Chapter 1

INTRODUCTION

1.1BACKGROUND OF STUDY
In present day world, economy has started dominating every sphere of life and for
the socio-economic growth of any country, monitory institutions are critical. In this
context, banking sector plays a an important role. Banking sector is the backbone of
the industrial sector, trade and commerce of the country, hence providing stimulus
to overall development of the economy.

They gather the scattered amounts from a number of people pool these amounts and
then lend or invest these amounts in profitable projects. Banks thus create credit,
take part in capital formation process, and channelize the financial resources in to
productive uses. A sound banking system is very essential to support the trade and
industrial activities within a country.

The role of banks in the development of a country has greatly increased with the
advent of modern tools and techniques in banking operations. Moreover intense
competition among banks, the privatization of the financial institution and financial
liberalization in general are gradually and continuously making the banking sector
efficient and effective.

In this era of ever going change and knowledge explosion, manifested by modern
technology, banks are also adopting themselves to cope this change. For Pakistan,
being a developing country of third world banks are crucial to Pakistan’s economy,
and specially in the case of NWFP, where a huge amount of remittances come from
abroad by population residing there. This makes a significant contribution to the
economy of Pakistan in general and NWFP in particular.

1.2OBJECTIVES OF THE STUDY

To fulfill the requirements for the degree of Bachelor of Business Administration at
Government Commerce College, University of Malakand.

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To acquire first hand knowledge of practical field and develop the discerning
capabilities to apply the knowledge gained during the course of studies to real world
situations.

To perform financial and other analyses of BOK 4To make

possible recommendations in light of the analysis.

To get better long report writing skills.

To achieve the stated objectives of the study, the area of work is classified as follow:

To study the tools and techniques used for the analysis.

Collection of financial data thoroughly and collect other relevant information.

To ascertain problems through primary and secondary survey.

To enumerate the prospects mostly through secondary data survey, that is, annual
reports.

Develop recommendations for solution of the discerning problems.

1.3SCOPE OF STUDY
During this study I was able to observe operations and identify various
problems which the BOK management has to face. The BOK has been analyzed
from marketing, financial and operations points of view. However IFE Matrix, EFE
Matrix, SWOT and Financial analyses have been carried out are the main focuses
of the report.

1.4LIMITATION OF THE STUDY

There are always some limitations which are to be faced during every study. In case
of banks it is very difficult task to collect all types of relevant data and information
because of confidential nature. Also due to the bank tight work schedule and non-
availability of the required staff complete information could not be collected easily.

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 1.5METHODOLOGY OF STUDY
The data collected for analysis and review includes both primary and secondary
data. Every nerve was strained to collect the quality information. The methods used
for collecting primary and secondary data are as follows:

1.5.1 Primary Data

Data collected for the first time is called primary data. The methods used to collect such
data include:

1Personal observations
2Discussions
2Interviews 3Survey

1.5.2 Secondary Data

The data collected earlier by someone else and which has gone through
mathematical and statistical techniques after its collection, is called secondary data.
Methods used to collect secondary data include:

1BOKannual reports
2BOK manuals
3Internship reports on BOK available in library
4Journal and Newspapers
5Internet
6Stories
7Internet

1.6 INTERPRETATION OF THE WORLD ‘BANK’

The word ‘Bank’ has been derived from French word “banque” or bancus which
means bench, office or institution for the keeping, lending and exchanging of money. Some
other authorities have the opinion that “Bank” is derived from the German word back which
refers to the meaning of “joint stock fund”. Bank is a financial institution that borrows
money from one party and lends money to another party (Government, individual, business)

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and the difference between borrowing and lending make profit for the bank. Banks borrow
and lend money on interest basis.

Banks are classified according to their sphere of activities, the main the types of banks are as
under:

a.Commercial Banks
b.Industrial Bank.
c.Agricultural Banks.
d.Saving Banks.
e.Exchange Banks.
f.Central Banks.
g.Cooperative Banks.

1.7 BANKING SECTOR IN THE KPK

The KPK Province is a land of geographical diversity ranging from glacial mountain ranges
in the north to arid and semi arid regions in the south. This geographical diversity holds a
significant potential for development of agricultural, industry, forestry, hydro electricity
and tourism. The Bank of Khyber is the first KPK. based bank and assists in the
development of sound business in these areas of growth.

There are about 22 Pakistani scheduled banks operating in the KPK having 1147 branches
or about 15% of all the branches of scheduled Pakistani banks, in the country. In addition 3
foreign scheduled banks with a total of 3 branches are also operating in the province.
Historically banks in the KPK have been able to mobilize substantial amount of the total
deposits of the country. However their share of investment in the province has not been
proportional as the development process has gathered pace over the years, investment
within the province has also increased creating a demand for banking services. A large
expatriate community from KPK residing overseas especially in the Middle East are also
offering opportunities to banks operating in province.

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1.8 COMMERCIAL BANK
Commercial bank is engaged in performing the routine duties of banking business.
Such bank collects surplus money from the people (as borrowing) and extends the same
money as a loan for development purposes. Commercial Bank plays a vital role in the
economic development of a country by performing the variety of function as given below:

1.Accepting of deposits (Current, saving and fixed account)

2.Making loans and advances (overdraft, cash credit, discounting bill)
3.Agency services to customers (Collection of cheques, dividends, electricity, water and
gas bills, purchase and sale of securities, and acts as a trustee.

4.General utility services (Forex Business, Issue traveler cheques, providing trade
information).

1.10 ROLE OF KHYBER BANK ON ECONOMIC GROWTH AND

DEVELOMPENT
The Bank of Khyber established in 1991 through an Act No. XIV, passed by the was
Awarded the status of a scheduled bank in September 1994. The Bank of Khyber Enjoys
A unique position, and stands out amidst the other, banks operating within Pakistan, and
Has the privilege of being bracketed amongst the only three government Banks in the
.The Bank of Khyber has really played a vital role in the economic development of the
N.W.F.P. This is evident from the fact that 65% of the total lending has been made in the

Province, which is Billion. A major portion of this has been dispensed to the SME sector,
Further opening up avenues for employment. Lending, in fact, has been made to every

Sector of the business community and the society at large. The bank has also shown Significant
improvement in all financial indicators including….

Deposits, advances, profitability and complete provisioning for the non-performing loans
(NPLs) has also been made. Hence, the Bank of Khyber has now emerged as a viable
Commercial bank having assets worth Rs.30 Billion and deposits of around Rs.22.8
Billion. The Bank of Khyber now truly possess the capacity and capability to explore and

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Procure maximum market share. Sensing the great demand for Islamic mode of banking In
the province, the Bank of Shariah compliant banking solutions. It was in the year 2002
that the Bank of Khyber Started its Islamic Banking operations, as per the demands of the

Local population. An Islamic Banking Division was established in January 2003, and a

Shariah Supervisory Committee was formed for supervising and conversion of

Conventional branches into full Fledged Islamic Banking Branches (IBBs)The conversion
Of the conventional branches Into IBBs is of great significance in not only the history of
The Bank of Khyber, but also in the evolution of Islamic banking throughout the country,
Since there had been no set Precedence in so far as the conversion of the conventional
Branches into Islamic ones is Dedicated Islamic Banking Branches (IBBs), whereas the
Rest of the 18 branches is all conventional banking branches. Currently the Bank has a
Total branch network of 34 branches throughout the country. 25 Of these branches are
Located within the N-W.F.P., 01 in Muzaffarabad, and the A network of ATMs now, and
Through the One-link network, clients can now withdraw Cash from any of the 2,412
ATMs installed across Pakistan. The Bank of Khyber has always been at the helm of all
Developmental activities carried out for the provision of basic amenities to the down
Trodden people of the N-W.F.P. in Particular, and for the alleviation of poverty from the
Under developed areas of the Country by endeavoring to engage our clientele in activities
Such that they feel financially empowered to ensure smooth functioning of their families

As the most basic institution of the society. The fact that the Bank of Khyber has made
Advancements to around twenty five thousand People under the 'Micro Finance Scheme',
And with a total Micro Finance disbursement Of Rs.1.10 Billion and around Rs.1.00

Billion disbursed under various other schemes, Such as House Finance, Car Finance,
Motorcycle/Scooter Finance, Cycle Finance, and 15 Take Home Salaries as Personal

Loans, to more than 13,000 Government Employees to Help alleviate their strife and
Improve their living standards, bears testimony to our long Standing commitment
Towards sustainable social development, and continuing ambitions towards fulfilling

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Our obligations towards the society. As part of the banks corporate social responsibility,
The BOK has also proposed for the Beautification and maintenance of a round-about in
The provincial metropolis of Peshawar. In all such goodwill ventures the theme would
Revolve around the traditional Values, customs, and traditions of the province. Besides,
The bank also sponsors and Patronizes sporting activities ranging from squash, to cricket
And golf. The Bank has developed a special product for small farmers of NWFP at the
Lowest rate of profit i.e. 6.5% p.a. in collaboration with the Agriculture, Livestock &
Cooperative Department N-W.F.P., funded by the Government of N-W.F.P. to the tune
Of Rs. 100 Million. The scheme is branded as the "Chief Minister Zaria Scheme" and is
Offered by Both the conventional and Islamic Banking Branches of the bank. The scheme
Covers Production and developmental requirements of on-farm and off-farm activities of
Agriculture sector with maximum limit of Rs 0.1 million per case for the period upto two
Years. From an all-encompassing macro perspective, the Bank of Khyber is deeply
Committed Towards financing Hydel Power Projects and views such projects as not only
Beneficial for our syndicated corporate lending, but promising for the present and future
Generations Of not only the N-W.F.P, but the entire country. The Bank would like to
Finance any Hydel Power Project to be undertaken by the private sector in order to help
Generate more electricity for the province. The Bank of Khyber prides itself in being
Sensitive towards all its stakeholder, i.e. our Clients, different communities, the

Government, our employees, shareholders, the top Management and all board members, And
is gratified and appreciative towards all who have been reposing trust in our efforts

And endeavor
1.11 REVIEW
Keeping in view the importance of the topic i.e. Role of Financial Deposits in the BOK a
review of the report has been carried out. The review covers changes in Assets, Liabilities
and Share Holder’s Equity. Economic Review, Performance Review The detail is
summarized in the preceding paragraphs.

