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Virtual University of Pakistan Evaluation Sheet for Internship Report Spring 2011
FINI61 ! Internship Report "Finan#e$ %re&it 'ours! (

Evaluation %riteria Report ,riting Presentation - Viva vo#e Final Result Na)e of Stu&ent! Stu&ent*s I+!

Result Pass

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PASS
Dear Student, keeping in view of your over all work, you are declared PASS in your written work. Start preparing for presentation & viva voce and improve your work according to the given instructions and guidelines available at V !"S of your course under the icon D#$%!#ADS after clicking &# 'S( $()S*+( at V !"S. Also read lesson , - of this course in this for effective preparation of your presentation slides. See evaluated *%+('%S.*P '(P#'+, follow the guidelines and instructions and remove deficiencies /if any0 till your presentation according to the given instructions. 1our concepts regarding your internship work and ratio analysis should be very strong for delivering an effective presentation. For any further guidance about your presentation and viva, ask your queries via MDB or email at fini619 vu!edu!pk

.he /ank of Pun0a1


2ain /ran#h %ir#ular Roa&3 Near Fa,ara %ho,k3 4u0rat "011$

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Fall 200 5Spring 2011

Su1)ission +ate!
5th August, 2011

Virtual University of Pakistan

+e&i#ation

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! dedicate this re"ort to my loving mother and sister and friends without whose hel" and encouragement it would not have #een "ossi#le. $or me accom"lish this task within the s"ecific time limit. ! was "rovided with every facility #y my mother who was necessary in order to com"lete this challenge assignment.

6#kno,le&ge)ent
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! am very thankful to 76l)ighty 6llah8 the most #eneficent, the most mercy full who has given the strength to com"lete this task. ! am also thankful to #ranch manager and o"erational manager res"ectively of the #ank of the Pun&a# circular 'oad near $awara (howk )u&rat. *ithout whose guidance and su""ort it would not have #een "ossi#le for me to accom"lish this assignment. $urthermore, ! am inde#ted to the staff of the staff of the +ank of the Pun&a#. (ircular 'oad ,ear $awara (howk, )u&rat. $rom whom ! have gained much e-"erience regarding o"erational work of #ank is concerned. .he last #ut not the last ! convey my credit and thankfulness to the virtual universities Authorities. *ithout whose well in time su""ort and guidance it would #e much difficult for me to achieve this task successfully.

E9e#utive Su))ary

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.he #ank of Pun&a# /+0P1 esta#lished in 1232 and got the status of scheduled #ank in 122%. .he #ank of Pun&a# offer num#er of "roducts in their customer. .here are 22 #raches of +0P in the whole country. $unctionally the #ank of Pun&a# is divided in the division and the each division is headed #ye the general managers. .he government of the Pun&a# holds the ma&ority of the shares in +0P. !t is doing #usiness in commercial #anking and the retail #anking. (or"orate #anking treasury and investment and trade finance. .he shares of +0P are traded in all three stock 4-changes of the Pakistan. 5y internshi" "rogram "eriod is 2 rd A"ril 2011 to 6th 7une 2011. 8uring internshi", ! worked in Accounts o"ening 8e"artment, Accounts 8e"artment, (learing 8e"artment, 'emittance 8e"artment, Advance and (redit 8e"artment and +ill for (ollection 8e"artment. As for as the different ratios of the +ank 0f the Pun&a#, they all give the healthy sign regarding financial "osition of the +ank as well as the o"eration results of the different financial years. All ratios are fully in accordance with the #anking industry9s standard and norm which is a yard stick to measure the "erformance of any #ank. .hese ratio de"ict and indicate that the financial strength of the on a higher side and further "ros"ect of the +ank is #righter. At the end the conclusion and the recommendations are the "art of the re"ort. +i#liogra"hy is the "art, which contain all the references from !, o#tained data to "re"are this re"ort.

.a1le of %ontents
.itle Page:::::::::::::....................................................01 %hapter 01 6

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Intro&u#tion of /anking::::::::::::::::::...... 03 %hapter 02 :vervie, of the /ank of Pun0a1 2;1 'istory<<<<<<<<<<<<<<<<<;;;;;;0 2;2 2. 2.% 2.5 2.6 2.> 2.3 2.2 %hapter 0( Internship Progra) .1 .2 . %hapter 0= .raining Progra) %.1 %hapter 0> Ratio 6nalysis 5.1 $inancial ?tatements of +0P ::::::::::.2> %hapter 06 Future Prospe#ts of /:P::::::::::::::::::::.56 %hapter 0? %on#lusion::::::.:::::::::::::::::::...5> %hapter 0@ Re#o))en&ations:::::::::::::::::::::........53 %hapter 0 /i1liography ::::::::::::::::::::::::.:52 !ntroduction 0f circular 'oad 5ain +ranch ::::21 ?tarting and ending dates of internshi" ::::.::21 ,ame of training de"artments and duration::::...21 .raining Program:::::::::::.:::..22 Vision an& 2ission State)ents<<<<<<<<<10 0rgani;ations <ierarchical (hart:::.....................11 +usiness Volume::::::::::::::..12 Product =ines :...........................................................1 (om"etitors:::::::::::::::......16 !ntroduction of All de"artments::::::::...16 $unctional <ierarchy of +0P::::::::::12 (omments on ?tructure::::::::::::..20

Intro&u#tion of /anking in Pakistan


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+anking "lays a ma&or role in a country9s economy. After "artition of !ndia and Pakistan +ritish government9s commission distri#ute the reserves #etween Pakistan and !ndia. !n August 12%>, various +anks transferred their head@uarters and funds to !ndia. +efore "artition of PakAoA<ind, some +anks were o"erated which were (hartered +ank, )rindA lays +ank, !m"erial +ank of !ndia, Australasia +ank and <a#i# +ank. After the inde"endence of Pakistan, 5uslim (ommercial +ank =imited, +ank of +ahawal"ur =imited, Pun&a# ,ational +ank and ,ational +ank of Pakistan were "roviding #anking facilities to general "u#lic. .he ?tate +ank of Pakistan was inaugurated #y our great leader 5uhammad Ali 7innah. 0n 1st 7uly 12%3. Australasia +ank and <a#i# +ank were "roviding facilities to the Pakistan9s nation. After some "eriod, Australasia +ank =imited was converted into Allied +ank of Pakistan. ?tate +ank of Pakistan is a (entral +ank of Pakistan. 0ther +anks are (ommercial +anks, ?"eciali;ed +ank and !nvestment +anks. ,ow a day in Pakistan, fifty four #anks are o"erated with thousands of #ranches. +anks are "roviding +anking facilities to their customers and clients #y offering different services and "ackages. Pakistan9s #anking sector consisting of !slamic +anks, Private +anks, Pu#lic ?ector +anks, and 5icro $inance +anks. .hese +anks are doing (or"orate +anking, .rade $inancing, =ease $inancing and some +anks are "roviding online #anking facilities, A.5 facility and money transfer facilities also. +anking sector is a #ack #one of our economy. !f this sector is making "rogress than whole economy is also growing a lot. 0ur Agricultural sector, !ndustrial sector, 5ining sector, 4-"ort sector all de"end on the #anking industry #ecause +anks "rovide long term funds as well as short term funds to all these sectors to meet out their short term as well as long term re@uirement. <ence, #anking "rogress is necessary indeed.

:vervie, of the :rganiAation


3

www.vustudents.ning.com 'istory
.he +ank of Pun&a# started functioning with the inauguration of its first #ranch of >A 4gerton 'oad, =ahore on ,ovem#er 15, 1232. .he founder of the #ank 5r. ,awa; ?harif "erformed the inauguration. .he +ank of Pun&a# is working as a scheduled #ank with its 2> #ranches in all ma&or cities of the country. .he #ank "rovides all ty"es of #anking services such as 8e"osit in =ocal currency, (lient 8e"osits in $oreign currency, 'emittances and Advances to #usinesses, trade, industry and agriculture. .he +ank of Pun&a# ahs entered into a new era of science to the nation under the e-"erienced and "rofessional hands of its management. .he +ank of Pun&a# has "layed a vital role in the national economy through mo#ili;ation of unta""ed local resources, "romoting savings and "roviding funds for investments. .he +ank of Pun&a# has "layed a vital role in the economy through mo#ili;ation of unta""ed local resources, "romoting savings and "roviding funds for investment. .he +ank of Pun&a# has the "rivilege to discharge its res"onsi#ilities towards national "ros"erity and "rogress. *ithin the cou"le of years of its scheduling, the #ank has not only carved out for itself "rominent niche in the mainstream #anking of the country #ut in certain areas it has the distinction of taking the lead. !n short s"an of time the +ank has #een a#le to evolve a distinct cor"orate culture through of its ownedA#ased "olicies, which are realistic and are on highly "rofessional footings.

