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Money & Banking

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This report is about The Bank of Punjab, its history, and the functions of the bank. This report contains detail about what I have learned. It starts with the short history and background and brief introduction about the departments, product and services and financial analysis of The Bank of Punjab. The vision of the bank along with its mission and existing status has also been discussed. This report contains detail about ´business practices in The Bank of Punjab.

The purpose of this exercise was to learn while working in the practical field specially, the knowledge related to the General Banking, foreign exchange and advances. It has really helped me observe to what extent the bookish knowledge is being practiced in real field.

This report contains the Comparison of other banks with the bank of Punjab, current financial position of the bank, the business process of the bank and all my learning, during the period.

Money & Banking

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All praises and thanks for ALLAH and source of all knowledge and wisdom and endowed to mankind who bestowed me a potential and ability to contribute a drop material to the existing ocean of knowledge. I am extremely grateful to my teacher ´MR. HAIDER MAHMOODµ Who always provided constructive comments and challenged to state our ideas clearly and to say only what needed to be said. He has provided us a useful information as well as relevant material in every possible matter. It was only possible to finish this project on ´The Bank of Punjabµ. I am really pleased here to acknowledge the sheer efforts and extreme of Numerous people, those who have provided me their relentless service in the completion of my internship report on ´Business practices at The Bank of Punjabµ. I would like to express my gratitude to my advisors in The Bank of Punjab who support me to understand the working in the bank. They really helped me a lot to gain practical knowledge about general banking and corporate banking. I am also grateful to Mr.Adil khan (Manager) and all my supervisors during the period without their guidance, this exercise of financial analysis would not have resulted in a success.

Money & Banking

Attractive rates of profit on all types of deposits. STATUS & NATURE The bank of Punjab was incorporated under BOP Act 1989. The Bank of Punjab is working as a scheduled commercial bank with its network of 266 branches at all major business centers in the country. The Bank provides all types of banking services such as Deposit in Local Currency.its shares are listed on all the stock exchanges in Pakistan i. Trade. Client Deposit in Foreign Currency. It is principally engaged in commercial banking and services with its registered office at 7-Egerton Road. Lahore and Islamabad. and Advances to Business. Industry and Agriculture. Exports and Remittances. providing them qualitative and competitive services with emphasis on encouraging exports. opening of Foreign Currency Accounts and handling of Foreign Exchange business such as Imports. Trade and Industry for working capital requirements and money market operations are some facilities being provided by the Bank. The Bank of Punjab has indeed entered a new era of science to the nation under experience and professional hands of its management. It was given the status of a scheduled bank by the SBP on September 19.Page 4 of 30 HISTORY OF PUNJAB BANK Established in 1989. of Punjab holds the majority shares of the bank Money & Banking . Lahore MAIN SPONSORS The bank of Punjab was incorporated under BOP Act 1989.e. 1994. Karachi. promoting savings and providing funds for investments. The lending policy of Bank is not only cautious and constructive but also based on principles of prudent lending with maximum emphasis on security. Financing. in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Govt. Remittances. The Bank of Punjab plays a vital role in the national economy through mobilization of hitherto untapped local resources. As agriculture is considered as backbone of our economy the Bank of Punjab has introduced "Kissan Dost Agriculture Finance Scheme" to small farmers ESSENCE OF BUSINESS The essence of our business philosophy is to cater the banking requirements of small and medium sized entrepreneurs.

175. opening of foreign currency accounts and handling of foreign exchange business such as import. Mission To exceed the expectation of our stakeholders by leveraging our relationship with the Govt. of Punjab and delivering a complete range of professional solutions with a focus on program driven products and services in the agriculture and middle tier markets through a motivated team. remittances. The lending policy of bank is not only cautious and principles of prudent lending with maximum emphasis on security. trade. The Bank provides all types of banking services such as deposits in local currency. industry and agriculture. ratio was disturbed and market price of BOP shares rose up to 150 rupees from 13 rupees and up to the end of 1991 it was nearly Rs. The bank of Punjab plays a vital role in the national economy through mobilization of hitherto untapped local resources. Attractive rates of profit on all types of deposits. promoting savings and providing funds for investments. After the inclusion of foreign investors. Vision To be a customer focused bank with service excellence. general public and others. 60% of its shares ownership was with the Govt. export and remittances. and advances to business. BUSINESS PROFILE The bank of Punjab is working as scheduled commercial bank with its network of 242 branches at all major business centers in the country. client deposits in foreign currency. which was ever highest price in the history of BOP till that time. of Punjab and 40% with the autonomous bodies.Page 5 of 30 OWNERSHIP In 1989. trade and industry for working capital requirements and money market operations are some facilities being provided by the bank. financing. The bank of Punjab has indeed entered a new era of science to the nation under experience and professional hands of its management. Money & Banking .

