Upload
siaapa
View
142
Download
11
Tags:
Embed Size (px)
DESCRIPTION
Internship report on Bank of Punjab with complete financial analysis
Citation preview
Chapter 1
Introduction of BANK OF PUNJAB
1
Topics Page No.
Mission Statement 3
Core Value 3
Scope of the Bank 3
Management of the Bank 3
Objectives 4
Organization Structure 6
2
1.1 Mission Statement
Be a dynamic resource of economic development and growth for stakeholders through
service excellence achieving high standards of professionalism, dedication integrity and
team work.
1.2 Core Values
Integrity
Dedication
Transparency
Team work
1.3 Scope of the Bank.
Being a commercial Bank, The Bank of Punjab performs all such functions as are
attributed to commercial banking institution both in the area of resource mobilization,
loans, and investment. The Bank is thus providing all type of advances to business, trade,
and industry on seasonal and annual basis, and is ensuring, through the prudent policy,
the safety and protection of its loan portfolios, as the resources base of the bank expands,
project financing will also be brought into its fold.
1.4 Management of the Bank.
At the level of Decision-making and implementation, senior management of the bank is
drawn from highly accomplished bankers with rich experience in the banking profession
both domestic and international.
The entire responsibilities of policy formulation and management have been placed,
under the law, with the Board of Director. Furthermore it will be heartening to know that
Mr. Nawaz Sharif, during his chief Minister ship of the province of Punjab issued special
3
instructions to the political and executives echelons not to interfere in The Bank of
Punjab, thereby ousting the possibility any pressure which may be put on the
management of the bank in respect of recruitment of staff or provision of credit. These
instructions have become an essential part of the culture of the bank.
1.5 OBJECTIVES.
The Bank of Punjab being a commercial bank performs all those function as are
attributed to such banking institutions both in the areas of resources mobilization and
investment. It is providing funds for commerce, trade, industry, and agriculture but its
main emphasis is on accelerated development of agro-based industry. So the main
objective of the bank is to channelize the resources into sectors, which have suffered
from neglect. Other objectives included.
1 To provide speedier services to the common man.
2 To provide the highest rate of return to the shareholders by achieving good
profitable growth.
3 To enter into financing contracts and to mobilize resources in local and now in
foreign currencies consistent with the objects of the bank.
Subsidiaries and Sponsorship
The bank is one of the sponsors of Trust Management Services Pvt. Limited besides
being a co-sponsor of Trust Modaraba a Modaraba company incorporated in Pakistan
under the Modaraba companies and Modaraba (Floatation and control) Ordinance, 1980.
Authorized Modaraba Fund and paid up Fund of the said unit in Rs. 500 million and Rs.
150 million respectively.
4
The Bank is one of the sponsors of Trust Leasing Corporation Limited a public limited
company established under the Companies Ordinances, 1984. Authorized paid up capital
of the company is Rs. 250 million and Rs. 100 million respectively.
First Punjab Modaraba Services (Pvt) Ltd. was established in Pakistan under
Companies Ordinance. 1984 and register under Moderate Companies and Modaraba
(Flotation and Control) Ordinance, 1980 is wholly owned subsidiary of the bank.
Authorized fund of this Modaraba is Rs. 500 million where as paid up fund is Rs 200
million.
5
1.6Organization structure
DIVISION DEPARTMENTS
ADMINISTRATION
OPERATIONS
BUSINESS DEVELOPMENT
CREDIT
INTERNATIONAL
FINANCE
RECOVERY
AUDIT & INSPECTION
TREASURY
ORGANIZATION &
METHODS
INFORMATIONAL &
TECHNOLOGY
OFFICERS TRAINING
INSTITUTE
LAW
PLANNING RESERCH &
PUBLICATION
HEADED BY: -
GENERAL MANAGER
HEADED BY: -
CHIEF MANAGER
6
DIVISION AND DEPARTMENTS
REGIONAL CHIEFS
BRANCH NETWORK
Total Branches 34 Total Branches 64
Total Branches 43 Total Branches 60
Total Branches 05 Total Branches 36
7
FAISALABAD LAHORE
GUJRANWALA MULTAN
KARCHI / QUETTA RAWALPINDI
REGIONAL NET-WORK
Chapter 2
FUNCTIONS OF DIVISIONS
8
2.1 Administration/Human Resource Division
G.M
]This division deals with the problems relates to the staff administration. The main
function of this department is to arrange a comprehensive training program for recruited
staff. Others function includes:
Recruitment
Staff remuneration
Placing the staff
Providing and defining the opportunities for career development and
growth
Devising and implementing services rules.
Promotion and demotion
Suspension and termination
Transportation
Security, health and benefits.
9
Admin & Establishment
Officer’s Training Institute
2.2 Operations Division
G.M
This Division is concerned with the operational working in general banking, which is
concerned with the routine working of the bank. Any problem or ambiguity arise in any
branch working are rectified and suggested for correction by this division. This Division
usually takes technical procedures involved the decisions like commissions. And also.
The maintenance of the existing building owned by the bank.
Opening new branches and their maintenance.
It also deals with the stationery problems of the bank.
10
Computer Dept.
Engg. & Maintenance
O & M Department
2.3 Business Development Division
G.M
It is the other name of the marketing division. It promotes the bank cause i.e. deposits and
work for the over all development of the bank. Deposits are the lifeblood of any bank.
Without deposits bank cannot perform any function of banking. This division fixes the
deposits target of every branch by keeping and eye over the potential customers in the
area. It gives motivation to branches to achieve their targets through different campaigns
and schemes like cash prizes and special increments. It publishes a bulletin in which
those branches are encouraged who achieves their monthly targets. The main function is
to develop and attract the customers and depositors. It also manages:
Advertising policy
Sales promotion.
Schemes offered by the bank.
11
Marketing Cell
PRP Department
2.4 Credit Division
G.M
This division control over all credit operations like sanction of loans, Inland Bill
Purchased (IBP) and also keeps check over securities mortgage, hypothecating or pledge.
It also fix the rate of mark-up and other decisions concerning with the credit.
There is a credit committee, which consists of senior officers; Branches send the
credit proposal to head office credit division. Credit committee approves it after making a
through analysis. It also
Prepare the policies regarding the sanctioning loan
Monitor loans and credit
Look after the portfolio of the bank
Define credit limits against specified securities.
12
Agriculture Credit Wing
2.5 International Division
G.M
This division is providing important services to the bank regarding the matters of
International Trade, Import, Export Letters of Credit, Travelers cheque etc.
It develops “ Correspondent Relationship” with others on commission basis and
this helps to deal with the clients having import export business.
It handles treasury operations.
The Marketing and Spot Inspection cell, which were introduced by the bank, are
showing positive results in terms of achieving foreign currency deposit targets
and other foreign related business.
