Hasham Bank Punjab

8/6/2019 Hasham Bank Punjab

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REPORT ON THE BANK OF PUNJAB

NAME

HASHAM AHMED 2102055

SECTION B

Submitted to:

Mr. HAIDER MEHMOOD

Course:

Money and Banking

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INTRODUCTION

OF

THE BANK OF PUNJAB

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Introduction:

Established in 1989, in pursuance of The Bank of Punjab Act 1989 and was given the

status of scheduled bank in 1994.

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, Client Deposit in Foreign Currency,

Remittances and Advances to Business, Trade, Industry and Agriculture. The Bank of

Punjab has indeed entered a new era of science to the nation under experience and

professional hands of its management. The Bank of Punjab plays a vital role in the

national economy through mobilization of hitherto untapped local resources, promoting

savings and providing funds for investments. Attractive rates of profit on all types of

deposits, opening of Foreign Currency Accounts and handling of Foreign Exchange

business such as Imports, Exports and Remittances, Financing, Trade and Industry for

working capital requirements and money market operations are some facilities being

provided by the Bank. The lending policy of Bank is not only cautious and constructive

but also based on principles of prudent lending with maximum emphasis on security. As

agriculture is considered as backbone of our economy the Bank of Punjab has introduced

"Kissan Dost Agriculture Finance Scheme" to small farmers.

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History

The Bank of Punjab started functioning with the inauguration of its first branch of 7-

Egerton Road, Lahore on November 15, 1989. The architect of the bank Mr. Nawaz Sharifthen, the Chief Minister of Punjab, performed the inauguration.

In Pakistan, over long periods of time the gap in saving and investment and balance of

trade deficit has posed serious threat to the target levels of growth The ailments related to

the budgetary deficit and public debt, both foreign and domestic are in addition.

Interestingly even such adverse circumstances growth of real sector during the preceding

year registered a favorable change, which speaks of hidden potential and strength of

economy

Fortunately, the banking sector of the country has the well organized and properly

institutionalized system, which is the major vehicle not only for mobilization of resources

to finance trade, agriculture, and industry but also for the effective conduct of monetary

policy.

The emergence of new bank on the national scene in the early 1990s has done two

important services to the nation.

The saving base of the economy has effectively enlarged and hence the investment

opportunities have increased.

The services of the banks in the fact of severe competition have improved

considerably so that now consumer are left with extensive choice to do or undo

their business relations with these banks keeping in view quality of their services.

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, Client Deposit in Foreign Currency,

Remittances, and Advances to Business, Trade, Industry and agriculture.

The Bank of Punjab has the privilege to discharge its responsibilities towards national

progress and prosperity. Within the couple of years of its scheduling, the bank has not

only carved out for itself prominent niche in the mainstream banking of the country but in

certain areas it has the distinction of taking the lead. .

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Constitutional Base:

The Bank of Punjab was established under the provisions of Section 28 of Federal List

included in the 4th schedule of the Constitution of the Islamic Republic of Pakistan 1973.

The Bank was established under the Act of Punjab Assembly viz. The Bank of Punjab Act

1989. The Bill to this effect was passed by the Provincial Assembly on July 3, 1989 and

was passed to, by Governor Punjab in accordance with the Provisions of the Constitution

on July 26, 1989.

The Act provided for the foundation on which the edifice of the bank was erected. It also

included and provided for various modalities concerning the structure, the organization

and scope of the bank laying down its objective share capital and principle of lending. The

Act defines rules for the following.

1. Short title, extent, and commencement.

2. Establishment and incorporation of the Bank.

3. Share Capital.

4. Register of Shareholders.

5. Qualification of Shareholders.

6. Government to be shareholders.

7. Head Office of the Bank.

8. Board of Director.

9. Managing Director.

10. Qualification and disqualification of the directors.

11. Removal of Directors.

12. Terms of office of directors.

13. Vacancies.

14. General and special meetings.

15. Votes of the shareholders.

16. Business, which the Bank is authorized to transact.

17. Business, which the Bank is not authorized to transact.

18. Auditors / Governments auditors.

19. Right and duties of the auditors.

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20. Liquidations of the Bank.

