Professional Documents
Culture Documents
Financial Project 0168
Financial Project 0168
Sciences
Financial Project
Adamjee Insurance Company
Submitted By:
Semester: 8th
Session: 2006-2010
2
DEDICATED
I dedicate this project to
And
And
To my parents,
ACKNOWLEDGEMENTS
Almighty ALLAH never spoils the effort. We consider it as our foremost duty
to acknowledge the omnipresent, kindness and love of Almighty ALLAH who
made it possible for me to complete this financial project.
Then we consider it our utmost duty to express gratitude and respect to Holy
Prophet (PBUH), who is forever a torch of guidance and knowledge for
humanity as a whole.
We pay our full regards and heartiest appreciation to all our teachers, who
taught me at any stage of our education career.
We greatly extend my zealous, sincerest and warmest thanks to all our dear
friends for their cooperation, beautiful moments of friendship and with whom
we have passed memorable events of life.
May Allah the Almighty bless our mother and father & well wishers with good
health & prosperous long lives (Aamin!).
Ahmad Raza
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“Punjab Government wishes to state that being the major stake holder in the
Bank of Punjab it has full faith in the new management and operations of the
Bank. The government further pledges its unequivocal support to the Bank and
firmly believes that the affairs of the Bank are sound and its financial health
robust.”
Finance Department
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The present management took over in the concluding quarter of the year
under review when the Bank was passing through a restructuring phase and
the negative media hype had affected patrons’ confidence. Accordingly,
imperative pragmatic and result oriented measures were warranted in utmost
expedition to salvage the institution from the imbroglio it was mired in and
also to restore and augment much needed order, balance and cohesion in the
work and service environment.
The Government of the Punjab, as the major stakeholder, has expressed its
unflinching faith in the management as well as operations of the Bank and
further pledged its unequivocal backing and abiding support. There is thus,
no cause, reason, occasion or room for even the slightest doubt,
apprehension, alarm or concern. The transition was rendered more difficult
on account of the impediments posed by the slow-down in our economy in
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size without getting bogged down by the baggage. We shall be yet stronger,
more stable and more profitable for our share holders to own, a more fulfilling
and enabling environment to work in and for our peers competitor worth
reckoning. Salutary outcome of the measures so far implemented has started
to surface. More beneficial results that accrue shall manifest themselves
vividly in the near future to validate the efficacy of the decisions. We must
strive together to ensure that the impact is enduring.
Naeemuddin Khan
TABLE OF CONTENTS
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VISION STATEMENT:.......................................................................................13
MISSION STATEMENT:.....................................................................................13
Core Values:...................................................................................................14
Branch Networks:...........................................................................................15
Banking History:.............................................................................................18
Deposits: ...................................................................................................29
SERVICES: .....................................................................................................81
Commercial Banking:..................................................................................81
SWOT ANALYSIS.............................................................................................83
Strengths:................................................................................................... 84
Weaknesses:...............................................................................................84
Opportunities:.............................................................................................84
Threats:.......................................................................................................85
PEST Analysis.................................................................................................85
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Political Factors...........................................................................................87
Economic Factors........................................................................................88
Technological Factors..................................................................................93
BALANCE SHEET.............................................................................................94
RATIO ANALYSIS:..........................................................................................101
a) Liquidity Ratios.........................................................................................102
Current Ratio:............................................................................................103
b) Leverage Ratios:......................................................................................105
Debt Ratio:................................................................................................106
c) Profitability Ratios:...................................................................................110
Return on Assets:......................................................................................112
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d) Activity Ratios:.........................................................................................115
d)Market Ratio:.............................................................................................117
Recommendation.........................................................................................121
INTERNAL CONTROL..................................................................................121
PROFESSIONAL TRAINING..........................................................................122
DELEGATION OF AUTHORITY.....................................................................122
PERFORMANCE APPRAISAL........................................................................122
TRANSFERS...............................................................................................123
TECHNOLOGICAL IMPROVEMENT...............................................................124
STAFF RELATIOSHIP...................................................................................124
MARKETING POLICY...................................................................................125
Conclusion....................................................................................................126
References...................................................................................................127
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VISION STATEMENT:
"To be a customer focused bank with service excellence"
MISSION STATEMENT:
“To exceed the expectations of our stakeholders by leveraging our
relationship with the Government of Punjab and delivering a complete range
of professional solutions with a focus on programme driven products &
services in the Agriculture and Middle Tier Markets through a motivated
team.”