Vision an& 2ission state)ent


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Vision State)ent
B.o #e a customer focused #ank with service 4-cellenceC

2ission State)ent
B.o e-ceed the e-"ectation of our stakeholders #y =everaging our relationshi" with the government of Pun&a# and delivering a com"lete range of "rofessional ?olutions with a focus on "rogram driven "roducts And services in the agriculture and middle markets .hrough a motivated teamD

:rganiAational 'ierar#hy #hart


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%hair)an

/oar& of +ire#tors

%hief E9e#utive :ffi#er E9e#utive %o))ittee

E9e#utive In#harges

6rea 2anager North

6rea 2anager South

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/usiness Volu)e
.otal Nu)1er of Sto#k 'ol&ers 8irectors Provincial )overnment Associated (om"anies $oreign ?hareholders !ndividuals !nsurance (om"aniesE5odara#a 5utual $unds =easing (om"anies (harita#le .rust (oo"erative ?ocieties ,!( Units !(P 7oint ?tock (om"anies 0thers .otal nu)1er of shares 0 262,636,662 0 >,56>,602 62,526,255 2,22 ,5%0 25>,>01 2> ,211 16,011 ,205,60> 22,00 12,3%6,333 101,>1 ,222 >2@3? @3(?6

Pro&u#t Bine
12

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(urrent Account +asic +anking Account .i&arat Account /=(F1 ?u"reme (urrent Account /$(F1 Foung =oin ?aving Account / ,ew Product 2010 1

Profit Boss Sharing .er) 6##ount


Profit and =oss sharing .erm Accounts offered #y +ank of Pun&a# areG P=? ?aving Account ?enior (iti;en Account )harayloo ?aving Account Hiada 5unafa ?aving Account P=?A?aving Profit "lus Account (or"orate Premium Account ?u"reme ?aving Account /P=?1 ?u"reme ?aving Account /$(F1 (or"orate Premium Account

%onsu)er Finan#e
.y"es of consumer finance offered #y +ank of Pun&a# areG Aasaih =oan Iuick (ash (ar =oan <ouse =oan ?mall (ash Personal =oan +0P 5otorcycle =oan

www.vustudents.ning.com %o))er#ial Finan#e


.he +ank of Pun&a# offers following (ommercial $inancing =oansG 'unning $inance (ash $inance 8emand $inance (,) $illing ?tation ?cheme Auto =ease $inancing ?cheme (ar =ease $inancing ?cheme Jaro#ar +arao ?cheme $ertili;ers 8ealers $inancing ?cheme Ali Ak#ar )rou"K $ranchise $inancing ?cheme Atlas <onda =imited KAuthori;ed 8ealers $inancing ?cheme $inancing ?chemeK Purchase of 0fficeE?ho"s

Ele#troni# /anking
4lectronic +anking "rovides nonAsto" #anking convenience, twenty four hours a day, seven days a week. Visa 8e#it (ard !nternet +anking A.5 ,etwork +0P Iuick "ay (all (enter

Servi#es
.he +ank of Pun&a# is dedicate in its efforts to "rovide a @uality #anking e-"erience to our customer via a range of uni@ue +anking ?ervices (ommercial +anking 0nline +anking (ash 5anagement ?ervices Utility +ills =ockers .reasury *estern union 5oney .ransfer 1%

www.vustudents.ning.com 6gri#ulture %re&it


Agriculture credit is "rovided to the farmers and livestock organi;ations. +ank of Pun&a# "rovides following agriculture loans with a s"ecific marku" rateG )reen .ractor =ease $inance Agri $inance +ranch Agri $inance ?cheme Jissan 8ost $inance ?cheme ?econd <and .ractor =ease $inance ?cheme Jissan 8ost Aa#iari ?cheme Jissan 8ost 5echani;ation ?u""ort ?cheme Jissan 8ost $arm trans"ort ?cheme Jissan 4slahiAeA4ra;i ?cheme Jissan 8ost =ive ?tock 8evelo"ment ?cheme =ivestock +reed !m"rovement .rough VV* Jissan 8ost (ommercial Agro ?ervices Jissan 8ost Agri 5all $inance ?cheme (or"orate $arming $inance ?cheme (ommercial =ease $inances .ractor ?cheme 8emand $inance ?heds (onstruction and (ivil *ork =ease $inance $acility for 5ilked Animals 'unning $inance =ivestock Poultry Jissan 8ost 5odel dairy $arms /P88(1 Jissan 8ost 5odel 5ilk (entre /P88(1 Jissan 8ost )reen <ouse $inance $acility Jissan 8ost (old ?torage $inance $acility ?cheme for (ontrolled ?hed =ease $inance $acility for !nstallation of +ioAgas Plant )rou" $inance to ?mall farmers (lean (redit $acility through ?yngenta $ranchises Harkaashat 8ri" !rrigation ?ystem 5arku" of ?chemes

.ra&e Finan#e
.rade finance is a loan "rovided to the im"orters and e-"orters to make their transaction effective. .his enhances the glo#al #usiness. .he +ank of Pun&a# makes some 15

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trade "rocessing centers to coo"erate the e-"orters and also to the im"orters in different cities of Pakistan such as =ahore, !slama#ad, 'awal"indi and Jarachi.

%o)petitors
.he com"etitors of the +ank of Pun&a# are the other commercial #anks in Pakistan such asG 5uslim (ommercial +ank =imited, ?oneri +ank =imited, United +ank =imited, Allied +ank =imited, Askari +ank =imited, $aisal +ank =imited, ?tandard (hartered +ank =imited, <a#i# +ank =imited, <a#i# 5etro"olitan +ank =imited, And +ank AlA<a#i# =imited

Intro&u#tion to 6ll +epart)ents


.he de"artments and divisions of +ank of Pun&a# are as followsG 'etail +anking 8ivision ?"ecial Assets 5anagement 8ivision (redit Administration 8ivision <uman 'esource 8ivision $inance division !nformation .echnology 8ivision 0"erations 8ivision (redit 'isk 5anagement 8ivision (or"orate +anking 8ivision (ontrol and (om"liance 8ivision .raining, 'esearch, (ommunication and Pu#lic 8ivision (onsumer #anking 8ivision Audit and !ns"ection 8ivision 16

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=aw 8ivision

Retail /anking +ivision


'etail #anking division of the #ank deals with the customers and e-ecutes their transaction directly. !t "rovides the services of saving account, mortgage loans, "ersonal loans, de#it cards, accounts checking, credit cards, A.5 cards.

Spe#ial 6ssets 2anage)ent +ivision


.he +ank will invest on #ehalf of its clients and give them access to a wide range of traditional and alternative "roduct offerings that would not #e to the average investor. !t includes the automatic swee" of cash #alances into a money market fund, as well as #rokerage services.

%re&it 6&)inistration +ivision


!n this division, #anks deals with the credit, #anks give loans to individuals and to the cor"orations.

'u)an Resour#e +ivision


.his division "erforms the duty of hiring the em"loyees, training the em"loyees as well as retaining the em"loyees and if necessary, firing the em"loyees.

Finan#e +ivision
.his division controls the overall activities relating to finance i.e. monitoring the investment activities, financing activities, 8e#it and (redit of funds and reasons there of with "roofs.

Infor)ation .e#hnology +ivision

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.his de"artment controls and record the data related with the #ank. .he #acku" of all #ranches is sent to !. de"artment on daily #asis.

:perations +ivision
.his division controls the whole o"eration of all the #ranches and controls the cash activities, che@ues, account o"ening and other things a#out o"erations.

.raining3 Resear#h3 %o))uni#ation - Pu1li# +ivision


.his division conducts research on new "roducts, trains newly hired em"loyees, train old em"loyees on new and innovative circulars in #anking sector. !t also "rovides training on customer relation management.

6u&it an& Inspe#tion +ivision


.his de"artment of #ank includes the Audit of all the #ranchesL they do audit of the #ranches and give some o"inions to e-ecute their transactions.

Ba, +ivision
!n this division of +0P, lawyers are em"loyee to solve the cases of the #ank.

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!nternational 8ivision

'tail +anking 8ivision

President of +0P

(redit Administration 8ision

$inance Audit <' !. 8ivision

'egions

(ommercial Assets 5anagement

'e"ort to 'egional ?tate +ank of Pakistan .eams

<u# +ranches

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Fun#tional 'ierar#hy of the /ank of Pun0a1


(hair"erson of +oard of )overnor President of +0P

!nternational 8ivision

'etail +anking 8ivision

?"ecialPresident Assets 5anagement of 8ivision +0P

(redit Administration 8ivision

Audit 8ivision

<' 8ivision

$inance 8ivision

!. 8ivision

'isk 5anagement

'egions

(ommercial Assets 5anagement

(or"orate Assets 5anagement

'(A8 8e"artment

'egional .eams

'e"ort to ?tate +ank of Pakistan

Areas +ranches

<u#

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www.vustudents.ning.com %o))ent on :rganiAational Stru#ture of /ank of Pun0a1


+ivision of Ba1or
.he structure of the +ank of Pun&a# is divided into division and these divisions are further divided into de"artments. .his ty"e of structure hel"s the management in controlling the o"erations of the #ank effectively. 4ach division is res"onsi#le for its res"ective duties.