21. Powers of the Board to make byelaw.

SCOPE OF THE BANK OF PUNJAB

Being a commercial bank, The Bank of Punjab performs all such functions as areattributed to commercial banking institution both in the area of resources mobilization,

loans and investment. The bank is thus providing all types of advances to business, trade

and commerce on seasonal and annual basis, and is ensuring, through the product policy,

the safety and protection of its loan portfolios, as the resources base of the bank expands,

projects financing will also be brought into its fold.

Management of the Bank.

At the level of Decision-making and implementation, senior management of the

bank is drawn from highly accomplished bankers with rich experience in the banking

profession both domestic and international.

The entire responsibilities of policy formulation and management have been

placed, under the law, with the Board of Director. Furthermore it will be heartening to

know that Mr. Nawaz Sharif, during his chief Minister ship of the province of Punjab

issued special instructions to the political and executives echelons not to interfere in The

Bank of Punjab, thereby ousting the possibility any pressure which may be put on the

management of the bank in respect of recruitment of staff or provision of credit. These

instructions have become an essential part of the culture of the bank.

CORPORATE INFORMATION (The Bank of Punjab)

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Name: The Bank of Punjab

Registration # 00000013054/19891102

Registration Date: 15- 11 - 1989

CRO Lahore

Auditors

A.F. Ferguson & Co. Chartered

Registered Office

7-Egerton Road, Lahore

Pakistan

Mission Statement

To exceed the expectations of our stakeholders by leveraging our relationship with the

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43 ,62

34 ,93

3 05

6 6 , 3 2

5 4 , 7 2

4 , 4 2

1 1 1 , 1 5

8 8 , 4 6

6 , 7 7

16 4 ,8 5

13 7 ,7 2

1 0 , 6 5

2 3 4 , 9

1 9 1 , 9

1 5 , 1 1

0

5 0 , 0 0 0

1 0 0 , 0 0 0

1 5 0 , 0 0 0

2 0 0 , 0 0 0

2 5 0 , 0 0 0

3 0 0 , 0 0 0

3 5 0 , 0 0 0

4 0 0 , 0 0 0

4 5 0 , 0 0 0

Rs.

(M)

7

B a la n c e S h e e t O v

government of Punjab and delivering a complete range of professional solutions with a

focus on program driven products and services in the agriculture and middle tire markets

through a motivated team.

Vision Statement

To be a customer focused bank with service excellence.

Business VolumeThese are the quick facts of the business in October 2007. At that instant BOPs businessvolume is as under.

Assets(Current +Fixed)

US$ 2.7Billion PKR 164.7 Billion

LoansUS$ 1.7Billion PKR 103.7 Billion

DepositsUS$ 2.3Billion PKR 140.3 Billion

Business Volume in terms of Investment, Current & Fixed Assets, Share Capital,Revenues, Deposits, Advances, Income, and EPS for the last 5 years is as under:

2003 2004 2005 2006 2007

Total assets RS (M) 43,621 66,320 111,154 164,855 234,974

Revenue RS (M) 3,675 5,488 10,912 18,603 26562

Shareholder'sEquity RS (M) 3052 4,420 6,777 10,659 15,110

Investment RS (M) 11,458 16,198 18,026 28,233 73,462

Deposits RS (M) 34,938 54,724 88,465 137,728 191,968

Advances (net) RS (M) 18,344 39,439 63,624 101,320 133,894

Income RS (M) 831 1,368 2,353 3,804 4,446

EPS (Rs/share) Rs 6.86 9.08 10.01 13.14 10.51

ROI % 7 8 13 13 6

Over last five years, Pakistaneconomy grown with realpace. Because of which recordgrowth in Banking sector.

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3,6

75

1,0

02

831

5,4

88

1,7

36

1,3

68

10,9

12

3,1

65 2

,353

18,6

03

4,7

69

3,8

04

26562

4,8

46

4,4

46

0

5,000

10,000

15,000

20,000

25,000

30,000

Rs(M)

2003 2004 2005 2006 2007

Imcome Statement Overvi

BODs, Management and Employees

Staff Strength

The total number of employees in the organization is 3859. Which is increasing. Regular

hirings are taking place.

Core Values

IntegrityHasham Ahmed 10


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Dedication Transparency Team work

OBJECTIVES

The Bank of Punjab being a commercial bank performs all those function as are

attributed to such banking institutions both in the areas of resources mobilization and

investment. It is providing funds for commerce, trade, industry, and agriculture but its

main emphasis is on accelerated development of agro-based industry. So the main

objective of the bank is to channelize the resources into sectors, which have suffered from

neglect. Other objectives included.

