbas D. Habib who was the joint managing
director and closely associated with the bank since its inception in 1991, was appointed as the
managing director and Chief Executive of the Bank. On 1 November 2016, he was appointed as
chairman.
In 2005, Bank AL Habib began offering internet banking, with accounts and records visible
online. In 2006, Bank AL Habib became partners with MasterCard, allowing them to issue credit
cards for the first time.
Bank Al Habib has decided to purchase from TPL Properties, Centrepoint, a high-rise building
in Karachi.

PERFORMANCE IN TERMS OF SALES:

HABIB BANK:
RETURN ON ASSET: (ROA):

2021 2020 2019 2018 2017

HBL 4326494 3857412 3235694 3031992 2701687

 RETURN ON EQUITY (ROE):

2021 2020 2019 2018 2017

HBL 283686 265495 224752 199252 188751

RETURN ON INVESTMENT (ROI):

2021 2020 2019 2018 2017

HBL 1922819 1921063 1356007 1369845 1351648

MEEZAN BANK:
RETUN ON ASSET: (ROA)
2021 2020 2019 2018 2017
MEEZAN 1.7 1.7 1.5 1 0.9
BANK

RETURN ON EQUITY: (ROE)

2021 2020 2019 2018 2017
MEEZAN 36.4 34.6 3.7 23.8 19.3
BANK

RETURN ON INVESTMENT: (ROI)

2021 2020 2019 2018 2017
MEEZAN 110,073 106,589 94,270 48,625 36,427
BANK
Bank AL HABIB LIMITED:

RETURN ON ASSET: (ROA):

Year 2020 2019 2018 2017 2016
Return on 1.17 0.86 0.8 0.94 1.08
Assets

RETURN ON EQUITY (ROE):

Year 2020 2019 2018 2017 2016
Return on
Equity 22.3 18.16 16.99 18.85 19.1

RETURN ON INVESTMENT (ROI):

Year 2020 2019 2018 2017 2016
Return on
investment 764,944 586,141 414,605 476,125 405,028

PERFORMANCE IN TERMS OF SALE IN COLLECTIVE:

BANKS ROA ROI ROE YEARS

HBL 0.4% 6.58% 2018
MEEZAN 14.55% 23.77% 2018
BANK AL HABIB LIMITED
----- ------ ----- -----

HBL 0.5% 7.48% 2019

MEEZAN 1.5% 2019
BANK AL HABIB LIMITED 0,95% 20,0% 2019

HBL 0.9% 12.99% 2020

MEEZAN 1.1% 2020
BANK AL HABIB LIMITED 1,27% 25,3% 2020
HBL 0.9% 14.9% 2021
MEEZAN 1.65% 19.26% 2021
BANK AL HABIB LIMITED
---- ------ ----- -----

HBL 0.7% 2022

MEEZAN 1.38% 2022
BANK AL HABIB LIMITED
----- ------ ----- -----

IMPACT OF GDP:
HBL BANK:

IMPACT OF INFLATION:
IMPACT OF INFLATION:
MEEZAN BANK:
IMAPCT OF GDP:

IMPACT OF GDP:
BANK AL HABIB LIMITED:
IMPACT OF INFLATION: