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1) Introduction of Banking
Bank is a pipeline through which currency moves into and out of circulation.
Bank accepts deposits and repays cash to its customers on their demand. The bank
borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate.
It is thus a profit-lending concern. Bank cannot lend all the money that has been
deposited with it. It has to keep a certain portion of the total deposits in cash with
them in order to meet the cash requirements of the individuals and business concern.

1.1 Banking History

Word Bank is said to be derived from the words Bancus or Banque. The history of
banking is traced to as early as 200 BC. The priests in Greece used to keep money and
valuables of the people in temples. These priests thus acted as financial agents. The
origin of banking is also traced to early goldsmiths. They used to keep strong safes for
storing the money and valuables of people. The persons who had surplus money
found it safe and convenient to deposit their valuables with them. The FIRST
STAGE in the development of modern banking, thus, was the accepting of deposits of
cash from those persons who had surplus money with them.
The Goldsmiths used to issue receipts for the money deposited with them. These
receipts began to pass from hand to hand in settlement of transactions because people
had confidence in the integrity and solvency of Goldsmiths. When it was found that
these receipts were drawn in such a way that it entitles any holder to claim the
specified amount of money from goldsmiths. A depositor who is to make the
payments may now get the money in cash from goldsmiths or pay over the receipt to
the creditor. These receipts were the earlier bank notes. The SECOND STAGE in
development of banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with
them did not come to withdraw their funds in cash. They found that only a few
persons presented the receipt for encashment during a given period of time. They also
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found that most of the money deposited with was lying idle. At the same time, they
found that they were being constantly requested for loan on good security. They
thought it profitable to lend at least some of money deposited with them to the needy
persons. This proved quite a profitable business for the goldsmiths. They instead of
charging interest from the depositors began to give them interest on the money
deposited with them. This was the THIRD STAGE, in the development of banking.
.

1.2 Commercial Banking in Pakistan

At the time of partition total number of Banks was 38 only. Out of these Banks the
Pakistani Banks were only 2, Indian Banks 29, Exchange Banks were 7. The total of
deposits of Pakistani Banks was Rs.880 Million and advances were Rs.198 Million.
According to banking companies ordinance Banks are the companies, which transacts
the business of banking in Pakistan. Commercial Banks have constituted the most
important part of the intuitional credit in the economy of Pakistan. Being the largest
source of credits, banking industry is a pivot of whole the economic activities in
Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the
Banks must have paid-up-capital and reserve of not less than Rs.5 Lac and fulfilling
certain other requirements for declaring as Scheduled Bank.
At the time of independence Bank services was badly affected. But with the passage
of time these are improving. The Government of Pakistan nationalized all Banks in
early 1974. This act was done to minimize control of few hands over banking. But
this step was proved futile for the banking in Pakistan. So the Govt. had to revise its
decision in 1990. Two Banks Allied Bank of Pakistan Limited and Muslim
Commercial Bank of Pakistan Limited have been denationalized. Since then Banks
were working well.
Now slogan of the Banks is to serve their customers in the best possible manner.

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2) An Overview of the Bank of Punjab

2.1

History of BOP

The Bank of Punjab was established in November 1989, the first branch which
opened was the Main Branch Lahore. In 1989 BOP was mended as a non-scheduled
Bank in the province of Punjab. The Bank of Punjab started functioning with the
inauguration of its first branch of 7-Egerton Road, Lahore.
In beginning the main deposits were the Government, because it was opened to
support the Government of Punjab. In 1994 the BOP was converted into a Scheduled
Bank it opened its branches in all over the country. There are 306 branches of BOP in
the whole country and now management plan to open 46 new branches of BOP..
Functionally the bank of Punjab is divided in the division and the each division is
headed by the general managers.
The government of the Punjab holds the majority of the shares in BOP. It is doing
business in commercial banking and the retail banking. Corporate banking treasury
and investment and trade finance. The shares of BOP are traded in all three stock
Exchanges of the Pakistan. The strength of its branches in province of Punjab is 237.
The bank provides all types of banking services such as Deposit in Local currency,
Client Deposits in Foreign currency, Remittances and Advances to businesses, trade,
industry and agriculture. The Bank of Punjab has entered into a new era of science to
the nation under the experienced and professional hands of its management. The Bank
of Punjab has played a vital role in the national economy through mobilization of
untapped local resources, promoting savings and providing funds for investments.
The total number of staff of BOP is approx.4000. The staff of BOP is highly qualified
and hard working. Most of the employees are Master Degree Holder. If we highlight
the fact of network BOP is the 6th largest among both the local and foreign banks, in

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the last year ratings it was at 7 th position among the top ten banks in Pakistan. Bank
earned a pre-tax profit of Rs. 124.739 million.
The Bank of Punjab has the privilege to discharge its responsibilities towards national
prosperity and progress. 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. In short span of time the
Bank has been able to evolve a distinct corporate culture through of its owned-based
policies, which are realistic and are on highly professional footings.

