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EXECUTIVE SUMMARY
Internship is considered to be a compulsory practical training for students of business
administration at COMSATS institute of information technology, Wah Cantt. Its time is
six weeks and has demonstrated to be an opportunity of training for the students. The
main usage of such training is to make students endowed to relate the theoretical
knowledge in practical environment. Students recognize about the practical knowledge.
This is my internship report; I have completed my internship at BOP (Wah Cantt Branch). In
this report there is introduction, background of study, banking overview and the purpose and
methodology. In BOPs introduction, its past, the present and the future outlook are included,
along with the vision, mission, goals and core values of BOP.
This report show my analysis and my working in different finance areas and also introduction
of the organization i.e. the business operations section, the major products, services,
departments as a whole and the departments of the branch is discussed. The financial analysis
of the financial statements that is balance sheet and the income statement of BOP has been
conducted including the common size analysis, ratio analysis of five years.
I have shown the basis of the business and how they have modified themselves to 21st
century. I found strength and weaknesses of the BOP as a whole and of Wah branch. The
report is then concluded and I gave some recommendations according to my knowledge. The
purpose of the study is to get experience of the real life finance practices in order to bridge
the gap between the theoretical and the practical approach and to gather the knowledge of the
different aspects of the vast field of profession.
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CHAPTER # 01
COMPANY BACKGROUND
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COMPANY BACKGROUND
Introduction:
The Bank of Punjab is basically a commercial bank and provides commercial banking
and related services.The services provide by the bank deposit in local currency, client
deposit in foreign currency, remittances, and advances to business, trade, industry and
agriculture. The segments that this bank includes are as follows: trading and sales, in
which there is fixed income, equity, foreign exchanges, commodities, credit, funding,
own position securities, lending and repose, and brokerage debt; retail banking, includes
retail lending and deposits, private lending and deposits, trust and estates investment
advice, merchant / commercial and private labels and retail; commercial banking, which
includes project finance, real estate, export finance, trade finance, lending, guarantees,
bills of exchange and deposits; payment and settlement, which includes payments and
collections, funds transfer, clearing and settlement, and agency service, which has
depository receipts, securities lending (customers), issuer and paying agents in it. The
Bank of Punjab has entered a new era of science to the nation under experience and
professional hands of its efficient management. The Bank of Punjab plays a vital role in
the national economy through mobilization of rare as well as untapped local resources,
promoting savings and providing funds for investments. The Bank of Punjab is privileged
to be responsible for providing services to the nation that leads to national progress and
prosperity. Within the couple of years of its scheduling, the bank has not only carved out
for itself prominent niche in the mainstream banking of the country but is also leading in
certain areas. In the short span of time the Bank has been able to evolve a distinct
corporate culture of its owned-based policies, which are realistic and are on highly
professional footings.
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Nature of the Organization:
The Bank of Punjab is a commercial bank and performs all the functions that are
attributed to the commercial banking institution in the area of resource mobilization as
well as loans, and investment. The Bank is thus providing all type of advances to
business, trade, and industry on seasonal and annual basis, and is ensuring, through the
prudent policy, the safety and protection of its loan portfolios, as the resources base of the
bank expands, project financing will also be brought into its fold.
History:
The Bank of Punjab (BOP) was established in Pakistan on 15 Nov 1989, under the Bank
of Punjab Act 1989 and was given the status of scheduled bank in 1994. The bank is
listed on Lahore, Karachi & Islamabad Stock Exchange. The majority shares of the bank
are held by the Government of the Punjab. The role of technology in effective/efficient
operation of financial sector was recognized by the Bank of Punjab, and hence it has
computerized all its branches which are inter-connected with online real time system.
Banks customers are facilitated by shared network of online ATMs in all major citi es of
Pakistan. Substantial share in economic growth, especially of agricultural and SME
sectors are possessed by the bank. Strategic positioning of branches and introduction of a
number of Agri-based financing schemes as well as penetration into Agri-economic
allowed the bank to play a vital role in the development of agriculture sector in Pakistan.
The Bank of Punjab is working as a scheduled commercial bank with its network of 286
branches at all major business centers in the country having the employee strength of
35000. Customer confidence and satisfaction in the services of the bank is depicted by its
increasing branches all over the country.
:
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Role of the BOP in Pakistan:
The bank's major customer is the government. Other customers are various public sector
enterprises from different segments of the economy including textile, real estate,
transport, agriculture, financial institutions and individual customers. Currently, the bank
operates with a network of 286 branches across the country. Bank of Punjab is amongst a
few banks which enjoy better credit rating by Pakistan Credit Rating Agency (PACRA)
like for long-term "AA-" and for short-term "A1+"
Objectives of BOP:
The Bank of Punjab being a commercial bank performs all those function as are
attributed to such banking institutions. The primary objective of the BOP is to
channel the resources into sectors, which have suffered neglect. Other objectives
included:
To expedite the banking services for the masses
To provide the highest rate of return to the shareholders by achieving good profitable
growth.
To enter into financing contracts and to mobilize resources in local and now in
foreign currencies consistent with the objects of the bank.
To be perceived by the customers and step forward as the best in every operation.
Have the staff of the highest caliber.
To inspect, supervise and estimate credit of member societies.
To help the growth of the cooperative movement.