Span of %ontrol
?"an of control among hierarchical structure is clearly defined. 4ach de"artment re"orts to the central de"artment and then this central de"artment re"orts to the head office.

%o))uni#ation
(ommunication among the organi;ational de"artments is easy. <ori;ontal and vertical communication among de"artments is very effective.

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Plan of your internship progra)


+ank of Pun&a# 5ain #ranch (ircular 'oad, ,ear $awara (howk, )u&rat +ank of Pun&a# o"ened its #ranch (ircular 'oad, ,ear $awara (howk, )u&rat in 200 . .he code of #ranch is 011. 0"erations of the #ranch are controlled #y +ranch 5anager and 0"erations 5anager. ?taff of the #ranch is consist on +ranch ?ystem Administrator, 0"erations ?taff /including )rade ! officer, )rade !! officer, )rade !!! officer and two cash officers1. Starting an& en&ing &ates of Internship! ! started internshi" on 2 rd A"ril, 2011 which ended on 6th 7une, 2011 Na)e of training &epart)ents an& &uration! .he duration of the internshi" "rogram was si- weeks. .he staff of the #ranch was much coo"erative. .hey im"arted me training in all de"artments of the #ranch i.e. Accounts 0"ening, Accounts 8e"artment, 'emittance 8e"artment, (learing 8e"artment, +ills E (ollection, (redit and Advance. . $rom 2 rd A"ril, 2011 to 22th A"ril, 2011. ! worked in Accounts 0"ening 8e"artment in which ! learnt how to o"en an account, how to close an account and how to o"erate an account. $rom 0th A"ril, 2011 to 6th 5ay, 2011. ! worked in Accounts 8e"artment in which ! learnt how to use 5anual $action of Accounts 8e"artment. $rom >th 5ay, 2011 to 1%th 5ay, 2011. ! worked in 'emittance de"artment where at ! learnt and worked in 4ntry of remittance instruments in the system and "re"aration of "hysical instruments $rom 15th 5ay, 2011 to 22nd 5ay, 2011. ! worked in (learing 8e"artment where at ! learnt a#out !nward (learing, 0utward clearing. $rom 2 rd 5ay, 2011 to 0th 5ay, 2011. ! worked in +ill for (ollection de"artment where at ! learnt a#out 0utward +ill for (ollection /0+(1 and !nward +ills for (ollection /!+(1. $rom 1st 5ay, 2011 to 6th 7une, 2011. ! worked in Advance and (redit /$inance de"artment1 where at ! learnt a#out the allocation of funds in different "ortfolios.

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.raining progra)
First +ay in /ank of Pun0a1
! started my internshi" "rogram on 2 rd A"ril, 2011 at the #ank of Pun&a# which ended on 6th 7une, 2011. 0n first day of my "rogram ! was #riefed #y the #ranch manager a#out different #ranches of the #ank ! was also told the ma&or rules and regulations which were #eing o#served #y the management of the #ank ! was also giving some #riefing #y the 5anager 0"eration which "roved as a miles stone during my internshi" "rogram. ! also met different mem#ers of the staff in different #ranches of the #ank where at ! ?*0. for #asic knowledge a#out those #ranches. .hen ! started my working in accounting o"ening de"artment.

6##ount :pening +epart)ent


!n this de"artment, ! worked for the "eriod from 2
rd

A"ril, 2011 to 22th A"ril, 2011.

6##ount :pening Pro#e&ure! 6##ount :pening For)


(ustomer a""roach to #ank and an account o"ening is given to him for com"eting and signed #y the account holder at different "laces of the form.

%o)pletion of the For)


Account form is com"leted in all res"ect and checked #y the #ank officer and is duly signed #y the customer which is also verified #y the 0"eration 5anager.

Spe#i)en Signature %ar& "SS%$


?ignature s"ecimen card is com"ulsory for o"ening an account in the #ank. *ithout getting signature of customer you can not o"en the account.

Signature +ifferen#e For)


!f client signature differs from the (,!(, the signature of the client is taken on a signature difference form 2

www.vustudents.ning.com %o)puteriAe& %he#king


.he #ank officer connected via internet to the ,A8'A we#site checks the record of his customer9s social life. !f the record of the "erson is ok, then the officer of the #ank authenticates the record under his signature and stam" and send it to the +ranch 5anager

6##ount Nu)1er
Account num#er is written on the che@ue #ook re@uisition. After com"letion of all "rocedures, the #ank "re"ares a letter and sends it to the client at his "ostal address to "ay gratitude to the customer.

%heCue /ook Issuan#e


.he first che@ue #ook consists of 25 leaves and no charges are deducted from the account the account of client. .here after #ank sends a recommendation for 25, 50 and 100 leaves with different "rices and charges are deducted from the account of clients.

Pro#e&ure for %losing of an a##ount


!f customer wants to close the account, he fills u" an account closing form and signs there in, account #alance should #e ;ero, a""roval is taken from the +ranch 5anager ?"ecimen card is taken #ack and is attached with the form and account is closed.

Pro#e&ure of issuan#e of /ank State)ent


A re@uisition sli" is taken from the customer duly signed and the "eriod from which the customer wants to take the statement. After verification of signature +ank ?tatement is issue to the customer and 's. 55 are deducted from account of customer

Pro#e&ure for 6.2DPIN Issuan#e


+ank of Pun&a# "rovides the A.5 facility to its (ustomers and they can withdraw their amount at any time through A.5. $or issuance of A.5, customer has to sign an A.5 form and +ank office make an entry in the system and within 15 days #ank receives A.5 card from <ead 0ffice which is given to the customer.

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6##ounts +epart)ent
*hen ! com"leted my training in Account 0"ening 8e"artment, the +ranch 5anager sent me to Account 8e"artment. ! worked in Accounts 8e"artment from 0th A"ril, 2011 to 6th 5ay, 2011. Account de"artment is res"onsi#le for #udgeting kee"ing record of the revenue and e-"enses all transaction that are take "lace in the #ank and their "hysical "rove /voucher1 are come to the account de"artment ne-t day these voucher are also "osted to com"uter and the com"uter generated re"ort of daily transaction is created in !. de"artment and then they send to the account de"artment to match or tell to com"uter generated re"ort and their voucher of daily transaction and save it as a "hysical record that these transaction are take "lace in the #ank at following date. .he re"ort generated #y the accounts de"artment on a daily, weekly, monthly, #iAyearly and yearly is written in a "ro"er format. !t is neither necessary nor "ossi#le to get ac@uainted #y all of these re"orts in a short "eriod of time. ?ome of the common re"orts areG 5onthly Assets M =ia#ilities, 5onthly +udget 'eview 'e"ort, 5onthly 5onitory statement, 5onthly Performance 'eview 'e"ort and 5onthly fi-ed investment. $or these statements, five re"orts carry e-treme im"ortance. .he five re"orts areG 8aily "osition of advances and de"osit, ?tatement of affairs, 8aily e-change "osition re"ort, fi-ed assets statement and 5onthly review of "erformance. .he account de"artment of +0P has to record even the minor e-"enses of the #ranch like tea for staff, stationery for the #ranch.

Re)ittan#e +epart)ent
! worked in 'emittance 8e"artment from >th 5ay, 2011 to 1%th 5ay, 2011 'emittance de"artment transfers the fund form one #ank to another #ank and one "lace to another "lace. !n this de"artment collection take "lace. .he #ank of Pun&a# makes "ayment of only o"en che@ue on the counter and "rohi#its the "ayment of crossed che@ues. +ank of Pun&a# transfer money from one "lace to another "lace #y way of "ayment order, demand draft, inward collection, outward collection.

+e)an& +raft
An order to "ay money to the "ayee who is residing outside the city, 8emand draft can #e for a customer who may or may not have and account in the #ank #ut the other "erson9s 25

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account must #e maintained with the #ank for which the "ayer has demanded the demand draft.

Pay)ent :r&er
Pay order is order money #ut this "ayment is to #e made within city. !n other words it can #e said that the "ayee and the "ayer should #e in one city. !n "ay order "ayment can #e made in cash, clearing and transfer.

%learing +epart)ent
! worked in clearing de"artment from 15th 5ay, 2011 to 22nd 5ay, 2011. ! learnt their a#out clearing of different che@ues and remittance handling. ! was told there the main o#&ects of clearing. ! received all the clearing che@ues and made a schedule of these che@ues after making entries in outward and inward clearing registers and sent the same to main #ranch where at all the che@ues were sent to ,!$./,ational !nstitutional $acilitation .echnology1

NIF.
,!$. stand for ,ational !nstitutional $acilitation .echnologies. (learing house of ?+P has shifted a "art of its work to "rivate institution names ,!$.. ,!$. collets che@ues, demand draft, "ay order, travelers che@ues etc. from all #ranches of different #anks within city through its carriers and send them to the #ranches on which these are drawn for clearing. ,!$. "re"are a sheet for each #ranch and send it to each #ranch as well as to ?tate +ank of Pakistan where accounts of +anks are settled.