13
International wing
Forex Money Market
Investment
Eng. & Maintenance
2.6 Finance Division
G.M
It controls the routine financial matters. The permission of special expenditure incurred in
the branches, and other such cases. The daily position and HO Extracts are daily sent to
this division by all the branches. This division not only estimates the profit and loss of
every branch but also prepare overall income statement and balance sheet of the complete
bank. It also keeps record of total deposits of the bank and then their classification in the
form of loans into different sectors of economy. The basic functions are:
Monitoring the fiscal and financial policies of the bank.
Deals in exploring means for investing surplus bank funds.
Maintenance and investment of Gratuity and Pension Funds of the employees.
14
Balance Sheet Results Monitoring
SBP Affairs, and Compliance.
Company Affairs
2.7 Recovery Division
G.M
The recovery division, which was established in 1994 to assist in regularizing the difficult
loan accounts, has rendered valuable services in this respect. To effect recoveries in an
efficient manner, a policy has been framed in accordance with the guidelines issued by
the State Bank of Pakistan Moreover, recovery cells at regional levels have been set up to
assist the head office. This division looks after the matters of recovery of loans with the
assistance of legal advisors.
2.8 Audit and Inspection
G.M
15
Law Department
Audit of Branches
Rectification and Persuasion
This department ensures appropriate system of checks and balances. It checks all
the irregularities, errors and forgeries if any, under the rules and regulations formed by
the Government of Punjab. For this purpose it doesn’t only keep and eye on the branches
in their vicinity but also conduct surprise and comprehensive audits of the branches. This
strategy has improved working at the branch level. It not only points out the
discrepancies but also tries to solve it. Surprise audit maintain a good check on the over
all working of the branch especially of the side of finance.
16
Chapter 3
Business Operations
17
3.1 SERVICES PROVIDED TO CUSTOMERS
The following are the services being provided to the claims.
Acceptance of deposits
Granting of loans
Transaction Foreign Exchange Services
Remittance – Collection
SPEDFAX- instant Fund Transfer Service
Lockers facility
Utility Services
The Bank of Punjab attaches specials importance to the fee earning business and business
base remuneration. As part of diversification of the banks utility services, the collection
of bills of INSTAPHONE (mobile phone network) was added to existing collection
arrangements for WAPDA, SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s
extensive branch network, effort have been to made to maximize the exploitation of this
source in view of its rich potential of yielding business and deposit direct earning of
commission.
3.2 Deposit Section
In modern times very few business enterprises are carried out solely with the capital of
the owners. Borrowing funds from different sources has becomes an essential feature of
today business enterprise. But in the case of a entire banking system is based on it. The
18
borrowed capital of the bank is much greater then their own capital. Banks borrowing is
mostly in the form of deposits.
These deposits are lent out to different parties. The larger the difference between the rate
at which the deposits are borrowed and the rate at which they is lent out the greater of the
profit margin of the bank. Furthermore, the larger the deposit the larger will be the funds
available for employment; larger the funds lent out the greater will be the profit of the
bank.
To receive the deposit is the basic function of all commercial banks. The bank does not
receive these deposits for save keeping purpose only, but they accept deposits as debts.
When banks receive deposit from a customer, the relationship of a debtor and creditor is
established where by the customer become the creditor and the bank a debtor. When the
bank receives amount of deposit as a debtor, it becomes the owner of it. It may, therefore
use it as deems appropriate. But there is an implicit agreement that the amount owned
would be paid back by the bank to the depositor after a specified period.
3.3 NATURE OF DEPOSITS
CURRENT DEPOSITS
PROFIT & LOSS SHARING ACCOUNT
SHORT NOTIC TERM DEPOSITS
CALL DEPOSIT
TERM DEPOSIT RECEIPTS (TDR).
3.3.1 CURRENT DEPOSITS:
In this type of account the client to allowed to deposit or withdraw money as and when he
likes. Because of their nature, these deposits are treated as the current liabilities of the
19
bank. There is not profit on such deposits. Usually this type of account is opened by the
business.
3.3.2 PROFIT & LOSS SHARING ACCOUNT.
This type of accounts is one step towards the Islamization of banking system in
Pakistan. There are two types of PLS Accounts.
PLS Saving Account
PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).
PLS saving accounts can be opened with the minimum sum of Rs. 100 and PLS-
TDR account can be opened for a sum of Rs. 1000 or above. Profit is paid on both types
of the PLS account on half yearly basis.
Under PLS saving account the depositor undertakes to share profit or loss on the deposits
earned or sustained by the bank. Secondly the bank is at the liberty to invest the funds of
the deposits in any avenue, it deems fit. The PLS deposits are invested in non-interested
channels.
3.3.3 SHORT NOTICE TERM DEPOSITS (SNTD)
This kind of deposit is for a short period. The depositor may withdraw his deposit at any
time by giving seven days notice to the bank. This type of deposit facilitates the depositor
to withdrawn his amount with interest of the deposited period.
3.3.4 CALL DEPOSIT
20
Call deposits are the sorts of deposits, which are deposited with the banker against any
tender. This is without interest deposit. This may be with interest provided the depositor
has agreed to keep this amount with the bank for some fixed period.
3.3.5 TERM DEPOSIT RECEIPTS (TDR)
This type of deposit is same as the SNTD. The difference is that SNTD is for short period
(7- 30 days) while TDR is for long period (1 month up to 5 years).
3.4 ACCOUNT OPENING SECTION
Account opening is the first step towards establishing a relationship between the
customer and the bank. The Bank of Punjab is offering basically two types of account:
CURRENT DEPOSIT ACCOUNT
PROFIT & LOSS SHARING ACCOUNT
The necessary condition for a customer, who wants to open an account with the
bank, is introduction, which is preferably by the bank officers or any account holder of
the bank. The different categories of accounts that are available are as under.
INDIVIDUAL account
Joint Account
Partnership Account
Limited Company Account
Clubs, Society, Association, or Trust Account
SNTD
TDR
Foreign Currency Deposit
21
3.5 CLEARING DEPARTMENTClearing is the most important department of the bank performing various function.
Clearing House:
A clearinghouse is an organization of the member banks, working under SBP and which
is for the purposes of setting inter banks claim resulting from transmission of funds from
one bank to another. The branch cheque/instruments are credited into the account of the
customer. The clearing can be:
Outward
Inward
Outward Clearing
The instrument collected or stored bank wise and a schedules is prepared separately for
each bank mentioning the total number of instruments and the amount of the instruments.
Then these are recorded in a register called “OUTWARD CLEARING REGISTER” then
a main schedule is prepared showing the total number of cheque and their aggregate
amount being presented in the clearing.
The cheque/instruments are handed over the clearing branch. Central clearing branch
issue CREDIT ADVICE to the branch for passing credit to its customer immediately. The
branch, on receiving credit advice debits the clearing account and credit the respective
customer accounts.
Inward Clearing
On receiving cheque/instruments from central clearing branch, the in charge checks the
number and amount of cheque received in clearing must tally with the main schedule
received from central clearing branch.
22
These cheque/instrument are entered in “INWARD CLEARING REGISTER” for the
cheque/instrument passed in clearing is a credit advice for the aggregate amount of
cheque passed in clearing is prepared, drawn on central clearing branch.