1. To provide speedier services to the common man.

2. To provide the highest rate of return to the shareholders by achieving good

profitable growth.

3. To enter into financing contracts and to mobilize resources in local andnow in foreign currencies consistent with the objects of the bank

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ORGANIZATIONAL STRUCTURE


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Board of Directors (BOP)

01 MR. JAVED MAHMOOD CHAIRMAN

02 MR. SAJJAD HUSSAIN ACTING PRESIDENT

03 MR. SOHAIL AHMADDIRECTOR

04 MR. ALMAN ASLAMDIRECTOR

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-

-

-


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05 MR. ANEEQ KHAWARDIRECTOR

06 MR. SHAFQAT ELLAHIDIRECTOR

07 MR. SHAFQAT MAHMOODDIRECTOR

01 MR. RAZA SAEEDSECRETARY

TO THE BOARD

BOP Top Level Management

Mr. Naveed Hafeez Shaikh Acting General Manager HR

Mr. Nadeem Amir General Manager Finance

Mr. Sharjeal Masud General Manager OperationsMr. Muhammad Salim

MirzaGeneral Manager Treasury

Mr. Shaheen N. Qureshi General Manager Special Assets

Dr. Shahid A. ZiaGeneral Manager T.R.C. & P

Division

Mr. Feisal Azmat Khan General Manager IT

Mr. Muhammad Hanif Head Audit & Inspection

Mr. Salman Saeed Head Credit Policy

Mr. Moazzam M ManekaHead Agriculture Credit

Department

DIVISION DEPARTMENTS

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DIVISION AND DEPARTMENTS


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ADMINISTRATION

OPERATIONS

BUSINESS DEVELOPMENT

CREDIT

INTERNATIONAL

FINANCE

RECOVERY

AUDIT & INSPECTION

TREASURY

ORGANIZATION & METHODS

INFORMATIONAL & TECHNOLOGY

OFFICERS TRAINING INSTITUTE

SHARES

LAW

STATIONERY

PLANNING RESERCH & PUBLICATION

HEADED BY: -

GENERAL MANAGER

HEADED BY: -

CHIEF MANAGER

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REGIONAL CHIE

BRANCH

REGIONAL NET-WORK


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There are 266 branches of the BOP in all over Pakistan; the detail of the network isdescribed below:

Total Branches 39 Total Branches 66



Head office, 7-Egerton Road, Lahore 042 9200421-33

Officers Training Institute, Lahore

(042) 5714180 5755625

Main Branch, Lahore

(042) 9200419 9200383 -9200351

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FAISALABAD LAHORE

GUJRANWALA MULTAN

KARCHI / QUETTA RAWALPINDI


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Critical Analysis

eptsThis part of report is the essence of the internship, as this will help other students to betterunderstand 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. The theory written in thebooks in cases is not implemented as it is. In some cases theory is implemented with alittle modification but in other cases theory has nothing to do with practice. In accounting,banks dont prepare worksheet, but part of worksheet is prepared like trial balance, butlittle differences, theory and practice has substantial relationship. The securities for theloans are handled in the same way as theory says like mortgage, pledge, hypothecation,advances against insurance policies or liquidation procedure is the same. The difference isthere in the case of loans. Theory talks about four or five terms of loans that is cashfinance, overdraft, loans etc., but in practice there are some more terms used like runningfinance, demand finance etc. All other concepts of remittances, bills, foreign exchangedeposits, letters of credit are in accordance with theory almost. So for a internee it is more

important to learn new things which he/she has never heard about in his/her course book.To me, Theory gives you the direction to understand the processes and the terminologiesgoing across the World using best business practices in a broader view covering each andevery aspect of possible business scenarios. On the contrary practical life is specific,enclosed in a jar. In practical professionalism and firms environment is each and everything. Professional life only builds on the knowledge based on books even though it mayonly use 1% of the theoretical knowledge.

Computer system

The system has not totally shifted on computer. Manual procedure is still there hencecomputer facility is not fully availed. There should be a system at each counter for quickprocessing.