.ypes of #learing In,ar& #learing!


*hen che@ues of other +anks are de"osited in our #ank, after clearing these che@ues through ,!$. #y the other +anks on which these are down. Accounts of customers are credited.

:ut,ar& #learing!
*hen che@ues of our #ank are de"osited in other +anks and these che@ues are sent to us for verification, we de#it the of our client after verification their account.

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/ill for %olle#tion +epart)ent


! worked in +ill for (ollection from 2 rd 5ay, 2011 to 0th 5ay, 2011. +ill for collection is the clearing "rocedure for che@ue, draft, #ill of e-change, and "romissory note in case that a collection #ranch and a "aying #ranch are located in different clearing areas. +ill of collection "rovides service to their customer to get "ayment from the nearer #ank at nominal chargers.

6&van#e an& %re&it +epart)ent


! was worked in advance and credit de"artment from 1st 5ay, 2011 to 6th 7une, 2011. Advances and credit de"artment is the most im"ortant de"artment in the #ank in this de"artment advances are giving to the #usiness man, e-"orter etc. #efore giving advance, credit worthiness of the #orrower is taken into account i.e. character, ca"acity, collateral, credit terms etc. advances are also given to different #anks.

Prin#iples ,hile 6&van#ing


$ive "rinci"le that must #e "ro"erly "ragmatic while advancing money to #orrowers i.e. safety, li@uidity, dis"osal, remuneration and suita#ility

%al#ulation of BiCui&ity ratio


(alculation of li@uidity ratio i.e. (urrent ratio and Iuick ratio

.ypes of Ben&ing
.here are three ty"es of lending short term, medium term and long term. <owever they are further classified i.e. 'unning finance, 8emand $inance, (ash $inance and =etter of )uarantee

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Ratio 6nalysis
'atio analysis is hel"ful to the management of the organi;ation as well as for the investors and creditors. An investor kee"s an eye on the com"any9s financial statement and makes decisions whether to invest funds in that com"any or not. ?imilarly a creditor also analysis the financial statements and makes decisions whether to grant loan or not.

Finan#ial State)ents
! used $inancial ?tatements of +ank of the Pun&a# for the last three years 2006, 200> and 2003 #ecause +ank of the Pun&a# have no $inancial ?tatements of 2002 and 2010, due to court case $inancial ?tatements of +ank of the Pun&a# for the last three years 2006, 200> and 2003 are, .he /ank of Pun0a1 Profit an& Boss 6##ount 6s on (1st +e#e)1er 2006 Rs; "000$ 11,6% ,26 >,5> ,>22 =30?032=1 %0,626 ,000 100 > ,>26 (36 63>1> 200? Rs; "000$ 1>,5 2,5 3 1 ,2 2, >> (36003161 1,616,%21 2%,%>2 2%6,362 1,33>,>62 13?123( 2 200@ Rs; "000$ 1>,>52,652 16,61%,000 131(@36>2 13,36 ,530 33,>5> AAAA 12,252, > "1@311(36@>$

5arku"E returnEinterest earned 5arku"EreturnE interest e-"ensed Net )arkupDinterest in#o)e Provision against nonA"erforming loans and advancesAnet Provision for diminution in the value of investments +ad de#ts written off directly Net )arkupDinterest in#o)e after provisions N:N 26REFUPDIN.ERES. IN%:2E

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$ee, commission and #rokerage income 8ividend income !ncome from dealing in foreign currencies )ain on ?ale of ?ecurities Unreali;ed )ain E =oss on 'evaluation of !nvestments classified as held for trading 0ther income .otal non )arkFupDinterest in#o)e N:N 26REFUPD IN.ERES. EGPENSES Administrative e-"enses Provision against lending to financial !nstitution Provision against off +alance ?heet !tems Provision against receiva#le from ,!. 0ther charges .otal nonF )arkupD interest e9penses 4-traordinary Eunusual items PR:FI. /EF:RE .6G6.I:N .a9ation $or the year N(urrent A8eferred $or "rior year N(urrent A8eferred PR:FI. 6F.ER .6G6.I:N UnAa""ro"riate "rofit #Ef 'eversal of 4-cess management fee accrued last year .ransfer from sur"lus on revaluation of $i-ed assets N net of taProfit availa1le for appropriation %> ,212 1, 35,3>5 2 2,30% 32,06 AAA %66,% 5 2,25%, 32 636>03 0= 1,>51,2>0 1 0,000 652,%33 1,312,3>0 >>,2 2,0 2,5 5 AAAA 5%>,6 5 5,% 6,>61 ?31= 31>( 2,255, %2 AAAAAAAA 5>2,520 2,025,160 2%, 2> > ,>3> AAAAAAAA 526,136 %,133,230 "1(3 2=3?0>$ 2,303,3 5 10,101 AAAA AAA 11%,>00 "23 ((36(6$ "163@>@3(=1$ AAAAAAAAA "163@>@3(=1$ 20>,600 1,052,000 3,0 ,001 6,>> ,%01 "1030@=3 =0$ ,%63,256 6,250 5,5>2 ,%63,2>3 "636163662$

1>5 222 AAA AAAA 3 >,250 "13@@231@($ "232 (3>@=$ =3?6@3?21 AAAAAAAA =3?6@3?21 330,22> AA 3 ,%62 26%,%66 (3@0=32>> 162,31> AAAA 6,1>% 1>5,221 (3 @032=6 =3@>>3>6 AAAAAAAAA =3@>>3>6 1>0,>00 /12,2211 250,>>2 %01,551 =3=>=301@ ,226,261 AAAAA 5,366 ,2 2,32> ?36@63@=>

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.he /ank of Pun0a1 /alan#e Sheet 6s on (1st +e#e)1er 2006 Rs; "000$ 6SSE.S! (ash and +alances with treasury +anks +alances with other +anks =endingOs to financial institutions !nvestments Advances 0ther assets 0"erating fi-ed assets 8eferred .a- assets .otal 6ssets BI6/IBI.IES +ills "aya#le +orrowings from financial institutions 8e"osits and 0ther accounts ?u#ordinated =oans =ia#ilities against assets su#&ect to finance lease 0ther lia#ilities 8eferred .a- lia#ilities .otal Bia1ilities Net 6ssets 'e"resented +yG ?hare (a"ital 'eserves UnAa""ro"riate Profit .otal ECuity 356,%%3 6,232,%2% 1 >,>2>,606 AAAAAA %0,233 2,316, %1 223,616 1=@3?2 3=2( 16312>3?1= 2 >,6%> 1>,3%2,215 121,263, >> AAAAAAAA %0, 21 2,23 ,2>> 2,205,5 0 21>3 ?@3?6? 1 30113 0@ 1,212,301 12,2>3,>> 16%,0>1,> 2 AAAAA 0,6 2 %,56%,%31 AAAAAAA 1@2316>3=1 (3?2?3>>= 1%,05%,352 ,>22,032 11,3%6,32 23,2 ,211 101, 12,25% ,602,%5> 2,063,>%% AAAAAAAAAA 16=3@>>31(? 200? Rs; "000$ 1%,210, 02 1,22>,662 2,%50,000 > ,%61,62 1 ,322,1% 5,>32,116 ,252,>52 AAAAAAAAA 2(=3 036?> 200@ Rs; "000$ 10,635,053 2,1>3,%55 6 , 22,632,603 1 1,>2%,11 6,122,%06 ,%>1,3 3 3, 33,162 1@>3@ 23 ?(

2,202,%20 %,5 >,> 2 ,212,2%6 1036>@3 6@

%,2 0, >2 >,%2>,2 2 ,%63,256 1>31263>6?

5,23>,2>% >,%2>,2 2 />,6>%,25>1 >30=03 =

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Surplus on Revaluation of 6ssets >3=663?=6 (3@@>3(=1 "13(1(3( > $

6nalysis
$or the analysis, management and the investors make some ratio analysis, in which =i@uidity 'atios, Profita#ility 'atios, 5arket 'atios, Activity 'atios, =everage ratios are familiar.