Page 6 of 30 Branches in pakistan Head Office Main Branch.Egerton Road.9200187 Fax: (042) 9200229 Fax: (042) 9200351 Money & Banking . Lahore (Pakistan) 7 . Lahore (Pakistan) Chief Manager Tel: (042) 9200421-33 Tel: (042) 9200419.

Page 7 of 30 BANK MANAGEMENT HIERARCHY Senior executive vice president Executive vice president Senior vice president Vice president Assistant Vice president Officer grade l Officer grade ll Officer grade lll A. PRPDUCT AND SERVICES Money & Banking .

promoting saving and providing funds for investment AGRICULTURAL BANKING Different types of KISSAN DOST schemes are offered by the bank which includes: Kissan Dost Agricultural Finance Scheme Kissan Dost Tractor Finance Scheme Kissan Dost Mechanization Support Scheme Kissan Dost Farm Transport Scheme Kissan Dost Eslah-E-Arazi Scheme Kissan Dost Live Stock Development Scheme Kissan Dost Live Stock Scheme Kissan Dost Commercial Agro Services Finance Scheme Kissan Dost Agri Mall Finance Scheme Money & Banking . BOP is playing a very important role. along with the other banks in the country.Page 8 of 30 1) AGRICULTURAL BANKING 2) BUSINESS PROMOTION BANKING 3) INTERNATIONAL BANKING 4) E-BANKING 5) GENERAL BANKING 6) DIFFERENT SERVICES 7) AND MANY MORE 8) COMMERCIAL BANKING In fact. in mobilization of hitherto untapped local resources by offering a reasonable and attractive rate of profit on savings.

GENERAL BANKING       Account maintenance Clearing Cash management Remittances Deposits department Other department Commercial Banking  Running Finance for Working Capital requirements (RF)  Finance Against Packing Credit for Pre-shipment (FAPC)  Finance Against Foreign Bills for Post-shipment (FAFB)  Finance Against Imported Merchandise (FIM)  Finance Against Trust Receipt (FATR)  Demand Finance: Medium Term Loans (DF)  Letter of Credit (LC) o o DA ( Usance) DP ( Sight) Money & Banking .Page 9 of 30 INTERNATIONAL BANKING Banks is performing international banking function through its corresponding relationship with many famous local and international banks. They can have many services available online without any delay in this fast info -techno progressing era. Its international division is playing a very important role in this regard E-BANKING Currently 147 branches in different regions are online as announced by information technology division of bank. Bank is providing e-banking services so without any inconvenience now customers can deal with the bank online.

Automated Teller Machine (ATM) Money & Banking . 2. Microwave Oven. in addition with the free home delivery. The financing tenure of this product is max 36 months.Page 10 of 30 2. BOP CAR LOAN BOP car loan is a demand financing facility to purchase brand new locally manufactured/Assembled cars for personal use. BOP Aasaish Loan BOP Aasaish loan is demand finance facility for purchase of consumer durable goods like TV. DIFFERENT SERVICES These are the services provided by the BOP. This facility can be availed by salaried person of different nature and by the business persons. y y y y y y y y y y y y y ATM Facility Letter of Credit Pay Order On-Line Banking E-Banking Debit Card Consumer Financing Agriculture Financing Corporate Financing Commission free Remittance Demand Drafts Collection of Utility Lockers Facility 3. The nature of employment should be salaried or the business man. Business Promotion Finance Schemes y y y y y y BOP Quick Cash BOP Car Loan BOP House Loan BOP SME Loan BOP Assaish Loan BOP House Loan For Federal Govt 2. Fans.2. Mobiles. All must have the holdings of NIC. Audio/Video system etc with no down payment.1. Refrigerators.1.