Right person for right jobDuring my internship I have observed the person who has came as customer RelationshipOfficer was acting as Cashier. It should not be like this. The person should be postedaccording to his qualification, profession skills and experience.

Customer problemPeople have to wait for en-cashing their cheques for about 10-20 minutes, which is not

good for the reputation of bank, the delay is due to manual work. Therefore I suggest thatcomputers and other electronic machines should be installed in bank so that time could besaved.

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Deficiency in managementI felt at some places the BOP need to have employees, because a lot of work is to be doneby a single employee that will result in work overload and employee might not performhis/her job with full devotion.

To analyze the financial position of BOP, different tools are use, which includes RatioAnalysis, Common size Analysis of the last five years.

Introduction and Importance of Financial AnalysisFinancial analysis involves the use of various financial statements. These statements doseveral things. First the balance sheet and the second is income statement.The balance sheet summarizes the assets, liabilities, and owners equity of a business at apoint in time, while the income statement summarizes revenues and expenses of a firmover a particular period of time. A conceptual framework for financial analysis providesthe analyst with an interlocking means for structuring the analysis.

Financial Statements (2006-07)

Balance Sheet

Balance Sheet

As of DEC 31, 2007

2006 2007

Rupees in 000Assets

Cash and balances with treasury banks 14,054,859 14210302

Balances with other banks 3,722,089 1927662

Lendings to financial institutions 11,846,823 2450000

Investments 28,233,211 73461695

Advances 101,319,954 133893585

Operating fixed assets 2,068,744 3252759

Deferred tax assets - -

Other assets 3,609,457 5778192

164,855,137 234974195

Liabilities

Bills payable 856,448 937647

Borrowings 6,989,424 17842915

Deposits and other accounts 137,727,606 191968909

Sub-ordinated loans - -

Liabilities against assets subject to finance lease 40,988 40321

Deferred tax liabilities 298,616 2205530

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Other liabilities 2,816,341 2983079

148,729,423 215978401

Net Assets 16,125,714 18995794

Represented By

Share capital 2,902,490 4230379

Reserves 4,537,232 7427232Unappropriated profit 3,219,246 3452842

10,658,968 15110453

Surplus on revaluation of assets - net 5,466,746 3885341

16125714 18995794

Income Statement

Income Statement

As of the year ended Dec 31, 20072006 2007

Rupees in 000Mark-up/return/interest earned 11,579,036 17,539,094Mark-up/return/interest expensed 7,508,795 13,939,377

Net mark-up/ interest income 4,070,241 3,599,717

Provision against non-performing loans andadvances 340,626 1,616,421

Provision for diminution in the value ofinvestments 33,000 24,479Bad debts written off directly 100 246,869

373,726 1,887,769

Net mark-up/ interest income after provisions 3,696,515 1,711,948Non Mark-up/interest Income

Fee, commission and brokerage income 473,212 653,512Dividend income 1,385,875 1,804,878Income from dealing in foreign currencies 239,804 377,233Gain on sale and redemption of securities 389,063 2,039,535

Unrealized gain / (Loss) on revaluation ofinvestmentsclassified as held for tradingOther income 466,435 547,635

Total non-markup/interest income 2,954,389 5,422,793

6,650,904 7,134,741Non Mark-up/interest Expenses

Administrative expenses 1,751,970 2,250,777

Provision against lending to financialinstitutions 130,000 -Provision against off balance sheet items 175 292

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Operating Results

0

5,000

10,000

15,000

20,000

25,000

RSinMillions

Balance Sheet

0

50,000

100,000

150,000

200,000

250,000

RsinMillions

Investments

Rs in

m 11,458 16,198 18,026 28,233 73,462

Shareholders Equity

Rs in

m 3,052 4,420 6,777 10,659 15,110

Revaluation Reserve

Rs in

m 2,155 3,419 6,893 5,467 3,885

Deposits

Rs in

m 34,938 54,724 88,465

137,72

8 191,969

Borrowings from FIs

Rs in

m 2,684 2,832 6,791 6,989 17,843

Graphical Representation of Financial Summary (Income

statement)

BOPs income statement for thelast five years represents a highgrowth in it.

Its all due to the increase in equity, and increase in the deposits ofthe bank.

Rise in the Markup Interestearning income results rise up inthe profit of bank represents increase in lending by the bank.