2.2 Board of Directors of BOP

Name

Designation

Office Address

Mr. Abdul Ghafoor Chairman

The Bank of Punjab, Head Office BOP Tower, 10-

Mirza

B, Block-E-II, Main Boulevard, Gulberg-III,

Mr.

Naeemuddin President

Lahore
& The Bank of Punjab, Head Office BOP Tower, 10-

Khan

CEO

B, Block-E-II, Main Boulevard, Gulberg-III,

Mr. Javaid Aslam

Director

Lahore.
Chairman, Planning & Development Board
Punjab P&D Department, Govt. of Punjab Civil

Mr. Tariq Bajwa

Secretary

Secretariat, Lahore.
Finance Department, Govt. of Punjab, Civil

Finance/

Secretariat, Lahore.

Director
Mr. Tariq Mahmood Director

Secretary, Auqaf& Religious Affairs, Aiwan-e-

Pasha

Auqaf, Shah Chiragh Building, Near Lahore High

Director

Court, Lahore.
403-Sadiq Plaza Shahrah-e-Quaid-e-Azam Lahore

Ashraf Director

ASSAC CORPORATION, 16 AllamaIqbal Road,

KhawajaFarooqSaeed
Mr.

Junaid

Khawaja
Mr. Saeed Anwar

Director

Lahore.
108-A, Block-E/I, Halli Road Gulberg-III, Lahore

Dr. Umar Saif

Director

Punjab Information Technology Board(PITB),

Arfa Software Technology Park, 11th Floor, 346B, Ferozepur Road, Lahore

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Mr. Raza Saeed

Secretary

to The Bank of Punjab, Head Office BOP Tower, 10-

the Board

B, Block-E-II, Main Boulevard, Gulberg-III,

Lahore

2.3 Top level Management of BOP

Name
Mr.Naeemud Din Khan
Mr. Khalid Siddiq Tirmizey
Mr.Taha Mahmood
Mr.Sajjad Hussain
Mr.Moghis Rafiuddin Bokhari
Mr.Ijaz ur Rehman Qureshi
Mr.Kamran Khalil
Mr.Liaqat Ali
Mr.Taimur Afzal
Mr.MustafaHamdani
Mr.Mahboob ul Hassan
Mr.Tariq Maqbool
Mr.Irfanddin

Designation
President & CEO
Deputy CEO & Head Islamic Banking
Group Head, Retail Banking
Group Head, Special Projects & Legal
Group Head, Human Resources
Group Head, Audit & Risk Asset Review
Group Head, Administrative Support
Group Head, Commercial Banking
Group Head, Retail Finance
Group Head, Payment Services
Group Head, Special Assets Management
Group Head, Compliance & Internal Control
Group Head, Operations

2.4 Awards & Achievements

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Excellence Award by the Central Board of Revenue

The Central Board of Revenue presented "Excellence Award" to the Bank of Punjab
in recognition of the contribution made by the bank towards Government exchequer.

3rd Kissan Time Awards

In recognition of Bank's contribution in development and growth of agricultural
sector, the Bank honored with "Top Bank for Agriculture Loans" and "Best Bank Crop
Insurance" under 3rd Kissan Time Awards year 2006.

Best Corporate Report Award

Annual Report of the Bank for the year 2005 won 5th position for "The Best
Corporate Report Award" for the financial sector, adjudicated jointly by the Institute
of Chartered Accountants of Pakistan and the Institute of Cost and Management
Accountants of Pakistan.

16th Bolan Excellence Award

The Bank was awarded Best Bank Award under 16th Bolan Excellence Awards
distributed in 2006.

Achievement Award
The Lahore Chamber of Commerce & Industry (LCCI) awarded the Bank "LCCI
Achievement Award" 2006.

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Vision Statement of BOP

To be a customer focused bank with service Excellence

Mission Statement of BOP

To exceed the expectation 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
markets through a motivated team"

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3) Structure of Bank of Punjab

3.1 Hierarchy Chart

Functional Hierarchy of Bank of Punjab

Chairperson of Board of
Governor
President of BOP

International
Division

Retail Banking
Division

Special Assets
Management
Division

Credit
Administration
Division

Regions
Risk
Management

Areas

Branches

Commercial
Assets
Management

Corporate
Assets
Management

RCAD
Department

Audit
Division

Regional
Teams

HR
Division

Finance
Division

Report to
State Bank of
Pakistan

Hub
IT
Division

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Hierarchy Chart of BOP Branch BWN (0031)

Branch Manager

Operational
Manager

Credit

Remittances
Account
Opening

Advances

Short-term
Loans

Mortgage
Loans

4) Departments of BOP

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4.1) Account Opening Department

This department is basically known as Deposit Department. Deposit of funds from
outside people is one of the most important functions of this system. Banking system
is based on such deposits without these deposits it is difficult for the bank to run
effectively. Deposits are capital of bank and it is more than bank own capital fund.
This deposit is a form of borrowing for bank. Bank then uses these deposits by lent
out it other parties that generate profits and bank is shared as well in such profit as
well. Such deposit formation is done through opening an account in the bank account
opening department.
Basic Tasks

Responsible for processing request of account opening/closing.