8. and ease of transaction.2. balance enquiry and mini statement? Complete security is ensured because access to the account is only possible by entering a four digit personal identification number (PIN) known only to the account holder.6. BOP s letter of credit service is with competitive rates. The rates for this service is quiet impressive as compare to the market. Agricultural Finance It help farmers utilize funds efficiently to further develop and achieve better production.7.3. The charges for this service are extremely competitive. 3.Page 11 of 30 Through the ATM s Customers have access to the various services such as withdrawal.4. 3. 3. 3.per card.20. important documents and other valuables. security. Letters of Credit BOP is offering its business customers the widest range of option in the area of money transfer. Money & Banking . and supervision of farming. Online Banking BOP is currently offering window-based online banking to its customers. BOP s rates of profit are extremely attractive. speedy and reliable way to transfer money at vary reasonable rates. Its pay orders are a secure and easy way to move the money from one place to another. 3. along with the security and service only BOP can provide. Annual charges of ATM is Rs. technical knowledge.250/. can purchase a Demand Draft from a bank branch.9. The packages are starting from 3 months. Short Term Investment BOP offers excellent rates of profit on all its short term investment accounts. 3. Cash withdrawal limit is up to Rs. Demand Drafts BOP provides safe. Provides farmers an integrated package of credit with supplies of essential inputs. BOP Letter of credit is the best way to do the business transactions. which gives access to information on their accounts and the liability to act on the latest information received over the net. 3. 3. 000 per day. Mail Transfer Moves money safely and quickly from BOP Mail Transfer service. Any person whether an account holder of the bank or not.5. Lockers It is one of the utility services that BOP provides to their customers for keeping jewellery. Pay Order BOP provides transfer of money using different facilities.

Accounts department is responsible for proper handling and maintenance of vouchers of different department MANUAL FUNCTIONS OF ACCOUNTS DEPARTMENT Accountant prepares vouchers for all daily activities of different departments. It plays a vital in performing different functions of a bank. Accounting books of different departments are maintained under this department and with the help of these. 1) DEPARTMENT OF BOP ACCOUNT DEPARTMENT Account department is the backbone of a bank. The account department of is computerized as well as manual. Checking officer checks and tallies these vouchers with their daily transactions and posts their entries under proper heads. Good working of accounts mainly depends on the voucher system. semiannually and yearly financial statement and order statement of the whole bank. accountant prepare the monthly quarterly. All the transaction taking place is recorded daily in the books of accounts and in computerized ledgers.Page 12 of 30 Major Customers of BOP         Some of the major customers of Bank of Punjab are: Educational Institutes Agriculturists Pakistan Telecommunication Private Limited WAPDA Pharmaceutical Companies WASA MDA B. For every transaction there is Voucher prepared and through these vouchers contra entries are passed under different head. TYPES OF VOUCHERS        Debit Voucher Credit Voucher Cash voucher Transfer voucher Clearing voucher Daily paid voucher sheet Daily receipt voucher sheet Money & Banking .

The cheque/instruments are handed over the clearing branch. draft. It provides service to their customer to get payment from the nearer bank at nominal charges. Then these are recorded in a register called OUTWARD CLEARING REGISTER then a main schedule is prepared showing the total number of cheque and their aggregate amount being presented in the clearing. 3) BILLS DEPARTMENT This department deals in bills for collection for all kinks such as cheque. call deposits etc. drawn on central clearing branch. Central clearing branch issue CREDIT ADVICE to the branch for passing credit to its customer immediately. This cheque/instrument are entered in INWARD CLEARING REGISTER for the cheque/instrument passed in clearing is a credit advice for the aggregate amount of cheque passed in clearing is prepared.     Outward Bill for Collection (OBC) Inward Bills For Collection (IBC) Outward Documentary Bills For Collection Inward Documentary Bills For Collection (ODBFC) (IDBFC) Money & Banking . The branch on receiving credit advice debits the clearing account and credits the respective customer accounts. with outstation branches of BOP or with other banks. Outward Clearing The instrument collected or stored bank wise and a schedules is prepared separately for each bank mentioning the total number of instruments and the amount of the instruments. the in charge checks the number and amount of cheque received in clearing must tally with the main schedule received from central clearing branch. and pay orders. The four main heads of bill department is. Inward Clearing On receiving cheque/instruments from central clearing branch. 3.Page 13 of 30 2) CLEARING DEPARTMENT Clearing is the most important department of the bank performing various functions. Clearing House: A clearinghouse is an organization of the member banks. working under SBP and which is for the purposes of setting inter banks claim resulting from transmission of funds from one bank to another. The clearing can be: j Outward j Inward 2. 1. The branch cheque/instruments are credited into the account of the customer.