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i.Assets

The Assets during 1998 – 99 were increased to 10% while in 1999 – 2000 it enhanced to 11%.
The increase in assets was due to professional expertise of the BOK staff.

ii.Liabilities

The liabilities during 1998 – 99 were increased to 10% whereas during 1999 – 2000 these
increased to 13%. The main reason for increase in liabilities was operational losses the BOK
suffered for the first time since its inception.

iii.Share Holder’s Equity

The Share Holder’s Equity during 1998 – 99 was increased to 6% while during 1999 – 2000 it

increased to 33%. The increase was due to good performance and professional

Expertise of the BOK staff.

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1.12 ECONOMIC REVIEW

The recent historic floods in the Country had huge bearing for the economy mid-year

Onwards. This catastrophe poses economic challenges for the Country as a hole,

Especially. The agriculture sector, and would trickle down to all sectors whereas the

Banking sector may face issues in terms of both asset creation and deterioration of asset

Quality Country had huge bearing for the economy mid-year onwards. This catastrophe

Poses economic Challenges for the Country as a whole, especially the agriculture sector,

And would trickle down to all sectors whereas the banking sector may face issues in term Of
both asset creation and deterioration of asset quality. Coupled with after shocks of the

International economic setback as well as political instability, the economy of Pakistan Has

witnessed financial crises during the year 2010.

Lower revenue collection, weakening of balance of payments, unconvincing exports and

Current account deficit amounted pressure on budget. However, the higher trade deficit

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Was compensated to a certain extent by rising remittances. The foreign reserves also

Continued to cross record levels with foreign loans under rehabilitation and emergency

Aids packages. The average CPI inflation for the year under review stands at 15.68

Percent as compared to 10.3 percent of the corresponding year. The energy crises badly

Hampered the production. Activities on a large scale thus lowering the export targets to a

Significant level. The huge support extended by the foreign countries against the fear of

Economic collapse helped Pakistan to remain a controlled state whereas strict monitory

Measures adopted by the State Bank of Pakistan helped contain the financial crisis to

Restore shareholders’ confidence. Having major presence in Khyber Pakhtun khwa were

The menace of Militancy hit hard, the banking activities have suffered however; the Bank

Of Khyber through its dedicated efforts has managed to revitalize the core banking

Activities and posted an operating profit of Rs.385 million. The markup based income

Grew to Rs.4, 207 Million from Rs.3, 390 million in 2009indicating and increase of

24%.Resultantly, the Bank achieved profit before tax of Rs.713 million as against loss of

Rs.799 million for last year. Profit after tax amounted to Rs.563 million translating into

An EPS of Rs.1.13 against (Rs.1.27) for 2009.Total deposits presented a robust increase

Of 41% reaching Rs.36.981billion from Rs.26.286 billion at December 2009. The

Advances of the Bank also showed tremendous increase of 30% increasing toRs.21.272 Billion
from Rs.14.821billion at year end 2009. The Bank also able to increase the size of

Investments from Rs.17.926 billion toRs.19.853 billion with an increase of11% from the

Last year the total asset base of the Bank grew up to Rs.50.794 billion from

Rs.38.811billion registering growth of 31%.During the year, the Bank retained its

Strategy of concentrating on growth while placing its customers as the pivotal point of its

Activities. Currently, the Bank is providing customized services through its expanded

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Network of 50 branches nationwide wherein nine new branches in the cities of Karachi,

Faisalabad, Gujarat, Gujranwala, Mirpur (AJK), Upper Dir,

1.13 Performance Review

Havelian, chaman and jamrod Road (Khyber Agency) have been opened in 2010. The

Bank's paid-up capital for the year ended December 31, 2010 stood atRs.5 Billion .Fresh

Injection of funds to the tune of Rs.3billion has been made by the Government of Khyber

Pakhtun khwa as advance share deposit money. To increase it's Paid-up capital, The Bank

plans to issue Right shares to it's existing share holders whereas The Government being

the major shareholder will subscribe it settlement of right shares Against the Funds Stated

above .After the right issue, the Bank will be compliant with he Minimum Capital

Requirements up to year end 2011. The right issue is expected to Be offered before June

30 , 2011.

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11
 Chapter 2

ORGANIZATIONAL BACKGROUND

2.1 EVOLUTION AND ENHANCEMENT OF BANKING

Banking is as primitive as human society because when importance of money as a
medium of exchange, it was felt that there should be a regulating agency.
Babylonians may be the first who developed in the pristine era of as early as
2005 B.C.

Origin of banking is still a mysterious thing. Various assertions may be cited about
the origin of word bank. Among the various opinions some authors say that this
word is derived from the words “bancus” or “banque” which connotes a bench.
Some say that it has been derived from German word “back” which means a joint
stock firm. After Italy fell to Germans the word “back” was Italianized into bank
Hence these variety of opinions does not permit a person to be certain about one
opinion that it is authentic because none is backed by a valid record.

It is not certain as to who invented money: but history records that Gyges, king
Lydia, and casted electrum (a natural alloy of gold and silver) in gods of identical
shape and of uniform weight with a triple emblem engraved on it as an official
guarantee of value in 687 B.C.

The temples of Ephesus and Delphi were the biggest “Banks” of their time. The
Romans also tried to regulate the conduct of private banks in such a way that utmost
confidence of the people was created in them.

German public bank was formed in 1401 and by the 16th century some more public
banks were formed in Milan, Amsterdam, later the bank of Amsterdam was founded
in 1609.

Despite the classical origin banking in its modern form and structure started in
Britain, when many of the Lombardy merchants came to England in the 14th century
and settled in parts of the city of London now called Lombard Street.
2.2 DEFINITION AND CHARACTERIZATION OF BANK

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 It is pertinent in this context to have a definition of bank. Certain individuals have
tried to define bank, banker or banking-all are used interchangeably and hence may
be cited for the purpose. Dr. Herbert l.Hart defines ‘banker’ or ‘bank’ as: “A person
carrying on the business of receiving money, and collecting drafts for customers
subject to the obligation of honoring cheques drawn upon him from time to time by
the customers to the extent of the amounts available on their current accounts”

Sir John Paget, who is regarded as a great authority on banking law, defines banker in
these terms:

“That no person or body, corporate or otherwise, can be a banker, who does not
(1) Take deposit account
(2) Take current account
(3) Issue and pay cheques and
(4) Collect cheques crossed and uncrossed for his customers”
In short bank can be defined as,
“A bank is an institution which deals in money and credit. It accepts deposits from
individuals and firms at a lower interest rate and gives at higher interest to those
who need them”.

2.3FUNCTIONS OF A COMMERCIAL BANK

A commercial bank performs many functions. They can be broadly classified in two
categories; primary functions and secondary functions.

2.3.1 PRIMARY FUNCTIONS

The basic functions of a bank are accepting deposits and advancing loans.

i.Accepting Deposits
This is a very important function of commercial bank to accept money from those
who have it but can’t put it to a profitable use. To attract more deposits, a bank
offers various facilities to customers to deposit their money with it. These facilities
include current account, saving account, and fixed account. Current account bears
no interest, yet a customer can withdraw any number of cheques in a day. Saving

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deposit offers a moderate interest with limited withdrawal facility. Fixed deposit
offers interest rate higher than the saving account; however, the accountholder
cannot withdraw the money deposited during that fixed period.

ii. Advancing Loans

The second important function of a bank is to advance the money deposited with it
to those who need it for productive uses. The parties receiving these loans include
businessmen, traders, exporters, individuals, and corporations. Loans are extended
against proper securities like mortgage, pledge, hypothecation of goods and
documents of title. To adjust to the needs of the various types of customers, a bank
offers different types of credit facilities. These facilities include loans, cash credit,
overdraft, and discounting of bills. Cash credit permit customers to withdraw funds
within a given limit and interest is charged on the balance actually withdrawn.
Overdraft is provided for short period of time and interest is charged on amount
actually withdrawn. Discounting of bills refers to making the payment of bills before
its maturity.

2.4 Advances on BOK

i.Conventional
Advances are starting net of specific and general provision. Specific and general
provision against the advances determined on the bases of prudential regulation and
other directives issues by the state of bank of Pakistan charged the profit and loss
account Advances are written off when there are no realistic prospects of recovery
ii.Murabaha

Funds disbursed for purchase of goods are recorded as 'Advance for Murabaha'. On
culmination of murabaha i.e. sale of good to customer murabaha financings are
recorded at the invoice amount Goods. that have been purchased But remain unsold
are recorded as inventories. Profit is recorded at the time of sale of Goods under
murabaha as deferred income and is included and the amount of murabaha
financings. Profit is taken to the profit and loss Account over the period of the
murabaha.

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 iii.Ijarah financing
Ijarah financings executed on or before December 31, 2008 have been
Accounted for under finance Method, thereafter all ijarah financing are
Accounted for under IFAS-2

2.5.2 SECONDARY FUNCTIONS

The secondary functions are those which a commercial bank performs for their
customers in addition to their primary functions. These functions include the
following;

i.Collection of Bills
Bank collects and makes payments of cheques and notes for its customers as the agent
of the customer.

ii.Collection of Dividend
The bank provides a very useful service in the collection of dividend or interest earned
on shares, debentures, or TFCs held by its customers.

iii.Execution of Standing Instructions

A customer may order in writing to his bank to make payments of regularly recurring
nature of expenditures to an individual or firm by debiting it to his account.