Graphical Representation of Financial Summary (Balance

Sheet)

Deposits are almost rose uptoaround 300% in last 5 years.

As last 5 years were really good forbanking sector. Assets of the banksare risen upto 400% particularly in2007 just because of crescenttowers.

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Common Size Analysis

Horizontal Analysis

This type of analysis represents the percent change in specific line item of the Incomestatement or the balance sheet from the last year. This analysis is used to comment on thegrowth of specific line item in the industry or the firm.

2003 2004 2005 2006 2007

Operating Results

Markup/ return/ interest earned % -24.399 34.872858.2857

147.1025

1 33.98141

Markup/ return/ interest

expenses %

-105.78

5

32.6842

8

73.0610

7

64.4559

9 46.12956

Net markup income % 9.067835.7298

5 46.875 15.086 -13.0556

Non-markup based Income % 54.99424.2479

517.5807

754.9424

5 45.52831

Non-markup based expenses %4.0918

212.8695

710.9217

731.4027

6 17.78069

Provision against NPLs % -57582.9787

2 85.800611.4973

3 80.19068

Net profit before tax %56.886

242.2811

145.1500

833.6338

9 1.588939

Net profit after tax %58.780

8 49.634541.8614

538.1440

6 14.43995

Balance Sheet

Total Assets %32.296

434.2264

840.3350

332.5746

9 29.84117

Advances (net) %63.906

553.4876

638.0123

9 37.2049 24.3282

Investments %27.605

229.2628

710.1409

136.1527

3 61.56789

Shareholders Equity %22.575

430.9502

3 34.779436.4199

3 29.45731

Revaluation Reserve %55.916

536.9698

750.3989

6 -26.0838 -40.7207

Deposits %31.973

836.1559

838.1405

135.7683

3 28.25508

Borrowings from FIs %51.937

45.22598

958.2977

52.83302

3 60.83058

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Income Statement

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

2003 2004 2005 2006 2007

Percentage

Total Earnings (Markup/Non Markup) Total Expense Net profit after tax

Graphical Representation (Income Statement)

Total earnings mark-up & non mark-up were rising 33% from last year. Asdeposits and the lendings of thebanks are rising up.

Administrative expenses areincreased with a great pace in lastfew years because of high rate ofinflation.

Rise in expenses results decrease inthe 22% percent profit from lastyear.

Graphical Representation (Balance Sheet)

Total assets were increased in lastfew years. 22% increase in theassets from the last year representsgrowth in the Bank.

As bank increase their paid upcapital because of which SOEincrease at the end of 2006.

BOP is grabbing the confidence of

their customers results increase inthe deposits.

Vertical Analysis

It represents the percent of a line item (expenses, tax, interests, dividends) impacts on totalrevenues.

2003 2004 2005 2006 2007

Markup/ return/ interest

earned %66.6

9 69.96 82.15 79.67 76.38

Non-markup based Income %33.3

1 30.04 17.85 20.33 23.62Markup/ return/ interest

expenses %19.4

0 19.69 35.80 51.67 60.70

Hasham Ahmed 23

Balance Shee

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

2003 2004 2005 2006 2007

Percentage

Total Assets Shareholders Equity Deposits


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Non-markup based expenses %40.1

6 31.49 17.31 12.95 9.97Provision against NPLs % 0.32 1.29 4.44 2.57 8.22

Net profit before tax %40.1

6 47.54 42.45 32.81 21.10

Net profit after tax % 27.62 37.46 31.56 26.17 19.36

Graphical Representation

Markup interest earned isincreased because of increase in30% lendings from the last year.

Net profit before and after tax is

decreased because of huge rise upin the admin expenses.

Ratio AnalysisRatio analysis is used to calculate the profitability, liquidity/leverage etc. of the firm.From ratio analysis it is possible to predict future variances.Following ratios of BOP has been calculated:

Ratios 2003 2004 2005 2006 2007

Gross spread ratio % 71 72 56 35 21

Profit before tax to total income % 49.8 59.19 66.11 67.89 53.71

Markup/ Interest cover ratio times 5.15 5.08 2.79 1.94 1.65

Profit after tax to total income % 34.26 46.65 49.16 54.16 49.27

Total assets turnover times 0.06 0.06 0.07 0.09 0.1

Return on avg total assets (after

tax) % 1.88 2.49 2.65 2.76 2.22

Price earning ratio times 5.09 7.25 10.23 7.71 9.31

EPS (Non dilutive) Rs./share 6.86 9.08 10.01 13.14 10.51

Dividend per share Rs./share 2.5 4 5.2 3.25 3.5Market value per share Rs./share 34.95 65.9 102.45 101.25 97.8

