SWOT Analysis.

The word SWOT stands for firms internal Strengths and Weakness and external Opportunities
and Threats. The purpose of this analysis is to using company’s strengths to exploit opportunities
and counter threats to correct company’s weakness.

 In this we discuss the internal and external analysis of HABIB BANK LIMITED.
 Internal Analysis;
 The internal analysis of organization is the analysis of its strengths and weakness.
 Followings are the main strengths and weakness of HBL.

Strength;
Strength is an area where a company is best at doing something or a feature that puts the
company at an advantage in comparison to its competitors.HBL has following strengths.

 HBL is a well establish bank enjoying long history of over 70 years of experience and
profit operations.
 HBL was first privatized bank that take an edge over other nationalized banks. It develop
an strategy consist with demand of market and free from any political influence.
 HBL is one of the largest private bank in Pakistan and create high people trust.
 It has largest branch network among private banks of Pakistan.
 HBL provides wide range of services.
 Name strength ( good will )
 Customer enjoys the services at the residential localities.
 HBL is a market leader in introduction of e-banking.
 HBL has strategic alliances with other international banks for expanding its network
further both locally and internationally.

Weakness;
A weakness is an area where HBL is not as good at doing something as its competitor or a thing
that HBL lack thus putting the organization at disadvantages in comparison to its competitors.

HBL has following weaknesses.

 Mission of HBL is not well defined.

 Through HBL is second largest bank in Pakistan, yet the fact remains that it is not market
leader as NBP. Its total assets are always less than NBP.
 Now it is a privatize bank that is why government support to HBL decrease as it was in
past.
 Less trained staff.
 Satisfaction of job is low.
External Analysis;
An organization has to monitor its environment constantly to keep up with new developments
and changes in the environment. A change in the external environment may be an opportunity or
threat. Organization capture its opportunities and minimize its threats.

HBL has following opportunities and threats.

Opportunities;
An opportunity is a change in external environment which if properly exploit with organization
strengths will result in enhance sales, market share, or income.

HBL has following opportunities.

 It can introduce debit card system or may convert the existing ATM cards into a complete
debit card.
 New products like personal loans, mortgages and auto leasing and cash management
which diversify credit risk and add to value generating products.
 Provide Master cards.
 Use global technological advancement.

Threats;
A change in external environment which if not met with proper strategies will result in loss of
revenues, market share, or income.

Threats of HBL are as follows

 The frequent reduction on 6 months and 12 months treasury bills discount rates by SBP
may create pressure on the banks profitability.
 The low discount rates also negatively influencing the advances rates which may affects
the bank’s profit from other side.
 Growing global technological advancement

PESTEL Analysis

Political Factors
  Political instability in Pakistan can make changes in laws and policies which can be in
favor or against the HBL.
 Most of the banks are finance under political pressure which becomes bad later on.
 Corruption also impact on the HBL

Economic Factors
 Economy of the Pakistan shows a general slow down and most of the business showing a
negative growth which have potential impact on the growth of the HBL.
 Rise in inflation leads to decrease in the value of the money over the years and customer
demanding high profit rate to meet the inflation and banks unable to give them such rates.
 Country’s literacy rate is lowest in the world and people of the country unable to use new
product of the bank like online banking, call centre, Debit and Credit cards etc.

Social Factors
 98% people are Muslim in Pakistan and interest is prohibited in their religion and they
are reluctant to use the services of the financial institution and HBL have not entered in
Islamic Banking.
 Country’s most people are not using the banking channel to make their business
transaction due to non availability of knowledge of product of the bank.
 New Government regulations regarding deduction of With Holding Tax keep in the
people away from the financial institution because they don’t want to pay Tax to
Government.

Technology Factors
 Rapidly changes in technology that financial institution has to invest a lot in buying the
new technology and train their employees to use these technologies.
 HBL purchase new System for interpretation of data to make financial decision.
 HBL has purchased software called as “MISYS” from a Singapore firm. In 2005, it
installed the system in one branch in Karachi and in its Singapore Branch. After its
successful launching, it has now installed MISYS in about 300 branches in domestic and
overseas branches.

Legal Factors

 The banks in Pakistan have to perform their functions in line with SBP directives
(regulators),
 Country laws with regard to maintenance of secrecy of information about the customers.
 All the nationalized banks except NBP have been privatized by Privatization Commission
of Pakistan.
 Health and Safety Act aims to ensuring health and safe workplace for the employees.
Porters Five Forces Analysis.

Threat of New Entrants:

How much easy it is for a competitor to enter in a new business.

For opening a new bank high capital investment is required and there are a lot of legal issues like
government regulations for licensing etc.

It is difficult for new banks to start their business due to involvement of money of other people but people
trust on big brand names those are well known big banks.

Today banks are providing all facilities related to financial needs of customers at one place. Customers
allow a major well known bank to look their accounts and financial needs. It creates a threat for new
banks to enter.

Bargaining Power of Suppliers;

It examines the power and control of a supplier over business and price.

In banking sector major resource is capital and there are four suppliers of capital

Deposits of the customer

Loans and mortgages

Mortgages securities

Loans taken from the other institutions

Through these suppliers bank meets its requirements .

The power of the suppliers is widely based on the market and impact of this power is between medium to
high.

Bargaining Power of Buyers;

It examines the power of consumer and its affect on pricing and quality.
The high switching cost can affect the power of buyer. If a single bank looks after all the banking
requirements of the customer i.e savings, mortgages and other financial needs, then it will be a big
problem for the customer to move to some other bank. For persuading customers to move to their bank,
the mangers may use different techniques like lowering the switching costs, but most of the customer may
still with their current bank.

Internet play a big role in increasing the power of customers in banking sector. Cost for opening and
maintaining an account as well as rates offered by different banks can be compared by customers.

Threat of Substitute Products;

How much it is easy for a customer to switch from one’s product to its competitors product.

The banking sector is affected by rival banks and non-financial organizations that pose a bigger
threat of substitution. These organizations not provide deposits but they provide services such as
mutual funds, insurance, and fixed earning securities in a convenience way.

Method of loans and payments creates a threat of substitution.

Intensity of Competitive Rivalry;

It examines how much competition in current market and how much competitors in market and
what each can do.

The banks try to keep away their customers from their rival banks. This is done by lower rate of
interest on loans, pay higher rates on deposits, convenient and other investment related services.