Acting as Trustee or Executor: If a customer instructs its bank to act as the trustee
in execution of its will or asks the bank to act as trustee in administration of business
settlement which requires technical knowledge, the bank acts as trustee or executor.
iv.Foreign Exchange Business
A bank transacts foreign exchange business by discounting foreign bills of exchange
and thus provides facilities for financing the foreign trade.

v. Advice on Financial Matters

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 Sometimes the banks give valuable advices on various financial mattes to their
customers.

vi.Safe Custody of Valuable

A bank keeps valuables, ornaments, documents etc. for safe custody.

2.7 HISTORY OF ISLAMIC BANKING IN PAKISTAN

S Teps for Islamization of banking and financial system of

Pakistan were started in 1977-78. Pakistan was among the three countries
in the world that had been trying to implement interest free banking at
comprehensive/national level. But as it was a mammoth task, the switchover plan
was implemented in phases. The Islamization measures included the elimination of
interest from the operations of specialized financial institutions including HBFC,
ICP and NIT in July 1979 and that of the commercial banks during January 1981 to
June 1985. The legal framework of Pakistan's financial and corporate system was
amended on June 26, 1980 to permit issuance of a new interest-free instrument
of corporate financing named Participation Term

Certificate (PTC). An Ordinance was promulgated to allow the establishment of

Mudaraba companies and floatation of Mudaraba certificates for raising risk based
capital. Amendments were also made in the Banking Companies Ordinance, 1962
(The BCO, 1962) and related laws to include provision of Bank finance through
PLS, mark-up in prices, leasing and hire purchase. Separate Interest-free counters
started operating in all the nationalized commercial banks, and one foreign bank
(Bank of Oman) on January 1, 1981 to mobilize deposits on profit and loss sharing
basis. Regarding investment of these funds, bankers were instructed to provide
financial accommodation for

Government commodity operations on the basis of sale on deferred payment with

16
a mark-up on purchase price. Export bills were to be accommodated on exchange
rate differential basis. In March, 1981 financing of import and inland bills and that
of the then Rice Export Corporation of Pakistan, Cotton Export Corporation and the
Trading Corporation of Pakistan were shifted to mark-up basis. Simultaneously,
necessary amendments were made in the related laws permitting the State Bank to
provide finance against Participation Term Certificates and also extend advances
against promissory notes supported by PTCs and Mudaraba Certificates. From July
1, 1982 banks were allowed to provide finance for meeting the working capital
needs of trade and industry on a selective basis under the technique of Musharaka.

2.8 INTEREST FREE BANKING IN PAKISTAN

The quest to eliminate interest from the banking system of Islamic Republic of
Islamic Republic of Pakistan is deep rooted.. While inaugurating the State Bank of
Pakistan on 1st July 1948, the father of the nation Quaid-e Azam Mohammad Ali
Jinnah said:

“I shall watch with keenness the work of your research organization in evolving
banking practices compatible with Islamic ideals of social and economic life… The
adoption of western economic theory and practice will not help in achieving our
goal of creating a happy and connected people”.

The Islamic Ideology Council (CII) also wanted to initiate interest free banking in
Pakistan. In pursuance of these ideals, government took the step of Islamizing the
banking sector operations in Pakistan. It was, therefore just before the end of 14 th
century of Hijrah (12th Rabiul -Awal 1399- H/9th February, 1979) that the unique
event in modern economic history took place, when Pakistan announced the
elimination of usury, phase-wise from its financial and banking system and so profit
and loss sharing (PLS) Accounts were introduced.

In 2001 Supreme Court of Pakistan has passed a decision, in which the government
has been ordered to develop RIBA Free economy in the country. In respect of this
decision financial institutions and the government have been working for the last
one year, for making necessary arrangements to implement the decision in a
concerted way.

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Chapter 3
INTRODUCTION TO THE KHYBER BANK OF
PAKISTAN

3.1 HISTORICAL BACKGROUND

The Bank of Khyber was established through an Act of the NWFP
Assembly called, “The BOK Act, 1991” passed in June 1991 the Bank was
Formally launched on November 01, 1991 and its first branch office
Commenced commercial operations at University Road, Peshawar on
December 22 1991.

3.2 MISSION OF BOK

• “To be recognized in the market place by institutionalizing a merit and
performance culture, creating a powerful and distinctive brand identity,
achieving top-tier financial performance, and adopting and living out our
core values”.

• To increase shareholders' value and provide excellent service and innovative

products to customers through effective corporate governance, friendly work
environment, and contributing towards an equitable sub-economic growth.
Role of bank of Khyber in the development of N-W.F.P

3.3 VISION OF BOK

“To be the pre-eminent financial institution in Pakistan and achieve market
recognition both in the quality and delivery of service as well as the range of product
offering”.

3.4 OBJECTIVES OF BOK

BOK is a commercial bank. So being a commercial bank, the primary objective of BOK
is to earn maximum profit. To achieve this following ways are adopted.

1. By increasing deposits.

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 2. By charging on loans disbursed to private sector and business community.
These are achieved by:

3.4.1 Procuring Low Cost Deposits

This era is characterized by severe competition, and banking industry is no exception.
Every bank, whether it is Pakistani or foreign, wants to procure as much deposits as
possible, by providing better customer services. BOK, with special emphasis on
corporate governance, is improving its facilities and services to attract customers with
higher volume of deposits. BOK is applying two pronged strategy i.e. by improving
the services and courtesy simultaneously. BOK has the largest deposits as compared to
other competitors by accepting deposits on current, fixed, saving, term deposit and
profit and loss sharing accounts.
3.4.2 Advancing and Lending Money to Its Clients
The earnings of any bank depend upon the amount of loans it extends. By assessing
the credit worthiness of the clients, BOK disburses loans. The deposits so procured
are invested in different projects. In extension of credit BOK prefers genuine sound
and reliable parties. The credit section of BOK is well organized. The trained staff
carries out extensive analysis before extending loans. The Bank gets substantial
profit by charging interest

Branches of BOK
Province Branches
Azad khashmir

KPK

Punjab

Sindh

Baluchistan

Chapter 4
MANAGEMENT AND ORGANIZATION OF BANK
OF KHYBER OF PAKISTAN

4.1 ORGANIZATIONAL STRUCTURE OF BOK

Bank of Khyber is one of the modern organizations; a competent staff is

19
 Managing it. It is a centralized organization and the authority flows from top to
Bottom. All the available information about the organization’s management and
Structures are given in this chapter. Based on Bank of Khyber has been entrusted to
The Board of Directors. The Board consists of five directors comprising four
Directors nominated by the Government of N.W.F.P.

4.2 BOARD OF DIRECTORS

The board of directors is the apex controlling body for the management of banks.
Pursuant to section 11 of the banks’ (Nationalization) act 1974, the number of
directors for the bank shall not be less than 5 and not more than 7, excluding the
President. The federal government may, if it deems necessary appoint a chairman
of the Board in respect of the bank.

So board members of the BOK are led by the Chairman who is the President and is
the Chief Executive officer (CEO) accompanied by 6 directors. The CEO of the
bank presides over the meetings of the board. The government appoints the
directors, richly experienced and caliber. The composition of Board of Directors is
as under.

BOARD OF DIRECTORS
The board of directors comprises the following:
* Mr. Bashir Ahmed Chairman & Managing Director
* Additional Chief Secretary Director
* Secretary Finance (N.W.F.P) Director
* Secretary Industries (N.W.F.P.) Director
* Mr. Saeed-ur-Rehman. FCA Director

CHART# 4.1
Group Heads

Human Resource Group M. Ayub Hamid

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 Executive Vice President

Credit Management Group Imran Samad

Executive Vice President
Divisional Heads

Business Development Division Business Development Division

Sohail Khan Lal Nawaz Khattak
Senior Vice President Head (BDD Conventional)

Credit Administration Division Credits Management Division

Hassan Afzal Tauni Zahoor Ahmad Khan
Head (CAD) Vice President

Special Asset Management Division Establishment Division

M. Yaseen Chaudhary Tariq Naseem
Senior Vice President Senior Vice President

Operations & Support Division Risk Management Division

Shabeer Ahmed Sheikh Sher Muhammad
Senior Vice President Vice President

Compliance & internal Control Division Treasury & Investment Division

Saeed Iqbal Khattak Masood A.S Wahedna
Chief Compliance Officer Senior Vice President

Information Technology Division Internal audit Division Feisal Khan Head

(I.T.) Hermond javed Bhatti Head(IAD)

2.12 MANAGEMENT HIERARCHY

The management hierarchy represents the different positions and designations in the
hierarchy of the BOK. However this is not the reporting hierarchy but merely
represents the positions and grades on the basis of seniority grades.

21
BOARD OF DIRECTORS

4.2.1.1.1 Voting Rights

Upon a show of hands every member present in person shall have one vote upon a
poll every member present or by proxy shall have one vote for every ten shares held
by him, subject to a maximum of ten votes. The Federal Government as a
shareholder may appoint any person to be present at any General Meeting and to
vote on its behalf.

Provided that subject to any exemption granted by the federal Government under
section 93 of the Banking Companies Ordinance (BCO) 1962, the voting rights of
any one shareholder shall not exceed 5% of the total voting rights of all shareholders
of the bank.

The share being offered herewith shall rank pair pass in all respects, except that
these do not have the right elect or remove Directors of the Bank, being the right
ordinarily available to the shareholders of the companies registered under the
provisions of the Companies Ordinance, 1984.

4.3 EXECUTIVE BOARD

Mundane activities of commercial banks are looked upon by the executive board.
Executive board directs and supervises the general affairs of any commercial bank.
Numbers of the Board are appointed by the Federal Government and comprises the
president, secretary and other members. The President who is the Chief executive
of the board is vested with the responsibility of redirecting, controlling and
managing the activities of the bank.