Customer queries
Statement printing and other customer related transactions (this position is also

responsible for signature capturing).

NDRA verification of CNICs before account opening.
Issuance of checkbook as per laid down procedure and preparation of
periodical MIS related to client service area.

4.2) Cash Department

This department is considered as most likely to risk in any bank. The requirement to
work in this department is that the very careful, capable, competent and alert are
required. Balance of payments actually has a diligent staff with considerable skills and
to work. There is a department of box in which the head of the department of housing
and deeply controlling all the money on their activities

Basic Tasks

Issuance of Token.
Receiving of cash/payment.
Receiving of utility, credit card bills.
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Receiving of school fee.

Handling and keeping records of said department.
Marketing for branch deposit.
Alternate of Cash Officer on Alternate Saturday.
Any other duty will be assigned by the Manage at any time

4.3) Clearing Department

The function of this department is to make the arrangements for collection of bank
cheques. But in the traditional banking system it is not the legal obligation of the
banker to collect cheques drawn upon other bank for a customer. But, in today
banking system scenario through modern banking practices it is now easy the
collection of cheques and bills on behalf of the customer.

4.4) Remittance Department

Transfer of money or equivalent to money from one branch to another branch of the
same bank is called remittance. This service is specially provides to the regular
customer of the bank. The main function of this department is transfer of funds.
Fundamental function of this department is under below

Demand Draft.
Travellers Cheque
Telegraphic transfer.
Mail transfer.
Pay order.
OBC.

IBC.

4.5) Credit Department

Credit department is also one of the most important departments of the bank. It's
called the brain bank. This department controls the relations of the bank or financerelated loans. The credit department of the balance of payments also performs the
functions of connecting to the credit management and credit accounts. Skilled
professionals offer modern corporate banking services in personal behavior. The
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commitment to maintain steady long-term relationships and long term relationships
with our customers, the Bank's balance of payments services change combined with
the technological capacity to offer banking solutions complicated.

5) Marketing Mix of BOP

Marketers use several tackle to obtain preferred reactions from their objective
markets. That tackles compose a promotion mix.
These tackles are categorized into four large group that are called the four Ps of
selling: product, price, place and advertising.
From the buyers point of sight every marketing tool is planned to convey a consumer
advantage. The sellers four Ps communicate to the customers four Cs.
4 Ps

4 Cs

Product

Customer Solution

Price

Customer Cost

Place

Convenience

Promotion

Communication

5.1 Products
Product is the combination of goods and services that can be obtainable to a market to
suit the need and wants
Product is the first and the major significant aspect of promotion mix. Product plan
calls for creation corresponding decision on product mix, product line, brands,
packaging, and laboring.

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Cut out to gather the high and diverse demands of todays customer, The Bank of
Punjab has an array of products in the pipeline.
New Product Are Essential To Growth
The Bank of Punjab has a big product collection but it should keep on initiate new
products & services to the customers, to keep side by side with the change and
innovation.

Replacement product must be created

To build sales

To keep up with the competition

As the product ages, its profit generally declines.

Primary Banking Product

Primary banking products offered by BOP are:

Current Account

Saving Account/PLS Deposits

The three major product offered by The Bank of Punjab.

Deposit Product

Current Account

BOP Basic Banking Account

YLS(Young Line Saving Account) launch in 2010

Online Banking
When a customer wants deposit the money or encash the cheque or to transmit the
money from account in one city branch to another city branch he use the online
banking facility. The client has to be relevant for this particular array between
branches and that will make him capable to transmit his money very fast. Ideally this
transfer should take only 5 to 10 minutes but practically it takes about half an hour or
so. Bank charge a amount on Rs 300 if the amount of deposit or withdraw is less than
100,000 and if the amount exceeds 100,000 the bank dont charge any amount.
Lockers
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Lockers are available in three different sizes small, medium and big against a fee on
annually basis.
Locker Size

Annual Fee

Small

Rs.1,200

Medium

Rs.1,800

Large

Rs.3,000

Extra Large

Rs.6,500

Car Financing
The Bank of Punjab Car is an extremely successful scheme which, has enabled
hundreds of individuals to own their desired brand new cars at

Easily affordable & Flexible Installments

Minimum Down Payment

Minimum Insurance

Others

SME Financing

Agriculture Credit

Consumer and Commercial Financing

ATM Facility

Debit Card

Credit Card

E-Banking etc

BOP solar scheme (Launch inn 2013)

5.2) Pricing
Price is anything which is paying against something.
The major ordinary and clear validation given for the significance of price is that price
is the only aspect in the marketing mix that produces profits; all other aspects are
linked with cost. The charges rewarded for the services mainly include:
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Mark up/ interest

Bank Charges

Fees and Bank Commission

The Bank of Punjab proposes very rational and aggressive charges on all the services
it offers to its customers. Its rates for some client products like car finance are the
lowest in the peer group.