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Core Values:
Corporate
To Enrich the Lives of community where we
Social
operate.
Responsibility
Recognition
For the talented and high performing
and
employees.
Reward
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Branch Networks:
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Banking History:
Banks are financial institutions that accept deposits and make loans.
Included in the term banks are firms such as commercial banks, saving
and loan associations, mutual savings banks and credit unions. Banks
are the financial intermediaries that an average person deals with
most frequently. A person who needs a loan to buy a house or a car
usually gets it from a local bank. Most citizens’ keep a large proportion
of their financial wealth in banks in the form of checking accounts,
saving accounts, or other type of bank deposits. Because banks are the
largest financial intermediaries in any economy, they deserve the most
careful study.
The First Stage in the development of modern banking, thus, was the
accepting of deposits of cash from those persons who had surplus
money with them.The goldsmiths used to issue receipts for the money
deposited with them. These receipts began to pass from hand to hand
in settlement of transactions because people had confidence in the
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It was decided that a bank should be set up by the state, which should
streamline the banking organization and technique. The first central
bank was formed in Geneva in 1578. Bank of England was established
in 1694. The responsibility of issuing of notes is now entrusted to a
central bank of each country.
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Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the
Banks must have paid-up capital & reserve of not less than Rs: 5 Lac &
fulfilling certain other requirements for declaring as “Scheduled Bank”.
At the time of independence Bank services was badly affected. But
with the passage of time these are improving. The government of
Pakistan nationalized all Banks in early 1974. This act was done to
minimize control of few hands over banking. But this step was proved e
futile for the Banking in Pakistan. So the Govt. had to revise its
decision in1990. Two Banks (Allied Bank of Pakistan Limited & Muslim
commercial Bank Of Pakistan Limited has been denationalized. Since
then Banks were working well.
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Accepting Deposits Some people have excess money and they want
to deposits it to some honest man or an institution which can give
them some profit. So the first function of commercial bank is to receive
deposit there are three types of deposits.
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First Punjab Modaraba (FPM) was established in the year 1992 and is
being managed by Punjab Modaraba Services (Pvt) Ltd, a wholly owned
subsidiary of The Bank of Punjab.
The net assets of the subsidiary stood at Rs. 149.4 million as at the
year end as against Rs. 181.1 million, last year.
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GOALS:
international activities.
taker.
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Deposits:
Types of Deposits:
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• Current Deposit:
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The following are the criteria for opening a current account at the
Bank of Punjab:
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Note
If any existing customer desire to get his regular banking
account converted into Basic Banking Account, he / she may
kindly contact the branch where his / her account is being
maintained. The facility for conversion into BBA will be provided
free of charge.
Portfolio Sharing:
The following are the portfolio products offered by The Bank of Punjab
to its clients:
• PLS Account:
The following are the terms and conditions for the opening of a
PLS Account for a client of The Bank of Punjab:
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This is a saving bank product available for all senior citizens i.e.
persons of 60 years and above who are eligible to open a saving
account as per our Bank’s criteria. The account can be opened
singly or preferably jointly (husband & wife) provided either of
them is of 60 years or above. This product is designed to attract
procure deposit/savings of senior citizens by offering attractive,
innovative incentives and higher rates of profit to senior citizens.
The Main Features are:
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This is a saving bank product available for all females who are
eligible to open a saving account as per our Bank’s criteria. The
account can be opened singly or jointly with husband. This
product is designed to attract procure deposit/savings of ladies
particularly housewives of expatriates & students.
This product is governed under PLS rule of Profit & Loss sharing
system. The rates mentioned are expected and the Bank reserves the
right to review/revise the profit rates quarterly.
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This product is governed under PLS rule of Profit & Loss sharing
system. The rates mentioned are expected and the Bank reserves the
right to review/revise the profit rates quarterly.