Reserves at State Bank of Pakistan
Deposit held by bank at SBP serves as check clearing and collection balances. Rather
than physically transferring funds between banks, check clearing and collection can be
done by simply debiting or crediting a bank’s account at SBP.
3.6 REMITTANCE DEPARTMENT
Remittance is a major function of the bank. It is the transfer of money from one place to
another place. The need for remittance is commonly felt in commercial life particularly
and in everyday life generally.
By proving this service to the customers the Bank of Punjab earns a lot of income in the
form of service charges.
The Bank of Punjab deals with the following type of remittances: -
Demand Draft (DD)
Mail Transfer (MT)
Telegraphic Transfer (TT)
Pay Order
Now we discuss all these in detail: -
3.6.1 DEMAND DRAFT (DD):
23
Demand draft is a written order given by the one branch of a bank on behalf of customer
to another branch of the same bank to a certain amount to the certain person.
Procedure for Prepare Demand Draft.
1. A draft voucher is filled which contains the following information
Name of the parties involved
Date
Amount to be sent
Account number (if DD is crossed)
2. A credit voucher is filled in order to get the excise duty and exchange
commission.
3. The sender deposits the total amount of the two vouchers i.e. the debit and
credit vouchers.
4. Then the cashier sends the cash receipt voucher to the accounts department
and the account records the amount paid in his cash scroll.
5. Accountant gives the DD leaf along with the DD voucher to his assistant who
records the sender’s name, amount and receiver’s name. After writing all the
information in the DD register he gives it to the officer along with the DD for
authentication.
6. After authentication the DD is handed over to the sender and bank sends the
advice to the concerned branch. So when the party presents the DD in the
concerned branch its payment could be made.
Parties involved in the Demand Draft
The following parties are involved in demand draft;
24
1. Purchaser or Sender
The purchaser is the person who sends the money to a particular person payable at
a certain branch.
2. Issuing or Drawing Branch
The branch from where the demand draft is issued to another branch of the same
bank.
3. Drawer Branch
Branch in which the draft has drawn and called upon to pay the amount.
4. Payee
The person who is entitled to receive the amount after presenting the demand draft in
the drawer branch.
3.6.2 MAIL TRANSFER (MT):
It is the transfer of money from one branch to another branch of the same bank through
mail service. In mail transfer there is no need of advice as the amount is directly credited
to the receiver’s account.
Procedure
First a voucher is filled in whish the sender writes the amount to be sent, name,
account number of the receiving person with the branch name and date.
A credit voucher is filled in order to deduct exchange, postage charges according
to the amount of the mail transfer.
25
The sender deposits the total amount in the cash department.
The cash officer gives the vouchers to the officer after affixing received cash
stamp and writing the amount in red ink.
Then the officer writes the amount paid in the cash scroll and gives the MT to his
assistant.
MT leaf is filled according to the information provided in credit voucher. He also
writes the same information in the MT register. Then he gives the MT leaf and
MT register to the officer for authentication.
3.6.3 TELEGRAPHIC TRANSFER (TT):
This is the most urgent method of remitting the money from one place to another place.
This method is used when the sender desires to send urgently, in this case the sender
request the manager of the branch to issue TT.
Procedure;
For sending the TT the manager and officer apply a test. In the test the manager and
officer uses a coding technique. They write their own code numbers, which is allotted, to
them as the bank branch code. After making all the conformation the concerned branch
makes the payment to the receiver. If the sender wants to convey the same message
through telephone then he has to pay the charges of telephone along with the TT charges.
First the person deposit the TT amount along with the charges through the credit voucher
then his TT sent to the relevant branch.
3.6.4 Pay Order (PO):
A pay order is a written order issued by the bank on its own branch, drawn upon and
payable by itself to pay a specified sum of money to the person. The purpose of a pay
26
order is to transfer the fund from one place to another. It is usually not issued in favor of
the parties of other cities. Usually the pay order is issued for the local transfer of money
from one person to another or from the person to any other department. It is used for
different purposes. The purpose may be the repairs of the branch or renovation of the
branch.
Procedure.
The procedure of a pay order varies with the nature of the purpose. If the work is of huge
amount then first the manager writes a letter to the Zonal Chief in order to get sanction of
the work. Then the advertisement of the work is given in the newspaper in order to invite
the contractors. But if the work is small then the branch manager has discretionary power
to select the party whose rate is lowest. After finishing the work the contractor submits
the bill of work on his stamp pad. Then the bank issues a pay order, against the pay order
the contactor gets the amount from the issuing branch.
3.7 ADVANCES / CREDIT DEPARTMENT
A “Major source of bank’s Income”
It is the loan function, which produces the major person of bank’s income, and as such it
is the major areas of professional banker’s concern and attention.
Principles while advancing
Basically there are five principles that must be duly observed while advancing money to
borrowers.
Safety
Liquidity
27
Disposal
Remuneration
Suitability
Forms of Lending
Many there are two types of advances:
Short-term (maturity within one year)
Long term (maturity with the period of more than one year)
However they are further classified as:
Running Finance
Demand Finance
Cash Finance
Letter of Guarantee
3.7.1 Running Finance
This form of finance was previously known as “overdraft”. When a customer
requires the temporary accommodation, his bank allows withdrawal his account in excess
of credit balance, which the customer has in its account, a running finance occurs. The
accommodation is thus allowed collateral security. When it is against collateral securities,
it is called a “Secured Running Finance” and when the customer cannot offer any
collateral security except his personal security, accommodation is called a “Clean
Running Finance.” The customer is in advantageous position in running finance because
he has to pay the mark-up only the balance outstanding against him on daily product
basis.
28
3.7.2 Demand Finance.
This is common form of financing to commercial and industrial concerns and is mad
available either against pledge or hypothecation of goods produce or merchandise. In
Demand Finance the party is financed up to a certain limit either at once or as and when
required. The party due to facility of paying mark-up only on the amount it actually
utilizes prefers this form of financing.
Ordinary Shares
Preferred Shares
It can be
Quoted or Unquoted
Registered
Bearer
Inscribed
3.7.3 Advances Against Immovable Property (Mortgage).
A mortgage is the transfer of and interest in specific immovable property for the purpose
of securing the payment of the money, advanced or to be advanced. By way of loan, and
existing debts or the performances of the engagement this may rise the pecuniary
liability.
The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’ the principal
money and interest of which payment is secured for the time being and instrument by
which the transfer is affected, is called the letter of the mortgage deed.
Availability of adequate flows of credit for industry and agriculture are a sine qua non for
the growth and development of an economy. This acquires added importance when
29
agriculture is the mainstay of the economy as also the sector where the bulk of the poor
are concentrated. Growth and productivity in Pakistan's agriculture has slowed down in
recent years and is, therefore, of serious concern given its importance for the economic
prosperity of the country. Apart from various other weaknesses in the infrastructural
support of the agricultural sector, inadequacy and lack of efficacy of credit, flows to
support agriculture related activities has been a major constraining factor.