This register is updated two times once at the time of receiving bill from clients and the other when the confirmation advice of this cheque is received from the payable branch. The party account must be opened in that branch. Customer account must be opened in that branch. sales invoice. OUTWARD DOCUMENTARY BILLS FOR COLLECTION Originating branch receives the documentary bills from their clients and sent them to out station branches of the same bank or other bank. Bank gets a commission Rs. 3. If the buyer is the account holder then bank will debit his account otherwise purchaser deposits the amount of the bills. The responsibility of this branch is to verify the bills for collection with in three days and send the advice to the originating branch. on behalf of which buyer receives the goods. railway receipt. 40/on the service. INWARD DOCUMENTARY BILLS FOR COLLECTION Bank receives the documentary bills from the other outstation branches of the same banks or other banks for collection the amount from purchaser. bank gets as commission 0. The branch forwards the check with schedule or covering letter to that branch on which bills is drawn.Page 14 of 30 1. The checking officer of bills department will cross the cheque with special bank stamp before forwarding the cheque. Seller and producer both can avail the facility of bank in case of selling and purchasing their product or goods. banks debit the account of the respective account holder and send a debit advice to the originating branch and at the same time credit the head office account for inward bills IBC register is maintaining for keeping the proper record of the bills. OBC register is also maintained for proper record keeping of outward bills. Bank hand over these documents to purchase. receipts of courier service etc.35% plus postage charges plus courier service charges of this service. 4. OUTWARD BILLS FOR COLLECTION Bills department receive cheque or other of bills from its kinks client whose account must be opened in that branch. In case of verification of bills is approved. trust receipt.and courier charges Rs. when bank receives the documentary bills they send intimation to buyer about his arrival of goods. 25/.e. 2. The documentary bills are i. Bank also charges commission 4) ADVANCES/CREDIT DEPARTMENT Money & Banking . INWARD BILLS FOR COLLECTION The branches which receive bill have to verify these bills for payment. In this case back acts as a buyer s bank.

his bank allows withdrawal his account in excess of credit balance. which produces the major person of bank s income. a running finance occurs. The customer is in advantageous position in running finance because he has to pay the mark-up only the balance outstanding against him on daily product basis 3) DEMAND FINANCE This is common form of financing to commercial and industrial concerns and is mad available either against pledge or hypothecation of goods produce or merchandise. it is called a Secured Running Finance and when the customer cannot offer any collateral security except his personal security. A. which the customer has in its account. and as such it is the major areas of professional banker s concern and attention. In Demand Finance the party is financed up to a certain limit either at once or as and when required. y Safety y Liquidity y Disposal y Remuneration y Suitability 1) FORMS OF LENDING Many there are two types of advances: y Short-term (maturity within one year) y Long term (maturity with the period of more than one year) However they are further classified as: y Running Finance y Demand Finance y Cash Finance y Letter of Guarantee 2) RUNNING FINANCE This form of finance was previously known as overdraft . When it is against collateral securities. The accommodation is thus allowed collateral security.Page 15 of 30 It is the loan function. PRINCIPLES WHILE ADVANCING Basically there are five principles that must be duly observed while advancing money to borrowers. The party due to facility of paying mark-up only on the amount it actually utilizes prefers this form of financing y y Ordinary Shares Preferred Shares Money & Banking . accommodation is called a Clean Running Finance. When a customer requires the temporary accommodation.

Under a desirable development model. is called the letter of the mortgage deed. and existing debts or the performances of the engagement this may raise the pecuniary liability The transfer is called the mortgager and the transferee the mortgagee the principal money and interest of which payment is secured for the time being and instrument by which the transfer is affected. therefore. Due to policy and administrative exigencies. a remarkable capacity to bring about a turnaround in the economy. Punjab can: y y y y Increase agricultural production to meet the country's requirement of essential foods items and industrial raw materials. This is a sector that has the shortest gestation period for Investments and. This important sector in Pakistan is suffering from a number of maladies and is consequently witnessing stagnation in productivity. therefore. By way of loan. that shortage of savings and lack of availability of capital is one of the major reasons for poverty in the country. therefore. Agriculture is the largest sector of the economy. Generate additional employment opportunities in rural as well as adjacent small towns/cities Elevate poverty and improve the income generating capacity of the agri-based population. It contributes 25 percent to GDP. advanced or to be advanced. The pricing of input and output in agriculture over the years has forced the majority of farmers in Pakistan to plough back their incomes into agriculture and non-institutional credit. the savings in the agriculture sector remain low and. suffering from severe under-development. Money & Banking . The agricultural and rural sectors in Pakistan in general and in Punjab in particular are. and has more often than not served to sap their potential earnings. Develop agro-based industry in the rural sector for economic value addition. provides raw materials to 80 percent of industry and employment to over 50 percent of the population. ADVANCES AGAINST IMMOVABLE PROPERTY A mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of the money. Needless to say.Page 16 of 30 y y y y Quoted or Unquoted Registered Bearer Inscribed B. the sector has perpetually remained capital starved.