Capital adequacy Ratio % 15.5 12.83 12.78 10.09 9.69

No. of branches No. 241 253 266 266 272

Staff Strength No. 3,019 3,144 3,430 3,681 3,859

Gross margins % 4.00% 3.51% 4.19% 3.10% 3.30%

Net margin % 3.30% 3.41% 3.99% 3.03% 3.16%

Hasham Ahmed 24

Vertical Analysi

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

2003 2004 2005 2006 2007

%age

Markup/ return/ interest earned Non-markup based Income

Markup/ return/ interest expenses Non-markup based expenses


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Net Interest Margin % 3.23% 3.34% 3.90% 2.95% 3.09%

Total revenue % 5.50% 5.34% 5.39% 4.81% 4.91%

Equity / Assets %11.60

%11.90

%12.10

%10.80

% 10.30%

RoE %

16.20

%

21.00

%

21.90

%

25.50

% 25.40%

Cost/Income %49.80

%38.10

%26.90

%26.40

% 24.70%

Gross spread ratio

Gross spread ratio defines the totalspread of interest betweenborrowing and lending.

Spread: Difference between fundedrevenue as a percentage of averageearning assets and the cost of fundsas a percentage of average payingfunds.

The higher the spread the higherwill be the profit margin.

GSR= Rev/CGS

GSR= (Mark-up earned Mark-up Expense)/Mark-up earned

GSR is 2nd

highest all over the globe in Pakistan. GSR of the bank is decreasing because of the decrease in margin, a SBP rise up the

interest rates on the deposits.

Profit before tax to total income

Operating income less operatingcost (profit before tax).

This ratio tells what percent oftotal income is earned beforepaying all the taxes.

BOP has a high value of profit before tax to total income and

Hasham Ahmed 25

56

35

21

71 72

0

10

20

30

40

50

60

70

80

2003 2004 2005 2006 2007

Gross spread ratio


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5.15 5.08

2.79

1.941.65

0

1

2

3

4

5

6

2003 2004 2005 2006 2007

they are decreasing after 2006 because of increase in admin expenses and rightingoff the bad debts.

The main reasons for reduction in the profitability were additional provisionagainst NPL due to the elimination of benefit of FSV and downturn in consumerand individual banking.

Mark-up/ Interest cover ratio

This ratio tells what percent ofinterest is covered from the totalincome of a firm or a bank.

It tells the ability of a bank to pay

its mark-up to the depositors..

MP/Interest cover ratio=EBIT/Mark-up

Profit after taxto total income

This ratio analysis tells profitability of afirm after paying all the taxes to totalincome.

Profitability of BOP is increased becauseof decrease in the tax paid to the govtand of high spread ratio.

BOP negotiated their taxes with thegovernment and only paid 20% tax in2006 and only 8% in 2007 instead of 35%

Hasham Ahmed 26

Pr ofit after tax to total incom

34.26

46.6549.16

54.16

49.2

0

10

20

30

40

50

60

2003 2004 2005 2006 2007

Pr ofit after t ax to total income


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0.06 0.06

0.07

0.09

0.1

0

0.02

0.04

0.06

0.08

0.1

0.12

2003 2004 2005 2006 2007

Total assets turnover

Total assets turnover

Asset turnover= Net Income/ Totalassets

This ratio tells the turnover of theasset to generate income.

This ratio is increased during last fewyears which represent increase in theturnover by assets.

Return on Total assets (after tax)

This ratio gives an idea of returningnet profit generated by the bank incomparison with assets.

Return on assets= Profit after tax /Total Assets

This ratio is decreasing in the last year because of decrease in Profit asexpenses raised up.

The decrease was mainly due to increased equity as a result of increase inminimum capital requirements and additional provision due to withdrawal ofbenefit of FSV for most types of advances.