Agriculture is the largest sector of the economy. It contributes 25 percent to GDP,
provides raw materials to 80 percent of industry and employment to over 50 percent of
the population. This is a sector that has the shortest gestation period for investments and,
therefore, a remarkable capacity to bring about a turn around in the economy. This
important sector in Pakistan is suffering from a number of maladies and is consequently
witnessing stagnation in productivity.
Due to policy and administrative exigencies, the savings in the agriculture sector remain
low and, therefore, the sector has perpetually remained capital starved. The pricing of
input and output in agriculture over the years has forced the majority of farmers in
Pakistan to plough back their incomes into agriculture and non-institutional credit, and
has more often than not served to sap their potential earnings. Needless to say, that
shortage of savings and lack of availability of capital is one of the major reasons for
poverty in the country. The agricultural and rural sectors in Pakistan in general and in
Punjab in particular are, therefore, suffering from severe under-development. Under a
desirable development model, Punjab can:
30
Increase agricultural production to meet the country's requirement of essential
foods items and industrial raw materials.
Develop agro-based industry in the rural sector for economic value addition;
Generate additional employment opportunities in rural as well as adjacent small
towns/cities;
Control massive migration to the urban centers that in turn is causing a number of
social, administrative (i.e. law and order) and economic problems for the urban
areas.
Elevate poverty and improve the income generating capacity of the agri-based
population.
Never before in the history of Pakistan, has the development of the agricultural and food
sectors been as critical as at this juncture and appropriate short and long term measures
are necessary for its revival, sustenance and stability. Supply of credit by Financial
Institutions for meeting the specific needs of agriculture and rural sectors are essential
components for improvement in both short and long-term development of the country.
This has assumed even greater importance in the present situation of declining water
availability. Per acre, production is plummeting. The per acre yield of most of the crops is
stagnant rather diminishing. The most important factors responsible for this downward
trend in productivity are: -
FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:
* Imbalanced fertilizer use
* Availability of certified and good quality seeds
31
* Improper control of pests and weeds
SCARCITY AND INEFFICIENT USE OF WATER:
* Natural and mechanical water resources.
NON-USE OF MECHANIZED FARMING PRACTICES:
LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE
ADVANCED TOOLS FOR AGRICULTURE:
HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE
NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO
THE AGRICULTURE SECTOR
The importance of availability of credit to the agriculture sector has always been
recognized by Government and given Top Priority. Specialized institutions have been in
place for a number of years. However, these institutions have failed to realize the full
potential from the sector and at times contributed to its further deterioration..
The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.
►Farm Credit. And
►Non-Farm Credit
Farm Credit is further bifurcated into:
Short-Term
Medium-Term
Long-Term Credit.
32
The priority items, which are recommended for inclusion in our schemes, are given here
under;
EXISTING: (Kissan Dost Agriculture Finance Scheme) Product /purpose of
Finance) Seeds, Fertilizers, Pesticides, Herbicides, Weedicides. All types of labor and
water charges are already embodied in our package financing, i.e., 8000 Per Acres (no
change)
PROPOSED:
(Product /purpose of Finance)
1. Orchard and Nursery 2. Manual Sprayers
3. Sericulture 4. Apiculture
EXISTING: Tractors
(Product/purpose of Finance)
PROPOSED:
(Product & Purpose of Finance)
Tube-Well
Installation of Tube Well, water management, equipment, modules & culvert, lining of
channels etc. Solar energy plants and pumps for irrigation, equipment for
sprinkle/trickle/drip irrigation system.
Mechanization Support
33
Agri-implements, Equipment, i.e. trailers and thrashers, power tillers, power & boom
sprayers, ploughs and cultivators, ridggers / drills, rotavators, diggers, saw machines for
crates making, press machines for wheat straw and dry fodders.
Farm Transport
Lease finance for purchase of Motor Cycles and small Vans for Milk and other agri
products transportation to local market.
slah-e-Arazi
Precision land leveling & reclamation, soil improvement, embankment, land formation
and land improvement, laser leveling etc.
For the time being, bank does not propose to extending Non-Farm Credit, i.e. for big
Dairy Farms, Poultry Farm but will accommodate existing borrowers and established
small individual farmers by financing livestock. (Goat, sheep, cattle & fattening animals)
on a limited scale to revive, accelerate and supplement the income generating capacity of
the small farmers.
34
Chapter 4
PERFORMANCE
35
4.1 Deposits
YearsDeposits (Rs in
Million)
2002 12116
2003 14256
2004 15797
2005 17101
2006 15019
2007 17028
2008 19034
2009 23767
36
4.2 Advances
YearsDeposits (Rs in
Million)
2002 2909
2003 4208
2004 5065
2005 5612
2006 6151
2007 6144
2008 5772
2009 6621
37
4.3 Investment
YearsDeposits (Rs in
Million)
2002 6649
2003 5435
2004 5919
2005 6581
2006 4991
2007 7866
2008 5970
2009 8295
38
4.4 Capital & Reserves
YearsDeposits (Rs in
Million)
2002 1389
2003 1509
2004 1672
2005 1795
2006 1823
2007 2180
2008 2391
2009 2313
39
4.5 Total Assets
YearsDeposits (Rs in
Million)
2002 14340
2003 16419
2004 18512
2005 19886
2006 18215
2007 21275
2008 24802
2009 29532
40
4.6 Profit
YearsDeposits (Rs in
Million)
2002 174
2003 151
2004 163
2005 123
2006 28
2007 356
2008 222
2009 283
41
4.7 Growth of Shareholder
YearsDeposits (Rs in
Million)
2002 2691
2003 3955
2004 5389
2005 5389
2006 5389
2007 5896
2008 6436
2009 5891
42
4.8 Categories of Shareholders
CategoriesNo of Share
HoldersShares Held Percentage
Directors/CEO/Spouse 4 11576 0.01
Provincial Govern 1 51781427 51.57
Foreign funds 50 3052275 3.04
Individuals 5659 14378263 14.32
Insurance Companies 4 3453355 3.44
Financial Institutions 28 5881765 5.85
NBFI 103 16547565 16.48
Modaraba & Modaraba Management Co
8 9279 0.01
Others 28 5299821 5.28
43
TOTAL 5891 100415326 100
Chapter 5
FINANCIAL STATEMENTS AND ANALYSIS
44
5.1 Balance Sheet