5.3) Place
This includes the past actions the company undertake for made the product that
accessible to the target customers.
The manufacturer does not sell his products straight to ending user. Between producer
and ultimate users locate one or more marketing channel. They detain the market
through diverse channels. For this reason, they select positions for head office and its
branches, which are suitable to detain final market.
To constantly propose polite, specialized and superior banking solutions & to become
easy to get to to more & more people, The Bank of Punjab has go on board upon a
quick development programmed, planning to offer a networking that compose
services accessible to any of the customers in all the main city of Pakistan. The Bank
of Punjab has 306 branches in all over the Pakistan and now the BOP management
plan to open 46 more branches in Punjab.

5.4) Promotion
Promotion means communicate the product to the public about the merits of the
product and also induces the potential buyers to buy it.
That is an age of opposition. Many organizations are giving monetary services to the
consumer. Those days everyone is in front of stress of competitor. In this world of
rising rivalry between banks that is single method to carry on and develop for banks.
The market place is the suitable marketing and support of its products. Same is the
case with banking company. There is massive number of distant and limited banks
working in the country and it has been observed that they are highlights much on their
marketing plans. In this situation the key for a bank to be successful and capture its
customers is sufficient support of its products &services. The bank can capture and
keep its customers through:

Sales advertising
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commercial

straight Marketing

community Relation

5) Human Resource Activities

This division performs the duty of hiring the employees, training the employees as
well as retaining the employees and if necessary, firing the employees.

6) SWOT Analysis of BOP

SWOT analysis is an acronym that stands for strengths, weaknesses, opportunities and
threats. SWOT analysis is careful evaluation of an organizations internal strengths
and weaknesses as well as its environment opportunities and threats.
SWOT analysis is a situational which includes strengths, weaknesses, opportunities
and threats that affect organizational performance.
The overall evaluation of a company strengths, weaknesses, opportunities and threats
is called SWOT analysis.
In SWOT analysis the best strategies accomplish an organizations mission by:

Exploiting an organizations strengths and opportunities.

Neutralizing its threats.
Avoiding or correcting its weaknesses.

SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context; managers assess internal strengths distinctive
competencies & weaknesses and external opportunities & threats. The goal is to then
develop good strategies and exploit strengths and opportunities, neutralize threats and
avoid weaknesses.

Strengths
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Firstly it is Supported by Punjab Government, or funded by the Punjab

Government, it build people trust

BOP has signed an MOU with Government of the Punjab to provide facility
regarding to SME financing to the engineering firms of Government of the Punjab

for managing infrastructure

The bank of the Punjab is rated among top six banks in Pakistan; in perspective of

remittance business as compare other province banks

BOP has high credit rating as compare to other province bank, because BOP is
performing positive role in economic progress through reengineered operations

and innovative financial products

BOP is doing well in every facet of performance through clients focused policies

to maximize value and satisfaction as compare to other province bank

Wide range of consumers financing, agriculture loans scheme as compare to

others province bank

The BOP in strength that it is managing the Chief Minister self employment

scheme for unemployed educated youth.

The BOP has employ energetic work ethics conducive to merit, integrity better
then peers and exceeding customers expectations as compare to other province

banks
BOP in a strength because it have Government Deposit as compare to others
BOP has huge branches in commercial areas even remote area to meet the

consumers desired
BOP is following roles and regulation very strictly which received from Punjab

Government, so it makes the environment in disciplined

BOP has strength due to its name Punjab so Majority people prefer to deposit

money in this bank

BOP in strength because it has reliable, user friendly internal computer system for

their consumers
BOP has very sound financial strength as compare to others bank

Weaknesses

Poor performance of the employees because most the employee did not

communicate with the managers related to task issue or for effective planning
Lack of coordination: employee could not coordinate each other if any worker
face any dispute during the work, so there is need coordination in decision
making, problem solving, in any issues if raise during working hours.
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Traditional approach Because BOP is still using old method for working and

for documentation
BOP has good product and service but it cannot participate in promoting its

product on electronic media. Less promotion activities

Poor customers dealing as compare to other banks, employee did not behave

with consumers in sweat manners

Lack of training and awareness program, BOP is not conducting extensive
training to their employees, thats why employee are not well trained in their
job

Opportunities

Due to huge Government Deposit BOP has the opportunity to expand its

network in remote areas.

