EFFECT OF PRIVATIZATION OF HABIB BANK LIMITED ON IT A PROFITABILITY

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%.