Ratios
!n order to analysis the financial "erformance of the #ank, investors and management use the ratio analysis in which following ratios are calculatedG 1; 2; (; =; >; BiCui&ity Ratios Beverage Ratios Profita1ility Ratios 6#tivity Ratios 2arket Ratios

BiCui&ity Ratios
=i@uidity ratios means to measure short term solvency of the com"any. A#ility of the com"any to "ay off its short term de#t. $ollowing ratios are calculated in order to measure the short term solvency of the com"any (urrent 'atio Acid .est 'atio *orking (a"ital

%urrent Ratio
%urrent 6ssets H (ash and +alance with .reasury +anks P +alance with other +anks P=ending to $inancial !nstitution P ?hort !nvestment P ?hort Advances P 0ther Assets %urrent Bia1ilities H +ill Paya#les P ?hort +orrowing P ?hort 8e"osit P 0ther =ia#ilities Iear 2006 %urrent Ratio H %urrent 6ssets D %urrent lia1ilities Iear 200? Iear 200@ 1

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QRs;122, %>,22% E Rs; 2%,2>%,512 QRs;1> ,120,>22E Rs;1%0,202, >1 QRs;123,26>,25 E Rs;10>,21%,05> Q 1;( ! 1 Q 1;2( ! 1 Q 1;1 ! 1

Jorkings! For 2006


%urrent 6ssets Q 1%,05%,352 P ,>22,032 P 11,3%6,32 P 20,501,2>3 P63,612,013 P ,602,%5> Q Rs;1223 (=?3 22=

%urrent Bia1ilities Q 356, %%3 P 6, 232, %2% P 3 , 612, 222 P 2,316, %1 Q Rs; =32?=3>12

For 200?
%urrent 6ssets Q 1%,210, 02 P1,22>,662 P 2,%50,000 P 65,35>,361 P 32,335,>33P 5,>32,116 Q Rs;1?(3 1203?2

%urrent Bia1ilities Q 2 >,6%> P 15,35>,522 P 120,%2 ,225 P 2,23 ,2>> Q Rs; 1=032023(?1

For 200@
%urrent 6ssets Q 10,635,05> P 2,1>3,%55 P 6 6,102,1 > QRs; 12@3 6?3 >( , P 20,0 3,51> P 32, 2 ,%5% P

%urrent Bia1ilities Q 1,212,301 P 10,601,162 P 21,523,3 0 P %,56%,25> Q Rs; 10?3 1=30>?

4raphi#al Representation!

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2.7 2.36 2.35 2.34 2.33 2.3 2.26 2.25 2.24 2.23

&urrent 'atio

3885

388-

3886

E9planation!
.he standard of this ratio is 2G1, means current assets are twice the current lia#ilities. +ut +ank of Pun&a# has a lower current ratio to the standard rate. !n 2006 it was 1. , in 200>, 1.2 and in 2003 it will #e 1.12 which is more than the 200> #ut lesser the 2006.

6#i& .est Ratio


%urrent 6ssets H (ash and +alance with .reasury +anks P +alance with other +anks P=ending to $inancial !nstitution P ?hort !nvestment P ?hort Advances P 0ther Assets %urrent Bia1ilities H +ill Paya#les P ?hort +orrowing P ?hort 8e"osit P 0ther =ia#ilities Prepai& e9penses H Advances, de"osits, advance rent and other "re"ayments 6#i& .est Ratio H %urrent 6ssets K "Inventories L prepay)ents$ D %urrent lia1ilities Iear 2006 Iear 200? Iear 200@ H Rs;122, %>, 22%A Rs;102, 5>1ERs; Q Rs;1> , 120,>22A Rs; 152,% 3D QRs; 123,26>,25 ARs;161,55 E 2%,2>%,512 Rs; 1%0,202, >1 Rs; 10>,21%,05> H 1;2 Q 1;2( Q 1;1

Jorkings! For 2006


%urrent 6ssets Q 1%,05%,352 P ,>22,032 P 11,3%6,32 P 20,501,2>3 P63,612,013 P ,602,%5> Q Rs;1223 (=?3 22=

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%urrent Bia1ilities Q 356, %%3 P 6, 232, %2% P 3 , 612, 222 P 2,316, %1 Q Rs; =32?=3>12 Prepai& E9penses H Rs;1023 >?1

For 200?
%urrent 6ssets Q 1%,210, 02 P1,22>,662 P 2,%50,000 P 65,35>,361 P 32,335,>33P 5,>32,116 Q Rs;1?(3 1203?2

%urrent Bia1ilities Q 2 >,6%> P 15,35>,522 P 120,%2 ,225 P 2,23 ,2>> Q Rs; 1=032023(?1 Prepai& E9penses H Rs;1> 3 =(@

For 200@
%urrent 6ssets Q 10,635,05> P 2,1>3,%55 P 6 P6,102,1 > QRs; 12@3 6?3 >( , P 20,0 3,51> P 32, 2 ,%5%

%urrent Bia1ilities Q 1,212,301 P 10,601,162 P 21,523,3 0 P %,56%,25> Q Rs; 10?3 1=30>? Prepai& E9penses H Rs;1613 >>(

4raphi#al Representation!
2.7 2.36 2.35 2.34 2.33 2.3 2.26 2.25 2.24 3885 3883886 Acid +est 'atio

www.vustudents.ning.com E9planation!
As the Acid test ratio from year 2006 to 2003 isG 's.1.22, 's. 1.2 and 's 1.12 res"ectively. !n all three years acid test ratio is slight more than is standard ratio. !t must #e 1G1 in order to "roof the short term solvency of the #ank to "ay off is short term #ank.

Jorking #apital
Jorking %apital H %urrent 6ssets K %urrent Bia1ilities Iear 2006 QRs;122, %>,22%ARs; 2%,2>%,512 Q Rs;23,0>2,>12 Iear 200? HRs;1> ,120,>22A Rs; 1%0,202, >1 Q Rs; 2,213, 53 Iear 200@ HRs; 123,26>,25 N Rs;10>,21%,05> Q Rs;21,05 ,326

Jorkings! For 2006


%urrent 6ssets %urrent Bia1ilities Q Rs;1223 (=?3 22= Q Rs; =32?=3>12

For 200?
%urrent 6ssets %urrent Bia1ilities Q Rs;1?(3 1203?2 Q Rs; 1=032023(?1

For 200@
%urrent 6ssets %urrent Bia1ilities Q Rs; 12@3 6?3 >( Q Rs; 10?3 1=30>?

4raphi#al Representation!
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79888888 78888888 39888888 38888888 29888888 28888888 9888888 8 3885 388388$orking &apital

E9planation!
.he working ca"ital is ra"idly increasing from 2006 to 200>. +ecause the current assets of +0P are ra"idly, increase. !n 2003 it declined #ut not in a ra"id as it grow 2006 to 200>.

Beverage Ratios
.hese ratios show the ca"ital structure of the firm. .hrough these ratios we find that how the firm finance their activities. !t is more im"ortant for the lender to assess that the firm can re"ay the loan amount ort not. !ncreasing de#t increases the likelihood of #ankru"tcy of the firm. $ollowing ratios falls under this category, .i)e Interest Earne& +e1t Ratio +e1t to ECuity Ratio +e1t to .angi1le Net Jorth .otal %apitaliAation Ratio

.i)e Interest Earne& Ratio!


.i)e Interest Earne& H Profit 1efore ta9 L Interest E9pense "E/I.$ D Interest E9pense Iear 2006 Iear 200? Iear 200@ QRs;%,>63,>21ERs;>,5> ,>2 QRs;%,355,562ERs;1 ,2 2, > Q/Rs;16,3 2,2061ERs;16,61%,000 2 > Q F1;01 Q 0;6( Q 0;(>

Jorking
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)iven in the Profit and =oss Account

For 2006 Profit 1efore ta9LInterest E9pense H Rs;%, >63,>21 Interest E9pense H Rs;>, 5> ,>22 For 200? Profit 1efore ta9LInterest E9pense H Rs; %,355,562 Interest E9pense H Rs; 1 ,2 2, >> For 200@ Profit 1efore ta9LInterest E9pense H Rs; A16,3 Interest E9pense H Rs; 16,61%,000 4raphi#al Representation!
8.6 8.5 8.4 8.3 8 :8.3 :8.4 :8.5 :8.6 :2 :2.3 3885 3883886

2,206

+ime *nterest (arned

E9planation!
.he .ime !nterest 4arned 'atio of +0P is not #etter. .he ratio is consistently is declining even in 2003 it went negative. .his gra"h is showing that the #ank 4+!. is not enough to cover its interest e-"enses.

+e1t Ratio
.otal +e1t Q +ills Paya#le P +orrowings from financial institutions P 8e"osits M other accounts P ?u#ordinate =oans P =ia#ilities >

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against assets su#&ect to finance lease P deferred ta- lia#ilitiesP 0ther lia#ilities .otal 6ssets H )iven in the +alance ?heet +e1t Ratio H ".otal +e1t D .otal 6ssets$ N 100 Iear 2006 Iear 200? Iear 200@ QRs;1%3,>22,%2 ERs;16%,355,1 QRs;215,2>3,>6>ERs;2 %,220,6> QRs;132,165,%12ERs;135,202,120 > Q 0;21O 5 Q 1; 0O Q ?; O

Jorking For 2006


.otal +e1t Q 356,%%3 P 6,232,%2% P 1 >,>2>,606 P 0 P %0,233P223,616P2,316, %1 H Rs;1=@3?2 3=2(

For 200?
.otal +e1t M .otal +e1t Q 2 >,6%> P 1>,3%2,215 P 121,263, >> P 0 P%0, 21P2,205,5 0P2,23 ,2>> H Rs;21>3 ?@3?6?