The BOP management have been improved by the new management, now
there is opportunity to considered adequate effectively implemented and

monitored
BOP has opportunity it is earning commission on Government Transaction
Due to huge revenue, BOP has opportunity to introduce new scheme related to
Consumers finance, in Retail banking, and in Agriculture loan scheme to

obtained maximum market share

BOP Trust and reliability due to supported by Punjab Government create
opportunity to increase the deposit and profitability through expanding their

products and services to the peoples

Due to increasing in deposit BOP could increase its investment and financing
in banking sector

Threats
Inflation is big causes, Modern type of banking, these are the big threats for
BOP, it leads to reduce the deposit by reducing the consumers as well as

working condition
Punjab roles and regulation, the changing trend in Punjab Government policies

also become threat to BOP

Political instability, changing or up and down in Politician parities also a big

threat for BOP, new candidate will come with new policies
Due to usability among country and its economic condition investor feel

hesitate to investment their revenue

Modern marketing concept, efficient service adopt by the competitors are also

threat to BOP
Muslim community hate the consumers banking, it is also threat for BOP
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7) PEST Analysis of BOP

PEST analysis of any industry investigates the important factors that affect the
industry and influence the companies operating in the sector. PEST stands for
Political, Economic, Social and Technological analysis. The PEST Analysis is a tool
to analyze the forces that drive the industry and how those factors can influence the
industry.

POLITICAL

ECONOMICAL

SOCIO CULTURAL

TECHNOLOGICAL

Political:
The political condition of our country is not satisfactory. Every government
has its own policies.

Every government cut off polices of previous

Government also is trying to implement new tax policies and other regulation
to encourage the economy. When the political environment is not satisfactory,
the foreign investors would not like to come and make investment due to
which foreign investment would go down.

Economic:
The bank of Punjab is operating its business in present economy. The
economic condition of this country is not up to mark. Heavy loans and
increasing inflation rate make the business environment strict. Increasing
inflation rate cause of production due to which our countries products well out
at a high prices with low margin.

Social:

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In this environment, many processes can effect the organization like attitudes,
values behavior and beliefs of people living in different areas. The bank of Punjab
is providing services according to the varying demands and changing life styles.
Technological:
Technical achievement is very important tool to provide services and
customers changing demands. The development and application of advanced
technology help this organization to compete in the global market place.

9) Financial Analysis of Bank of Punjab

To analyze the financial position of BOP, different tools are use, Horizontal analysis,
and Vertical analysis and Ratio analysis of three years.

9.1) Introduction & importance of financial analysis

Financial analysis involves the use of various financial statements. These statements
do several things. First the balance sheet and the second is income statement.
The balance sheet summarizes assets, liabilities and owners equity of a business at a
point in time, while the income statement summarizes revenues and expenses of a
firm over a particular period of time. A conceptual framework for financial analysis
provides the analyst with an interlocking means for structuring the analysis.

9.2 Financial Summary of BOP (3 Years)

Operating Results
Markup/Return/Interest Rs

in

Earned
Millions
Markup/Return/Interest Rs
in
Expense
Net Markup Income

Millions
Rs
in

Non-markup based

Millions
Rs
in

Income
Non-markup based

Millions
Rs
in

Expense

Millions

2011

2012

2013

6,125

11,579

17,539

2,669

7,509

13,939

3,456

4,070

3,600

1,331

2,954

5.423

1,291

1,882

2,289

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Provision against

Rs

NPLs

Millions
Rs
in

Net Profit Before Tax

Net Profit After Tax

in

Millions
Rs
in
Millions

331

374

1,888

3,165

4,769

4,846

2,353

3,804

4,446

Balan
ce Sheet
Total Assets
Advances(net)
Investments
Share Holders Equity
Revaluation Reserve
Deposits
Borrowings from FIs

Rs

in

Millions
Rs
in
Millions
Rs
in
Millions
Rs
in
Millions
Rs
in
Millions
Rs
in
Millions
Rs
in
Millions

1,11,154 1,64,855 2,34,974

63,624

1,01,320 1,33,894

18,026

28,233

73,462

6,777

10,659

15,110

6,893

5,467

3,885

88,465

1,37,728 1,91,969

6,791

6,989

17,843

COMMENTS

BOP income statement for these three years represents a high growth in it.
Its all due to the increase in equity and increase in deposits of bank.
Rise in markup interest earning income results rise up in the profit of bank

represents increase in lending by the bank.

Deposits are almost rose up to around 300% in these five years.
These five years were really good for banking sector. Assets of the banks are
rise up to 400% particularly in 2013 just because of crescent towers.