BOK has an executive committee with the President has its Chairman, five SEVP’s
as its members and President Advisor as an observer. This is the premier body that
has been given the authority to see the mundane affairs of the bank and sanction the
financial and business proposals.
4.4 CHIEF EXECUTIVE

22
 In the administrative hierarchy, President is at the apex. Meetings of Executive
Board are presided over by him. So he is responsible for management of the whole
of the bank.

4.5 GROUP CHIEFS

Decentralization is an effective tool for managing any large and expended
organization. So NBP has been divided into a number of divisions, where Regional
Chiefs/SEVP/EVP supervises and controls each region.

4.6 MANAGEMENT
The day-to-day operations of the Bank are run by a capable team led by
Mr. Bashir Ahmad who is a competent, well-qualified and highly respected
Banker. He has served with the World Bank and as Federal Secretary to the
Government of Pakistan. He has served as the Managing Director of PICIC,
IDBP, NIT and Chairman, ADBP during his career. He holds a degree in
Economics from the London School of Economics Over the past few years; Mr.
Bashir Ahmad has gathered a team of professionals and well qualified senior
Executives of the bank. These executives have been selected from foreign and Local
private and public sector banks.

Bank of Khyber emphasizes on lean, efficient and professionally managed

Organization, with a strong private sector orientation. It competes for business on
Commercially competitive terms with other banks in the province.

4.7 EMPLOYEES
The bank currently employs 300 regular officers in various cadres of the Bank.
They include 1 Ph.D. 136 postgraduates including 40 MBAs from foreign and
local universities and 156 graduates. The bank provides them with on the job
Training, as well as exposure to advance courses and seminars conducted by the
Institute of Bankers in Pakistan and other professional institutes. The bank places

23
 High priority on professional education and encourages its employees to sit in the
Professional examinations conducted by the institute of Bankers in Pakistan

4.8 HEAD OFFICE MANAGEMENT

. Head office management is divided into twelve Groups which are as under:
o Operation Group
o Treasury Management Group
o Commercial and Retail Banking Group
o Audit and Inspection Group
o Special Asset Management Group
o Finance Group
o Corporate and Investment Banking Group
o HR Management Department
o Organizational Development and Training Department
o Strategic Planning and Economic Research Group
o Risk Management Group
o IT Planning, development and implementation Group

Chapter – 5

5.1 GENERAL BANKING AND DEPARTMENTALIZATION

General banking means the day-to-day business of bank, under the supervision of
Vice President, Zonal Head Office of the main branch. General or day to day
banking of BOK consists of various departments, which are explained below.

1.Deposit Department

2.Clearing Department

3.Inland Remittances Department

4.Bills Department

5.Advances Department

6.Cash Department

7.CD Department.

24
5.2 DEPOSIT DEPARTMENT
The basic function of a bank is to accept the surplus of individuals, public sector, and
public institution and to honor Cheque drawn upon them.

How to Open an Account

The applicant is provided with a copy of rules and an application form to open an
account. This form is filled by the applicant in a manner prescribed and duly singed
by the applicant. An existing account holder of the bank must introduce the
application. A copy of ID card is attached with the specimen signature card. The
application is presented at the branch with the initial amount of deposit for credit of
his account. The amount is entered in the passbook and is singed by the responsible
officer of the bank; finally a Checkbook is issued to the account holder, for
withdrawal purpose.
Classification of Deposits

The deposits can be classified under three main heads.

i.Current Account

ii.Saving Account

iii.Fixed Deposit

iv.Profit/loss Account

1. Current Account or Demand Deposits

Current account or demand deposit can be withdrawn by Cheque or transferred to

someone else by the depositor at any time without prior notice to the bank. This
account can be opened with a minimum of Rs.500/. In such case the bank does not
allow any interest on it, because such deposits are meant for short period and can be
withdrawn without any prior notice. Current account can be opened by or through.

a.Partnership

b.Limited Companies Account

25
 c.Welfare Account

d.Individual Account

a) Partnership Account

The assets of partnership are held partners of the firm, or by one of its member acting
on behalf of all members as trustees for all of them. A partner has an implied power
by law to open an account on behalf of his partnership firm, but not on his individual
name. The bank only honors that Cheque which confirms to the mandate given to
it by all the partners.

Procedure and Requirements for Opening Partnership Account

a.Names of all partners are taken with their specimen signature.

b.Instructions for operation are obtained from each partner.

c.Signature of authorized partner is obtained.

d.A letter of partnership, signed by all partners is obtained.

e.In case a partner who was not authorized to operate the account is now authorized by
all partners. Thus the authority letter is obtained.

b) Limited Companies Account

Before opening an account for a limited company the following documents are
obtained.

i.The true copy of the certificate of incorporation.

ii.True copy of the certificate of commencement of business (only in case of public

limited company).

iii.Three copies of the memorandum and article of Association.

iv.True copy of the resolution of the Board of Director regarding conduct of the
account.

Procedures and requirements for opening a Limited Company Account

26
 i.The certificate of incorporation and commencement certificate of business should be
called in original which are returned after inspection.

ii.The specimen signature of the director named in the resolution authorized should be
obtained on specimen card.

iii.In case the company is taken-over by the Government fresh instruction are obtained
from the managing director appointed by the government

c) Welfare Account

The Associations and welfare unions open such accounts.

Requirements for Opening Welfare Account

No registration certificate is needed but only a paper containing registration of the

Association is sufficient.

d) Individual Account (personnel Account)

Any individual can open individual account. Following are some requirements to be
fulfilled by the individual in order to be able to open an account with a bank.

Requirements for Opening an Individual account:

i.National ID Card ii.Introducers reference iii.Rs.500/- or maximum as

initial amount to be credited to his account.

Procedure is the same as explained earlier in this chapter.

e) Saving Account
In saving account the basic purpose is to mobilize the saving trend in the lives of people
and to enable people to draw money within certain limits.

In saving account al BOK the customers are not allowed to draw a big amount at
once without any notice. The customer is bound to follow the rules and regulations
of the bank. Saving accounts can be opened in following shapes.

a.Individual account

27
 b.Joint account

f) Fixed Deposit Account

In case of fixed deposit account the time period of the account is in accordance of
the different fixed deposit schemes offered by the bank and according to wishes of
the customers. The customers can not withdraw money from his/her account in
accordance and compliance of terms decided by the bank and the customer.
5.3 CLEARING DEPARTMENT

i. Clearing
Every bank performs the function of paying and collecting. The cheque drawn on
other bank by the customers of the bank is collected by the bank for or without
charging fee is called clearing. The bank through the clearinghouse (State Bank of
Pakistan) performs the function of clearing.

ii. Clearinghouse

A clearinghouse is a place where the representative of all banks get together to settle
the payment and receipts of Cheques drawn on each other.

Functions of Clearing Department in Branch

i.To accept transfer, transfer delivery and clearing Cheques from the customers of the

branch and to arrange for their collection ii.To arrange the payment of Cheque drawn on

the branch and give Cheque for collection to any other branch of BOK or any other member

or sub-member of local clearing house.

iii.To collect amounts of Cheques drawn on members of local clearing house sent for collection

by BOK branches, not represented at the local clearing house.

Types of Clearing
a.Outward clearing

28
 b.Inward clearing

A) OUTWARD CLEARING

It includes those Cheques and other instruments which are sent by the bank to other
banks for payment on behalf of its own clients. Cheques are sent to clearing house
through local main branch.
Procedure for Outward Clearing
i)Account number of payee/endorsee is written on backside of the Cheques.
ii)The investment and paying-in-slips are separated.
iii)The instruments are sorted bank wise and branch wise.
iv)Schedules are prepared.

v)Jottings of all the schedules are taken in the clearinghouse statement. Amount of
Cheques is written in ‘delivered’ and ‘to pay’ columns.

vi)After balancing the outward clearing, the pay-in-slips are released to the C.D.
Department.
vii)After balancing a transfer debit voucher is prepared.
viii)The instruments, schedules etc. are delivered to the message from the main branch.

B) INWARD CLEARING

This includes the cheques drawn on the bank presented by other banks for payments.

Procedure of inward clearing at the Drawer Branch

i)Numbers of instruments noted in the schedule are verified immediately on receipt.

ii)The amounts of all the instruments are jotted down and totaled. It should be equal
to the amount mentioned in the IBDA from the local main branch.

iii)The IBDA is responded crediting the account in the IBDA from the main local
branch.

iv)The IBDA is responded crediting the account of the main branch.

29
 v)The amounts are released to the concerned department.

Chapter 6
ANALYSIS OF REPORT OR ORGANIZATION ANALYSIS

6.1 THE NEED OF RESEARCH

There are about 22 Pakistani schedule banks operating in the NWFP
Having 1147 branches or about 15% of all the branches of scheduled Pakistani
Banks in the country. In addition 3 foreign scheduled banks with a total of 3
Branches are also operating in the province. Hence, competition between the
Banks. The competition made compulsion on BOK to increase its deposits and
Make comparison with the other banks. This comparison will show the status of
BOK in the market. Therefore, need was felt to carry out a research on the “Role Of
Financial Deposits in the BOK.”

RESEARCH METHOD

FINANCIAL ANALYSIS

Financial statement analysis are the principal means of reporting the financial
condition and result of operations of an organization, or in other words we can say
that financial analysis are carried out for the purpose of identifying the financial
strengths and weaknesses of an organization by properly establishing the
relationships between the balance sheet and income statement items. This analysis
helps various parties in decision making who are interested in the activities of
business. To improve the quality of decision making, proper analysis of these
statements helps a lot.

30
 The firm itself and the outsider providers of capital—creditors and investors—all
undertake financial statement analysis. The type of analysis varies according to the
specific interests of the party involved.