THE BANK OF PUNJABSUMMARISED BALANCE SHEET
Rs. In MillionFor the Years 2009 2008 2007 2006 2005
ASSETCURRENT ASSETSCash 2814341 4448268 1483412 2021955 1746493Balance with other Banks 3170272 432575 458204 2071514 1968484Account Receivable 7479833 6776167 2911000 1750000 4644966Advances 6620988 5771526 6143664 6150648 4111500TOTAL CURRENT ASSETS
20085434 17428536 10996280 11994117 12471437
LONG TERM INVESTMENT
8294651 5969947 7865794 4990619 6580583
Fixed Asset 388788 274059 248575 230646 233601Capital work in progress 5048 2136 2641 33749 44807TOTAL FIXED ASSETS 393836 274059 251216 264395 278408Deferred Tax Debt 185070 192077OTHER ASSETS 758930 942955 881108 961312 555210
TOTAL ASSETS 29532851 24802703 20186475 18210443 19885638CURRENT LIABILITIESNotes Payable 250144 162545 130480 872378 543309Account Payable 1289547 2509262 312319 10745674 10009548
45
Accrued Liabilities 64240 18804 67345 27857Other Liabilities 731756 686653 535706 429930 415076
TOTAL CURRENT LIABILITIES
2335687 3377264 978505 12115327 10995790
Deferred Liabilities 117435 3000 3000Long Term Liabilities 23767017 19034737 17028412 7091933 4273426
TOTAL LIABILITIES 26220138 22411998 18006917 16391753 18090723STOCK HOLDERS EQUITYShare Capital 1004154 979662 851880 851880 774436Reserves 1357499 1275191 1327231 971049 1020343Unappropriated Profit 1452 05 447 225 136Stock Holder Equity 2363105 2390705 2179558 1823154 1794915Total Liabilities & Equity 28583243 24802703 20186475 18214907 19885638
5.2 Horizontal Analysis
THE BANK OF PUNJABCOMPARATIVE BALANCE SHEET
Rs. In Million
For the Years 2009-2008 2008-2007
ASSETS Rs(In Million)
%AGERs
(In Million)%AGE
CURRENT ASSETS
Cash (1633927) (93%) 2964856 170%
Balance with other Banks 2737697 139% (25629) (1.3%)
Account Receivable 703666 15% 3865167 83%
Advances 849462 20.6% (372138) (9%)
TOTAL CURRENT ASSETS 2656898 21% 6432256 51%
LONG TERM INVESTMENT 2324704 35% (1895847) (29%)
Fixed Asset 114729 49% 25484 11%
Capital work in progress 2912 7% (505) (1.12%)
TOTAL FIXED ASSETS 119777 43% 22843 8.2%
Deferred Tax Debt (185070) (96%) (7007) (3.6%)
OTHER ASSETS (184025) (33%) 61847 11%
TOTAL ASSETS 4730148 23.7% 4616228 23%CURRENT LIABILITIESNotes Payable 87599 16% 32065 6%
46
Account Payable (1219715) (12%) 2196943 21%
Accrued Liabilities 45436 163% 18804 67%
Other Liabilities 45103 11% 150947 36%
TOTAL CURRENT LIABILITIES
1041577 9.5% 2398759 22%
Deferred Liabilities 117435 3914%
Long Term Liabilities 4732280 110% 2006325 47%
TOTAL LIABILITIES 3808140 21% 4405081 24%STOCK HOLDERS EQUITYShare Capital 24492 3% 127782 16.5%
Reserves 82308 8% (52040) (5%)
Unappropriated Profit 1447 1064% (442) (32.5%)
Stock Holder Equity 27600 105% 211147 11.7%
Total Liabilities & Equity 3780540 19% 4616228 23%
Horizontal Analysis (Balance Sheet)
THE BANK OF PUNJABCOMPARATIVE BALANCE SHEET
Rs. In Million
For the Years 2007-2006 2006-2005ASSETS Rs
(In Million)%AGE
Rs(In Million)
%AGECURRENT ASSETSCash (538543) (31%) 275462 15.7%Balance with other Banks (1613310) (82%) 103030 5.23%Account Receivable 1161000 25% (2894966) (62%)Advances (6984) (.16%) 2039148 50%TOTAL CURRENT ASSETS (997837) (8%) (477320) (3.8%)LONG TERM INVESTMENT 2875175 44% (1589964) (24%)Fixed Asset 17929 8% (2955) (1.2%)Capital work in progress (31108) (69%) (11058) (24.6%)TOTAL FIXED ASSETS (13179) (4.7%) (14013) (5%)Deferred Tax Debt 192077 (100%)OTHER ASSETS (80204) (14%) 406102 73%
TOTAL ASSETS 1976032 10% (1675195) (8.4%)CURRENT LIABILITIESNotes Payable (741898) (136%) 329069 60%Account Payable (10433355) (104%) 736126 7%Accrued Liabilities (67345) (241%) 39488 141%Other Liabilities 105776 25% 14854 3.5%
47
TOTAL CURRENT LIABILITIES
(11136822) (101%) 1119537 10%
Deferred Liabilities (3000) (100%)Long Term Liabilities 9936479 232% 2818507 66%
TOTAL LIABILITIES 1615164 10% (1698970) (9%)STOCK HOLDERS EQUITYShare Capital 0 0% 77444 10%Reserves 356182 35% (49294) (5%)Unappropriated Profit 22 163% (89) 65%Stock Holder Equity 356404 20.4% 28239 1.5%
Total Liabilities & Equity 1971568 10% (1670731) 8.4%
5.2.1 Profit & Loss Account
THE BANK OF PUNJABSUMMARISED PROFIT & LOSS ACCOUNT
Rs. In MillionFor the Years 2009 2008 2007 2006 2005
Service Revenue
Mark up/Interest, Discount & Returned Earned
2069555 2172956 1934794 2260770 2259608
Fee Commission & Brokerage
60320 51937 61395 60637 58521
Dividend Income 189051 109804 161307 71258 46738
Other Operating Income 104581 58647 47300 25725 26150
Total Service Revenue 2423507 2393344 2204796 2425299 2391017
Less: Cost /Return on Deposit
996335 1113151 1083344 1510145 1755443
Gross Income 1392644 1259790 999004 912797 635100
Less: Operating Expenses
Administrative Expenses 901041 837055 678675 722009 601368
Provision against non- performing advances
76076 39286 143059 81230 (123615)
Provision for diminution in (23472) 0 0 0 27273
48
value of investment
Bad Debts 1574 200 33 0 337
Total Operating Expenses 955219 876541 821767 803239 505363
Operating Profit 437425 383249 177237 109558 129737
Other Income 43154 28480 21967 17269 7561
Other Charges 4664 1460 690 2088 1683
Profit Before Tax 431844 421275 319639 124739 135615
Less: Tax 147870 185030 162220 96500 12500
Profit After Tax 283979 236245 157419 28239 123115
Horizontal Analysis (P&L A/c)
THE BANK OF PUNJABCOMPARATIVE PROFIT & LOSS ACCOUNT
Rs. In Million
For the Years 2009-2008 2008-2007
Service RevenueRs
(In Million)%AGE
Rs(In Million)
%AGE
Mark up/Interest, Discount & Returned Earned
(103401) (4%) 238162 10%
Fee Commission & Brokerage 8383 15% (9458) (17%)
Dividend Income 79247 170% (51503) (110%)
Other Operating Income 45934 175% 11347 43.39%
Total Service Revenue 30163 1% 188548 8%
Less: Cost /Return on Deposit (116816) (7%) 29807 1.6%
Gross Income 132854 21% 260786 41%
Less: Operating Expenses
Administrative Expenses 63986 10.6% 158380 26%
Provision against non- performing advances
36790 30% (103773) (84%)
Provision for diminution in value of investment
(23472) (86%) 0 0%
49
Bad Debts 1374 407.7% 167 49.5%
Total Operating Expenses 78678 15.5% 54774 11%
Operating Profit 54176 41.7% 206012 159%
Other Income 14674 194% 6513 86%
Other Charges 3204 190% 770 46%
Profit Before Tax 10569 8% 101636 75%
Less: Tax 37160 297% 22810 183%
Profit After Tax 47734 38.7% 78826 64%
Horizontal Analysis (P&L A/c)
THE BANK OF PUNJABCOMPARATIVE PROFIT & LOSS ACCOUNT
Rs. In Million
For the Years 2007-2006 2006-2005
Service RevenueRs
(In Million)%AGE
Rs(In Million)
%AGE
Mark up/Interest, Discount & Returned Earned
(325976) (15%) 1162 1%
Fee Commission & Brokerage 758 .71% 2116 3.61%
Dividend Income 90049 193% 24520 52%
Other Operating Income 21575 82.5% (425) (1.6%)
Total Service Revenue (220503) (9%) 34282 1.4%