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This is a fixed deposit product. The following are its salient features:
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• Munafa Hi Munafa :
Loan Products:
A loan is a type of debt. Like all debt instruments, a loan entails the
redistribution of financial assets over time, between the lender and
the borrower.In a loan, the borrower initially receives or borrows an
amount of money, called the principal, from the lender, and is
obligated to pay back or repay an equal amount of money to the
lender at a later time. Typically, the money is paid back in regular
installments, or partial repayments; in an annuity, each installment
is the same amount. The loan is generally provided at a cost,
referred to as interest on the debt, which provides an incentive for
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Commercial Finance:
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Sony
LG
Samsung
PEL
Intel
Raffles Computer system
Daikin
Daikool
Hisence, etc
• Quick Cash:
You are thinking of sending your child abroad for higher education or a
daughter’s wedding perhaps. However, you do not see to fulfill them as
you do not have money. Don’t get troubled as Bank of Punjab has the
answer to this in the form of Quick Cash.
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• House Loan:
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You can take upto 25% net salary income. Maximum limit for this
facility is Rs. 500,000. With floating mark-up rate.
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b) Consumer Banking:
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4. Car Dealers:
5. Karobar Barhao:
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6. Fertilizer Dealer:
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c) Agricultural Credit:
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Provision of financial facility to the farmers and non farmers (those who
provide tractors to farmers on rental basis for various tractor related
operations), for purchase of Tractor on Lease Finance Basis.
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Islah-E-Arazi Scheme:
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Farmers, self-employed
persons/firms/companies/institutions related directly or
indirectly related with Agri Business.
The amount of finance will be 80% of purchase price of the
Tractor and lessee/borrower will contribute 20% equity
towards the purchase price of Tractor.
Tractor itself which will be Registered in the name of Bank.
Two personal guarantees of the persons having good
market reputation and acceptable to the Bank. The
guarantors should be having sufficient assets to cover the
amount of finance. The Manager and ACO will verify the
worth and market reputation of client and guarantors.
Comprehensive insurance of the assets (with Bank
mortgage clause) and life assurance of the borrower.
Average Six months KIBOR + 500bps (5.00%) with floor of
10% per annum.
In five years 60 monthly installments (Principal + Markup).
The installment will start from the month of delivery of
tractor. Sixty post dated cheques equal to the amount of
installment (Principal + Markup) will be obtained from the
borrower at the time of disbursement.
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Primary Security:
Collateral Security:
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Letters of Credit:
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Shipping Guarantees:
a) Policy The issuance of shipping guarantees to cover
missing documents under our own documentary
Letters of Credit and documentary collections will be
subject to the requirement set forth in this section.
Issuance of shipping guarantee will require a sub-
limit under LC.
b) Customer Documentation In all cases involving
shipping guarantees, the customer will sign our
standard shipping guarantee application, which
includes an irrevocable undertaking that the
customer will accept the relative documents when
received, regardless of discrepancies.
c) Security Shipping guarantees related to sight/Usance
documents under LCs and collection will be issued
against cash collateral. Cash collateral should be
kept in local currency unless requested by the
customer, since it will be refunded as soon as the
shipping guarantee is received back by the Bank.
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SERVICES:
Commercial Banking:
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Investment Banking:
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2) Utility Bills:
The bank collects all kinds of utility Bills including Electricity,
Gas and Telephone from customer. All Branches of the Bank
collect Utility Bills during banking hours which are paid
through cash and cross checks
3) BOP Locker:
The Bank of Punjab Lockers are available in three different sizes
Small, Medium and Large on an annually fee with one time Security
Deposit respectively to the size of locker. Locker holders need
to have an account in the Bank
SWOT ANALYSIS
BOP is one of the fastest growing banks in Pakistan. In the light of these
situations we can make an analysis.
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Strengths:
Weaknesses:
Although the bank is growing fastly but it has some weaknesses which it
should remove to make itself further strong.
Less Advertisement
Slow in introducing new products
The staff is not satisfied with the salary structure
Gives its staff less benefits
Opportunities:
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Threats:
PEST Analysis
POLITICAL
ECONOMICAL
SOCIO CULTURAL
TECHNOLOGICAL
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ECONOMICAL
Gdp
monsoon
inflation
savings & accounts
agriculture credit
interest rates
raising living
Standred
disposable incomE
SOCIOCULTURAL
POLITICAL
changes in life style
literacy rate
Government demographic of
policy & budgect Organizatio large population
budject measures n shift towards the
monatory policy nuclear family
fdi limit
TECHNICAL
technology in banks
core banking
solutions
ATM
internate
i.t serves and mobile
banking
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Political Factors
Monetary policy
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Repo Rate It has been reduced under the Liquidity Adjustment Facility (LAF)
Reverse Repo Rate : It has been reduced under LAF by 25 basis points from
3.5% to 3.25% with immediate effect. RBI has retained the option to conduct
overnight or longer term repo/reverse repo under the LAF depending on
market conditions and other relevant factors.