For example, trade creditors (supplier’s owed money for goods and services) are
primarily interested in the liquidity of a firm. There claims are short term, and the
ability of the firm to pay these quickly is best judged by an analysis of the firm’s
liquidity. The claims of bondholders, on the other hand, are long term. Accordingly,
bondholders are more interested in the cash-flow ability of the firm to service debt over
a long period of time. Investors in a company’s common stock are principally
concerned with present and expected future earnings as well as with the stability of
these earnings about a trend line. As a result, investors usually focus on analyzing
profitability. They would also be concerned with the firm’s financial condition insofar
as it affects the ability of the firm to pay dividend and avoid bankruptcy. Management
also employs financial analysis for the purpose of internal control and to better to better
provide what capital suppliers seek in financial conditions and performance from the
firm. Similarly government agencies analyze financial data for tax purposes

6.1 SIX YEARS PERFORMANCE OF BOK AT A GLANCE

TABLE: 6.1 Rs in million

2010 2009 2008 2007 2006 2005

Deposit 3,6981 26,286 24,732 21,411 19,077 17,452

Advance(Net) 1,8238 11,836 12,644 10,086 9,189 10,590

Investment 19,853 17,926 8,985 8,903 8,565 7,698

Total Asset 50,794 38,811 31,339 29,712 27,183 25,074

Capital&Reserves 5,604 5,041 5,678 5,540 2,796 2,047

Return on Equity 10.05% 12.04% 2.44% 5.11% 8.38% 11.30 %

Profit/Loss(B.Tax) 713 (799) 206 77 203 234

31
Profit/Loss(A.Tax) 563 (637) 137 213 203 219
100 %

80 %

60 %
East
40 %

20 %

0%
2010 2009 2008 2007 2006 2005

Profir/Loss(After tax) Graph6 . 1

100 %

80 %

60 %
East
40 %

20 %

0%
2010 2009 2008 2007 2006 2005

Profit/(Loss)Before Tax Graph6.2

32
STATEMENT OF FINANCIAL POSITION (OR)
BALANCE SHEET
AS AT DECEMBER 31, 2010

DECEMBER31, DECEMBER31 ,
2010 2009

Assets
Cash and balances with treasury 5,079,720 1,542,102
Balances with other banks 1,502,684 2,403,698
Lending to financial institutions 2,562,093 1,810,846
Investments 19,852,093 17,925,911
Advances 18,238,333 11,835,962
Operating fixed assets 1,121,554 1,013,670
Deferred tax asset –net 443,320 456,420
Other assets 1,993,869 1,821,961
Total Asset 50,794,303 38,810,570

LIABILITIES

Bills payable 280,665 229,973

Borrowings 2,894,759 5,147,063
Deposit and other accounts 36,981,351 26,285,794
Sub-ordinate loans - -
Liabilities against assets subject to finance lease - -
Deferred tax liabilities - -
Other liabilities 1,237,155 1,185,470
Total Labilities 41,393,930 32,848,273

NET ASSETS 9,400,373 5,962,297

REPRESENTE BY

Share capital 5,004,001 5,004,001

Reserves 548,039 435,342
Unappropriated profit /(accumulated Loss) 52,079 (398,710)
5,604,119 5,040,633
Advance against shares subscription 3,224,000 224,000
8 ,828,119 5,264,633
Surplus on revaluation of assets 572,254 697,664

Total Labilities & Equity 9,400,373 5,962,297

33
PROFIT AND LOSS ACCOUNT (OR) INCOME STATEMENT
FOR THE YEAR ENDED DEC31,2010

DEC31,2010 DEC31,2009

Mark-up / return / interest earned 4,207,155 3,390,014

Mark-up / return / interest expensed 2,925,066 2,390,388 Net
mark-up / interest income 1,282,089 999,626

Provision against non-performing loans and advances – net 48,916 659,758

(Reversal of provision) / provision for diminution in the
value of investments – net ( 371,682) 602,061
Bad debts written off directly -
(322,766) 1,261,819
Net mark-up / interest income after provisions 1,604,855 (262,193)

NON MARK-UP / INTEREST INCOME

Fee, commission and brokerage income 172,565 127,123
Dividend income 74,848 117,458
Income from dealing in foreign currencies 30,761 3,371
( Loss) / gain on sale of securities – net (285,934) 67,148
Unrealized gain / (loss) on revaluation of investments
classified as held for trading – net 1,431 (1,294)
Other income 66,006 69,896
Total non-mark-up / interest income 59,677 383,702
1,664,532 121,509

NON MARK-UP / INTEREST EXPENSES

Administrative expenses 943,680 719,453

Other (reversals) / provisions / write offs (5,705) 185,500
Other charges 13,416 15,326
Total non-mark-up / interest expenses 951,391 920,279
713,141 798,770
Extra ordinary / unusual items
______________ _____________
PROFIT / (LOSS) BEFORE TAXATION 713,141 (798,770)

Taxation
- Current 89,631 75292
- Prior years 2,040 - Deferred
57,984 (236,879)
149,655 (161,587)

PROFIT / (LOSS) AFTER TAXATION 563,486 (637,183)

(Accumulated loss) / unappropriated profit brought forward 398,710 238,473

Unappropriated profit / (accumulated loss) carried forward 164,776 (398,710)

Earnings per share - Basic and Diluted (in Rupees) 1.13 (1.27)

34
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER31,2010
December31,2010 December31,2009

Profit / (loss) after taxation for the year 563,486 ( 637,183)

Other comprehensive income _ _

____________ _____________
Total comprehensive income for the year 563,486 (637,183)

CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2010

December31,2010 December31,2009

CASH FLOWS FROM OPERATING ACTIVITIES

Profit / (loss) before taxation 713,141 (798,770)

Less: dividend income 74,848 117,458
638,293 (916,228)
Adjustments for non-cash changes
Depreciation 39,039 23,998
Amortization 1,940 __
Provision against non-performing advances – net 48,916 659,758
Unrealized (gain) / loss on revaluation of investments
Classified as held-for-trading – net (1,431) 1,294
( Reversal) / Provision for diminution in the value of investments-net (371,682) 602,061
Other (reversals) / provisions / write offs (5,705) 185,500
Gain on sale of operating fixed assets (12,013) (2,853)
(300,936) 1,496,758
337,357 553,530
( Increase) / decrease in operating assets :

Lending to financial institutions (745,542) 336,148

Net investments in held-for-trading securities 384,220 (757,740)
Advances – net (6,451,287) 148,094
Others assets (excluding advance taxation) (357,432) (65,426)
7,170,041
Increase / (decrease) in operating liabilities:
Bills payable 50,692 107,457
Borrowings (2,252,277) 4,236,345
Deposits and other accounts 10,695,557 1,553,599
Other liabilities 51,685 293,099
8,545,657 6,190,500

Income tax refunded 91, 129 40,490

Net cash flows from operating activities 1,804,102 6,445,596

35
CASH FLOWS FROM INVESTING ACTIVITIES
Net investments in available-for-sale securities (2,676,458) (7,726,709)
Net investments in held-to-maturity securities 570,963 41,784
Net investment in related party _ 4,496
Dividend received 74,848 117,458
Investments in operating fixed assets (172,915) (86,362)
Proceeds from sale of operating fixed assets 36,064 4,876

Net cash used in investing activities (2,167,498) (7,644,457)

CASH FLOWS FROM FINANCING ACTIVITIES

Advance against shares subscription 3,000,000 224,000

Net cash flows from financing activities 3,000,000 224,000

Increase / (decrease) in cash and cash equivalents 2,636,604 (974,861)

Cash and cash equivalents at beginning of the year 3,945,800 4,920,661 Effect
of exchange rate changes on cash and cash equivalents _ _

Cash and cash equivalents at end of the year 6,582,404 3,945,800

103
STATEMENT OF FINANCIAL POSITION - ISLAMIC
OPERATIONS
December31,2010
December31,2010 December31,2009
ASSETS

Cash and balances with treasury banks 740,552 534,375

Balances with and due from financial Institutions 554,970 1,377,610
Lending to financial institutions _ 20,000
Investments 4,612,539 3,040,878
Financing and receivables

Murahaba 1,579,798 635,353

Ijarah 267,208 404,21
Ijarah under IFAS-2 271,100 178,467
Musharaka 31,091 31,025
Diminishing musharaka 800,391 700,975
Others _- 3,000
2,949,588 1,953,031
Less: Provision against non-performing facilities (37,444) (65,968)
2,912,144 1,887,063
Operating fixed assets 86,453 67,947
Other assets 499,076 508,876

LIABILITIES

Bills payable 40,525 74,134

36
Deposits and other accounts
Current accounts 8825,325 1,711,853
Saving accounts 4,181,593 3,560,648
Term deposits 2,218,634 473,606
Others 132,860 81,815
7,415,413 5,827,922
Deposits from financial institutions – remunerative 281,416 263,825
Deposits from financial institutions - non remunerative 1 1
Other liabilities 310,020 323,889
8,047,374 6,489,771
NET ASSETS 1,358,330 946,978

REPRESENTED BY
Islamic Banking Fund 460,000 460,000
Reserves _ _
Unappropriated profit 898,330 486,853
1,358,330 946,853
Surplus on revaluation of assets - 125
1,358,330 946,978
REMUNERATION TO SHARIAH ADVISOR 850 594

CHARITY FUND
Opening balance at the start of the year 583 -
_Additions during the year 28 583
Payments during the year (611) -
Closing balance at the end of the year - 583 .

