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INTERNSHIP REPORT ON
SUBMITTED BY:
Muhammad Waqas
MBA
(2014-18)
(Multan Campus)
The Bank of Punjab
DEDICATION
TO MY BELOVED
PARENTS
Who always wishing and praying for my success in every sphere of life I pray to Almighty
Allah to enable me to serve them so well and kindly as they did in my life especially in my
childhood.
Aamin!
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Acknowledgement
First of all, I thank to ALMIGHTY ALLAH who enable me to reach this stage and ability to
accomplish this task.
I wish to express deep sense of gratitude to all my teachers for teaching and their kind
guidance.
I am immensely thankful to all staff of The Bank of Punjab who helped me a lot in
completion of this report.
I am also thankful to my parents whom I owe everything, whose heartfelt prayers and
appreciation has always been an asset and a great source of inspiration to me. Without their
shadow of love, perhaps, it could be difficult for me to achieve this target.
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Preface
Prerequisite of MBA study is to undergo internship. I got the opportunity to join the bank of
Punjab Rohillan Wali branch for the said purpose for a period of 08 weeks.
Practical involvement was a great experience as interactions both with the experienced
executives and clients cemented the base of knowledge I have been acquiring in the
classroom.
This internship report includes the material about BOP and different departments along with
their working procedure.
For the completion of this project I met the various persons of these organizations. As far as
my knowledge and hard work is concerned this report will provide a good in sight of BOP.
I have special thanks for following persons who have encouraged & guide me lot. I learned
very much under their guidance.
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5. Executive Summary
As we know that Department of Business Administration sends their students for internship
purpose in different organizations for having practical experience in the respective
organization by utilizing the knowledge which they gain from their Bachelor/Master Degree
programs. For the internship purpose I was sent to the Bank of Punjab, Rohillanwali Branch
Tehsil & District Muzaffargarh.
I joined BOP on June 28, 2017 and I spent Eight (08) weeks there. During this period, I
was visited different departments of the bank where I observed working there and also
participated in few departments as well.
Before I joined the Bank, first I was appeared before The Branch Manager for a formal
interview then I was selected for Internship Program.
Next day I was introduced about the departments and made me sit in the account-opening
department. In this department I learnt how to open the accounts and also open account as
a customer myself. Along with I also learnt how to issue a Cheque Book and how to fill
deposit and on-line slips.
After account opening the next remittance department was visited. In this department I
learnt how to transfer money. I was visited advances and loan department.
In this section I learnt about different kinds of loans and their procedure.
After this I was visited collections/clearing section. In this section, I learnt about different
ways of transferring funds from one place to another or from one person to another either
among branches of the different banks in different cities or among the branches of the
same city. Last I learnt about the consumer banking only about the car financing and
ATM cards. For the purpose of financial analysis, I requested the manager to provide me
the annual reports of BOP. This is all the summary of my Eight weeks’ internship. From
this program, I had come to know the working, functioning and activities involved in the
banking fields.
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Table of Content:
1. Title Page…………….………………………………………............................01
2. Internship Completion Certificate……………………………........................01
3. Dedication……………………………………………………............................02
4. Acknowledgement………………………………………………………….…..03
5. Executive Summary……………………………………………………….…...05
6. Table of Contents……………………………………………............................06
7. Overview of an Organization………………………………………….……....08
7.1 History of BOP……………………………………….……………….……......08
7.2 Mission Statement……………………………………………….......................10
7.3 Vision Statement……………………………………………….........................11
7.4 Major clients……………………………………………………........................12
7.5 Business volume……………………………………………….……….…...….12
7.6 Product & Services…..........................................................................................13
7.7 List of Main competitor………………………………………...........................20
8. Organizational Structure…………………………………………..….……….20
8.1 Hierarchical view…………………………………………………..…………..20
8.2 Main Offices………….…………………………….…………..........................21
8.3 Board of Director……………………………………………………………….22
8.4 List of employees ……………………………….……...……....………………23
8.1.1 Introduction of all the department……….……...…………………………23
8.1.2 Operation Department……………………..…...…………..............................23
8.1.3 Remittance Department……………………...………………..........................23
8.1.4 Cash Department……………………………………………….......................25
8.1.5 Comments on Organizational Structure ……..………………………….........25
8.1.6 Departmentalization……………………..…………………………................25
8.1.7 Chain of Command…………………..…………………………......................25
8.1.8 Span of Control………………………………………………..........................25
8.1.9 Centralization & Decentralization…….………………………........................26
9. Plan of your internship program…..………………………...…………………26
10. Training program………………...……………………………….……………26
11. Structure of the Finance Department……...………………………….............28
11.1 Marketing Department…………………………………………….....................29
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7. Overview of Organization
7.1 History of Banking in Pakistan
Pakistan came into being on 14th August, 1947; sufficient banking services were available in
the areas forming Pakistan. Out of the total branches of the nearly 3,500 in the undivided
India, as many as about 1,500 branches were existing in these areas.