FDI LIMIT
worth to meet CAR norms. Ceiling for FII investment in companies was also
increased from 24.0 percent to 49.0 percent and have been included within
the ambit of FDI investment
Economic Factors
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sector and industrial sector, therefore, booming the economy. If the FDI limits
are relaxed, then more FDI are brought in India through banking channels
It is great news that today the service sector is contributing more than
half of the Indian GDP. It takes PAKISTAN one step closer to the developed
economies of the world. Earlier it was agriculture which mainly contributed to
the GDP. The Pakistani government is still looking up to improve the GDP of
the country and so several steps have been taken to boost the economy.
Policies of FDI
Inflation Rates
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Different fiscal and monetary policies have curbed the Inflation rate. To fight
against the slowdown of the Economy, Government of Pakistan & SBP took
many fiscal as well as monetary actions. Clubbed with fiscal & monetary
actions, decreasing commodity prices, decreasing crude prices and lowering
interest rate, we expect that Indian Economy could again register a robust
growth rate in the year 2009-10
AGRICULTURE CREDIT
Agriculture has been the mainstay of our economy with 70% of our
population deriving their sustenance from it. In the recent past, the sector
has recorded a growth of about 4% per annum with substantial increase in
plan allocations and capital formation in the sector. The target for agriculture
credit flow for the year 2009-10 is being set at Rs.3,25,000 crore. To achieve
this, I propose to continue the interest subvention scheme for short term crop
loans to farmers for loans upto Rs.3 lakh per farmer at the interest rate of 7%
per annum. For this year, the government shall pay an additional subvention
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of 1% as an incentive to those farmers who repay their short term crop loans
on schedule
Socio culture factors also affect the business. They show in which
people behave in country. Socio-cultural factors like taboos, customs,
traditions, tastes, preferences, buying and consumption habit of people, their
language, beliefs and values affect the business. Banking industry is also
operates under this social environment and it is also affect by this factor.
These factor are changing continuously people’s life style, their behavior,
consumption pattern etc. is changing and also creating opportunities and
threat for banking industry. There are some socio-culture factors that affect
banking in India have been analyzed below.
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POPULATION
LITERACY RATE
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Technological Factors
TECHNOLOGY IN BANKS
ATM
queries, currency accounting machines makes the job easier and self-service
counters are now encouraged.
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and they can make the balance inquiry, get the statement of accounts, give
instructions for fund transfers, etc.
Today banks are also using SMS and Internet as major tool of
promotions and giving great utility to its customers. For example SMS
functions through simple text messages sent from your mobile. The
messages are then recognized by the bank to provide you with the required
information. All these technological changes have forced the bankers to
adopt customer-based approach instead of product-based approach.
Technology advancement has changed the face of traditional banking
systems. Technology advancement has offer 24X7 banking even giving faster
and secured service.
