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COMMERCIAL BANKING

ASSIGNMENT

ANALYSIS OF ASSETS AND


LIABILITIES OF A BANK

SUBMITTED BY:
AYAZ QAISER, UNSA HAIDER ZAIDI
MEHRAN USMANI, SARDAR MOHSIN
BBA-7B
ANALYSIS
OF
ASSETS AND LIABILITIES
NIB started as NDLC-IFIC Bank which was incorporated in March 2003, as a public
limited company. It started its operations in October 2003 with paid up capital of Rs.
1.2bn with amalgamation of NDLC and of IFIC’s Pakistan operations and their assets
& Liabilities, and subsequently those of Credit Agricole Indosuez Pakistan in April
2004. Temasek Holdings acquired 25% shareholding in NIB in March 2005 through
Bugis Investments which was enhanced to over 70% in June 2005. NIB has branches
all over Pakistan.

NIB vision is to rank amongst top 5 banks in Pakistan. Therefore it acquired majority
shares of PICIC on June 28 2007, which gave control of its subsidiaries (commercial
bank –PCBL, an asset management company - PICIC AMC and PICIC Insurance).
Legal merger of PICIC & PCBL into NIB took place on 31st December ’07, once all
regulatory approvals were obtained. Post merger NIB total assets increased to Rs.
176.6 bn as of 31st December 2007, further increasing to Rs 180 bn as of 31st
September ’08. Present paid up capital of Rs. 40.4 bn is highest amongst banks in
Pakistan. Temasek Holding remains the largest single shareholder with approximately
74%shareholding.

NIB has almost 4500 employees, working in the different business units of the bank
which include:

• Retail Banking and Transaction Banking


• Small Medium Enterprises and Commercial Banking Group
• Corporate and Investment Banking Group / Financial Institutions
• Treasury of Capital Market Group
NIB BANK LTD PRODUCTS

NIB is offering several kinds of products, details of which are as under:

1. Khazana Daily Product Account


2. Azadi Saving Account
3. Term Deposit Scheme
4. Basic Banking Account (Current Account)
5. Foreign Currency Accounts (FCY Account)
6. Auto Finance
7. Small Business Loan
8. Personal Installment Loan
9. ATM

1- Khazana Daily Product Account


The fascination for an individual in Khazana Daily product Account is as under:
Interested In More Profit? Want Cash Every Month?
NIB offers his customers that; with “NIB Khazana Daily Product Account” they
can see their money grow – every day, every month.
Attractive Returns Every Month
NIB Khazana enables his customers to earn profit daily, on the basis of their day –
end balance, which is credited to their account every month. NIB offers the
opportunity to earn as high as 4.5% profit. The higher the balance, the higher the
return. The deposits and Rate per annum of NIB Khazana Product Account is given
as under:
Deposits Rate (Per Annum)
Up to Rs. 99,999/- 0.10%
Rs. 100,000 – 499,999/- 1.50%
Rs. 500,000 – 999,999/- 3.50%
Rs. 1,000,000 – 2,999,999/- 4.50%

The minimum balance requirement to avail this product is Rs. 100,000/-

2- Azadi Saving Account


NIB offers yet another attractive opportunity to earn an even higher rate of return
on investment. Now the customers can get as much as 6% on a deposit of Rs.
1,000,000/- and above. Whether salaried or Self-employed, Trader or a
Businessman, Housewife or a Pensioner, Proprietor or a Partnership concern, the
Azadi Account is designed to offer each one a host of special benefits.
The deposits and Rate per annum of NIB Azadi Saving Account is given as under:

Rate (Per Annum)


Deposits
For Individuals & Corporate
Up to Rs. 99,999/- 0.10%
Rs. 100,000 – 499,999/- 1.50%
Rs. 500,000 – 999,999/- 3.50%
Rs. 1,000,000 – 2,999,999/- 4.50%
Rs. 3,000,000 & above Treasury

3- Term Deposit Scheme


Term Deposit scheme comprises of PLS Notice Deposit, NIB Promise Term
Deposit, NIB Term Deposit Certificates and NIB Amanat Deposit. Term Deposit
Scheme is available from 1-5 year period. So an individual has the advantage of
choosing the tenor that best suits to him. NIB is also offering the loan facility of the
account holder. In case of need an account holder can borrow up to 95% o of his
Term Deposit amount.
Additional Benefits
*Free Cheque Book.
*No Minimum Balance Requirement.