It was agreed between the two countries that reserve bank of India shall continue to function
in the Pakistan territory until 30th September 1948 and that Indian notes would continue to be
legal tender at Pakistan until 30th September 1948. Unfortunately, relationship between the
two countries became most strained immediately after independence; banking was mostly in
the lands of Hindus who immediately started transferring their offices and assets into
India. As a result, most of the banks in Pakistan were closed down and even those which
were open were not doing any effective business.
The number of banking office in Pakistan came down to about 200 on 30th June 1948.
Branches of some European banks were also functioning in a limited manner, financing in
export of crops, and their number was limited to about 20.
It was only the Habib Bank, which transferred its office from Bombay to Karachi AustralAsia
Bank was another bank, which was in existence in the Pakistan territory at the time of
independence. Despite of best efforts on the part of government of Pakistan, no heady way
could be made on this behalf and reserve bank of India was in no mood to help the new
country. Imperial bank of India, agent of the reserve bank of India also started closing down
its branches in Pakistan. Reserve bank also refused to advance money to Pakistan to make
essential payments such as salaries etc., also Pakistan’s share of Rs.75 billion in cash balance
was withheld by bank, causing hardships to the newly born state. In view of these hopeless
state affairs it was agreed between the two countries that reserve bank would serve as
monetary authority in Pakistan only up to 30th June 1948.
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Private Banks
• Askari Commercial Bank Limited
• Bank Al-Falah Limited
• Bank Al Habib Limited
• Meezan Bank Limited
• Faysal Bank Limited
• Silk Bank Limited
• Soneri Bank Limited
• Muslim Commercial Bank Limited
• Allied Bank of Pakistan
• Union Bank Limited
• ABN Amro Bank
• CITI Bank
• Standard Chartered Bank.
Specialized Banks
• Zari Tarqiati Bank Ltd.
• The Industrial Development Bank of Pakistan
• The Punjab Provincial Cooperative Bank Limited
It has not so far been decided as to how the word ‘Bank’ originated. Some author’s opinion is
that, this word is derived from the word ‘Bancus’ or ‘Banque’, which means a bench. Others
authors hold the opinion that the word ‘Bank’ is derived from the German word ‘Back’,
which means joint stock fund. It is therefore so much difficult to decide as to which opinion
Is correct. Banking in fact is primitive as human society, forever since man came to realize
the importance of money as a medium of exchange, the necessity of a controlling or
regulating agency or institution was naturally felt. Perhaps it was the Babylonians who
developed banking system as early as 2000bc. It is evident that the temples of the
Babylon were used as ‘Banks’ because of the prevalent respect and confidence at the clergy.
At the time of independence there were 631 offices of the scheduled banks in Pakistan, of
which 487 were located in West Pakistan alone. As a new country with resources it was very
difficult for Pakistan to run its own banking system immediately. Therefore, the
expertcommittee recommended that the Reserve Bank of India should continue to function in
Pakistan until 30, September 1948, so that problems of time and demand liability, coinage
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currencies, exchange etc, could be settled between India and Pakistan. The non-Muslims
started transferring their funds and accounts to India. By the end of June 1948, the number
of officers of scheduled banks in Pakistan declined from 631 to 255. Pakistan,
while there were only two Pakistani institutions, Habib Bank, and Australasia Bank, thecusto
mers of the banks are not satisfied with the uncertain condition of banking. Similarly, the
Reserve Bank of India was not in the favor of Govt. of Pakistan. The Govt. of Pakistan
decided to establish a full-fledge central bank. Consequently the Governor General of
Pakistan Quaid-e-Azam inaugurated the State Bank of Pakistan on July 1,1948 Thus a
landmark was made in the history of banking when the State Bank of Pakistan assumed full
control of banking and currency in Pakistan.
Source: http://www.bop.com.pk/
“To exceed the expectations of our stakeholders by leveraging our relationship with the
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.”