BALANCE SHEET
The Bank of Punjab
Balance Sheet
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As at 31.dec 2005,06,07,08
CURRENT ASSETS
Cash and balance with treasury banks 5579566 8787387 14054859 14210302 10685058
Balance with other banks 2118242 9367595 3722089 1927662 2178455
Lendings to finnacial instituions 1019488 7593681 11846823 2450000 633333
Investments 16197505 18026181 28233211 73461693 22689608
Advances 39438923 63623705 101324443 133899143 131724113
other Assets 1277201 2040568 3612692 5789116 6122406
TOTAL CURRENT ASSETS 65630925 109439117 162794117 231737916 174032973
LIABILITIES
CURRENT LIABILITIES
Bills payable 267113 478001 856448 937647 1219801
Deposits and other accounts 54724311 88465051 137727544 191968377 164071732
Liabilities against asset subject to finance lease 81795 55403 40988 40321 30632
Deferred tax liabilities 567540 1474425 298616 2205530 0
other liabilities 8964 220177 2816412 2983977 4564481
TOTAL CURRENT LIABILITIES 55649723 90693057 141740008 198135852 169886646
NON CURRENT LIABILITIES
Borrowings 2831605 6791007 6989424 17842915 12278773
Sub-ordinated loans - - - - -
TOTAL NON CURRENT LIABILITIES 2831605 6791007 6989424 17842915 12278773
REPRESENTED BY
share capital 1506230 2349719 2902490 4230379 5287974
Reserves 2770645 4257337 4537232 7427232 7427232
Unappropriated profit 143590 169817 3226961 3468956 -7674257
4420465 6776873 10666683 15126567 5040949
surplus on revalution of assets - net 3418618 6893241 5466746 3885341 -1313395
7839083 13670114 16133429 19011908 3727554
Total liabilities & SHE 66320411 111154178 164862861 234990675 185892973
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ASSETS 4 2005 2006 2007 2008
CURRENT ASSETS
Cash and balance with treasury banks 100 157.49 251.90 254.68 191.50
Balance with other banks 100 442.23 175.72 91.00 102.84
Lendings to finnacial instituions 100 744.85 1162.04 240.32 62.12
Investments 100 111.29 174.31 453.54 140.08
Advances 100 161.32 256.91 339.51 334.00
other Assets 100 159.77 282.86 453.27 479.36
TOTAL CURRENT ASSETS 100 166.75 248.04 353.09 265.17
LIABILITIES
CURRENT LIABILITIES
Bills payable 100 178.95 320.63 351.03 456.66
Deposits and other accounts 100 161.66 251.68 350.79 299.82
Liabilities against asset subject to finance lease 100 67.73 50.11 49.30 37.45
Deferred tax liabilities 100 259.79 52.62 388.61 0.00
other liabilities 100 2456.24 31419.14 33288.45 50920.14
TOTAL CURRENT LIABILITIES 100 162.97 254.70 356.04 305.28
NON CURRENT LIABILITIES
Borrowings 100 239.83 246.84 630.13 433.63
Sub-ordinated loans
TOTAL NON CURRENT LIABILITIES 100 239.83 246.84 630.13 433.63
REPRESENTED BY
share capital 100 156.00 192.70 280.86 351.07
Reserves 100 153.66 163.76 268.07 268.07
Unappropriated profit 100 118.27 2247.34 2415.88 -5344.56
100 153.31 241.30 342.19 114.04
surplus on revalution of assets - net 100 201.64 159.91 113.65 -38.42
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CURRENT ASSETS
Cash and balance with treasury banks 8.41 7.91 8.53 6.05 5.75
Balance with other banks 3.19 8.43 2.26 0.82 1.17
Lendings to finnacial instituions 1.54 6.83 7.19 1.04 0.34
Investments 24.42 16.22 17.13 31.26 12.21
Advances 59.47 57.24 61.46 56.98 70.86
other Assets 1.93 1.84 2.19 2.46 3.29
TOTAL CURRENT ASSETS 98.96 98.46 98.75 98.62 93.62
0.00 0.00 0.00 0.00 0.00
NON CURRENT ASSETS 0.00 0.00 0.00 0.00 0.00
Operating fixed assets 1.04 1.54 1.25 1.38 1.87
Deferred tax assets 0.00 0.00 0.00 0.00 4.51
TOTAL NON CURRENT ASSETS 1.04 1.54 1.25 1.38 6.38
0.00 0.00 0.00 0.00 0.00
TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00
LIABILITIES
CURRENT LIABILITIES
Bills payable 0.40 0.43 0.52 0.40 0.66
Deposits and other accounts 82.52 79.59 83.54 81.69 88.26
Liabilities against asset subject to finance lease 0.12 0.05 0.02 0.02 0.02
Deferred tax liabilities 0.86 1.33 0.18 0.94 0.00
other liabilities 0.01 0.20 1.71 1.27 2.46
TOTAL CURRENT LIABILITIES 83.91 81.59 85.97 84.32 91.39
NON CURRENT LIABILITIES 0.00 0.00 0.00 0.00 0.00
Borrowings 4.27 6.11 4.24 7.59 6.61