The deposits and rates per annum under Term Deposits Scheme are as follows:

1-PLS Notice Deposit


Deposits Rate (Per Annum) For Individual & Corporate
7 Days - 29 Days 5.00%

*Minimum Balance requirement is Rs. 100,000/-


*Rates for amounts over Rs. 3,000,000/- are quoted by treasury.

2-NIB Term Deposit Certificates


Term Rate (Per Annum)
1 Year 7.00%
2 Years 8.00%
3 Years 9.00%
4 Years 10.00%
5 Years 10.50%

3-NIB Amanat Deposit


PLS Term Deposit For Rate (Per Annum) For Individual & Corp.
1 Month 6.00%
3 Months 6.25%
6 Months 6.50%
12 Months 7.25%

4-NIB Promise Term Deposit


Term Expected Annualized Rate of Return on Gross deposit
8 Years 12.50%

4- Basic Banking Account (BBA)


• NIB–BBA account is a non remunerative PKR current (checking) account.
From this account, an account holder would be able to make payment as and
when required. The PKR current account is a non interest bearing checking
account that allows an account holder to make as many withdrawals and
deposits as he may please. Ledger fee charges are levied only on balances
below Rs. 5,000/-
• The initial minimum deposit to open the account will be Rs. 5,000/-,
however, there will be no minimum balance charges, if the balance falls
below the above threshold.
• If the balance in the account remains ‘Nil’ for a continuous six month’s
period, the account will be closed. However, exemption to this effect may be
solicited from business head.
• The account should not be overdrawn. The bank is not obliged to honor any
cheques drawn by the account holder if in doing so the account would
become overdrawn and would debit the account with the charge of each
returned cheque, presented through clearing, as per its schedule of charges.
• The balance in the account can be offered as collateral for obtaining loan
from the bank, if such a facility is offered to the customer by the bank.
• Maximum two deposit transactions and two cheque withdrawals are allowed
free of charge, through cash/clearing per month.
• Unlimited, free of charge ATM (Automated Teller Machine) withdrawals
from the banks’ own ATMs will be allowed. In case of withdrawal from
BBA through the ATM machines of other banks, charges as applicable form
time to time will be levied.

5- Foreign Currency Account (FCY Account)


The schedule of NIB Foreign Currency Accounts is given as under:

NIB Foreign Currency Accounts


Rate Per Annum
Deposits
USD EURO GBP
Savings (US $ Only) 1.75% 0.50% 2.00%
7-29 Days 1.90% 0.75% 2.10%
FDR One Months 2.10% 1.00% 2.25%
FDR Three Months 2.30% 1.10% 2.50%
FDR Six Months 2.50% 1.20% 2.60%
FDR One Year 2.75% 1.30% 2.90%
Annualized Expected Rate of Return

NIB Foreign Currency Khazana Deposits


NIB Rate
Amount
USD Euro GBP
Up to US $ 1,000 1.00% 1.00% 1.00%
US $ 1,000 - 9,999 2.00% 1.75% 2.75%
US $ 10,000 - 24,999 3.25% 2.00% 3.50%
US $ 25,000 - 49,999 3.50% 2.20% 4.00%
US $ 50,000 - 99,999 4.25% 2.35% 4.20%
US $ 100,000 & above Treasury

6- NIB Auto Finance


NIB provides its customer the most convenient, affordable and flexible Auto
Loan/Lease scheme to fulfill its customer dream of owing a car.
7- Small Business Loan
NIB Small Business Loan (SBL) is designed to be a multi purpose business
installment loan. The intent is to provide a product designed and tailored
specifically for the needs of the small business segment in Urban Pakistan. SBL is
called secured loan because the bank require collateral against such loan and the list
of approved collateral types are also prescribed by the bank. Moreover, the bank is
financing the maximum 70% of the collateral value. Their target market includes
the small business with annual turnover between Rs. 250K to Rs. 10 Million is
classified as Commercial Mass Market (CMM). These are typically individual or
family owned businesses, mainly involved in retailing products / services or small
scale trading.

8- Personal Installment Loan


NIB Personal Installment Loan (PIL) is designed to fulfill the need of salaried
individual. It is called unsecured loan because the bank does not require any
collateral against such type of loan. The intent is to provide a product designed and
tailored specifically for the needs of salaried class in Urban Pakistan.

9- Automated Teller Machine (ATM)


Automated Teller Machine is designed to
facilitate the customers so that they get their
money through ATM networks countrywide
whenever they required. The intent of ATM
is to access the money even off the bank
timings. So through ATM card any one can
access the rupee account for withdrawal and
balance enquiries on all banks ATMs
countrywide. NIB Bank Ltd Ltd is offering
this facility to its customers / account holders free of charge provided that they
access NIB Bank Ltd ATMs otherwise they have to pay some amount on each
transaction.