Less: Cost /Return on Deposit (426801) (24%) (245298) (14%)
Gross Income 86207 13.6% 277697 43.7%
Less: Operating Expenses
Administrative Expenses (43334) (7%) 120641 20%
Provision against non- performing advances
61929 50% 204945 166%
Provision for diminution in value of investment
0 (0%) (27273) (100%)
Bad Debts 33 10% (337) (100%)
Total Operating Expenses 18528 3.6% 297976 59%
Operating Profit 67579 52% (20179) (15.5%)
50
Other Income 4598 61% 9708 128%
Other Charges (1398) (83%) 405 24%
Profit Before Tax 194900 143% (10976) (8%)
Less: Tax 65720 525% 84000 572%
Profit After Tax 129180 105% (94976) (77%)
Comparative Financial Statement
Comparative financial statement present financial information for the current period and
one or more past periods. In comparative analysis the statements predict about the
movements and trends of the business with respect to past years, whether there is increase
in the business activities or decrease. It may also help to comments about the future
expectations of the ways in which the financial and operating performance will go.
There are two type of comparative financial statement analysis.
Horizontal Analysis
Trend Percentage Analysis
Horizontal Analysis
Comparison of two or more years’ financial statement is called Horizontal Analysis.
It shows the changes between years both in rupee and percentages form. So in this
way it facilitates the analyst to predict about the ways if the business in which it is
going. It emphasis the proportional relationship between the reporting periods, rather
than with in the reporting period.
In this report I shall use this type of comparative financial statement analysis to
analyze the performance of The Bank of Punjab.
51
Trend Percentage Analysis
Trend percentages state the several years’ financial data in terms of a base year. The base
years equals to 100% with all other stated as some percentage of this base year. In this
way it predict good and easy way information about the business activities. By simple
looking at these percentages one can see the ways in which the business in going on
whether the business is making performance or not.
Comments on Comparative Analysis of 2009-2008
The results that I have perceived from the Comparative Analysis of Balance Sheet and
Profit & Loss Account of 2009-08.
From Balance Sheet
The current assets increased by 21%, this is mainly due to a higher increase in
Balance with other Banks i.e. 139%but cash is reduced which is not good for
the Short term solvency of the bank. Account receivable also increases as
compared to last year but other assets decrease i.e. 33%.
Total Assets are increased by 23.7%.
Fixed Assets are increased by 43%.
The increase in Balance with other banks by 139% is a good sign for the
short-term solvency of the bank.
The Account receivable is increased by 15% in this period.
As a whole total assets and total liabilities plus owner’s equity is increased by 19% which
corresponds with the increase in service revenue.
From Profit and Loss Account
52
The service revenue of the bank is increased by 1% than that of 2008, with the
decrease of –7% in the cost return on deposits. So service decreased less than
that of return on deposits.
This less decrease, service revenue than that of return on deposits results in an
increase of 21% of Gross profit.
The other income of the bank also increased in 2009 then that of in 2008.
These are increased by 194%.
As the service revenue increased, the administrative expenses also increased
by 11%.
Overall profit after tax also increased by 39% in 2005 then that of 2009.
Comments on Comparative Analysis of 2008-2007
From Balance Sheet
The current assets increased by 51%, this is mainly due to a higher increase in
cash i.e. 170% but balance with other bank is reduce which is not good for the
Short term solvency of the bank. Account receivable also increases as
compared to last year.
Total Assets are increased by 23%.
Fixed Assets are increased by 8.2%.
The decrease in Balance with other banks by –1.3% is not good sign for the
short-term solvency of the bank.
The Account receivable is increased by 83% in this period.
53
As a whole total assets and total liabilities plus owner’s equity is increased by 23% which
corresponds with the increase in service revenue.
From Profit and Loss Account
The service revenue of the bank is increased by 8% than that of 2007
This less decrease, service revenue than that of return on deposits results in an
increase of 41% of Gross profit.
The other income of the bank also increased in 2001 then that of in 2007.
These are increased by 86%.
As the service revenue increased, the administrative expenses also increased
by 26%.
Overall profit after tax also increased by 64% 2001 then that of 2007.
Comments on Comparative Analysis of 2008-2009
The results that I have perceived from the Comparative Analysis of Balance Sheet
and Profit & Loss Account of 2008-2009.
From Balance Sheet
The current assets decreases by -8%, this is mainly due to a higher decrease in
Balance with other Banks i.e. -82% and cash is also reduced by -31%, which
is not good for the Short-term solvency of the bank. Account receivable
increase as compared to last year but other assets decrease i.e. 14%.
Total Assets are increased by 10%.
Fixed Assets are increased by 8%.
54
The decrease in Balance with other banks by -82% is not a good sign for the
short-term solvency of the bank.
The Account receivable is increased by 25% in this period.
From Profit and Loss Account
The service revenue of the bank is decreased by -9% than that of 2009, with
the decrease of –15% Mark up interest on deposits. So service decreased less
than that of Mark-up Interest.
This less decrease, service revenue than that of mark-up on deposits results in
an increase of 14% of Gross profit.
The other income of the bank increased highly in 2005 then that of in 2009.
These are increased by 61%.
As the service revenue decreased, the administrative expenses also decreased
by -7%.
Overall profit after tax also increased by 105% in 2005 then that of 2009.
Comments on Comparative Analysis of 2007-2008
The results that I have perceived from the Comparative Analysis of Balance Sheet
and Profit & Loss Account of 2007-2008.
From Balance Sheet
The current assets decreases by –3.8%, this is mainly due to a higher decrease
in Account Receivable but increased in Balance with other Banks i.e. 5% and
cash is also increased by 15.7% which is good for the Short term solvency of
the bank.
55
Total Assets are decreased by -8.4%.
Fixed Assets are also decreased by -1.2%.
The Account receivables are decreased by -62% in this period.