Sub-ordinated loans
TOTAL NON CURRENT LIABILITIES 4.27 6.11 4.24 7.59 6.61
0.00 0.00 0.00 0.00 0.00
TOTAL LIABILITIES 88.18 87.70 90.21 91.91 97.99
0.00 0.00 0.00 0.00 0.00
NET ASSETS 0.00 0.00 0.00 0.00 0.00
REPRESENTED BY 0.00 0.00 0.00 0.00 0.00
share capital 2.27 2.11 1.76 1.80 2.84
Reserves 4.18 3.83 2.75 3.16 4.00
Unappropriated profit 0.22 0.15 1.96 1.48 -4.13
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Provision against non-performing loans and advances 46,940 327,373 340,626 1,616,421 18,863,580
Provision for diminution in the value of investments 0 0 33,000 24,479 388,757
Bad debts written off directly 121 3,623 100 246,869
47,061 330,996 373,726 1,887,769 19,252,337
1,788,90 3,125,35
Net mark-up/ interst income after provision 4 8 3,697,112 1,712,392 (18,113,685)
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1,368,17 2,353,24
PROFIT AFTER TAXATION 4 2 3,803,671 4,454,018 (10,084,940)
10
Mark-up/return/interest earned 0 239.73 453.21 686.47 694.81
10
Mark-up/return/interest expensed 0 371.14 1044.23 1938.52 2310.47
10
Net mark-up/ interst income 0 188.26 221.73 196.09 62.02
10
Provision against non-performing loans and advances 0 697.43 725.66 3443.59 40186.58
Provision for diminution in the value of investments
10 2994.2 204023.9
Bad debts written off directly 0 1 82.64 7 0.00
10
0 703.33 794.13 4011.32 40909.32
10
Net mark-up/ interst income after provision 0 174.71 206.67 95.72 -1012.56
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PROFIT AFTER TAXATION 0 172.00 278.01 325.54 -737.11
10
Unappropriated profit brought forward 0 141.19 175.14 3173.05 3411.00
Transfer from surplus on revaluation of fixed assets - net of tax
10
0 144.30 181.21 3178.82 3404.86
10
Profit available for appropriation 0 170.08 271.31 522.96 -450.53
10
Basic Earinings per share - Rupees 0 171.99 154.81 180.93 327.66
10
Diluted Earning per share- Rupees 0 171.99 154.81 180.93 327.66
Provision against non-performing loans and advances 1.84 5.34 2.94 9.22 106.26
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Provision for diminution in the value of investments 0.00 0.00 0.28 0.14 2.19
Bad debts written off directly 0.00 0.06 0.00 1.41 0.00
1.84 5.40 3.23 10.76 108.45
Net mark-up/ interst income after provision 70.01 51.03 31.93 9.76 -102.03
RATIO ANALYSIS:
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a) Liquidity Ratios
b) Leverage Ratios
c) Profitability Ratios
d) Activity Ratios
e) Market Ratios
a) Liquidity Ratios
Liquidity ratios measure a firm’s ability to meet its current obligations.
These include:
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Current Ratio:
This ratio indicates the extent to which current liabilities are covered
by those assets expected to be converted to cash in the near future.
Current assets normally include cash, marketable securities, accounts
receivables, and inventories. Current liabilities consist of accounts
payable, short-term notes payable, current maturities of long-term
debt, accrued taxes, and other accrued expenses. Current assets are
important to businesses because they are the assets that are used to
fund day-to-day operations and pay ongoing expenses.
Current Ratio
1.25
1.20
1.20 1.18 1.17
1.15
1.15
Ratio
1.10
1.05 1.02
1.00
0.95
0.90
2004 2005 2006 2007 2008
Years
Interpretation:
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Current Ratio of the company was quite good in 2004 and 2007 but
then current liabilities of the company increased in 2005, 2006 and
2007. Over all although the current ratio is decreasing yet it is showing
the good ability of firm to pay its current liabilities from current assets.
4.50
4.00
3.50
3.00
Ratio
2.50
2.00 4.28
1.50
1.00
0.50
0.26 0.33 0.55 0.52
0.00
1 2 3 4 5
Years
Interpretation:
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b) Leverage Ratios:
By using a combination of assets, debt, equity, and interest payments,
leverage ratio's are used to understand a company's ability to meet it
long term financial obligations.