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Source: http://www.bop.com.pk/
Source: http://www.bop.com.pk/
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2. Educational Institutes
3. Agriculturists
5. WAPDA
6. WASA
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1. Deposits
2. Advances
3. Remittances
4. Other Facilities
1. Deposits
The customers invest their savings in different deposit schemes which offer attractive rates on
different terms and conditions. Some of the most important deposit schemes are described
below.
1.1 Profit and loss sharing saving scheme
It is ordinary profit and loss sharing saving account on which profit is given to each customer
on half year irrespective of their balances. The rate of profit applied in last half year ended in
Dec.31, 2016 was 4 %. There is no restriction on minimum balance amount. The customer
can deposit and withdraw money at his own discretion. The profit is calculated monthly at
minimum balance retained during the month. The profit accrued at each month is paid in each
half year after final declaration of profit rate.
1.2 Special notice term deposit -30 Days scheme
It is similar to above mentioned scheme in operation except the difference of 30 days. The
customer who with draw money before 30 days will earn profit proportionate to number of
days passed. The profit rate lastly announced i.e. in Dec. 2016 on this scheme was 4%. Per
annum.
1.3 Term Deposit Receipt (TDR)
On these schemes the profit is given according to different terms and conditions agreed
between the customers and the Bank. The customers are issued different certificates for
different terms and are en-cashed on their request.
1. 4 BOP Munafa Hi Munafa scheme
It is again a term deposit which is placed for five years and profit is paid after six months.
The current rate of profit being paid on such type of deposit is Rs.11%. In case of premature
encashment, the profit will be paid on normal rate of profit for lower term i.e. of four years,
three years, two years and one year etc.
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2. Advances
Advances provided by bank are of the following two types.
1. Funded
2. Non-Funded
2.1 Funded
In fund based bank contributes a large amount of the fund based on clarified as follows.
• Demand Finance
• Term Finance
• Running Finance
• Cash Finance
• Agriculture Finance
• Consumer Finance
• Consumer Finance
• Staff Finance
They are provided primarily to fulfill mandatory credit targets assigned by the State Bank of
Pakistan or in return for refinance provided by the S.B.P. The details are as under.
2.1.1 Consumer Finance Schemes
The important consumer finance schemes of BOP are briefly introduced hereunder.
2.1.2 Car Loan Schemes
This loan is given usually to individuals who are salaried persons, self-employed
professionals and businessmen having monthly income exceeding Rs: 10,000/-, Rs: 15000/-
and Rs: 20,000/- respectively and is extended for seven years. Mark up is charged @ KIBOR
+ basis points .Monthly schedule of installments is given to borrower to appropriate the loan .
2.1.3 Quick Cash Schemes
It is extended to salaried persons to purchase consumer durables for one year and is
renewable each year subject to satisfactory operation in the account. The Mark up is charged
@ KIBOR + Basis points. The cash is provided on purchase invoices of consumer items and
these items are insured from Bank’s authorized insurance company.
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account. Mark up is charged @ 6 Month KIBOR + 350 bps with floor of 8.5 % per annum.
The loan is also secured through life and crop insurance of borrower.
2.1.9 Live Stock Development Scheme
Again it is given to small farmers for breeding of animals, their feed, for fish Farming, for
cattle and Goat farming. The animals are being insured from bank’s authorized insurance
company. The mark up on the account is charged @ KIBOR+ 450 bps. These are short and
long term loans.
3. Others Financing Schemes
The Bank’s other financing schemes are described below.
3.1 Auto Rickshaw Scheme
It is financing facility under consumer finance sponsored by Govt. of Punjab for providing
employment facilities to unemployed individuals for purchase of Auto Rickshaw. The
applicant must have driving license and he has to deposit 20% down payment. The remaining
80% is advanced by the Bank according to the cost of Rickshaw. It is long term loan and
repayment is scheduled on monthly installments. The insurance of borrower and motor is get
done from bank's authorized insurance company, the Rickshaw is registered with sole name
of the bank and will be transferred to borrower at full payment of the loan along with mark
up.
3.2 Fertilizer Development Scheme
It is the financing facility provided to authorized dealers /franchise of the company for
working capital requirements such as for the purchase of seeds, pesticides spray machines
and fertilizers. It is sanctioned for one year and is renewable subject to satisfactory conduct of
account. The securities are Hyp. Of stocks and pledge of stocks. The collateral securities are
Residential House, flat / commercial plot and Agri Land. The margin on securities is 25% of
forced sale value of property. Mark up is charged at the rate of six months KIBOR +350 basis
points. Repayment depends on the payment capacity of the borrower either monthly or
quarterly.