For 200@
Q 1,212,301, P 12,2>3,>> P 16%,0>2,5 2 P 0 P 0,6 2P 0 P%,56%,%31 H Rs; 1@2316>3=1

4raphi#al Representation!
<6.88; <5.88; <4.88; <3.88; <8.88; 66.88; 65.88; 3885 3883886 Debt 'atio

E9planation!
8e#t ratio is measure of de#t with the total assets. .he gra"h shows that the de#t ratio is consistently increasing that indicates the de"endence on de#t is increasing and in 2003 it

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is at the higher level. $rom 200> to 2003 it ra"idly increased. !n 2003 the total 8e#t was the almost 2>R of .otal Assets.

+e1t D ECuity Ratio


.otal +e1t Q +ills Paya#le P +orrowings from financial institutions P 8e"osits M other accounts P ?u#ordinate =oans P =ia#ilities against assets su#&ect to finance lease P deferred ta- lia#ilitiesP 0ther lia#ilities .otal ECuity Q ?hare (a"ital P 'eserves P UnAa""ro"riated Profit +e1t to ECuity Ratio H .otal +e1t E .otal ECuity Iear 2006 QRs;1%3,>22,%2 ERs;10,653,26 3 Q 1(; > Iear 200? QRs;215,2>3,>6>ERs;15,126,56 > Q 1=;2? Iear 200@ QRs;132,165,%12ERs;5,0%0,2%2 Q (6;1(

Jorking For 2006


.otal +e1t Q 356,%%3 P 6,232,%2% P 1 >,>2>,606 P 0 P %0,233P223,616P2,316, %1 H Rs;1=@3?2 3=2( .otal ECuity Q 2,202,%20 P %,5 >,2 2 P ,212,2%6 H Rs;1036>@3 6@

For 200?
.otal +e1t Q 2 >,6%> P 1>,3%2,215 P 121,263, >> P 0 P%0, 21P2,205,5 0P2,23 ,2>> H Rs;21>3 ?@3?6? .otal ECuity Q %,2 0, >2 P >,%2>,2 2 P ,%63,256 H Rs;1>31263>6?

For 200@
.otal +e1t Q 1,212,301, P 12,2>3,>> P 16%,0>2,5 2 P 0 P 0,6 2P 0 P%,56%,%31 H Rs;1@2316>3=1 .otal ECuity Q 5,23>,2>% P >,%2>,2 2 P /N >,653,636 /=oss11 H Rs;>30=03 =

www.vustudents.ning.com 4raphi#al Representation!

48 79 78 39 38 29 28 9 8 3885 3883886

Debt to (=uity 'atio

E9planation!
As we already o#served that the de#t is increasing, in this gra"h we com"are it with the e@uity. *e find the consistent increase in the de#t to e@uity ratio. !n 2003 it was at the higher level. .he de#t e-ceeded the e@uity.

+e1t to .angi1le Net Jorth


.angi#le ,et *orth Q .otal Assets N =ia#ilities N !ntangi#le Assets +e1t to .angi1le Net Jorth H .otal +e1t D .angi1le Net Jorth Iear 2006 Iear 200? Iear 200@ QRs;1%5,61%,%66ERs;16,025,2% QRs;210,>32,260ERs;13,22 ,>2 QRs;1>>,601,> 3ERs; ,> 5,61 3 Q ;0> 5 Q 11;10 Q =?;>=

Jorking For 2006


%0

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.angi1le Net Jorth Q 16%,355,1 > N 1%3,>22,%2 N 0,%66 H Rs;1630 >32=@

For 200?
.angi1le Net Jorth Q 2 %,220,6>5 N 215,2>3,>6> N 13,13 H Rs;1@3 (3?2>

For 200@
.angi1le Net Jorth Q 135,202,120 N 132,165,225 N >,512 H Rs;(3?(>361(

4raphi#al Representation!
98 48 78 38 28 8 Debt to +angible %et $orth

3885

388-

3886

E9planation!
As the gra"h is showing that the de#t to tangi#le net worth ratio is increasing. $rom 2006 to 200> it slightly increased #ut from 200> to 2003 it ra"idly increased due to the increase in de#t. ?o the +0P has not ,et .angi#le ,et *orth to cover the 8e#t.

%1

www.vustudents.ning.com .otal #apitaliAation Ratio


.otal (a"itali;ation 'atio Q Iear 2006 QRs; 6,226,156E Rs;%6,255,12% Q 0;??2 .i)es Bong .er) +e1t =ong .erm 8e#t =ong .erm 8e#t P ?hareholderOs 4@uity Iear 200? Iear 200@ QRs;55,5>1,>12ERs; >0,623,2>2 QRs; %6,>55,202E Rs;51,>26,153 Q 0; 026 .i)es Q 0;?@60 .i)es

Q 8e"osit and other account P =ia#ilities against assets su#&ect to finance lease P 8eferred ta- lia#ilities P other lia#ilities

Jorking For 2006


Bong .er) +e1t Q 5,330,563P 2 163P223,616P 2 ,30% H Rs;(632 631>6 Q 6,226,156E / 6,226,156P10,653,2631 Q 6,226,156E %6,255,12%

For 200?
Bong .er) +e1t Q 5 ,212,2> P 0615P2,205,5 0P115,52% H Rs;>>3>?13?12 Q55,5>1,>12E /55,5>1,>12 P 15,126,56>1 Q55,5>1,>12E >0,623,2>2

For 200@
Bong .er) +e1t Q%6,555,>20P12352P0P 1>2,560 H Rs;=63?>>320 Q %6,>55,202E /%6,>55,202P 5,0%0,2%21 H %6,>55,202E51,>26,153

4raphi#al Representation!

%2

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<3.88; <8.88; 66.88; 65.88; 64.88; 63.88; 68.88; -6.88; -5.88; -4.88; -3.88; -8.88;

+otal &apitali>ation 'atio

3885

388-

3886

E9planation!
.he total ca"itali;ation ratio com"ares the total de#t with the sum of de#t and e@uity. .he low ca"itali;ation ratio indicates the financial fitness of the firm. According to the gra"h, ! can see that the ratio in 2003 is higher. !n 200>, it was at the lowest level in selected years.

Profita1ility Ratios
Profita#ility ratios measure the earning a#ility of the firm. $ollowing ratios are calculatedG ,et Profit 5argin 'eturn on Assets 8uPont 'eturn on Assets 0"erating !ncome 5argin 'eturn on o"erating Assets 'eturn on .otal 4@uity )ross Profit 5argin

Net Profit 2argin


Net Profit H Profit after .a-ation .otal Revenue Q 5arku"E returnEinterest earned

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Net Profit 2argin H Net Profit D .otal Revenue Iear 2006 Q Rs; ,30%,255 E Rs;11,6% ,26 H (2;6?O Iear 200? Q Rs;%,%5%,013 E Rs; 1>,5 2,5 3 H 2>;( O Iear 200@ Q "Rs;10,03%,2%01 E Rs;1>,>52,652 H F>6;@1O

Jorking For 2006


Net Profit H Rs;(3@0=32>> .otal Revenue Q Rs;1136=(3 6(

For 200?
Net Profit H Rs;=3=>=301@ .otal Revenue H Rs;1?3>( 3>(@

For 200@
Net Profit H Rs;F1030@=3 =0 .otal Revenue H Rs;1?3?>236>2

4raphi#al Representation!

48.88; 78.88; 38.88; 28.88; 8.88; :28.88; :38.88; :78.88; :48.88; :98.88; :58.88; 3885 3883886

%et Profit "argin

E9planation!
%%

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.he net "rofit margin is declining from 2006 to 2003, as shown in gra"h. !n 2006 the net "rofit margin is 2.6>R which is higher in selected three years. After this it start to decline and in 2003 .he +ank of Pun&a# has to #ear a loss.

Return on 6ssets
Net Profit H Profit after .a-ation .otal 6ssets Q )iven in the +alance ?heet

Iear 2006 Q Rs; ,30%,255 E Rs;16%,355,1 > Q 2. 1R

R:6 H Net In#o)e D .otal 6ssets Iear 200? Iear 200@ Q Rs;%,%5%,013 E Rs;2 %,220,6>5 Q /Rs;10,03%,2%01E Rs;135,322,2> Q 1.325R Q A5.%25R

Jorking For 2006


Net Profit H (3@0=32>> .otal 6ssets H 16=3@>>31(?

For 200?
Net Profit H =3=>=301@ .otal 6ssets H 2(=3 036?>

For 200@
Net Profit H 1030@=3 =0 .otal 6ssets H 1@>3@ 23 ?(

4raphi#al Representation!

%5

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7.88; 3.88; 2.88; 8.88; :2.88; :3.88; :7.88; :4.88; :9.88; :5.88; 3885 3883886

'eturn on Assets

E9planation!
!t is sim"le 'eturn on Assets, which calculate through net income, and total assets #ut the result is same as in 8uAPont '0A. !t is showing the consistent decline in the return on Assets.

