Individual Assignment

Not less than 1500 words.

You are the Chief Risk Officer of The Bank of Homeland with an asset base of Rs. 100
billion. The financial statements as of 31.12.20xx and the following information has
collected by your unit to analyze and present a Board paper to the upcoming Board of
Directors Meeting.

The Bank of Home Land

Income Statement for the period

ending 31.12.20xx Rs. Millions

Gross Income 6,000

Interest Income 4,500
Interest Expense (1,500)
Net Interest Income 3,000
Fee-Based Income 400
Other Operating Income 600
Total Income 4,000
Staff Related Expenses (600)
Other operating Expenses (200)
Profit before provisions 3,200
Provision for Bad & Doubtful debts (400)
Profit Before Tax 2,800
Provision for corporate Tax (800)
Profit After tax 2,000

The Bank of Home Land

Statement of financial position as 31.12.20xx

Assets Rs. Millions Rs. Millions

Current Assets
Cash + Account balance of 7,000
Central Bank
Investments –
Government securities 12,000
Quoted Company shares 1,000
Gold 2,000 15,000
Loans and Advances
Gross 70,400
Provisions (400) 70,000
Fixed Assets 8,000
Total Assets 100,000
Liabilities
Current Liabilities
Customer Deposits 80,000
 Long term Liabilities
Debentures 6,000
Equity
Shareholder Capital 10,000
Reserves 4,000 14,000
Total Liabilities 100,000

The Bank of Home Land has incorporated six years ago and has its head office in the
capital and two other branches in two provincial capitals. They operate 10 ATM
machines in prominent shopping malls. The finance department has disclosed the
following information to the corporate management.
The Deposits placed by the top ten deposit customers amount to Rs. 40 billion whilst
the top ten borrowers have taken Rs. 30 billion.
The non-performing assets of the bank amount to a gross of Rs 1.5 billion and a net
NPA of Rs 1.1 billion respectively.
The credit portfolio has been tabulated as per industry and rating. Exposure to
Construction, Manufacturing, and Trading stood at Rs 21, 14, 14 billion respectively.
Asset quality of the bank based on rating is AAA-AA 50% and C the non-investment
category advances are amounted to Rs. 0.7 billion.
Despite recent RCSA exercise conducted on international department on lodgment of
collection documents stated that existing controls were sufficient, there had been
fraudulent bill of lading found in one set of documents. Internal Audit confirms that
customer had got hold of the original with the connivance of staff member and used
that document to clear the goods.
At the IT steering committee reveals that the hits on our firewall has increased and
close monitoring required.
As per the budget and the strategic plan Bank expected to record 20% growth in
deposits and advances however, what is recorded on the financial statement is only 10%
growth in advances and 15% in deposits.
As the economy was underperforming economist predicts rise in interest rates,
depreciation of rupee, and 10% drop in share prices, which is banks stop lost limit.

You are required to analyze the above information, using risk management techniques
to assess the existing and future risks to the bank, based on the results of analysis
prepare a board paper consisting of key risk indicators.