3.3 Foreign Remittances
Foreign remittance is two types. These are under,
• IN WARDS
• OUT WARD
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3.3.1 IN WARD
Foreign exchange coming into Pakistan from Pakistani residing abroad or from foreigners is
called in ward foreign exchange.
3.3.2 OUT WARD
Foreign exchange going out from Pakistan by Pakistani residing in the country is called out
ward foreign exchange. All the foreign exchange is done with the help of DD's, Tic’s, to
Tot’s.
3.4 Demand Draft (DD)
Demand draft also known as DD. A person who wishes to remit money to some one other
country. If he does not send his own Cheques, obtain from his banker a draft on demand
payable to the person who is to be paid the money. It may be drawn upon one of the banker
own branches or upon some other bank where an arrangement exists from draft to drawn.
3.5 Remittance of Money
The Bank of Punjab, like other Commercial Banks undertakes to remit or transfer money
from one place to any part of the country and outside the country. The money is remitted by
means of:
1- Demand Draft (DD)
2- Mail Transfers (MT)
3- Telegraphic Transfers (TT)
4- On line Transfer.
4.1 Demand Drafts (DD)
The most common means of remittance in the bank is Demand Draft. When a person wants to
transfer his money to another person having account with any other bank, he can do so by
obtaining a Demand Draft. The purpose of DD is to secure the amount which we have. DD is
a very secure method of transferring the money from, one place to another.
4.2 Mail Transfer (MT)
To transfer money from one place to another through a bank the second means of remittance
is Mail Transfer generally called MT. Money is Transferred through MT mainly because the
transferor, unlike in case of DD does not want to obtain and take care of any instrument like
DD and, of course, to present it at the Drawee Bank. So in order to avoid above mentioned
risks, which may contribute to the loss or delay on the part of both the banker and the DD
holder, the money transferor resorts to the MT.
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Characteristics
1- Locker’s Size
There are four sizes of lockers:
a. Extra-large its annual rent is Rs.3000/-
b. Large Size: - its annual rent is RS. 2000/-
c. Medium: - its annual rent is RS. 1200/-
d. Small Size: - its annual rent is RS. 1000/-
e. RS. 3000 is also charged as key deposit money which is flat for all sizes and is refundable.
2- Locker’s Security
Security of all lockers is Equivalent to two years Rent for respective locker. Late payment fee
5% per month of annual rent or Max of 25% of the annual rent. The breaking charges are
actual or Rs.2000/- whichever is higher.
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8. Organizational Structure:
8.1 Hierarchical View of Management:
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The Bank of Punjab
• Faisalabad Region
• Gujranwala Region
• Rawalpindi Region
• Karachi/Quetta Region
• Multan Region
• Peshawar Region
Rests are the branches working under these regions. Which are almost 520 in all over
Pakistan.
Branch Network:
The Bank of Punjab is working as a scheduled commercial bank with its network of 520
branches at all major business centers in the country.
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Corporate Heads
There is one corporate head in each Region who monitors the activities of branches who are
maintaining the corporate accounts. The proposals relating to corporate clients are forwarded
to Head office by the corporate Head. Increasing business volume in corporate sector is
responsibility of the Head. There are four offices of corporate Heads in the Pakistan which
are as under.
8.3 Management:
Board of Directors:
• Dr. Pervez Tahir Chairman
• Mr. Naeemuddin Khan President / CEO
• Mr. Mohammad Jehanzeb Khan Director
• Mr. Hamed Yaqoob Sheikh Director
• Dr. Umar Saif Director
• Syed Maratib Ali Director
• Dr. Muhammad Amjad Saqib Director
• Mr. Mohammed Afzaal Bhatti Director
• Khawaja Farooq Saeed Director
• Mr. Saeed Anwar Director
• Mr. Omar Saeed Director
• Mr. Raza Saeed Secretary to the Board
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Punjab, DD is used to transfer of funds from one branch of bank to another branch of same
bank.
Payment Order
Payment Order is an order instrument payable to a certain person which is issued by a branch
and drawn on a same branch. In payment order, the drawer and drawee is one and the same
branch. In short, payment order is used to transfer of funds in same city from one office of
bank to another office of same bank.
Mail Transfer
Under such method, transfer of funds is made through day. Under such transfer, one office of
bank sends advice to another office of same bank for payment. Such advice is called IBCA
(INTER BRANCH CREDIT ADVICE).