PROFIT AND LOSS ACCOUNT - ISLAMIC OPERATIONS

December31,210 December31,2009
Markup / return earned 858,664 676,489
Return on deposits and other dues 295,702 241,993 Net
markup / return earned 562,962 434,496

Provision against non-performing financing (28,524) (13,127)

Provision for diminution in the value of investments (1,950) 1,950
Bad debts written off directly - -

Net markup / return income after provisions (30,474) (11,177)

NON MARK-UP INCOME 593,436 445,673

Fee, commission and brokerage income 36,718 20,554

Dividend income - -
Income from dealing in foreign currencies 7,225 169
Gain on sale of securities - Other
income 12,897 14,470
Total non-markup / interest income 56,840 35,193
650,276 480,866
OTHER EXPENSES
Administrative expenses 283,737 181,963
Other charges 62 219
Total non-markup / interest expenses 238,799 182,182
Unappropriated profit brought forward 411,477 298,684
486,853 188,169
Profit available for appropriation 898,330 486,853

6.2 STRATEGIES PURSUED BY BOK IN EXTENDING THE FINANCE

37
Khyber bank of Pakistan has a scale of 1-10 from best to worst on which they rate
their credit risk before extending credit. According to this scale the country itself
stands at level 5. Whereas various sectors are at level 6, which is a pink area. At
Khyber bank of Pakistan credit training is an important part of credit officers
training and that is why their credit personnel keep abreast of the organization's
expectations in terms of credit policies implementation. Apart from the Risk Asset
Review Team mentioned earlier, their are Remedial Management Unit which looks
after possible bad debts.Out of the about 4000 industries now operation in the
country 150 are selected on the basis of their strategic importance to the country and
economy by the Khyber Bank of Pakistan. After detailed studies of these industries,
50 are selected to be the target market. Among these industries only the top tier
companies are served or the ones that have the potential to get to the top tier. This
is established using the scale devised to weigh each company on certain criteria.
Their sector break up shows that they are well diversified in all strategically
important industries. Khyber Bank of Pakistan has already started attracting
Pakistan's blue chip companies due to its single party credit limit that is the highest
in the country after Citibank. The main competitor's in this area are Citibank, Bank
of America, ANZ Grindlays and ABN-AMRO.Khyber Bank of Pakistan has taken
a few very bad hits in the Textile and Cement sector. The poor performance of the
cement sector is explained by Government regulations that have turned the cement
sector into a low margin sector from a high profitability sector with a potential to
grow due to the expected boom in the construction industry. A slowdown in the
economy in general and the private sector in particular has resulted in some private
sector companies defaulting in their loan payments. BANK OF KHYBER of
Pakistan had funded exposure on some of the companies that have defaulted.

The financial data of BOK is analyzed in the following two ways.

1.Time Series analyses
2.Index Analysis

38
Common size and Index analysis are the two types of analysis which are carried out to measure
firm’s performance over time in relation to itself. This type of analysis is called time series
analysis. Whereas the analysis carried out to measure firm’s performance with other firms in
the industry is known as cross-sectional analysis
6.3 COMMON SIZE ANALYSIS
An analysis of percentage financial statements where all balance sheet items are
divided by total assets and all income statement items are divided by net sales or
revenues is called common size analysis.. Common-size analysis can give analyst
valuable insight into changes that have occurred in a firm’s financial condition and
performance. As common-size analysis gives us relative percentage of an item with
respect to total, so the growth or decline in various items of balance sheet and
income statement can not be detected from common-size percentages.

Table 6.2 COMMON SIZE ANALYSIS OF" BOK" BALANCE SHEET

Rupee in Million Commonsize analysis%
(2009) (2010) (2009) (2010)

Assets
Cash & Bal. with Try. Banks 1,542,102 5,079,720 3.97 10.0

Bal. With other banks 2,403,698 1,502,684 6.1 0.02

Lendings to fin. Institutions 1,810,846 2,562,093 4.66 5.04

39
Investments 17,925,911 19,852,093 46.1 39.08

Advances 11,835,962 18,238,333 30.4 35.90

Other assets 1,821,961 1,993,869 4.69 3.92

Operating fixed assets 1,013,670 1,121,554 2.61 0.02

Deferred Tax Assets 456,420 443,320 1.17 0.87

Total Assets 38,810,570 50,794,303 100.00 100.00

Bills payable 229,973 280,665 0.70 0.67

Borrowing from fin. Inst. 5,147,063 2,894,759 15.6 6.99

Deposits & other accounts 26,285,794 36,981,351 80.0 89.3

Liabilities Against assets subject to - -

Finance lease
Other liabilities 1,185,470 1,237,155 3.60 2.98

Deferred tax liabilities - -

Total Liabilities 32,848,273 41,393,930 100.00 100.00

Share capital 5,004,001 5,004,001 83.9 53.23

Reserves 435,342 548,039 7.30 5.82

Unappropriated profit (398,710) 52,079 66.8 0.55

Total 5,040,633 5,604,119 84.5 59.61

Surplus on Reval. of assets 697,664 572,254 11.7 6.08

Shareholders Equity 5,962,297 3,224,000 100.00 34.29

Total Liabilities & Equity 5,962,297 9,400,373 100.00 100.00

6.3.1.1 COMMON SIZE ANALYSIS OF BALANCE

As common size analysis shows the proportionate percentage of the different items
of Balance Sheet with respect to Total Assets. The common size analysis of BOK
balance sheet shows that both the current assets and current liabilities are increasing.
Among current assets investments are showing an increasing trend, while advances
are showing a decreasing trend at the same time. The reason behind this shift is that
interest rates have been increasing in year 2009. Bankers are left with the only
option of investing in short term investments, to increase their profit margin.
Investments, as being a non-interest source of income are more promising than

40
 advances that are becoming less profitable due to growing interest rates. This
proclivity towards investments seems to be abetting in the near future as well-where
interest rates are showing increasing trend. Topping it is the factors that at the
moment banks are washed with liquidity.On the liability side of the balance sheet
total liabilities are increasing. Major changes occur in bills payable, deposits and
other accounts, liabilities against assets subject to financial lease and deferred tax
liabilities. Although borrowing from financial institutions and other liabilities
decreased yet increase in former items was greater than decrease in later items
causing total liabilities to increase. Among bills payable, bills payable in both local
currency and foreign currencies increased. Among deposits and other accounts
growth was recorded in all the categories i.e. fixed, saving and current
(remunerative). However non remunerative current accounts remunerative deposits
from financial institutions declined. Economic stability and increased foreign
remittances were the major reasons in this growth in deposits. Deferred tax liabilities
were generated against the surplus on revaluation, securities and fixed assets as well
as against exchange equalization reserve. Liabilities against assets subject to
financial lease increased because more vehicles were hired against financial lease
during 2009. Borrowings from financial institutions decreased because banks are
already facing excessive liquidity and need for borrowings decreased accordingly.
There is no change in share capital and reserves also remained almost the same,
however there is considerable growth in unappropriated profit mainly contributed
by surplus on Table 6.3 COMMON SIZE ANALYSIS OF"BOK" INCOME
STATEMENT

Mark up revenue 3,390,014 4,207,155 100.00 100.00

Mark up expense 2,390,388 2,925,066 70.5 235.9

Gross profit margin 999,626 1,282,089 29.4 30.4

Provision for advan: 659,758 48,916 19.4 1.1

Provision for invest: 602,061 ( 371,682) 17.7 8.8

Pro:against B/s oblig: 1,261,819 (322,766) 37.2 7.6

Bad debts written off - -

41
Net markup income (262,193) 1,604,855 7.7 38.1

Fees & commission 127,123 172,565 3.7 4.1

Dividend income 117,458 74,848 3.4 1.77

Exchange income 3,371 30,761 0.09 0.7

Share of Profit of J/V

Other Income 69,896 66,006 2.0 0.01

Total non-markup 383,702 59,677 11.3 1.4

Total income 1,664,532 1,664,532 49.1 39.5

Administrative Exp: 719,453 943,680 21.2 22.4

Other provisions 185,500 (5,705) 0.5 0.13

Share of loss of J/V

Other charges 15,326 13,416 0.45 0.3

Non-markup Exp: 920,279 951,391 27.1 22.6

Amort: of def: cost - -

Staff welfare fund - -

Profit before Tax (798,770) 713,141 23.5 16.9

Taxation (161,587) 149,655 4.7 3.5

Profit after taxation (637,183) 563,486 18.7 13.3

6.3.2 COMMON SIZE ANALYSIS OF INCOME STATEMENT

The common size analysis of Income Statement of BOK as given in the above table
is showing a consistent increasing trend in the bank’s gross profit margin. The main
reason behind this increase is that the bank has controlled its mark up expenses in
relation to total mark up revenue, which were constantly reduced from year 2010 to
in the year 2009. In simple words we can say that this declining trend in the mark
up expenses resulting in the increased gross profits. Mark up expenses are actually
cost of sale incase of a bank. Furthermore this increasing trend in gross profit
margins shows the efficiency of the bank’s management in controlling mark up
expenses. So this increasing trend of gross profit margin is a positive or healthy sign
42
 and the bank’s management should continue such type of efforts in order to achieve
such type of results in the future.Now if we look at the figures of total income of the
bank, there is consistent increase. As total income is the summation of both mark
up income and non mark up income. This increase in total income is due to the
increase in both mark up income and non mark up income, and the increase in both
is consistent. Here total non mark up income consists of fees and commissions,
dividend income, exchange income, share of profit of J/V and other income. If we
observe each item, we see that fees and commissions are constantly increasing i.e.
in the year 2010 in the year 2009 it increases. Dividend income is also constantly
increasing i.e. in 2010, in 2009, the case with exchange income is opposite i.e. it is
decreasing all the time. All these resulted in increased total non mark up income.
But broadly speaking this increase in total mark up can be linked with the constantly
decreased mark up expenses that resulted in consistent increased gross profits.If we
look at the figures of non mark up expenses there is increasing trend and this
increasing trend in these expenses is due to the increase in administrative expenses.