FINANCIAL STATEMENTS
(ASSETS AND LIABILITIES)
NIB Bank Limited (Formerly NDLC - IFIC Bank Limited)
Balance Sheet
As At December 31, (2007 – 2009)

Assets Notes 2009 2008 2007


(Rupees '000') (Rupees '000')

Cash and balances with treasury banks 2,928,404 2,085,141 974,659


Balances with other banks 1,362,497 1,966,118 309,218
Lending's to financial institutions 2,600,000 2,270,000 1,812,907
Investments 6,594,036 5,129,285 766,716
Advances 31,052,169 19,622,929 12,158,088
Operating fixed assets 622,216 368,551 129,389
Deferred tax assets 127,158 - -
Other assets 1,142,363 576,691 406,486
46,428,843 32,018,715 16,557,463

Liabilities

Bills payable 215,769 274,325 98,620


Borrowings 9,164,121 4,547,096 4,159,194
Deposits and other accounts 30,566,540 21,123,556 10,648,570
Deferred tax liabilities - 2,465 98,911
Other liabilities 2,150,538 1,858,398 188,320
42,096,968 27,805,840 15,193,615
Net Assets 4,331,875 4,212,875 1,363,848

Represented By:

Share capital 3,361,522 3,361,522 1,229,041


Reserves 719,810 694,623 34,125
Inappropriate profit 298,376 197,626 114,609
4,379,708 4,253,771 1,377,775
Deficit on revaluate ion of securities - net (47,833) (40,896) (13,927)
4,331,875 4,212,875 1,363,848

Profit and Loss Account


for the year ended December 31, (2007-2009)

Notes 2009 2008 2007


(Rupees '000')

Mark-up / Return / Interest earned 3,499,278 1,716,917 803,542


Mark-up / Return / Interest expensed 2,452,192 1,118,957 412,680
Net Mark-up / Interest Income 1,047,086 597,960 390,862
Provision against non-performing loans and advances 269,583 120,931 (73,255)
Provision / (Reversal) for diminution in the value of investments - (29,643) -
Bad debts written off directly - - -
(269,583) (91,288) (73,255)
Net Mark-up / Interest income after provisions 777,503 506,672 317,607

NON MARK0UP / INTEEREST INCOME


Fee, commission and brokerage income 179,994 91,707 40,418
Dividend income 14,528 16,668 16,015
Income from dealing in foreign currencies 208,627 109,145 25,596
Gain on sale of securities 222 4,040 12,806
Other income 64,721 14,599 16,732
Total Non-Mark-up / Interest income 468,092 236,159 111,567
1,245,595 742,831 429,174
NON MARK-UP / INTEREST EXPENSES
Administrative expenses 1,221,423 711,545 393,719
Other (reversals) / Provisions / write offs (328) 327 3,964
Other charges 2,587 1,182 158
Total Non-Mark-up / Interest expense (1,223,682) (713,054) (397,841)
Reserves 21,913 29,777 31,333
Share of profit / (loss) from associates 8,079 (2,776) -
Extra ordinary / Unusual items - - -
Profit before taxation 29,992 27,001 31,333
Taxation - Current (33,422) (20,178) (14,031)
- Prior year - - 5,687
- Deferred 129,367 96,948 99,620
95,945 76,770 91,276
Profit after taxation 125,937 103,771 122,609
Unappropriated Profit brought forward 197,626 114,609 16,522
Profit available for Appropriation 323,563 218,380 139,131

Basic and Diluted earnings per share 0.37 0.45 0.99

NIB Investment Break down


NIB invest in following :
• Pakistan Investment bonds
• Overseases investment Securities
• Market treasure bills
• Government of pakistan guaranted bonds
• Government of Pakistan Bonds
• Listed companies
• Unlisted companies
LIQUIDITY OF NIB BANK

a. Current Ratio

The current ratio of a firm measures its short-term solvency, i.e. its ability to meet
short-term obligations

Current Assets CA
Current Ratio = ---------------------- = ----
Current Liabilities CL

Currents Assets are (Bank + Cash + A/R + Prepaid Expenses + Stock)

b. Quick Ratio / Acid Test Ratio

Quick Assets QA
Quick Ratio = -------------------- = ----
Current Liabilities CL

RATIO ANALYSIS OF NIB BANK LTD.


YEARS 2009 2008 2007

LIQUIDITY

CURRENT RATIO 1.10 1.15 1.09

CASH RATIO 0.23 0.26 0.11