Hasham Ahmed 27

1.88

2.49

2.652.76

2.2

0

0.5

1

1.5

2

2.5

3

2003 2004 2005 2006 2007

Return on avg total assets (aft er tax)


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Price earning ratio

Price Earning Ratio= Market price ofa share/ EPS

From this ratio it is analyzed what %of EPS is the part of MPS. What percent earned from a shareequivalent to the worth of 1 RS MPSby the bank or a firm.

Earning Per Share

EPS = Net Income/ total shares

Through this ratio it can beanalyzed what percent of 1RSshare is earned.

Capital adequacy Ratio

Capital adequacy ratio informs lendingup to a certain ratio of equity.

Hasham Ahmed 28

5.09

7.25

10.23

7.71

9.31

0

2

4

6

8

10

12

2003 2004 2005 2006 2007

Pr ice earning ratio

3.

34.95

65.9

102.45 101.2597

6.86 9.0810.01 13.14 10.

3.255.242.50

20

40

60

80

100

120

2003 2004 2005 2006 2007

Rs.PerShare

EPS Non dilutive Dividend er share

15.5

12.78

9.6

12.83 10.09

0

2

4

6

8

10

12

14

16

18

2003 2004 2005 2006 2007

Capital adequacy Ratio


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This ratio is set by the State Bank of Pakistan.

Net Interest

Income

Difference between funded revenue as apercentage of average earning assets andthe cost of funds as a percentage ofaverage paying funds.

Return on equity

Profit before tax as a percentage oftotal equity.

The decrease was mainly due toincreased equity as a result of increasein minimum capital requirements andadditional provision due towithdrawal of benefit of FSV for mosttypes of advances.

Hasham Ahmed 29

3.303.41

3.99%

3.033.16

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

4.00%

4.50%

2003 2004 2005 2006 2007

Net Interest Margin

16.20

21.00%21.90

25.50 25.4

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2003 2004 2005 2006 2007

RoE


30/33

Cost/Income

Operating cost includes all expenses chargedto arrive at profit before tax excluding costof funds, provisions and head office

expenses. Head office expenses are notconsidered since all banks do not accountfor head office expenses in their financialstatements.

Operating income means funded and non-funded revenue less cost of funds andprovisions.

As administrative costs are increasedbecause of which results decrease in the cost to Income ratio.

Hasham Ahmed 30

49.80

38.10

24.7

26.90 26.40

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2003 2004 2005 2006 2007

Cost/ Income


31/33

In the light of the Knowledge obtained during internship and studying the organization,

the following recommendations may prove to be successful to the bank.

In order to capture a considerable share in the banking sector of the country, the

prime objective should be awareness in the general public. For this it should

launch a well-planned advertising campaign in the general public.

Physical facilities in a bank also play their role in enhancing its grade and sound

image. The bank should keep these facilities like furniture, parking facilities for

the customer.

Salaries of the officers must be compatible to other private banks so that the BOP

can attract professionals, intelligent persons.

The Bank of Punjab should minimize its expenses.

Special awards should be given to the hardworking employees who performed

extra-ordinary in the bank.

The bank should come up with new and innovative products. It would be advisable

to make these products while keeping in mind the gap between what people want

and what their banks are providing them.

The Bank of Punjab should concentrate more on advances than on investments

The bank should come up with such products or services in which the customerswould not have to come to the bank at any stage i.e. Telephone Banking etc.

The Bank of Punjab should use the latest technology because the bank which can

provide speedy, accurate and standard services in the delivery of products, loans

etc. to the customers will be successful e.g. computerization, fax installation.

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The authority should be delegated to the manager level.

MIS should be improved by connecting all regional offices and branches to thehead office through a network for timely delivery of information.

Management of Bank of Punjab should try to avoid the political influences and

should give loans on merit.

The bank should make a plan to gear up its recovery function on war fooling and

recognize the recovery function.

The Bank of Punjab should give some extra credit to concern to professional

qualifications such as MBA(IT)s, M.B.As, C.As A.C.M.As at the time of

recruitment and selection.

Interview should be conducted while recruiting personnel, to consider the

personality characters, communications skills and sociability.

The bank should adopt a policy to accommodate and facilitate the research

scholars who want to study the banking affairs. The universities and other

institutions can help to launch the studies regarding banking business.

All possible efforts should be made to protect the bank from the interruption of

Provincial government.

There should be an association of employees to convey the voice of the employees

to the administration.

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33/33

Documents

Hasham Bank Punjab