Abstract:
Purpose
The objective of this research is to study the effect of privatization of Habib Bank Limited on
its profitability. Habib Bank was nationalized in 1974 and at that time it was one of the
largest banks in Pakistan. After nationalization, over staffing and rapidly changes in
government policies are main factors that reduce the profit of HBL. Employees were not
doing work effectively because jobs were secured and over staffing cut down the efficiency
of work.
Design
The design which is used in this research is the Cause and Effect approach. This research
investigated the effect of privatization on the performance of Habib Bank Limited through
Time Series Analysis. Through time series analysis research analyze simple exponential
smoothing method on various components like Total Assets, Total deposits, Expenditures,
Provisions for Non-Performing Loans, Investments, Advances, Total equity and Net Income.
Data of eight components has been collected from the annual reports of the Habib Bank.
Findings
A huge change in the performance of Habib Bank was seen after privatization. The total
deposits of the bank expanded by 12% amid the years of 2003-2004. The total assets likewise
expanded which diminishes the risk of liquidity. Loans and advances grown by 41% and
liquid assets were diminished which were because of the investment in different portfolios
and it was resulted by the decreasing in the non-performing loans. The net income also
expanded by 10%. The expenditure of the bank was expanded by 42% which was the
aftereffect of expansion in deposits. The non-performing loans were diminished by 56%.