Leverage ratios measure the degree of protection of suppliers of long
term funds. The level of leverage depends on a lot of factors such as
availability of collateral, strength of operating cash flow and tax
treatments. Thus, investors should be careful about comparing
financial leverage between companies from different industries. For
example companies in the banking industry naturally operates with a
high leverage as collateral their assets are easily collateralized.
These include:
The interest coverage ratio tells us how easily a company is able to pay
interest expenses associated to the debt they currently have. The ratio
is designed to understand the amount of interest due as a function of
company’s earnings before interest and taxes (EBIT). This ratio
measures the extent to which operating income can decline before the
firm is unable to meet its annual interest cost.
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4.00
3.50
3.00
2.50
Ratio
2.00
3.41
1.50
1.00 2.19
1.64 1.35
0.50
0.00 -0.01
-0.50 1 2 3 4 5
Years
Interpretation:
Debt Ratio:
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78 1 75 73
Debt Ratio 0.88 0.88 0.90 0.92 0.98
Debt Ratio
1.00
0.98
0.96
0.94
Ratio
0.92
0.90 0.98
0.88
0.92
0.86 0.90
0.88 0.88
0.84
0.82
1 2 3 4 5
Years
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40.00
35.00
30.00
25.00
Ratio
20.00 36.14
15.00
10.00
13.23 14.41 13.94 14.28
5.00
0.00
1 2 3 4 5
Years
Interpretation:
Current Worth to Net worth Ratio= Current Worth / Net worth Ratio
We can calculate current worth and net worth by using following
formulas:
Current Worth = Total Current Assets – Total Current Liabilities
Net Worth = Total Assets - Total Liabilities
Year 2004 2005 2006 2007 2008
1856606 3360206
Current Worth 9981202 0 21054109 4 4146327
1349011 1901190
Net Worth 7839083 4 16133429 8 3727554
Current Worth to Net
worth Ratio 1.27 1.38 1.30 1.77 1.11
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2.00
1.50
Ratio
1.00
1.77
1.27 1.38 1.30
0.50 1.11
0.00
1 2 3 4 5
Years
Interpretation:
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0.80
0.70
0.60
0.50
Ratio
0.40
0.71
0.30 0.54
0.50
0.20 0.39 0.40
0.10
0.00
1 2 3 4 5
Years
Interpretation
Total capitalize ratio of company show increasing trend except in 2006. it decrease
due to increase in shareholders’ equity
c) Profitability Ratios:
Profitability is the net result of a number of policies and decisions. This
section of the discusses the different measures of corporate
profitability and financial performance. These ratios, much like the
operational performance ratios, give users a good understanding of
how well the company utilized its resources in generating profit and
shareholder value. The long-term profitability of a company is vital for
both the survivability of the company as well as the benefit received by
shareholders. It is these ratios that can give insight into the all
important "profit". Profitability ratios show the combined effects of
liquidity, asset management and debt on operating results. These
ratios examine the profit made by the firm and compare these figures
with the size of the firm, the assets employed by the firm or its level of
sales. There are four important profitability ratios that I am going to
analyze:
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Net Profit Margin gives us the net profit that the business is earning
per dollar of sales. This margin indicates the profit after all the costs
have been incurred it shows that what % of turnover is represented by
the net profit. An increase in the ratios indicates that a firm is
producing higher net profit of sales than before.
80.00%
60.00%
40.00%
57.53%
20.00% 40.82% 43.83%
Ratio
34.44%
0.00%
-20.00% 1 2 3 4 5
-37.30%
-40.00%
-60.00%
Years
Interpretation
Net profit margin of company shows irregular trend. It decreases from 2004
to 2006 an then increase in 2007. In 2008 net profit margin massively
decrease to word negative. It is due to loss in net profit.