9.3 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. This analysis is used to comment on
the growth of specific line item in the industry or firm.
2010

2011

2012

Operating Results
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Markup/Return/Interest
Earned
Markup/Return/Interest
Expense
Net Markup Income
Non-markup based Income
Non-markup based Expense
Provision against NPLs
Net Profit Before Tax
Net Profit After Tax
Balance Sheet
Total Assets
Advances(net)
Investments
Share Holders Equity
Revaluation Reserve
Deposits
Borrowings from FIs

58.28

47.10

33.98

73.06

64.45

46.12

%
%
%
%
%
%

46.87
17.58
10.92
85.80
45.15
41.86

15.08
54.94
31.40
11.49
33.63
38.14

-13.05
45.52
17.78
80.19
1.58
14.43

%
%
%
%
%
%
%

40.33
38.01
10.14
34.77
50.39
38.14
58.29

32.57
37.20
36.15
36.41
-26.08
35.76
2.83

29.84
24.32
61.56
29.45
-40.72
28.25
60.83

COMMENTS

Total earnings marks-up and non mark-up were rising 33% from last year. As

deposits and the lendings of the banks are rising up.

Administrative expenses are increased with a great pace in last few years

because of high rate of inflation.

Rise in expenses result decrease in the 22% profit from last year.
Total assets were increased in last few years. 22% increase in the assets from

the last year represents growth in the bank.

As bank increase their paid up capital because of which SOE increase at the
end of 2013.

9.4 Vertical analysis

It represents the percent of a line item (expenses, tax, interestsand dividends) impacts
on total revenues.
Markup/Return/Interest
Earned
Non-markup based Income
Markup/Return/Interest
Expense
Non-markup based Expense
Provision against NPLs
Net Profit Before Tax
Net Profit After Tax

2010

2011

2012

82.15

79.67

76.38

17.85

20.33

23.62

35.80

51.67

60.70

%
%
%
%

17.31
4.44
42.45
31.56

12.95
2.57
32.81
26.17

9.97
8.22
21.10
19.36

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INTERNSHIP REPORT

COMMENTS

Mark-up interest earned is increased because of increase in 30% lendings

from the last year.

Net profit before and after tax is decreased because of huge rise up in the
administrative expense.

9.5 Ratio analysis

Ratio analysis is used to calculate the profitability, liquidity / leverage etc. of the firm.
From ratio analysis it is possible to predict future variances.
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
No. of branches
Staff strength
Gross margin
Net margin
Net interest margin
Total revenue
Equity/Assets
ROE
Cost/Income

%
%
Times
%
Times

2010
56
66.11
2.79
49.16
0.07

2011
35
67.89
1.94
54.16
0.09

2012
21
53.71
1.65
49.27
0.1

2.65

2.76

2.22

Times
Rs/share
Rs/share
Rs/share
%
No.
No.
%
%
%
%
%
%
%

10.23
10.01
5.2
102.45
12.78
266
3,430
4.19
3.99
3.90
5.39
12.10
21.90
26.90

7.71
13.14
3.25
101.25
10.09
266
3,681
3.10
3.03
2.95
4.81
10.80
25.50
26.40

9.31
10.51
3.5
97.8
9.69
272
3,859
3.30
3.16
3.09
4.91
10.30
25.40
24.70

Gross spread ratio

Gross spread ratio defines the total spread of interest between borrowing and

lending.
Spread: Difference between funded revenue as a percentage of average

earning assets and the cost of funds as a percentage of average paying funds.
The higher the spread the higher will be the profit margin.
GSR=Rev/CGS
GSR= (Mark-up earned Mark-up expense)/Mark-up earned
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INTERNSHIP REPORT

GRS is 2nd highest all over the globe in Pakistan.

GRS of the bank is decreasing because of the decrease in margin, SBP rise up
the interest rates on deposits.

Profit before tax to total income

Operating Income - Operating Cost = Profit before Tax

This ratio tells what percent of total income is earned before paying all the

taxes.
BOP has a high value of profit before tax to total income and they are
decreasing after 2012 because of increase in administrative expenses and

righting off the bad debts.

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

Markup/interest cover ratio

This ratio tells what percent of interest is covered from the total income of

the firm or 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 tax to total income

This ratio analysis tells profitability of a firm after paying all the taxes to total

income.
Profitability of BOP is increased because of the decrease in tax paid to Govt.

and of high spread ratio.

BOP negotiated their taxes with the Govt. and only paid 20% tax in 2012 and
only 8% in 2013 instead of 35%.

Total assets turnover

Assets turnover = Net Income/Total Assets

This ratio tells the turnover of the assets to generate income.
This ratio is increased during last few years which represent increase in the
turnover by assets.
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INTERNSHIP REPORT

Return on average total assets (after tax)

This ratio gives an idea of retuning net profit generated by the bank in

comparison with assets.

Return on assets = Profit after Tax/Total Assets
This ratio is decreasing in the last year because of decrease in profit as

expenses rose up.

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.

Price earnings ratio

Price earnings ratio = Market price of a share/EPS

From this ratio it is analyzed what % of EPS is the part of MPS. What percent
earned from a share equivalent to the worth of 1 Rs MPS by the bank or a
firm.

EPS (earning per share)

EPS = Net Income/Total Shares

Through this ratio it can be analyzed what percent of 1 Rs share is earned.