Just like the gross profit margin, net profit margin has also shown a continuous
Growth trend. The net profit margin increased from “1,282,089” in the year
2010 to “999,626” in the year 2009; thereafter it increased to of the total sales in
The year 2010. Over the period of three years from 2008 to 2009, the increase in
Gross profit percentage is higher than the increase in net profit percentage.

.6.4 INDEX ANALYSIS

An analysis of percentage financial statements where all balance sheet or income
statement figures for a base year equal 100.00 (percent) and subsequent financial
statements items are expressed as percentages of their values in the base year.

Table 6.4 INDEX ANALYSIS "BOK" BALANCE SHEET

Rupees in millions Index Analysis (%
Change)

Assets 2009 2010 2009 2010

Cash & Bal. with Try. Banks 1,542,102 5,079,720 100.00 329.4

Bal. with other banks 2,403,698 1,502,684 100.00 62.5

Lendings to fin. Institutions 1,810,846 2,562,093 100.00 141.4

43
Investments 17,925,911 19,852,093 100.00 110.7

Advances 11,835,962 18,238,333 100.00 154.0

Other assets 1,821,961 1,993,869 100.00 109.4

Operating fixed assets 1,013,670 1,121,554 100.00 110.6

Deferred Tax Assets 456,420 443,320 100.00 97.1

Total Assets 38,810,570 50,794,303 100.00 130.8

Bills payable 229,973 280,665 100.00 122.0

Borrowing from fin. Inst. 5,147,063 2,894,759 100.00 56.2

Deposits & other accounts 26,285,794 36,981,351 100.00 140.6

Liabilities Against assets - - 100.00 -

subject to Finance lease
Other liabilities 1,185,470 1,237,155 100.00 104.3

Deferred tax liabilities - - 100.00 -

Total Liabilities 32,848,273 100.00 126.0

41,393,930
Share capital 5,004,001 5,004,001 100.00 100

Reserves 435,342 548,039 100.00 125.8

Unappropriated profit (398,710) 52,079 100.00 13.06

Total 5,040,633 5,604,119 100.00 111.1

Surplus on Reval. of assets 697,664 572,254 100.00 82.02

Shareholders Equity 5,962,297 3,224,000 100.00 54.0

Total Liabilities & Equity 5,962,297 9,400,373 100.00 157.6

Index Analysis of Balance sheet OR Index analysis of financial Position

6.4.1 INDEX ANALYSIS OF BOK BALANCE SHEET
Index analysis of the balance sheet over a span of Two years shows that total assets
increased by and in year 2009 and 2010 respectively. This was due to many factors
like a surge in the balances with other bank head; increasing by in year 2010 and
then jumped to in the year 2009. This was accompanied by an increase to the lending
to the financial institution which increased by in the year 2010 and Then in yr 2009.
But the major contributor was investments head; though decreased by in the year

44
 2010 but then sky rocketed to a huge increase. Operating fixed assets also increased
to 2009 in year 2010, therefore, hastened the process of increase in total assets.This
would be much higher, had there been no counter effects by other heads. Cash
balances, though increased in year 2010 but Nose dived with in year 2009. Other
assets also showed a fluctuating trend, firstly increasing by in year 2010and then
sloping downward in year 2009. But the most prominent head which showed
declining drive is advances, that increased in year 2010 and then coming down to a
very low figure in year 2009.So the trend Analysis shows a mix trend among various
items though as a whole increasing. Actually fall in lending rates is the major factor.
Therefore bank’s assets increased

In the heads like balances with other banks lending to financial institutions and
Investments. All these are more lucrative and promising than advances and cash
And balance with treasury banks which area paying nearly nothing to banks as a
profit. So naturally, banks are maintaining there assets in such a form which is
comparatively more profitable. Hence over concentration is on the investments in
stocks and T bills but in 2010 lending rates are showing increasing trends, which
may change the situation in the future. Banks investments portfolio is increasing but
at the expense of national investment in industrial sector. If there is an investment
climate, then invariably the bank’s major source of earning would be advances.Total
liabilities also increased 2010 and in year 2009. increase came through an
accumulation of bills payable, which rose up to in 2010 on 2009.Similarly deposits
also showed an upward trend i.e. in year 2010 in year 2009. Then deferred tax
plummeted in year 2010 but rose up to in year 2009. This increase was contained
by Borrowing from Financial Institutions, which increased in year 2010 and other
liabilities increased in year 2010 but showed a decline in the Pervious year in the
year 2009.

Table:6.5 INDEX ANALYSIS OF "BOK" INCOME STATMENT

Rupees in Millions Index Analysis(% Change)

2009 2010 2009 2010

Mark up revenue 3,390,014 4,207,155 100.00 124.1

45
Mark up expense 2,390,388 2,925,066 100.00 122.3

Gross profit margin 999,626 1,282,089 100.00 128.2

Provision for advan: 659,758 48,916 100.00 7.4

Provision for invest: 602,061 ( 371,682) 100.00 61.7

Pro:against B/s oblig: 1,261,819 (322,766) 100.00 25.5

Bad debts written off - - 100.00 -

Net markup income (262,193) 1,604,855 100.00 612.0

Fees & commission 127,123 172,565 100.00 135.7

Dividend income 117,458 74,848 100.00 63.7

Exchange income 3,371 30,761 100.00 912.5

Share of Profit of J/V - - - -

Other Income 69,896 66,006 100.00 94.4

Total non-markup 383,702 59,677 100.00 15.5

Total income 1,664,532 1,664,532 100.00 100

Administrative Exp: 719,453 943,680 100.00 131.1

Other provisions 185,500 (5,705) 100.00 3.0

Share of loss of J/V - - - -

Other charges 15,326 13,416 100.00 87.5

Non-markup Exp: 920,279 951,391 100.00 103.3

Amort: of def: cost - - - -

Staff welfare fund - - - -

Profit before Tax (798,770) 713,141 100.00 89.2

Taxation (161,587) 149,655 100.00 92.6

Profit after taxation (637,183) 563,486 100.00 88.4

46
Chapter 7
ORGANIZATION ANALYSIS ON MATRIX AND SWOT
7.1 IFE MATRIX OF BOK

Table No:6.17 Internal Factor Evaluation Matrix for khyber bank of Pakistan
Weight Key External
factors Weight Rating Score
Strength

1. Western union facility 0.09 4 0.36

2. ATM finder 0.08 3 0.24
3. Government’s bank 0.09 3 0.27
4. Maximum range of customers 0.04 2 0.08
5. Online banking 0.06 2 0.12
6. Employee’s loyalty 0.04 2 0.08
7. Wide area of services 0.05 1 0.05
8. Strong financial position 0.03 3 0.09
9. Conducive environment 0.02 2 0.04
10. Govt. support and encouragement 0.04 3 0.12
11. Fastest growing financial institution 0.06 3 0.18
12. Young and energetic workforce 0.04 2 0.08
Weaknesses

1. Lack of communication between 0.05 2 0.10

employees 0.05 2 0.10
2. Weak implementation of rules 0.03 1 0.03
3. Public dealing is not very effective 0.05 2 0.10
4. Staff shortage 0.05 2 0.10
5. Inexperienced workforce 0.04 1 0.04
6. Poor advertisement and network 0.06 1 0.06
7. Over work load on employees 0.03 2 0.06
8. Employees are not very much 1.00 2.30
motivated Total
7.2 EFE MATRIX OF BOK
Table no:6.17External Factor Evaluation Matrix for Bank of Khyber of Pakistan
Weighted
Key External factors Weight Rating Score
Opportunities

47
 1. Growing banking system 0.08 3 0.24
2. BOK can avail the government projects 0.07 2 0.14
3. Increase in economic activities 0.08 1 0.08
4. Unemployment is increasing 0.05 2 0.10
5. Sponsor the IT based projects 0.05 2 0.10
6. Rapidly Growing Economy 0.08 3 0.24
7. Mega Projects Financing 0.07 3 0.21
8. Huge Demand for Consumer Financing 0.08 3 0.24
9. Spending Practices of Masses Threat s 0.06 2 0.12

1. Development in banking 0.18

2. The whole structure changes to online 0.06 3 0.20
3. Increase in number of banks 0.05 4 0.18
4. Increased Interest Rates 0.06 3 0.09
0.03 3 0.21
5. Uncertainty of Economy
0.07 3 0.04
6. High Rate of Inflation
0.02 2 0.03
7. Trend of Mergers 0.03 1 0.08
8. Privatization of Banks 0.04 2 0.02
9. Risk of Defaults 0.02 1 2.46
Total 1.00
7.3 SWOT ANALYSIS
SWOT is an acronym for an organization’s Strengths, Weaknesses, Opportunities and
Threats. SWOT analyses consist of sizing up a firm’s internal strengths and weaknesses and
its external opportunities and threats. It is a tool to get a quick overview of firm’s strategic
situation. In the following lines are the “SWOT” analyses of Bank of Khyber.

a) Strength

i.. Has market leadership in providing products and services to the customers
over the year.

ii. Have more branches and therefore accessible to more potential

customers than any other Bank. iii. Have
product innovation skills and resources.

iv. Bank of Khyber has the ability to cope with pressure of competition
and has several times come out of competition successful.

48
 v. It has modern technology and resources of Cater to its customers. vi. Staff
is young and rich in experience and working skills.

vii. Bank of Khyber has to good will of the people and it is also an
asset to it.

viii. Has access to all part of the world, thus also providing services
to Pakistanis outside the country. ix. Offer attractive schemes and more
saving for customers from time to time.

x. Bank’s management has the motivation to make it best bank of the

country.

b) Weakness

i.Marketing skills of the bank are good but they have little presence at
different media.

ii.The lower level management lacks clear direction and is not having the
managerial depth.

iii.Employees are lacking motivation. iv.They

also fear of downsizing.

v.Bank is not limits and thus reducing the efficiency. vi.Problems

of internal unionism from employees.

vii.Maximum number of branches, affecting the maintenance of

consistency and some working atmosphere at everywhere.

viii.Branch’s internal environment do not presents smart image of the bank

in most of cases.

ix.Communication gap between different levels of management.

c) Opportunities
i. Bank should take interest in the new market segments like I.T., business,
software business etc.