Operating Income Margin =Net mark-up / interest income after provisions + Mark-
up / return / interest expensed -
Total non mark-up / interest expenses
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80.00%
60.00%
40.00% 67.94%
20.00% 51.67% 41.20% 27.68%
0.00%
Ratio
-20.00% 1 2 3 4 5
-40.00% -94.96%
-60.00%
-80.00%
-100.00%
-120.00%
Years
Interpretation:
Return on Assets:
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10,084,94
4 8 0
88737294 138008519 1999267 21044182
Average Total assets .5 .5 68 4
Return on Assets 0 2.65% 2.76% 2.23% -4.79%
Return on Assets:
0.04
0.03
0.02
2.65% 2.76% 2.23%
0.01
0 0
Ratio
-0.01 1 2 3 4 5
-0.02
-4.79%
-0.03
-0.04
-0.05
-0.06
Years
Interpretation:
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the “Bottom line” ratio. By this, we can find out how much the
shareholders are going to get for their shares. This ratio indicates how
profitable a company is by comparing its net income to its average
shareholders' equity. The return on equity ratio (ROE) measures how
much the shareholders earned for their investment in the company.
The higher the ratio percentage, the more efficient management is in
utilizing its equity base and the better return is to investors
50.00%
30.95% 34.72% 35.66% 29.45%
0.00%
1 2 3 4 5
-50.00%
Ratio
-100.00% -200.06%
-150.00%
-200.00%
-250.00%
Years
Interpretation:
In 2004, 2005 and 2006 ROE increase slightly but it decrease in 2007
and 2008. In 2008 massive decrease in ROE. It is due to heavy loss in
profit after taxation. Company bears heavy loss on ROE about 200%.
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d) Activity Ratios:
Activity ratio are sometimes are called efficiency ratios. Activity ratios
are concerned
with how efficiency the assets of the firm are managed. These ratios
express relationship
between level of sales and the investment in various assets
inventories, receivables, fixed
assets etc.
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0.12
0.10
0.08
Ratio
0.06
0.10
0.04 0.07 0.07
0.06
0.02 0.04
0.00
1 2 3 4 5
Years
Interpretation:
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6.00
5.00
4.00
Ratio
Interpretation
An irregular trend can be seen in sale to fixed asset ratio. In 2006 ratio was
5.60 due more contribution of fixed asset to sale but it gradually decrease in
2007 and 2008.
d)Market Ratio:
Market Value Ratios relate an observable market value, the stock
price, to book values obtained from the firm's financial statements.
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15.00
10.00
13.10 10.53
5.00 9.08 10.01
0.00
Ratio
-5.00 1 2 3 4 5
-10.00 -19.07
-15.00
-20.00
-25.00
Years
Interpretation:
EPS of company show positive trend from 2004 to 2007 but it show
massive decrease in 2008. EPS in 2008 shows 19.07 loss which is due
to heavy loss in profit after tax. Investment in share of company is
containing heavy risk.
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1.20
1.00
0.80
0.60 1.10 1.00 0.95
0.40 0.76
Ratio
0.20
0.00
-0.20 1 2 3 4 5
-0.52
-0.40
-0.60
-0.80
Years
Interpretation:
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4.00
3.50
3.00
2.50
Ratio
Interpretation
Book value per share of company show random trend. In 2004, it is 2.93 and
it decrease in 2005 to 2.88. In 2006 book value per share increase to 3.68
and in 2007 it goes negative to 3.58. In 2008 it decrease significantly to 0.95.
Recommendation
INTERNAL CONTROL
To me the major and the most important flaw in the BOP is lack
of internal controls and inter communication between different
branches of the bank. As far as financial aspect is concerned there is
no proper system is configured that’s why there is always a risk of big
frauds with in the bank. I during my internship also pointed out that
point but no one bothered. To me the bank should install some proper
resource planning and controlling systems like other banks do i.e.,
oracle financials etc.
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PROFESSIONAL TRAINING
DELEGATION OF AUTHORITY
PERFORMANCE APPRAISAL
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TRANSFERS
BOP should start its operation in credit card. These cards are
very helpful for the ordinary customer in general and the business
people in particular. To make it mores secure and to eliminate the
misuse of it, the management is required to keep proper security
against the card.
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TECHNOLOGICAL IMPROVEMENT
I would like to suggest that at least all the main branches of BOP
should be fully computerized in order to expedite the dealing process
among bankers and their customers. Every department should be
provided a computer with adequate training
STAFF RELATIOSHIP
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the staff suffered was that all of them considered themselves more
important than others.
MARKETING POLICY
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Conclusion
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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 ban’s
performances are 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. Administration has
studied the administration 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.
References
http://www.bop.com.pk
http://www.scribd.com
http://www.wikipedia.com
http://www.sbp.gov.pk
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