Capital adequacy ratio

Capital adequacy ratio informs lending up to a certain ratio of equity.

This ratio is set by the State Bank of Pakistan.

Net Interest Income

Difference between funded revenue as a percentage of average earning assets

and the cost of funds as a percentage of average paying funds.
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INTERNSHIP REPORT

ROE (Return on Equity)

Profit before tax as a percentage of total equity.

Cost/Income

Operating Cost includes all expenses charged to arrive at profit before tax
excluding cost of funds, provisions and head office expenses. Head office
expenses are not considered since all banks do not account for head office

expenses in their financial statements.

Operating Income means funded and non-funded revenue less cost of funds

and provisions.
As administrative costs are increased because of which results decrease in the
Cost to Income Ratio.

10) Work done as an Internee

There are following learning points for me in the bank.

First Week

In my first week in Bank of Punjab, they assigned me work in Account Opening

Department. Mam. SHAHIDA trained me very nicely and I learned lot of things in
this department. He told me:

Different accounts names and their codes

How to open the account?
New Computerized National Identity Card is must for opening of new

account.
How to fill the deposit slip if anyone wants to transfer cash in the account?
How to fill the different accounts form?
How to fill the voucher for issuing of the cheque book for the first time?
How to fill the requisition slip for the second time issuance of cheque book?
How to issue the cheque book?
How to enter it in the register?
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INTERNSHIP REPORT

What are the procedures for the ATM card?

What are the necessary requirements of different accounts to be

opened?
Joint Stock Companys Account
Copies of following documents duly certified by the authorized officer:

Resolution of Board of Directors for opening of account specifying the

persons authorized to operate the companys account.

Memorandum and Article of Association
Certificate of commencement of company
Attested copies of CNIC of all directors

Individual Account

Application for account opening

SS (Specimen Signature) card
Attested copy of CNIC
Verification of person through NADRA Verysis System. It is a mandatory

requirement to verify the CNIC of the customer before opening the account
In case of salaried person attested copy of his/her service card or any other

acceptable evidence of service

In case of illiterate person two passport size photograph and thumb impression

Right & Left on SS Card

In case CNIC does not contain a photograph Bank may allow the customer to
open the account subject to provision the following documents:
A copy of the photograph duly attested by Gazette Officer / Nazim
A confirmation in writing to the effect that the person has no other
document bearing his/her photograph
Moreover, the particulars of CNIC of such person must be confirmed
from NADRA Verisys System

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INTERNSHIP REPORT

Partnership Account

Application for account opening

SS (Specimen Signature) card
Attested copies of CNIC of all partners
Attested copy of Partnership Deed or Letter of Partnership duly signed by all

partners of the firm

Attested copy of registration certificate with registrar of the firm. In case of
unregistered partnership, this fact should be clearly mentioned on the account

opening form
Authority letter in original, in favor of the person authorized to operate the
account of the firm

Illiterate/Photo/Disable Person Account

Attested copy of CNIC

Two attested photograph (one photograph should be pasted on the account
opening form and other should be pasted on SS card). Left thumb impression
in case of male and right thumb impression in case of female on the account
opening application & SS card.

Agent Account

Attested copy of CNIC of the agent

Certified copy of Power of Attorney

Trust Account

Attested copy of Certificate of Registration

Resolution duly passed by the trustees regarding opening and operating of

account in the bank in the name of said Trust Deed

Attested copies of CNIC of all trustees
Certified copy of Letter of Administration Instrument of Trust

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INTERNSHIP REPORT

Minor Account

A minor is a person who has not attained the age of 18 years, if the court
appoint guardian of his/her person or property, then the period of his/her

minority extends to the age of 21 years.

An account in the name of minor is allowed to open by his guardian preferably

jointly in the name of guardian / minor.

Title of account is on the minors name (as per Form-B) and word minor be
added to the title of account. In the account opening form, the particulars of

guardian will be filled out in the column of personal information.

Attested copy of CNIC of guardian
Attested copy of Form-B of minor

Clubs, Societies & Association Account

Certified copy of Certificate of registration issued by the registrar of Co-

operative Societies / Registration Authority

Certified copy of Memorandum and Article of Association of the society

containing official seal of the Registration Authority

Permission of the Registration Authority for opening of account in the name of

association as required under Section 37 of Co-operative Societies Act 1925.

List of member of the Managing Committee duly certified by the Registrar of

Societies
Attested copies of CNIC of the authorized officials / persons

Accomplishment
I am fully trained in this job how to open the different accounts, how to issue the
cheque book and enter it in the register, how to transfer the amount through cash or
cheque to an account and how to issue a Debit Card.

Second Week

In the second week in the Bank of Punjab, they assigned me work in the Clearing
Department. Mr. MAZHAR AZEEM trained me very nicely and I learned lot of
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INTERNSHIP REPORT
things in this department. Funds transfer between two banks and branches is known as
clearing.