49
 ii. Extending banking hours and providing more branches facilities to
customers.

iii. Increasing credit facilities to lower income groups, thus reducing the risk
of loss and also improving the image of the bank.

iv. If new schemes are introduced for the overseas Pakistanis can get the
business of remittances more than any other bank or Hundi business.

v. A new service to its product line.

d) Threats

i.Increasing number of private/foreign banks in the country.

ii.Global technological advancement. iii.Politic,
economical situation of the country. iv.Reduction in
the business activities in the country.

v.Reducing the rates of savings in different segments of people.

vi.Deteriorating confidence of people in bank uncertainties of the
investors. vii.Provisions of better services by private bank.

For “SWOT” analysis we can conclude that the management of the bank should
adopt systematic planning for the bank growth, talking with them all management levels of
the banks, discover new segments of the customers, offering new schemes for its customers.
Similarly Bank of Khyber has more customers as compared to the other banks; if they give
proper attention to every customer and their needs then it will become again one of the
leading and comprehensive banks
7.3 SWOT AND TOWS MATRIX FOR BOK
Figure No. A SWOT Matrix for BANK OF KHYBER of Pakistan
Weaknesses
Strength

50

Opportunities
1. Growing banking system
2. BOK can avail the government
projects
3. Increase in economic activities
4. Unemployment is increasing
5. Rapidly growing economy
6. Increase interest rates
7. Mega projects financing
8. Huge demand for consumer
financing
9. Spending practices of masses
Threats
1. Development in banking:
2. The whole structure changes to
online:
3. Increase in number of banks:
4. Increased Interest Rates
5. Uncertainty of economy
6. High rate of Inflation
7. Trend of mergers
8. Privatization of banks
9. Risk of defaults
1. Western union facility
2. ATM finder
3. Government’s bank
4. Maximum range of customers
5. Online banking
6. Employee’s loyalty:
7. Wide area of services:
8. Strong financial position
9. Govt. support and
encouragement
10.Fastest growing financial
institution
11.Young and energetic workforce
SO Strategies
1.BOK can decrease unemployment
as it has a strong financial position.
S8O4.
2. BOK can grow further by making
all the branches online. S5O1.
3.BOK can finance mega projects.
S10O7
ST Strategies
1. It can make plans for the
uncertainty of economy if in case it
occurs. S8T5
2. It can decrease the risk of
mergers and privatization. S9T7
51
1. Employees are totally
irresponsible and lack of
complete knowledge of
banking system.
2. Lack of computer literates.
3. No job satisfaction.
4. Lack of respect.
5. Avoiding rules and
regulations.
WO Strategies
1. If employees are getting a
proper training then this bank will
b the leading in the country for
ever. W1T1
2. If employees are provided with
remunerations and job satisfaction
then BOK can play a major role
in decreasing the unemployment.
WT Strategy
1. Strictly following the rules and
regulation it can take over many
organizations. W5T1
10. Development in banking: 3. It can make plans for the 1. Strictly following the rules and
11. The whole structure changes to uncertainty of economy if in case it regulation it can take over many
online: occurs. S8T5 organizations. W5T1
12. Increase in number of banks: 4. It can decrease the risk of
13. Increased Interest Rates mergers and privatization. S9T7
14. Uncertainty of economy
15. High rate of Inflation
16. Trend of mergers
17. Privatization of banks
18. Risk of defaults

Chapter 8

8.1 CONCLUSIONS AND RECOMMENDATIONS

Essence of knowledge is the ability to use one’s discerning faculties to interpret the
environments, and generalize it for betterment. So it is of utmost importance in this
connection that one of the fundamental qualities of successful managers is dexterity
in appreciating the right thing, pinpointing what is lacking and suggesting for
achievement of the desired.

In internship report, findings and recommendations are the core of the matter, as
these are our personal opinions regarding organization, a sort of novel work. These
findings are what may be called as bonafide assertions that what is? And
recommendations; what should be?

Naturally the outside person observes some things which seem out of order, and so
worthy to be given due attention. In fact participants of the organization are not
apathetic towards deficiencies rather their intimate relation with problems makes
them myopic. So an external is well placed to examine them and their organization
alike.

1)These findings and recommendations have been written as are result of thorough
analysis conducted. To put in writing these findings and recommendations possible
objectivity has been considered. For an easy grasp, these recommendations are only
for the corporate level.

52
 BOK is the leading commercial bank in Pakistan, with a seasoned management team
dedicated for its development. However some suggestions seem imperative at
corporate level .These recommendations/suggestions have been based on the SWOT
analysis, financial analysis and general observation.

In the end of this report I am giving the recommendation in order to improve the efficiency of the
Bank These recommendations are primarily based on the analysis. These recommendations, if
Followed will have a positive effect on the profitability, and the role it plays in the development of
Province.
These recommendations are as under:.

8.1.1 COST OF FUND SHOULD BE REDUCED

Cost of fund for BOK is high. This trend results in lowering the income for the bank.
If BOK margin on advances increases its cost of fund will be reduced.

8.1.2 CONCERN ABOUT CUSTOMER

In Today’s business environment where Total Quality Management (TQM) is the
catchphrase, being indifferent towards customer needs is high-priced. Nevertheless
customer care is a neglected area in the branches of NBP and customers’ complaints
are received intermittently.

They get lukewarm response as compared to the other private banks. The
proactiveness of foreign banks and their concern for customer can be gauged from
this, that if customers ask for cash, they are provided with even at 12 am(like
Citibank).But contrary to this, customers at BOK branches are even pushed in rush
days. Invariably customer should be the king. So it is of the essence that a serious
consideration should be given to the customer care by BOK management. phase
wise installation is feasible. Online banking should also be introduced to cope with
better equipped competitors.

8.1.3 EMPLOYEE MOTIVATION AND MORALE

Employee motivation at BOK branches is lacking. Notwithstanding that it has
become a recognized fact that devotion and motivation precede admiration and
recognition. The main reason for this is the senior management’s apathy towards

53
 employees. BOK should devise some kind of mechanism for motivating
employees and making them committed towards the bank. Like appraising the
employees and selecting from them for employee of the month or giving some
pecuniary reward.
8.1.4 Better Training Program

It has been noticed that the training program of BOK is not adequate. Special

marketing training should be given to employees for motivating customers. The

training program of bank should include scientific techniques to improve decision

making and inter-personal as well as individual needs of an employee.

8.1.5 Enhance Customers Services

Constant improvements in customer’s services are needed in today’s competitive
Environment. Personalized banking should be introduced to attract more customers.

Equal respect should be given to all the customers.

8.1.6 Automated Teller Machines (ATM)

The bank should provide a (ATM) facility to its customers at some branches. This
facility will enable the customers to use the card facility, within the same branch
where they have account. This facility is used in holidays and other than banking
hours. Customers can get information and with draw their money with the help of this
facility at any time.

8.1.7 Job Rotation

The employees of BOK are specialists in their fields but they need straightening in
general banking. They generally confine to their own work and do not give sufficient
consideration to other department. They must have some basic information of other
departments; it is recommended that there must be proper job rotation.

8.1.8 Proper job Analysis

54
 A detailed and systematic study of the job should be done to know the nature and
characteristics of the people to be employed. This will help in identifying the training
needs, evaluating the job and in appraising the performance of the employees.
8.1.9 Introduction Career Planning
As a matter of personnel policy, personnel department of BOK should prepare a career plan
showing their future growth, potential, depending on the job performance and evaluation,
which should be made known to the employees. In this regard the employees should be
given opportunities to show their performance.

8.1.10 Better Working Condition

The working are is comparatively smaller as compared to the needs of the branch. As a
result there is lesser working space provided to employees. They have to work from 8P.M
and some time even longer time period. The congested places affect their efficiency at work.
It is suggested that better working conditions should be provided for effective and efficient
out-put.

8.1.11 Promotions and Publicity

BOK should advertise itself and introduce its services in detail through media to people.
This is the best way to enhance its business like other successful banks. They should adopt
strong strategies for promotion and publicity of their services they offer.

8.1.12 International Banking

Bok should expand its branches. They should expand their branches not only in Pakistan but
also outside the country.

8.1.13 Use of Media

Bok is new organization in order to increase its customers and add to its publicity, it is
recommended that the bank should advertise itself and introduce its services in detail
through media.

8.1.14 Latest Computer Equipment

55
Latest software should be installed in the bank so that the data processing speed of computers
can be enhanced.
8.1.15 Proper Distribution of work
In Bok the distribution of work needs further streamlining. Some employees have more
work to do and are under stress while others are not fully occupied. The work should be
distributed in such a manner that there should no undue load or burden on any one.

8.1.16 Friendlier Environment

Most friendly environment should be created because it will help to gain the interest of
employees in work. Noise in the office should be reduced because it has unfavorable impact
on the working environment. Separate place or section should be created for each separate
task and more space should be provided. It would also be of greater help in establishment
of friendly environment.

56
 BIBLIOGRAPHY:
1National Bank of Pakistan “NBP Annual Report 2009”, National Institute of Banking and
Finance.

2National Bank of Pakistan (2007). “National Bank of Pakistan year book”, National
Institute of Banking and Finance.

3Koonts, Harold. (1997). “Management” 10th Edition New York Mc Graw Hill Inc.
4Meigs, Waller B. (1986) “Financial Accounting” 11th Edition New York, M.c Graw Hill
Inc.

5Van Horne, James C. (1986). “Fundamentals of Financial Management” 6th Edition.

Prentice ball international editions Englewood Cliffs New Jersey. USA.

57