From Profit and Loss Account
The service revenue of the bank is increased by 1% than that of 2008, with the
decrease of –14% in the cost return on deposits. So service decreased less than
that of return on deposits.
This less decrease, service revenue than that of return on deposits results in an
increase of 43.7% of Gross profit.
The other income of the bank also increased in 2005 then that of in 2009.
These are increased by 128%.
As the service revenue increased, the administrative expenses also increased
by 20%.
Overall profit after tax decreased by -77% in 2005 then that of 2009.
56
5.3 Vertical Analysis (Balance Sheet)
THE BANK OF PUNJABTREND PERCENTAGES
For the Years 2009/2005 2008/2005 2007/2005 2006/2005
ASSETSCCURRENT ASSETSCash 161% 254% 84% 115%Balance with other Banks 161% 21% 23% 105%
Account Receivable 161% 141% 62% 37%Advances 160% 140% 149% 150%TOTAL CURRENT ASSETS 161% 139% 88% 96%LONG TERM INVESTMENT 126% 90% 119% 75%Fixed Asset 166% 117% 106% 98%
Capital work in progress 11% 04% 05% 75%TOTAL FIXED ASSETS 141% 98% 90% 94%Deferred Tax Debt 00% 96% 100% 00%OTHER ASSETS 136% 169% 158% 173%
TOTAL ASSETS 148% 124% 101% 91%CURRENT LIABILITIESNotes Payable 46% 30% 24% 160%Accounts Payable 12% 25% 03% 107%Accrued Liabilities 230% 67% 00% 241%Other Liabilities 176% 165% 129% 103%
TOTAL CURRENT LIABILITIES
21% 30% 08% 110%
Deferred Liabilities 3914% 00% 00% 100%Long Term Liabilities 556% 445% 398% 165%
TOTAL LIABILITIES 144% 13% 99% 90%STOCK HOLDERS EQUITY
57
Share Capital 129% 126% 110% 110%Reserves 133% 125% 130% 95%Unappropriated Profit 1067% 3% 328% 165%
Stock Holder Equity 131% 133% 121% 101%
Total Liabilities & Equity 143% 124% 101% 91%
5.4 Trend Analysis (Profit & Loss A/c)
THE BANK OF PUNJABTREND PERCENTAGES
For the Years 2009/2005 2008/2005 2007/2005 2006/2005
Service Revenue
Mark up/Interest, Discount & Returned Earned
91% 96% 85% 100%
Fee Commission & Brokerage 103% 88% 104% 103%
Dividend Income 404% 234% 345% 152%
Other Operating Income 399% 224% 180% 98%
Total Service Revenue 101% 100% 92% 101%
Less: Cost /Return on Deposit 56% 63% 61% 86%
Gross Income 219% 198% 157% 143%
Less: Operating Expenses
Administrative Expenses 149% 139% 112% 120%
Provision against non- performing advances
61% 31% 115% 65%
Provision for diminution in value of investment
(86%) 0% 0% 0%
Bad Debts 467% 59% 9% 0%
Total Operating Expenses 189% 173% 162% 159%
Operating Profit 337% 295% 136% 84%
Other Income 570% 376% 290% 228%
Other Charges 277% 86% 40% 124%
Profit Before Tax 318% 310% 235% 91%
Less: Tax 1182% 1480% 1297% 772%
58
Profit After Tax 230% 191% 127% 22%
Graphically Presentation of trend Percentages
This table and graph shows the trend of Total current Assets, Total Fixed
Assets, and Total Assets during the years 2005-09
No of Years 2009 2008 2007 2006 2005
Total Current Assets 161% 139% 88% 96% 100%
Total Fixed Assets 141% 98% 90% 94% 100%
Total Assets 148% 124% 101% 91% 100%
59
This table and graph shows the trend of Gross Income, profit before tax, and Net
income.
No of Years 2009 2008 2007 2006 2005
Gross Income 219% 198% 157% 143% 100%
Profit before Tax 318% 310% 235% 91% 100%
Net Income 230% 191% 127% 22% 100%
60
2009 2008 2007 2006 2005
This table and graph shows the trend of current Liabilities, Deferred Liabilities
and Long Term Liabilities during the period 2005-09
No of Years 2009 2008 2007 2006 2005
Current Liabilities 21% 30% 08% 110% 100%
Long Term Liabilities 556% 445% 398% 165% 100%
Total Liabilities 144% 13% 99% 90% 100%
61
5.5 RATIO ANALYSIS
The relationship of one item to another expressed in simple mathematical form is known
as a ratio. A single ratio in itself is meaningless because it does not furnish a complete
picture. A ratio becomes meaning full when compared with some standard. So we have
taken ratios and percentage of the BOP based in its record of the past financial and
operating performance. On the following pages, I make the analysis of the financial
statements of BOP by using related items for the last five years.
Profitability vs. Investment
62
Return on Assets Net profit after taxes / Total assets
Return on Deposits Net profit after taxes / Deposits
Return on Equity Net profit after taxes / Equity
No of Years 2009 2008 2007 2006 2005
Return on Assets .96% . 95% .70% . 15% . 61%
Return on Deposits 1.19% 1.24% .92% . 39% 2.8%
Return on Equity 12.01% 9.88% 7.2% 1.54% 6.7%
Remarks.
The return on assets shows a increasing trend, which is good sign for the BOP.
Return on deposits is also not stable; in starting years it increases and then decreases and
knows again increase. This is due to an increase in deposits and less increase in profit.
The ROE ratio of five years of BOP indicates that the profitability of the bank with equity
is increasing day by day. This looks to be very positive sign.
Profitability Ratios.
Gross Profit Margin Gross profit / Income
Operating Profit Margin Operating profit / Income
Net Profit Margin Net profit / Income
No of Years 2009 2008 2007 2006 2005
63
Gross Profit Margin57% 52% 45% 37% 27%
Operating Profit Margin18% 16% 8% 5% 6%
Net Profit Margin11% 9% 7% 1% 5%
Remarks.
The net profit margin of five years indicates that the income of the BOP after
paying its non-productive expenses is increasing year by year, which is a very good sign
for the bank. As I see the operating profit of the bank shows a increasing trend in ratio.
This shows that the earning capacity of the bank is increasing year by year.
Earning Per Share
Earning Per Share Profit after Tax / No of Shares
No of Years 2009 2008 2007 2006 2005
Earning Per Share2.83 2.41 1.85 .33 1.59
Comments
Earning of BOP shows the increasing trend. This shows that the earning capacity
of a single share is increasing and shareholders are earning increase every year. This is
64
very good sign for BOP. This ratio should be as high as possible because it has a great
importance for an investor to invest in the Bank of Punjab.
Regulatory Ratios:
Advances to Deposits Ratio Advances / Deposits
Cash to deposits Ratio Cash / Deposits
No of Years 2009 2008 2007 2006 2005
Advances to Deposits Ratio28% 30% 36% 36% 33%
Cash to deposits Ratio12% 23% 9% 13% 42%
Remarks. Advances to deposits ratio of The Bank of Punjab shows that the portion
of loan in total deposit of the bank is not stable, 1st three year from 2005 to 2007 increase
then decrease. It means that the credit (advances) circulation of the bank has fallen from
36% to 28% during the last five years, which is a not good sign. And the cash to deposits
ratio is also decrease from 42% to 12%.