Telegraphic Transfer
It deals with transfer of funds by telephone.
Online Transfer
It is modern technique for transfer of funds. The modern concept of only banking has given it
a new dimension through which money is transferred from one place to another within no
time, even one country to another country; it takes hardly a few minutes.
Remittance & Bill for Collection (Inland)
Remittance department perform the function of sent and receive of money. Following
instruments are used for this purpose.
Cash order or payment order
The branches do local fund transaction by mean of cash orders payment orders issued on
behalf of the purchaser desirous of effecting payment in this way or by the branches for
settling their obligations. Separate registers are maintained for all these transactions, where
send and receive of all these documents are recorded.
Day end
Day end is a document maintained by the bank. It contains the record of each day transaction.
Every small to large transaction is recorded in it. The bank maintains this record in form of
printout and sends it in a cassette to the head office. This is done on daily basis.
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8.1.6 Departmentalization
Similar sort of activities is group and performed under particular departments. Now it is to be
decided that what types of activities organization is involved in, and according to that
departments are created. There are various factors on the basis of which organizations may
create their departments in their organizational structure. They may create Functional
departments like marketing, finance, HR, IT etc.
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8.1.9 Centralization/Decentralization
These elements of organizational design decide on how much decision making authority is to
be delegated down the line into the hierarchy. Centralization refers to that decision making is
done at the higher levels of organization. In such organizational structure, top management
considers it wiser to be decision maker rather authorizing employees to do this.
Decentralization is opposite of it as it allows giving authority to the employees to make
decisions in different scenarios. This helps workers be more efficient and respond to queries
and problems immediately.
There the 9 branches in the District and the Bank of Punjab (0224) are on the 1st in respect of
its investment more than 625 million. In the region it is on the 1st number. At present ATM
has been installed during the period of my internship and this provide an advantage to the
branch.
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Operations department manages all departments of bank except credit department. Operations
Manager is responsible for all operations of cash department, remittance department and
clearing department. Opening of new accounts, closing of zero balance accounts, updating all
operational records etc. is done in operations department.
Beside these foreign payments to customers via online transactions is also the function of
deposit department. For this purpose, NIC of the customer is verified on NADRA web site
www.verisys.com to make sure that payment is being made to the right person. The branch
credits the Head Office account when makes online payment to customer. They people
working abroad send money to their home viva express money which is deposited in bank of
Punjab head office so HO account debited while making payment HO account credited. In
closing HO credits all the branch accounts online with respective amount of payments.
Issuing the cheque books and making entries on computers for the authentication of cheque
books, filling deposit slips and cheques all are the functions of operation department.
2. Work/Assignments done by me during Internship
I have done my internship at The Bank of Punjab, Rohillan wali Branch. There are four
departments in the branch, and I worked as an assistant in that branch. For the first 4 weeks I
worked in deposit department under the supervision of Mr. Aslam (OG 3), where I have to
perform following tasks:
• I did the duty of Opening New Accounts.
• Providing help and assistance to newly come customers.
• As I have the knowledge of MS Office so frequently typed documents in Ms
Word and Excel as demanded by the manager.
• I also did the duty of taking signatures from customers who came to open new
accounts.
• Entering information in KYC (know your customer) forms well as on the
computer which was allowed to me for that job.
• Inform customer of essential conditions under which the account will be operated.
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3. Voucher checking:
Afterwards I have learnt about vouchers, checking of vouchers is essential to confirm that
correct calculation has been done. Vouchers are properly bind sealed, and checking by the
manager. I have checked the following things:
• The check should not be post-dated/anti-dated.
• Cash paid stamps (with dates) are duly affixed in case of cash cheques and in case
of clearing stamps is affixed.
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Take the deposit and provide them services. Relationship Manager do this activity
All accounting operations are being done at branch/ unit level. It is computer based
accounting operation system as there are large numbers of transactions, which are not
possible in manual accounting system. Professionally skilled personnel are doing these
operations, computer equipment and computer generated reports, which provide various
information for classifying and summarizing the data.
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banks and non-bank’s financial institutions. The comparative figures of deposit mobilized for
last 5 years are mentioned below.
2013 34,938
2012 23,767
The deposit figures show a 5 times increase as compared to base year of 2012 and 56 %
increase resulted in year 2016 as compared to year 2015.