the debit and credit vouchers.  Purchaser or Sender The purchaser is the person who sends the money to a particular person payable at a certain branch.e. By proving this service to the customers the Bank of Punjab earns a lot of income in the form of service charges. A draft voucher is filled which contains the following information A credit voucher is filled in order to get the excise duty and exchange commission. 3. 2.  Drawer Branch Branch in which the draft has drawn and called upon to pay the amount. 4. Parties involved in the Demand Draft The following parties are involved in demand draft. After authentication the DD is handed over to the sender and bank sends the advice to the concerned branch. Procedure for Prepare Demand Draft. The Bank of Punjab deals with the following type of remittances:  Demand Draft (DD)  Mail Transfer (MT)  Telegraphic Transfer (TT)  Pay Order Now we discuss all these in detail 1) DEMAND DRAFT (DD): Demand draft is a written order given by the one branch of a bank on behalf of customer to another branch of the same bank to a certain amount to the certain person. The sender deposits the total amount of the two vouchers i. So when the party presents the DD in the concerned branch its payment could be made. It is the transfer of money from one place to another place. The need for remittance is commonly felt in commercial life particularly and in everyday life generally.  Issuing or Drawing Branch The branch from where the demand draft is issued to another branch of the same bank. 1. 2) MAIL TRANSFER (MT): Money & Banking .Page 17 of 30 5) Remittance Department Remittance is a major function of the bank.

account number of the receiving person with the branch name and date. The purpose of a pay order is to transfer the fund from one place to another. 4) Pay Order (PO): A pay order is a written order issued by the bank on its own branch. to them as the bank branch code. 3. If the sender wants to convey the same message through telephone then he has to pay the charges of telephone along with the TT charges. which is allotted. Procedure. For sending the TT the manager and officer apply a test. The cash officer gives the vouchers to the officer after affixing received cash stamp and writing the amount in red ink. After making all the conformation the concerned branch makes the payment to the receiver. It is usually not issued in favor of the parties of other cities. It is used for different purposes. 3) TELEGRAPHIC TRANSFER (TT): This is the most urgent method of remitting the money from one place to another place. Procedure 1. name.Page 18 of 30 It is the transfer of money from one branch to another branch of the same bank through mail service. Usually the pay order is issued for the local transfer of money from one person to another or from the person to any other department. 2. This method is used when the sender desires to send urgently. 4. A credit voucher is filled in order to deduct exchange. drawn upon and payable by itself to pay a specified sum of money to the person. The sender deposits the total amount in the cash department. First the person deposit the TT amount along with the charges through the credit voucher then his TT sent to the relevant branch. The purpose may be the repairs of the branch or renovation of the branch Money & Banking . They write their own code numbers. postage charges according to the amount of the mail transfer. in this case the sender request the manager of the branch to issue TT. In mail transfer there is no need of advice as the amount is directly credited to the receiver s account. In the test the manager and officer uses a coding technique. First a voucher is filled in which the sender writes the amount to be sent.

FINANCIAL ANALYSIS To analysis the financial position of BOP. and owner s equity of a business at a point in time. Calculating ratios will aid in understanding the bank s strategy and in understanding its strengths and weaknesses relative to other companies and over time. while the income statement summarizes revenues and expenses of a firm over a particular period of time. and risk which can improve forecasts of future profitability and growth and estimates of the cost of capital. liabilities. These statements do several things. Finally. Common size Analysis of the last five years. A conceptual framework for financial analysis provides the analyst with an interlocking means for structuring the analysis Ratio analysis is a useful tool for analyzing financial statements. The balance sheet summarizes the assets. the ratios help in obtaining a better understanding of a firm s current profitability.Page 19 of 30 C. They can sometimes be useful in identifying earnings management and in understanding the effect of accounting choices on the firm s reported profitability and growth. Importance of Financial Analysis Financial analysis involves the use of various financial statements. First the balance sheet and the second is income statement. Money & Banking . different tools are use. growth. which includes Ratio Analysis.