There are two types of clearing:

I/W (Inward Clearing)

O/W (Outward Clearing)

In this week I entered the cheques lodged for inward clearing in clearing register as
their cheque number, account holder name, cheque amount and bank name amount to
be paid.
Secondly, in this week I prepared outward clearing for next day. Same as entered
cheque number, account holder name, cheque amount and bank name amount to be
paid.
In this week I also entered cheque return in cheque return register and put cheque
return slip on cheque.

Accomplishments
I am fully trained now in this particular job. How to fill cheque return slip? How to
enter in I/W, O/W clearing registered?

Third Week

In third week I perform following tasks relating to the banking system

.1. IBC
2. OBC
In this week I worked for IBC (Inter Billing Clearing). IBC means cheque lodged for
clearing from other city. I entered these cheques in IBC register if it is BOP cheque
then Mr. ASJAD cleared or return this cheque. If it is cheque of other bank then it is
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INTERNSHIP REPORT
again entered in O/W clearing registered and lodged next day for clearing. Secondly,
in this week I prepared OBC, filling of OBC slip as cheque number, their amount,
OBC number and branch name.

Accomplishments
In this week I repeatedly performed this job and now I am fully trained in this job.

Fourth Week
In fourth week in Bank of Punjab, they assign me work in Remittances Department.
Mr. SHAFIQ PARACHA trained me very nicely and I learned lot of things in this
department. He assigns me work for Remittances, Demand Draft and Pay Order
preparation. Demand Draft is for payment outside of city and Pay Order for local
payment. It is a secure source of payment. There are no charges for pay order while
other banks charge for this service so it is an advantage going to BOP to attract
customers.

Accomplishments
In this week I repeatedly perform the jobs and now I am fully trained in such type of
operations i.e. to make the DD, pay order and mark the charges if customer is not
account holder of bank then Rs.255commission of the bank.

Fifth Week

In this week I worked in Accounts and Cash Department. In this week I learned about
receipts and payments, how to enter it in computer, how to sort the vouchers and
preparation of salaries.

Accomplishments
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INTERNSHIP REPORT
I am fully trained in this job i.e. to check that all the vouchers are scrutinized and
matched with activity.

Sixth Week

In sixth week I worked in Credit Department. I learned about advances from Credit
Officer What are requirements for loan? It is a procedure that takes many days.

Accomplishments
In this week I am fully trained in these jobs and remaining period is spend to collect
internship letter

11) Conclusion

Marketing project is an interesting program, which gave us the practical touch of the
field. Through this, we learnt that what is the exact activities in the sectors and
approaches which they used when they are making their products. We learnt from the
company Manager and understood the operations of company. This program enhanced
my knowledge about the industry.

12) Recommendations

BOP policy frame work should be clear and should be transparences

BOP are required to motivate their supervisor, branch managers that they treat

with their employees fairly

BOP should improve its Performance appraisal system and it must be on merit
Employee training is essential, BOP should conduct training program for their
workers.

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INTERNSHIP REPORT

BOP should make a good working condition; e.g. branch physical

environment, working desk etc. if possible avoid overcrowding and allow each

worker his or her own personal space.

BOP should administer the associate performance review program
BOP should build a formal recognition program, like employee of the month.
Etc.

12) Bibliography

www.bop.com.pk
https://www.bop.com.pk/index.aspx
https://www.bop.com.pk/Products.aspx
https://www.bop.com.pk/Branches.aspx
http://hrweb.berkeley.edu/guides/managing-hr/managing-

successfully/performance-management
https://www.bop.com.pk/Financial/AnnualAccounts.aspx
http://www.investopedia.com/features/industryhandbook/banking.asp

Bank Magazine

Brochures

Information provided by the employees

My observation

13) Glossary
BOP: Bank of Punjab
H.O:Head Office
CEO: Chief Executive Officer
B.D: Board of Directors

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INTERNSHIP REPORT
FED:Federal Excise Duty
WHT: With Holding Tax
TDR:Term Deposit Receipts
CDR: Cash Deposit Receipts
AOF: Account Opening Form
SSC: Specimen Signature Card
KYC: Know Your Customers
IBC: Inward Bills for Collection
OBC: Outward Bills for Collection
NIFT: National Institute of Facilitation Technology
PO: Pay Order
DD: Demand Draft
ATM: Automated Teller Machine
PLS: Profit And Loss Saving A/C
LTF: Loan Transfer Facility
RF: Running Finance
RM: Relationship Manager

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INTERNSHIP REPORT
RO: Relationship Officer
TL: Transfer Letter
DAF: Delivery Acceptance Form
PO: Purchase Order
LOA: Letter of Acceptance
NIT: National Investment Trust
LTCF: Long-Term Credit Fund
CAC: Central Audit Committee
BRMC: Board Risk Management Committee

Page | 35