12.5 Generation of funds
The funds are generated from investment in different sectors of economy such as corporate
investment in shares, NIT units, Mutual Funds, Ordinary Shares of listed
Companies and Modarbas, Pakistan Market Treasury bills, Pakistan Investment Bonds, TFC,
WAPDA Bonds and Punjab Modarbas. The investment made in last 5 Years is mentioned
below.
2013 11,458
2012 8,295
The results show that the investments increased 57% in year 2016 as compared to year 2015
and three times than in base year of 2012. The major revenue to the bank was from NIT units
and Mutual funds.
12.6 Sources of Funds
The sources of funds in The Bank of Punjab are share capital, Reserves and liabilities created
from deposits collected from customers and borrowing from financial institutions. The last
Five years figures are given as under.
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To analyze the financial position of BOP, different tools are use, which includes Ratio
Analysis, Common size Analysis.
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Interpretation
This ratio shows that how much bank is earning through its income or revenue. The
relationship between the net profit and total income of the bank. Reason behind this profit is
that income of the bank is increasing with greater margin than the marginal increase in the
bank’s profit. In 2016 bank’s profit is high that is why this ratio is high from previous year.
This profit due to the bank’s increasing income.
Administrative expense ratio
Administrative expense ratio=Administrative expense/net sale*100
Year 2016 2015
Administrative 834,6001 738,959,1
expense
Net sale 296,744,88 312,664,27
Debt ratio 28.12% 23.63%
Expense ratio shows what percentage of sales is an individual expense or a group of
expenses. A lower ratio means more profitability and a higher ratio means less
profitability. The ratio is helpful in controlling and estimating future expenses.
Operating Income Margin
Operating income margin= (EBIT/Net Sale)*100
Interpretation
The operating income margin is increasing and it is useful for the bank because as the
percentage increases then the ability of the bank will also increase to distribute the income
among the shareholders. Operating margin can be used to compare a company with its
competitors and with its past performance. It is best to analyze the changes of operating
margin over time and to compare company's figure to those of its competitors.
Here the percentage of 2016 is increasing.
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Interpretation
Return on equity indicates the net income by the total equity of the owners. In the year of
2015, the total equity is increasing than previous years and net income is also increasing. It
means that generally, the owners gain profit. Return on equity is an important measure of the
profitability of a company. Higher values are generally favorable meaning that the company
is efficient in generating income on new investment. Investors should compare the ROE of
different companies and also check the trend in ROE over time.
Interpretation
Acceptable current ratio values vary from industry to industry. Generally, a current ratio of
2:1 is considered to be acceptable. The higher the current ratio is, the more capable the firm is
to pay its obligations. Current ratio is also affected by seasonality.
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If current ratio is below 1 (current liabilities exceed current assets), then the firm may have
problems paying its bills on time. However, low values do not indicate a critical problem but
should concern the management. Current ratio gives an idea of bank’s operating efficiency. A
high ratio indicates "safe" liquidity, but also it can be a signal that the bank has problems
getting paid on its receivable or have long inventory turnover, both symptoms that the bank
may not be efficiently using its current assets.
Total Asset Turnover
Net Sale / Total asset
Year 2016 2015
Net sale 296,744,88 312,664,27
Total asset 545,214,131 472,283,654
Total asset turnover 0.0544 0.0662
Interpretation
Total Assets Turnover measures the activity of the assets and the ability of the firm to
generate sales through the use of the assets. TAT is increasing which shows that company is
increasing the usage of assets to generate sales. This ratio measures how efficiently a firm
uses its assets to generate sales, so a higher ratio is always more favorable. Higher turnover
ratios mean the company is using its assets more efficiently. Lower ratios mean that the
company isn't using its assets efficiently and most likely have management or production
problems.
Acid-Test Ratio
Current assets less inventories divided by current liabilities. It shows a firm’s ability to meet
current ability to meet current liabilities with its most liquid asset.
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BOP’s current ratio for the year 2015 is 0.23 and for the year 2016 is 0.29, which shows the
increase of 0.01. It means the organization is going towards in profitable direction. The
current ratio of years shows that the organization in stable position.
12.1.3 Long term debt paying ability analysis
Debt ratio
The ratio is calculated by following formula
Debt ratio = Total liabilities / Total assets
Year 2016 2015
Total liabilities 517,359,633 449,605,314
Total asset 545,214,131 472,283,654
Debt ratio 0.94 0.95
Interpretation
These values indicate that the firm has financed more than of its assets with debt. The higher
this ratio, the greater the firm’s degree of indebtedness and the more financial leverage it
has. The debt ratio is shown in decimal format because it calculates total liabilities as a
percentage of total assets. As with many solvency ratios, a lower ratio is more favorable than
a higher ratio.