564.100 Liabilities Bills payable Borrowings Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities Other liabilities 1.306 18.995 937.968.257 182.995.455 633.000 73.743.219.731.341 18.893.137 185.842.801 12.711.333 22.056.520 15.109.450.453 3.125 5.072.427.585 3.125 Contingencies and Commitments INCOME STATEMENT Money & Banking .632 4.695 133.452.230.885.057 2.232 (7.984 (1.009.909.658.110.001.743.838 8.395) 3.805.461.165.471.097 235.530 3.321 2.909 40.120 14.313.158 3.302 1.287.974 4.647 17.759 5.794 (Deficit) / Surplus on revaluation of assets .Page 20 of 30 Balance sheet 2008 2007 (Rupees in µ000) Assets Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets Other assets 10.927.794 Net Assets Represented By 3.427.252.662 2.995.178.686) 5.842 Share capital Reserves (Accumulated loss) / Un-appropriated profit 7.379 7.210.532 -30.278.980 131.685.915 191.232 3.162 6.005.773 164.388.205.

401) (10.717 1.777 292 of tax (Accumulated loss) / profit available for appropriation Basic (loss) / earnings per share (after tax) .787 526.414 (6.908.731 8.921) 250.387 19.619 3.101 114.000 (8.967 (18.869 1.939.112 7.445.670.711.090.863.722 4.614.635 400.832.41 Money & Banking .887.41 8.969 16.Rupees 17.933 10.250.700 2.000 1.289.001) (6.734 (16.185 4.601.580 366.845.172) 2.512 1.233 2.246 5.752.600 1.535 547.Current .094 13.Deferred (Loss) / Profit After Taxation Inappropriate profit brought forward Transfer from surplus on revaluation of fixed assets .906) (16.377 3.091) (19.878 377.906) 207.793 7.02) (19.630 2.421 24.479 246.033.539.950 2.452.052.722 169.134.Page 21 of 30 (Rupees in µ000) Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/ interest income Provision against non-performing loans and advances Provision for diminution in the value of investments Bad debts written off directly Net mark-up/ interest income after provisions Non Mark-up/interest Income Fee.020.225.896 324.Rupees Diluted (loss) / earnings per share (after tax) .02) 653.505) 3.182.328 733.219.866 3.059. commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities Unrealized gain / (Loss) on revaluation of investments classified as held Other income for trading Total non-markup/interest income Non Mark-up/interest Expenses Administrative expenses Provision against other assets Provision against off balance sheet items Other charges Total non-markup/interest expenses Extra ordinary/unusual items (Loss) / Profit Before Taxation Taxation .741 2.572 3.103 4.599.826 (13.252 (19.845.998) 17.422.773.138.019 4.842 5.Prior years .804.458.769 1.616.799.924.832.969 18.948 577.

659 5.846 4.320 28.002 689 2005 2006 2007 2008 2.624 18.555 719 1.155 34.462 15.344 11.989 234.419 54.938 2.291 331 3.893 88.467 137.198 4.600 5.180 831 1.458 3.855 101.097 1.888 4.885 191.777 6.954 1.836 1.233 10.724 2.368 6.165 2.664 484 1.728 6.769 3.289 1.125 2.331 1.939 3.669 3.150 47 1.736 1.110 3.070 2.154 63.579 7.621 18.832 111.446 Balance Sheet Total Assets Advances (net) Investments Shareholders¶ Equity Revaluation Reserve Deposits Borrowings from FIs Rs in m Rs in m Rs in m Rs in m Rs in m Rs in m Rs in m 43.320 39.843 Money & Banking .052 2.804 17.539 13.420 3.Page 22 of 30 FINANCIAL BUSINESS SUMMARY 2004 Operating Results Markup/ return/ interest earned Markup/ return/ interest expenses Net markup income Non-markup based Income Non-markup based expenses Provision against NPLs Net profit before tax Net profit after tax Rs in m Rs in m Rs in m Rs in m Rs in m Rs in m Rs in m Rs in m 1.456 1.974 133.026 6.791 164.353 11.439 16.894 73.969 17.684 66.509 4.423 2.002 8 1.465 6.882 374 4.