+uPont Return on 6ssets Ratio


Net Profit H Profit after .a-ation .otal Revenue Q 5arku"E returnEinterest earned .otal 6ssets Q )iven in the +alance ?heet +uFPont R:6 H "Net In#o)e D .otal Revenue$ 9 ".otal Revenue D .otal 6ssets$ Iear 2006 Iear 200? Iear 200@ Q / ,30%,255E11,6% ,26 1 - H /%,%5%,013E1>,5 2,5 31 - H /A10,03%,2%0E1>,>52,6521 /11,6% ,26 E16%,355,1 >1 H 2;(1O /1>,5 2,5 3E2 %,220,6>51 H 1;@ =O - /1>,>52,652E135,322,2> 1 H F>;=2>O

Jorking For 2006


Net Profit H (3@0=32>> .otal Revenue Q 1136=(3 6( .otal 6ssets H 16=3@>>31(?

For 200?
Net Profit H =3=>=301@ .otal Revenue H 1?3>( 3>(@ .otal 6ssets H 2(=3 036?> %6

www.vustudents.ning.com For 200@


Net Profit H F1030@=3 =0 .otal Revenue H 1?3?>236>2 .otal 6ssets H 1@>3@ 23 ?(

4raphi#al Representation!
7.88; 3.88; 2.88; 8.88; :2.88; :3.88; :7.88; :4.88; :9.88; :5.88;

DuPont 'eturn on Assets

3885

388-

3886

E9planation!
8uPont '0A Analysis is the a""roach to calculate the 'eturn on Assets #y taking ,et !ncome, .otal 'evenue and .otal Assets. !t shows the effect of revenue on the net income and the total assets. *hen we calculate the 8uPont '0A of +0P, we find consistently the decline in the return on assets. ,et Profit 5argin is 8eclining on the other hand the total Asset were not generating enough revenue. .herefore, the 'eturn on Assets decline in 2003 and it goes to negative.

:perating In#o)e 2argin


:perating In#o)e 2argin H Earnings /efore ta9 L interest e9penses D .otal Revenue Iear 2006 Iear 200? Iear 200@ QRs;%,>63,>21ERs;11,6% ,26 QRs;%,355,562ERs;1>,5 2,5 Q/ Rs;2,%% ,%11ERs;1>,>52,652 3 Q =0; >O Q 2?;6@O Q F1;(?6O

Jorking
%>

www.vustudents.ning.com For 2006


Earnings /efore ta9 H =3?6@3?21 .otal Revenue Q 1136=(3 6(

For 200?
Earnings /efore ta9 H =3@>>3>6 .otal Revenue H 1?3>( 3>(@

For 200@
Earnings /efore ta9 H F163@>@3(=1 .otal Revenue H 1?3?>236>2

4raphi#al Representation!
58.88; 48.88; 38.88; 8.88; :38.88; :48.88; :58.88; :68.88; :288.88; 3885 388- 3886 #perating income "argin

E9planation!
)ra"h show a decline in the revenues. !n 2006 +0P generate enough revenue #ut in 2003 the "rovision "f non "erforming loans decline the "rofit even it went in negative which is A2%.26R.

Return on :perating 6ssets

%3

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:perating 6ssets H (ash and +alance with .reasury +anks P +alance with other +anks P=ending to $inancial !nstitution P Advances P 0"erating fi-ed Assets Return on :perating 6ssets H E/I. D :perating 6ssets Iear 2006 H Rs; %,>63,>21D Rs;1 H (;>@O ,012,%62 Iear 200? Iear 200@

H Rs;%,355,562DRs;155,> 2,366 H Rs; F16,353, %1ERs.1%3,622,>26 H (;12O H F11;((O

Jorking For 2006


Earnings /efore ta9 H Rs; =3?6@3?21 :perating 6ssets H 1%,05%,352 P ,>22,032 P11,3%6,32 L101, 12,25%P2,063,>%% H Rs;1((3 0123=6

For 200?
Earnings /efore ta9 H Rs; =3@>>3>6 :perating 6ssets H 1%,210, 02 P 1,22>,662 P 2,%50,000 P 1 H Rs;1>>3 ?( 3@66 ,322,1% P ,252,>52

For 200@
Earnings /efore ta9 H Rs; F163@>@3(=1 :perating 6ssets Q 10,635,05> P 2,1>3,%55 P 6 H Rs;1=@3 6 23? 6 , P1 1,>2%,11 P ,%>1,3 3

4raphi#al Representation!

%2

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4.88; 3.88; 8.88; :3.88; :4.88; :5.88; :6.88; :28.88; :23.88; 3885 3883886 'eturn on #perating Assets

E9planation!
As the 'eturn on 0"erating Assets from year 2006 to 2003 isG .53R, .12R and A11. R res"ectively. As for as inde- analysis concern return on o"erating assets has #een an decreasing from 2006 to 2003.it is much #elow standard in #anking industry.

Return in .otal ECuity


6verage Sto#khol&er ECuity H Share %apital L Reserves L UnFappropriate& Profit R:E H "Net In#o)e D 6verage Sto#khol&er ECuity$ N 100 Iear 2006 Iear 200? Iear 200@ QRs; ,30%,255ERs;10,653,26 QRs;%,%5%,013ERs;15,126,56 Q/Rs;10,03%,2%01ERs;5,0%0,2%2 3 Q (>;6 O > Q 2 ;=>O Q F200;06O

Jorking For 2006


Net Profit H (3@0=32>> 6verage Sto#khol&er ECuity Q 2,202,%20P%,5 >,2 2P ,212,2%6 H 1036>@3 6@

For 200?
Net Profit H =3=>=301@ 50

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6verage Sto#khol&er ECuity Q %,2 0, >2P >,%2>,2 2P ,%52,3%2 H 1>31103=>(

For 200@
Net Profit H F1030@=3 =0 6verage Sto#khol&er ECuity Q 5,23>,2>%P>,%2>,2 2P/A>,6>%,25>1 H >30=03 =

4raphi#al Representation!
98.88; 8.88; :98.88; :288.88; :298.88; :388.88; :398.88; 3885 3883886 'eturn on (=uity

E9planation!
'eturn on 0wner9s 4@uity in the year 2006 is 5.62R, in the year 200> is 22. 5R and in the year 2003 is A200.6R which shows an decreasing trend to a lesser e-tent from year on year #asis as well as it is not meet the standard of #anking industry.

4ross Profit 2argin


4ross Profit 2argin H "4ross Profit D .otal Revenue$ N 100 Iear 2006 Iear 200? Iear 200@ QRs;%,0>0,2%1ERs;11,6% ,26 QRs; ,600,161ERs;1>,5 2,5 QRs;1,1 3,652ERs;1>,>52,652 3 Q (=; 6O Q 20;>(O Q 6;=1O

Jorking
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)ive in the Profit and =oss Account

For 2006
4ross Profit H ,et marku"Einterest income H Rs;%, 0>0,2%1 .otal Revenue H 5arku"E returnEinterest earned H Rs;11, 6% ,26

For 200?
4ross Profit H ,et marku"Einterest income H Rs; , 600,161 .otal Revenue H 5arku"E returnEinterest earned H Rs;1>, 5 2,5 3

For 200@
4ross Profit H ,et marku"Einterest income H Rs; Rs;1, 1 3,652 .otal Revenue H 5arku"E returnEinterest earned H Rs; 1>,>52,652

4raphi#al Representation!

79.88; 78.88; 39.88; 38.88; 29.88; 28.88; 9.88; 8.88; 3885 3883886 ?ross Profit "argin

E9planation!
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.his ratio also shows the decline in revenue of +0P. !n 2006 it nearly 5R #ut after 2006 it start to decline and in 2003 it merely 6.%1R. +ecause the revenue of the +0P declines so the )ross Profit automatically decline.

6#tivity Ratios
Activity ratios measure a firm9s a#ility to convert different accounts within their #alance sheets into cash or sales. .otal Assets .urnover $i-ed Assets .urnover

.otal 6ssets .urnover


.otal 6ssets .urnover Ratio H Interest or 2arkup D .otal 6ssets Iear 2006 Iear 200? Iear 200@ QRs;11,6% ,26 ERs;16%,355,1 QRs;1>,5 2,5 3ERs;2 %,220,6> QRs;1>,>52,652ERs;135,322,2> > Q 0;0?1 times 5 Q 0;0?> times Q 0;0 > times

Jorking
)ive in the Profit and =oss Account and +alance ?heet

For 2006
2arkupD returnDinterest earne& H Rs;113 6=(3 6( .otal 6ssets H Rs;16=3 @>>31(?

For 200?
2arkupD returnDinterest earne& H Rs;1?3 >( 3>(@ .otal 6ssets H Rs; 2(=3 036?>

For 200@
2arkupD returnDinterest earne& H Rs;1?3 ?>236>2 .otal 6ssets H Rs; 1@>3@ 23 ?(

4raphi#al Representation!
5

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8.2 8.86 8.85 8.84 8.83 8 3885 3883886 +otal Assets +urnover 'atio

E9planation!
.otal Asset turnover ratio measures the firm9s effectiveness in generating the revenue from its investments in total assets. .he gra"h is showing the increase in the total assets turnover ratio. +ut its not real growth #ecause when we analy;e the $inancial ?tatements of +0P we find that in 200> the income and assets increased so the ratio also increased #ut in 2003 income decreased whereas the assets decrease with more ratio. ?o this factor caused the increase in the total assets turnover in 2003.