A lower debt ratio usually implies a more stable business with the potential of longevity
because a company with lower ratio also has lower overall debt. Each industry has its own
benchmarks for debt, but .5 is reasonable ratio.
Debit-to-Equity Ratio
The debt-to-equity ratio is computed by simply dividing the total debt of the firm (including
current liabilities) by its shareholders’ equity. The lower the ratio, the higher the level of the
firm’s financing that is being provided by shareholders and the larger the creditor cushion in
the event of shrinking asset values or outright losses.
Debit-to-Equity ratio = Total debt / Shareholders’ equity
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The Bank of Punjab
Interpretation
EPS is measure for good profitability when compared with other similar business. Here EPS
increase in 2016 so the price of share also increase.
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The Bank of Punjab
Cash and balances with 236,224,11 261,904,81 357,562,04 4.33 6.23 7.57
treasury banks
Deferred tax assets –net 9845426 7905981 648,025,6 1.80 1.88 1.37
Liabilities
Sub-ordinate Loans
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The Bank of Punjab
Interpretation
Horizental analysis shows that Cash & Balances with treasury Banks decreases in 2014 that is
because of current assets decreases. Balances with other banks decreases gradually with
passing year. Lending to financial institutions increases in 2015 that because of more
issuance of loans. Investments net increases and advances net reduces. Operating fixed assets
increase and others assets are also increase. Bills payable and borrowing are increased. Assets
are also increased. Deposits are increased, that is a good sign. That’s why 2016 is favorable
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The Bank of Punjab
Vertical analysis
Income Statement
Non markup
income
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The Bank of Punjab
in foreign
currencies
Expenses
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The Bank of Punjab
Interpretation
In vertical analysis of income statement Net markup/Interest income is decreasing in 2015.
Otherwise it is increasing 2016. In 2015 this was 24% and in 2016 it was increasing to
38%.profit also increasing, which is very good, and show that how much Bank of Punjab is
improving with every year.
Limited Staff
In the branch the staff is limited and the customers wait for a long time Bank of Punjab also
deals with most of the government affairs, federal and provincial pension’s salaries and taxes.
Handling these people are very difficult and at the beginning of the month large no of
customer wait for their turn. But the staff is low to handle such large no of customers.
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The Bank of Punjab
The SWOT analysis consists of analyzing organizational strengths and weaknesses, and its
environmental opportunities and threat. It helps to identify a strategic niche that the
organization might exploit. SWOT analysis of The Bank of Punjab is as follows.
Strength
• BOP has got a well reputed online system in most of its branches.
• Remittance department is working very efficiently in transferring the funds to peoples
due to this system
• The bank also has started ATM facility in its many branches.
• Management is well organized.
• Services provided by the branches are very good.
• The bank has stable growth in deposits since its emergence.
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The Bank of Punjab
• BOP has financial strength as they are gaining profit from the advances that they
provide to the organizations.
• BOP is providing lot of services to its customers like incase of remittances they have
services like online services.
• The Management has changed; employees which are useless are fired and new
experienced graduates are hiring to enhance the operations of the banks & the
employees which are efficient they are getting promoted.
• Certain training programs are arranged outside the working environment to train and
refresh them or entertain them.
Weakness:
• The human resource department is not performing well in the organization.
• Bank is not introducing new products these days, so bank should boost the product
development and increase the range of facilities offered for customers. And the rates
of interest on its various products have been reduced.
• Shortage of ATM machines in different branches of the bank.
• Bank is under staff so absence of members create problem.
• All the branches are not computerized.
• The general outlook and interior layout of branches are not as required according to
modern banking.
• BOP is centralized. It means authority is not delegated to branch level. Manager
cannot take initiative regarding different decisions such that for giving finance.
• The majority of people are not well aware about the products of BOP it is due to their
very low services of promotional activity.
• There is lack of advertising like sponsoring of any festival or any event.
• The bank has not powerful marketing campaigns.
• There is low level of motivation in the employees of the bank
• BOP Management has adopted reactive approach they respond to the market very
slow and are reluctant to take initiative before the problem arises.
• There is lack of advertising like sponsoring of any festival or any event.