Capital adequacy Ratios:
Equity to Asset Ratio Total Equity / Total Assets
Equity to Deposit Ratio Total Equity / Deposits
No of Years 2009 2008 2007 2006 2005
65
Equity to Asset Ratio8% 10% 11% 10% 9%
Equity to Deposit Ratio10% 13% 13% 12% 3%
Remarks
This ratios is showing increasing trend, in 2009 it decreased. This means that deposit of
the banks are decreased in 2009 and assets are also decreased in 2009, which is not good
for the Bank of Punjab.
Efficiency Ratios:
Deposits to total liabilities Ratio Deposits/Total Liabilities
Investment to Total Assets Ratio Investments / Total Assets
No of Years 2009 2008 2007 2006 2005
Deposits to total liabilities Ratio91% 85% 95% 92% 94%
Investment to Total Assets Ratio28% 24% 27% 27% 34%
66
Chapter 6
SWOT ANALYSIS
SWOT ANALYSIS
6.1 STRENGTHS
In the bank service quality standards are designed and monitored to ensure a
consistent and convenient customer experience.
Products and services are as diverse as market segments. Bank has structured and
syndicated financing arrangements, working capital finance, financing of
international trade, consumer credit, small business loans, credit cards and ATM
cards.
67
The human resource philosophy at BOP Bank focuses on multi-talent hiring,
professional grooming, requisite training and merit based reward system.
Staff welfare has always been a priority. New initiatives like hospitalization plan,
home loan insurance have added new dimensions to the staff-care policy and
motivated them to out-perform competitors.
Bank enjoys a strategic competitive advantage over all domestic players by virtue
of its leadership in technological innovations.
Bank has fully automated transaction-processing systems for back-office support.
Bank's branch network is connected on-line real-time and customers have access
to off-site as well as on-site ATMs, all over Pakistan.
Bank also is pioneer in e-commerce venture in Pakistan through a major retail
distributor.
From a humble beginning with just 10 branches in 1993, today bank enjoys a
network of 242 outlets, spread across the country. A network of self-service
ATMs supports these outlets.
6.2 WEAKNESSES
Bank is providing credit facilities only to the urban areas not too much attention is
paid to the rural areas.
As Pakistan is agriculture country but no special schemes for the agri- loans.
Bank is not giving emphasis on the small-scale businesses, which are large in
number in Pakistan.
There is enormous difference between the bank-lending rate and return on
deposits.
The procedure and documentation while sanction loan is thorny, which is a barrier
for advances.
Bank gives targets to employees for deposits due to this reason they pay more
attention to fulfil these targets to save their jobs. This distracts their attention from
their duties.
No job security is there for the employees, and no union exits to secure them.
68
BOP has only agency arrangements with the foreign banks, no branch exists
outside the Pakistan, while their main competitors have their own branch network
outside the Pakistan.
To improve the services and to remove the problems of customer the bank has no
customer complaint department.
Limited locker facility is there, which does not fulfil the requirements of customer
and charges of lockers are also very high.
6.3OPPORTUNITIES
Bank has a small branch network so The Bank of Punjab can increase its turnover
though increase the number of branches.
Bank has no foreign branches so it should open its branches outside the country
especially in U.K, U.S.A and in U.A.E.
Facilities like financing of housing should also be offered to general public
especially in the urban areas.
In agrarians cities like Rahim Yar Khan there is a potential for giving credit
facilities to farmers.
To increase its advances bank should focus small scale industries and choose one
among them and then a special scheme of lending should be introduced for that
particular small scale industry.
6.4 THREATS
Law and order situation in Pakistan is faulty that is why people are not confident
to invest anywhere.
The markets rates are now at extremely low levels, with very little chance of their
going up during the rest of the year. The low interest rate means low profits for
the banks.
Saving rate in Pakistan is very low i.e.15% as compared to 30% in China and
40% in Malaysia.
69
As the banking procedures are complicated that is why general public takes
interest into other options of investments like in shares of companies and in Term
Finance Certificates.
Now the world is a global village so competitors may rise from anywhere in the
world at anytime.
In near future the world is going to be free trade zone so the concept of "survival
of the fittest" will be in action.
After the 11 September incident and due to terrorist activities in Pakistan the
economy is moving very slow. It means less investment and as a result low loan
demands.
High rate of taxes on banking companies.
SBP have a heavy penalty on banks for violating the Prudential Regulation. So it
requires greater care while advancing.
Increasing ATM trend among the banks also requires attention of the management
to this side.
70
Chapter 7
CONCLUSION AND RECOMMENDATION
7.1 CONCLUSION
The Bank of Punjab is contributing a lot towards the industrial development and capital
formation in the country. As it is exhibit from the data regarding the bank’s financial
performance as shows in the financial performance as shows in the financial analysis, that
71
bank is sharing major banking business of the country. Further more the policies and
schemes as are introduced and carried on by the bank are of great source of help in its
trading and non-trading growth.
They facilitate trade both inside and outside the country. The Bank if Punjab has
endeavored to remain in the forefront of modern financial institutions and has
consistently shows tremendous growth in all area of its activity. However after
scheduling, due to its emphasis on consolidation and controlled lending, the growth of
profit has somewhat declined. But the bank’s performance is in line with its set goals.
The policies of the bank are uniform and going very smoothly. The employees are given
all the possible facilities and generous compensation. In return employees are stressed for
their best efficiency. Merit policy prevails in all the activities of the bank. Bank
Management has studied the administrative policies of all other banks, and all their
problems and drawbacks are planned to be avoided. Therefore, the policies of the
management are progressive and proper.
The progressive approach and trend towards progress and prosperity reflects that bank
will touch the zenith of development and progress. The dedicated, enthusiastic and
motivated employees can bring that time even earlier.
7.2 Recommendation
Survive in the Market
The bank should not relay on its present sources and facilities but also it should establish
new ways of acquiring, managing and sharing market information to survive in the
industry and to earn profits.
Computer Specialis
72
The bank should increase the computer specialist at branch level.
Customer Compliant Department
The bank should improve the services and remove the problems of customer by making a
vast customer complaint department.
Locker Facility
The bank should increase locker facility and decrease the charges of lockers.
Security Measurement
Bank has low security measurement in branches. Bank should increase the number of
guards and other technical security tools.
Improve and Update Website
The Bank should improve and keep the up to date information on web site.
Hire New Talent
Instead of preferring the old employees of the other banks, management should hire new
and well-educated talent. This will contribute to the long-term benefits of the bank.
Credit Policy
Credit policy should cover both the rural and as well as urban areas. Credit facilities
should be enhanced to small-scale businesses.
Bonus
Employees who perform extraordinary and achieve more than their targets should be
given bonus.
73