Fi9e& 6ssets .urnover


Fi9e& 6ssets .urnover Ratio H Interest or 2arkup D Fi9e& 6ssets Iear 2006 Iear 200? Iear 200@ QRs;11,6% ,26 ERs;2,063,>% QRs;1>,5 2,5 3ERs; ,252,>5 QRs;1>,>52,652ERs; ,%>1,3 3 % Q >;6( ti)es 2 Q >;( ti)es Q >;11 ti)es

Jorking
)ive in the Profit and =oss Account and +alance ?heet

For 2006
Interest or 2arkup H Rs;11, 6% ,26 Fi9es 6ssets H 0"erating $i-es Assets Interest or 2arkup H Rs;1>, 5 2,5 3 Fi9es 6ssets H 0"erating $i-es Assets

H Rs;2, 063,>%% For 200? H Rs;


, 252,>52 5%

www.vustudents.ning.com For 200@


Interest or 2arkup H Rs; Rs;1>, >52,652 Fi9es 6ssets H 0"erating $i-es Assets H Rs; , %>1,3 3

4raphi#al Representation!
9.9.5 9.9 9.4 9.7 9.3 9.2 9 4.< 4.6 3885 388388< @iAed Assets +urnover 'atio

E9planation!
.he fi-ed asset turnover ratio measures the com"anyOs effectiveness in generating sales from its investment in fi-ed assets. .he gra"h shows the decline in fi-ed assets turnover. !t means that the generation of revenue on the fi-ed assets is declining. .he +ank of Pun&a# is not using its fi-ed assets effectively.

2arket Ratios
5arket ratios are commonly used #y the investors to access the "erformance of a #usiness as an investment and also the cost of issuing stock. 8ividend "er share 4arning "er ?hare Price E 4arning 'atio

+ivi&en& per share


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+ivi&en& per share H +ivi&en& pai& to Sharehol&ers D Nu)1er of shares outstan&ing

Note! /ank of Pun0a1 has not pai& &ivi&en& so this ratio is not #al#ulate& Earning Per Share
Earning Per Share H Net In#o)e D 6verage No; of Shares :utstan&ing Iear 2006 Iear 200? Iear 200@ QRs; ,30%,255,000ERs;232,602, 65 QRs;%,%5%,013,000ERs;%2 ,0 >,201 Q/Rs;10,03%,2%0,0001ERs;523,>2>, >6 Q Rs;1(;1= Q Rs;10;>( QRs;"A1 ;0? 1

4raphi#al Representation!
29 28 9 8 :9 :28 :29 :38 3885 3883886 (arning Per Share

E9planation!
.he earning "er share was 1 .1% in 2006, which decrease in 200>, and was 10.5 . +ut in 2003 due to loss the dividend "er share went in negative its mean that in 2003 shareholders have to #ear a loss.

Pri#e D Earning Ratio


Pri#e to Earning Ratio H 2arket Pri#e per Share D Earning per Share Iear 2006 Iear 200? Iear 200@ 56

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Q 101 E 1 .1% Q Rs;>.62 Q 2>.35 E 10.5 Q Rs;2.22 Q 1 .20 E A12.0> Q Rs;" A6.50$

Representation!

28 6 5 4 3 8 :3 :4 :5 :6

Price (arning 'atio

3885

388-

3886

E9planation!
.he PE4 ratio was >.62 in 2006. !n 200>, it increased due to the decline in market "rice so the shares of +0P look more attractive in 200> #ecause the PE4 ratio is higher #ut in 2003 as we already have seen in 8P? and 4P? calculation the PE4 ratio went in negative. !n 2003, +0P has to #ear a loss so the 8P? and 4P? declined so the PE4 ratio was also decreased

Future Prospe#ts of the :rganiAation


.he success and growth of +ank of Pun&a# de"ends on the )overnment9s "olitical agenda and its efforts to #ring a#out a greater degree of o"timism amongst investors and #usiness community. 5>

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.he "revailing money market scenario with e-tremely low rates of interest and stagnant "rivate sector credit is a serious hurdle for #anking sector in Pakistan. .his situation will force #anking sector to shift their focus from conventional #anking a""roach to retail #anking. +anking taking lead in this shift "rocess will #e least affected #y the "revailing unfavora#le interest rate scenario. .he mission to transform .he +ank of Pun&a# into a moderni;ed #usiness oriented organi;ation is sailing smoothly and in this direction #y now com"uteri;ation of 2% #ranches has #een com"leted successfully. +ank of Pun&a# has decided to fi- facility of A.5 at its selected #ranches for which it has &oined hands with 5(+. +ank is highly keen to offer the facility of inter #ranch #anking services within year 2011.

%on#lusion
!nternshi" is an interesting "rogram, which gave me the "ractical touch of the #anking field. .hrough this, ! learnt that what is the #anking and its activities. ! learnt from the 53

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#ank officer and understood the o"erations of #anking. .his training "rogram enhanced my knowledge a#out the #anks. 'atio analysis shows that the year 2003 "ro#lematic for the +0P. As in this year, +0P has to #ear the loss. 5ain reason of this loss is the nonA"erforming loans and the other as well as <amish Jhan scandal. .he other reason is increasing de#t. 8ue to this, the #ank has to "ay more interest on the de#t. .his factor increased the interest e-"enses. !n 2003 the 4P? and 8P? more declined so the PE4 ratio also declined so the ?hares of +0P were not attractive for the investors. .herefore, the +ank of Pun&a# has to #ecome de"endent on the de#t. .he administrative e-"enses almost 60R increased from 2006 to 2003. !t seems that the management of the +0P almost fails to overcome the administrative e-"enses. .his thing also decreased the "rofit. .he investments, which are the "art of earning assets, also decline. .herefore, the sources of the other income also decreased. Almost 20R #ranches of +0P are located in Pun&a# even in Jarachi the hu# of economic activities of Pakistan only 11 #ranches. .herefore, the market coverage of +0P is much lower. .he "olitical factor cannot #e avoided in this regard #ecause the )overnment of Pun&a# holds the ma&ority of the shares so the government intervenes in the #ank activities.

Re#o))en&ations for I)prove)ent


An organi;ation considered to #e lucky whose #ad de#ts are recovered, the #ank of Pun&a# having too much #ad de#ts due to "reference of loans to dictators. 52

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5y o"inion to raise the "rofit of +0P, first they recover their #ad de#ts. !f they do it, .hen their "rofita#ility ratio will e-ceed. !n my analysis, +0P consumes their o"erating incomes as regarding the year 2003. ! will not say to close their costs #ecause these are not to #e closed #ut these are to #e reduced. According to statements of 2003, in +ank of Pun&a# having no much shares of investors. .he #ank of Pun&a# de"ends on the de#t, who im"roves the "rice to earnings ratio. $or the life of the #ank, the u""er management will make some strong strategies, who com"ete it from the com"etitors. !n my internshi" "rogram, ! see mostly the "ersons of government &o# holders make their accounts in the #ranch. ,o much account of social individuals are come to o"en their account in the #ank. .herefore, my o"inion is to motivate the individuals to o"en their accounts in +0P. .o #ecome "rofita#le the +0P should overcome its nonA"roductive e-"enses. !ts management has to take effective decision to reduce its administrative e-"enses. .he #ank has to control the nonA"erforming loans, which are the main reason of this heavy loss in 2003. As name shows, B+ank of Pun&a#C refers to the Pun&a# "rovision only, and a head office in Jarachi /?indh1. !t is essential for +0P to make its #ranches in the whole country of Pakistan #ecause the com"etitors are s"read over the country. .his is very im"ortant for +0P to reduce the o"erating cost. .herefore, the o"erating "rofit will increase. .he management of +0P should focus on shortAterm de"osits.

/i1liography
$or the analysis and the #rief history of the +ank of Pun&a#, his financial ?tatements, ! attain data #y using internet from different we#sites, in which, 60

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<istory of .he +ank of Pun&a# 'etrieved 10 7une 2011 from +ank of Pun&a# we# site htt"sGEEwww.#o".com."kEA#outUs.as"-

Product 8etail. 'etrieved 15 7une 2011 from +ank of Pun&a# we# site htt"sGEEwww.#o".com."kEProducts.as"Annual 'e"ort, 'etrieved 20 7une 2011 from +ank of Pun&a# we# site htt"sGEEwww.#o".com."kE$inancialEAnnualAccounts.as"+0P $inancial ?tatements 2006 +0P $inancial ?tatements 200> +0P consolidated 'e"ort 2003 +anking 'atios, 0#tained from the siteG htt"GEEwww.investo"edia.comEfeaturesEindustryhand#ookE#anking.as"

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