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The Bank of Punjab
Opportunities
• Government is taking very bold steps to promote IT in Pakistan. BOP has an
opportunity to improve in IT stock exchange is very volatile and takes immediate
effect so in times of crises conservative investors turns to saving deposits.
• The support of the Government of Punjab with the Bank of Punjab that makes the
customers satisfied to deal with the bank.
• The bank has the support of Punjab agro Marketing Company that will expand the
agricultural loan portfolio.
• Mobile banking is a concept that has started to find its roots in the banking sector. So
it is a big opportunity for BOP to avail this chance at big level.
• Opportunities exist for expansion of BOP chains in the International Arena; Particular
Invention must be given to the individual country’s customs and cultural practices to
be successful.
• BOP should organize trade shows for the promotion of export for that they should
finance the companies those who wanted to internationalize and wanted to introduce
their product and services outside Pakistan.
• Threats:
• BOP has many competitors who are continuously increasing their products and
marketing aggressively it may cause its customer to shift to its competitors.
• The rapidly changing environment in the banking sector and the quick response of the
other banks to these changes can be a threat for BOP.
• The falling markup rate scenario as a result of built up competitive pressure is a threat
to the bank's profits.
• What customer really wants is a difficult thing to identify as to identify the customer
perception and its behavior is complex procedure. So the changing needs of the
customer can be a threat for the banks.
• Changing Governmental Policies and instability in Politics can be seen as a threat for
the banking sector.
• The banking sector is expanding in Pakistan so competition can be the greatest threat
for the BOP. As old banks have started changes and many new banks are emerging as
a strong entity so BOP will face a strong threat from this competition unless adopt
proactive approach to handle these threats.
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The Bank of Punjab
• Restrictions applied from SBP on the banks are a threat to the expansion of bank's
business.
• 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.
• Salaries of the officers must be compatible to other private banks so that the BOP can
attract professionals, intelligent persons.
• 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 should come up with such products or services in which the customers
would not have to come to the bank at any stage i.e. Telephone Banking etc.
• MIS should be improved by connecting all regional offices and branches to the head
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 of Punjab should give some extra credit to concern to professional
qualifications such as MBA (IT)’s, M.B.A’s, C.A’s A.C.M.A’s at the time of
recruitment and selection.
• 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.
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The Bank of Punjab
During my internship I observed that other internees in the bank use to stick with one
department only. 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.
But I would suggest that one must work in every department for some time to gain a
hand on experience of all the departments. As in real working environment employee
have to coordinate with other departments, so he/she must know what the other
departments operations are and how they work.
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The Bank of Punjab
To me, 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. On the contrary practical life is specific, enclosed
in a jar. In practical professionalism and firm’s environment is each and every thing.
Professional life only builds on the knowledge based on books even though it may only use
1% of the theoretical knowledge.
16: Conclusions
The Bank of Punjab is contributing a lot towards the industrial development and capital
formation in the country. As it is exhibit from the data regarding the bank’s financial
performance as shows in the financial performance as shows in the financial analysis, that
bank is sharing major banking business of the country. Furthermore the policies and schemes
as are introduced and carried on by the bank are of great source of help in its trading and non-
trading growth they facilitate trade both inside and outside the country. The Bank if Punjab
has endeavored to remain in the forefront of modern financial institutions and has
consistently shows tremendous growth in all area of its activity. However after scheduling,
due to its emphasis on consolidation and controlled lending, the growth of profit has
somewhat declined. But the ban’s performances are in line with its set goals.
The policies of the bank are uniform and going very smoothly. The employees are given all
the possible facilities and generous compensation. In return employees are stressed for their
best efficiency. Merit policy prevails in all the activities of the bank.
Administration has studied the administration of all other banks, and all their problems and
drawbacks are planned to be avoided. Therefore, the policies of the management are
progressive and proper. The progressive approach and trend towards progress and prosperity
reflects that bank will touch the zenith of development and progress. The dedicated,
enthusiastic and motivated employees can bring that time even earlier.
By analyzing the financial statements of the bank, I came across to know that it is one of the
most growing banks in the subcontinent. Now they should carry on with the present
management which took it from one of the ordinary bank to this level. No doubt
professionalism and internal controls of the bank are one of the major issues which may
results some major losses to the bank. Bias in hiring’s and between colleagues should be
removed.
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The Bank of Punjab
17. References
Reference material used for compiling this report is gathered from these sites.
• www.bop.com.pk
• www.jpmorgan.com
• www.kpmg.com.pk
• www.sbp.gov.pk
• www.globalbanking.com
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