97872 42. This analysis is used to comment on the growth of specific line item in the industry or the firm.96987 36.994 4. 2004 Operating Results Markup/ return/ interest earned Markup/ return/ interest expenses Net markup income Non-markup based Income Non-markup based expenses Provision against NPLs Net profit before tax Net profit after tax Balance Sheet Total Assets Advances (net) Investments Shareholders¶ Equity Revaluation Reserve Deposits Borrowings from FIs % % % % % % % 32.56789 29.399 105.39896 38.26287 30.28111 49.0556 45.2964 63.8728 32.86145 47.28571 73.95023 36.86957 82.785 9.Page 23 of 30 Common Size Analysis Horizontal Analysis This type of analysis represents the percent change in specific line item of the Income statement or the balance sheet from the last year.52831 17.15273 36.6345 58.6052 22.06107 46.84117 24.22648 53.24795 12.15008 41.76833 2.43995 2005 2006 2007 2008 Money & Banking .833023 29.12956 -13.15598 5.0678 54.7794 50.25508 60.98141 46.14406 33.45599 15.8006 45.7808 34.94245 31.8862 58.83058 % % % % % % % % -24.63389 38.14091 34.58077 10.2049 36.9374 34.45731 -40.9738 51.40276 11.875 17.9065 27.01239 10.68428 35.29775 32.41993 -26.19068 1.33503 38.5754 55.7207 28.78069 80.92177 85.14051 58.9165 31.09182 -575 56.588939 14.3282 61.72985 24.086 54.0838 35.10251 64.225989 40.57469 37.48766 29.49733 33.

36 Analysis   Markup interest earned is increased because of increase in 30% landings from the last year.29 47.04 19. As bank increase their paid up capital because of which SOE increase at the end of 2006.96 30.46 82. Administrative expenses are increased with a great pace in last few years because of high rate of inflation.33 51.81 26. Analysis (Balance Sheet)    Total assets were increased in last few years.95 2.56 79.45 31.67 20. dividends) impacts on total revenues. Net profit before and after tax is decreased because of huge rise up in the admin expenses. Rise in expenses results decrease in the 22% percent profit from last year. 22% increase in the assets from the last year represents growth in the Bank. Money & Banking .38 23.44 42.31 4.16 27.32 40.62 69.69 31.17 76.15 17. As deposits and the landings of the banks are rising up. tax.22 21.70 9.69 33.67 12.49 1.85 35.Page 24 of 30 Analysis (Income Statement)    Total earnings mark-up & non mark-up was rising 33% from last year.40 40.54 37. BOP is grabbing the confidence of their customers results increase in the deposits Vertical Analysis It represents the percent of a line item (expenses.97 8. 2004 2005 2006 2007 2008 Markup/ return/ interest earned Non-markup based Income Markup/ return/ interest expenses Non-markup based expenses Provision against NPLs Net profit before tax Net profit after tax % % % % % % % 66.80 17.16 0.62 60.57 32.31 19.10 19. interests.

12 (0./share % 2004 72 59.19 5.45 12.29) 1.83 2005 56 66.23 10. Following ratios of BOP has been calculated: Ratios Gross spread ratio Profit before tax to total income Markup/ Interest cover ratio Profit after tax to total income Total assets turnover Return on avg total assets (after tax) Price earnings ratio EPS (Non dilutive) Dividend per share Market value per share Capital adequacy Ratio % % times % times % times Rs.08 46.2 102.76 7. From ratio analysis it is possible to predict future variances.60) (19.1 2.65 10. liquidity/leverage etc.09 2.07 2.05) (0.32 (189.71 13.65 49.42 (316.25 101.Page 25 of 30 RATIO ANALYSIS Ratio analysis is used to calculate the profitability.03) 0.01 5./share Rs.27 0.51 3.09 2007 21 53.78 2006 35 67.94 54.22 9.71 1.9 12.50 1.14 3.11 2.08 4 65. of the firm.69 2008 6.25 9.79 49.8 9.49 7./share Rs.16 0.89 1.92 Money & Banking .02) 11.25 10.5 97.16 0.65 0.06 2.31 10.

Spread: Difference between funded revenue as a percentage of average earning assets and the cost of funds as a percentage of average paying funds. a SBP rise up the interest rates on the deposits. PROFIT BEFORE TAX TO TOTAL INCOME Operating income less operating cost (profit before tax).Page 26 of 30 1.. It tells the ability of a bank to pay its mark-up to the depositors. 2. GROSS SPREAD RATIO Gross spread ratio defines the total spread of interest between borrowing and lending. This ratio tells what percent of total income is earned before paying all the taxes. GSR of the bank is decreasing because of the decrease in margin. The main reasons for reduction in the profitability were additional provision against NPL due to the elimination of benefit of FSV and downturn in consumer and individual banking 3. Mark-up/ Interest cover ratio This ratio tells what percent of interest is covered from the total income of a firm or a bank. GSR= Rev/CGS GSR= (Mark-up earned Mark-up Expense)/Mark-up earned GSR is 2nd highest all over the globe in Pakistan. The higher the spread the higher will be the profit margin. BOP has a high value of profit before tax to total income and they are decreasing after 2006 because of increase in admin expenses and righting off the bad debts. MP/Interest cover ratio= EBIT/Mark-up Money & Banking .

