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this work is done by my friendz in june 2009 in international islamic university islamabad.class MBA 19b
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Group Members
Umair Shahid Umar Munir ButtRao Umer ShehzadZubari Abdullah Khan Zahid Adnan Malik
Submitted to:
Sir Wasim ullah MBA (LUMS) Incharge Department of Finance
Introduction
Incorporated on October 09, 1991
Bank principally engaged in the banking business
Army welfare trust directly and indirectly holds it
Network in more than 95 countries
Overview of the Banking Industry
The loan portfolio (net) declined by 5.6 percent over the quarter while investments in Govt. papers increased by 20 percent.
Accordingly, the capital impairment ratio i.e. net NPLs to capital, went up to 17.9 percent for commercial banks, signifying that banks’ inability to recover NPLs and further deterioration in their credit quality could impose on solvency.
Accordingly, capital adequacy ratio improved to 12.9 percent (12.2 percent in Dec-08) and ROA registered a slight improvement to 1.8 percent (1.7 percent for 2008).
Nevertheless, the system is expected to remain profitable though the levels, the pervasiveness of earnings among different market players will remain constrained
Service Offered
Consumer Banking Services.
Islamic Banking Services.
Agriculture Finance Solution.
Corporate and Investment Banking.
SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
Strengths
Leading Private Sector Bank
Automatic Operation
Electronic Banking
Ethical Concern and Public Image
Weaknesses
Manual Book Keeping
Centralization
Lack of Training Facilities
Opportunities
It deals in bulk business.A large amount of foreign investment is
attracted.Strong potential for growthSteady increase in Customer DepositsOverseas OperationsBranches In Remote AreasIslamic BankingSharp increase in imports and exports
Threats
High Employees Turnover
High charges
Less attractive rate of return
Stiff Competition Less Experienced Staff
MICHEAL PORTER’S MODEL
Investment Portfolio
Investment Portfolio
Federal Government SecuritiesFully paid up ordinary shares
Fully paid preference shares Listed companiesTerm Finance Certificates
Foreign Securities
Return on Equity (ROE):
0
0.05
0.1
0.15
0.2
0.25
0.3
2006 2007 2008 Peer Group
Prof itability Ratios
ROE using Break down
Profitability Ratio
-5.00%0.00%5.00%
10.00%15.00%20.00%25.00%30.00%
Ret
urn
On
Asse
t (R
OA)
Net
inte
rest
m
argi
n
Net
ope
ratin
g m
argi
n
2006
2007
2008
Peer Group
Debt Management Ratio
0.0002.0004.0006.0008.000
10.00012.00014.00016.000
2006 2007 2008 Peer Group
Debt to Assets
Debt to Equity
Solvency Ratio
0.000%20.000%40.000%60.000%80.000%
100.000%120.000%
2006 2007 2008 Peer Group
Equity to Assets
Equity to Deposit
Earning Assets to Deposits
Provision for Loan Losses Ratio
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
2006 2007 2008 Peer Group
Provision / Total Assets
Provision / Average total Loan and leases
Earning Spread
0.000
0.020
0.040
0.060
0.080
2006 2007 2008 Peer Group
Earning Spred
Earning Spred
Credit Risk
-
0.20
0.40
0.60
0.80
1.00
2006 2007 2008 Peer Group
Non-Performing Assets to total loans
Annual provision for loans losses to eqiuty capital
Non Performing assets to equity capital
Recommendations
Banks would have to manage their credit disbursement policy prudently in order to minimize the non performing loans.
SBP has tightened the monetary policy. The bank should require making more prudent
investments. SBP should maintain the interest rates. Bank should control their administrative expenses. As there is sign of recession in the economy the bank
should adopt prudent policies. the bank should be efficient in collecting the outstanding
loans. Bank should adopt the careful loan distribution policy
Conclusion
2007 was a volatile year for the banking sector in terms of profitability
interest income was much higher in this yearnon-interest income share in the total income is also
increasing the bank is either not very efficient at collecting the
outstandingbank may face considerable credit risk from its loan
defaulters