Return on assets= Profit after tax / Total Assets This ratio is decreasing in the last year because of decrease in Profit as expenses raised up.Page 27 of 30 4.It tells the ability of a bank to pay its mark-up to the depositors 5. Profitability of BOP is increased because of decrease in the tax paid to the govt and of high spread ratio. RETURN ON TOTAL ASSET This ratio gives an idea of returning net profit generated by the bank in comparison with assets. BOP negotiated their taxes with the government and only paid 20% tax in 2006 and only 8% in 2007 instead of 35% 6.The decrease was mainly due to increased equity as a result of increase in minimum capital requirements and additional provision due to withdrawal of benefit of FSV for most types of advances. This ratio is increased during last few years which represent increase in the turnover by assets. 8. INTEREST COVERAGE RATIO MP/Interest cover ratio= EBIT/Mark-up This ratio tells what percent of interest is covered from the total income of a firm or a bank. PROFIT AFTER TAX TO TOTAL INCOME This ratio analysis tells profitability of a firm after paying all the taxes to total income. 7. TOTAL ASSET TURNOVER Asset turnover= Net Income/ Total assets This ratio tells the turnover of the asset to generate income. PRICE EARNING RATIO Money & Banking .

Page 28 of 30 Price Earnings Ratio= Market price of a share/ EPS From this ratio it is analyzed what % of EPS is the part of MPS. Money & Banking . The decrease was mainly due to increased equity as a result of increase in minimum capital requirements and additional provision due to withdrawal of benefit of FSV for most types of advances. Return on equity Profit before tax as a percentage of total equity. CAPITAL ADEQUACY RATIO Capital adequacy ratio informs lending up to a certain ratio of equity. What percent earned from a share equivalent to the worth of 1 RS MPS by the bank or a firm 9. EARNING PER SHARE EPS = Net Income/ total shares Through this ratio it can be analyzed what percent of 1RS share is earned. This ratio is set by the State Bank of Pakistan. 10. 11.

. but part of worksheet is prepared like trial balance. The most important of all is the difference between what we learn from the books i.e. hypothecation. but in practice there are some more terms used like running finance. Professional life only builds on the knowledge based on books even though it may only use 1% of the theoretical knowledge. so he/she must know what the other departments operations are and how they work. overdraft. As in real working environment employee have to coordinate with other departments. On the contrary practical life is specific. This difference is described in detail below:  Working in different departments During my internship I observed that other internees in the bank use to stick with one department only.e. as this will help other students to better understand the working environment of the bank by finding the relationship between what is written in the books and what is actually going on in fields. But I would suggest that one must work in every department for some time to gain a hand on experience of all the departments. Theory talks about four or five terms of loans that is cash finance. RECOMMENDATIONS In this section some recommendations for those students who are planning for an internship at BOP particularly and in any other bank generally.  Relationship between Theory and Practice: This part of report is the essence of the internship. banks don t prepare worksheet. but little differences. In practical professionalism and firm s environment is each and every thing. An internee with specialization in Finance was of the view that he should be in Finance department same was the case with other specialized Internees. In accounting. Money & Banking . The difference is there in the case of loans.Page 29 of 30 D. The securities for the loans are handled in the same way as theory says like mortgage. the theory and what actually is done i. advances against insurance policies or liquidation procedure is the same. In some cases theory is implemented with a little modification but in other cases theory has nothing to do with practice. in practice. loans etc. The theory written in the books in cases is not implemented as it is. Theory gives you the direction to understand the processes and the terminologies going across the World using best business practices in a broader view covering each and every aspect of possible business scenarios. theory and practice has substantial relationship. pledge. To me. demand finance etc. enclosed in a jar.

References Reference material used for compiling this report is gathered from these sites. I came across to know that it is one of the most growing banks in the 30 of 30 E. Bias in hiring s and between colleagues should be Conclusions By analyzing the financial statements of the Money & Banking .pk  www. No doubt professionalism and internal controls of the bank are one of the major issues which may results some major losses to the  www. Now they should carry on with the present management which too k it from one of the ordinary bank to this  www.