To afford financial assistance to members societies in such manner as required
Excel in the way of working of together to make decisions, manage change and get
things done.
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CHAPTER # 02
OVERVIEW OF ORGANISATION
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Board of Directors:
Ghafoor Mirza
(Chairman Board ,BOP)
Mr. Naeemuddin khan
(President)
Mr. Tariq Mahmood Pasha
(Director)
Ms. Tariq Bajwa
(Director)
Mr. Rizwan ullah khan
(Director)
Mr. Junaid Ashraf Khawaja
(Director)
Mr. Farooq Ahmed Awan
(Director)
Mr. M. Naveed Masood
(Director)
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Branch Networks:
During the year 2011, in recognition of consistent improvement and sustained growth in
all facets of operation, the State Bank of Pakistan granted additional 11 licenses for
opening of new branches. Accordingly, the number of branches has increased from 273
to 284 at close of the year 2011. The Bank has planned to further open 22 branches in
year 2012. The major branches are at Karachi, Lahore, Islamabad, Faisalabad,
Rawalpindi, Multan, Gujarnawala, and Peshawar.
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Organization Chart:
Source: www.google.com
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CHAPTER # 03
BUSINESS OPERATIONS
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BUSINESS OPERATIONS
Products of BOP:
Following are the major products offered by Bank of Punjab.
Agriculture scheme:
There are many agriculture promotion schemes provided by BOP
Agri finance branches
Kisan Dost Running Finance FacilityKisan Dost Lease Finance Facility
Kisan Dost Cold Storage Finance Facility
Kisan Dost Green House Finance Scheme
Kisan Dost Livestock Development Scheme
Agricultural Schemes Markup
Consumer schemes:
Aasaish loan
Quick cash
Car lease
House loan
Smart cash personal loan
Motorcycle lease scheme
Caravan fleet financing
Commercial schemes:
CNG filling station
Auto lease financing scheme
Car dealers
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Karobar barhao scheme
Fertilizer dealer financing scheme
Financing scheme for the purchase of office/shop
Women entrepreneur finance scheme
House loan:
This loan is provided to salaried individuals, self employed professionals, and self
employed businessmen.
The amount of loan starts from Rs.200,000 and is up to Rs.300,000.
The monthly installment is up to 50% of the net income of the individual
The tenure of the loan is from 3 years to 20 years.
Car loan:
The loan is provided for salaried individuals, self employed professionals, and
self employed businessmen.
The loan amount ranges from Rs.200,000 to Rs.5000,000
The tenure of these loans is from 1 year to 5 years.The monthly payment is up to 50% of the individuals salary.
Asaish Loan:
The loan is provided for salaried individuals, self employed professionals, and
self employed businessmen
The monthly payment of the loan is not more than 50% of the salary of the
individual
Smart Cash Personal Loan:
This loan is provided to salaried individuals and self employed professionals
The loan amount ranges from Rs.50,000 to Rs.500,000
The tenure of the loan ranges from 1 year to 5 years.
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The monthly payment of the loan should not more than 50% of the individuals
salary.
Karobar Barhao Scheme:
Loan is provided to meet working capital requirements of business
The amount provided under the loan ranges from Rs.200,000 to Rs.50,000,000
The tenure of the loan is 7 years
Live Stock Development Scheme:
The loan is provided to individuals who have their own self owned dairy farms.
The amount of the loan is up to 80% of the cost of animals
The tenure of the loan is 5 years.
The repayment is of 20 quarterly payments
Kisan Dost Aabiari Scheme:
The loan is provided to self cultivator having agriculture land minimum 5 acres
and maximum 50 acres.
The maximum loan amount is Rs.500,000
The tenure of the loan is 5 years
There are ten semiannual payments to repay the loan in 5 years
Kissan Dost Green House Finance Facility:
The applicant of the loan must possess the land to cultivate the green house
The 70%-80% cost of construction of the green house would be provided by the
bank
The repayment of the loan would be made by 20 equal quarterly payments.
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Services at BOP:
Along with above-mentioned products Bank of Punjab also provides numerous services.The difference between products and services is that products are offered while services
are rendered, but as both serve the same purpose (satisfying financial needs); therefore,
both are treated at equal footing.
Major services being rendered by the Bank of Punjab main branch:
Commercial Banking
Corporate & Investment
Cash Management Services
Utility Bills
Lockers
Commercial banking:
The commercial banking group has been developed to fulfill the needs of small &
medium size customers for enhancing banks business significantly with clear focus,
repositioning of resources and active marketing to increase banks profitability.
Commercial banking deals with customers whose sales turnover and aggregate credit are
exposed as per benchmarks prescribed in the sbps prudential regulations.
Corporate & investment banking:
Corporate banking:
The bop corporate banking seeks to attract new clients and retain the existing
relationships and build market share by offering superior services, competitive pricing
and wide product range to valued corporate clients including public sector entities as well
as multi national companies. Bop facilitates its customers for all types of their bankingneeds including working capital, trade finance, and project financing etc. Bop has worked
on some of the local markets largest and most complex transactions and infrastructure
projects. The bop corporate banking group constitutes of seasoned relationship
management team to meet the high service standards of large corporations. The group
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delivers a full range of high quality advisory, financing and operational service solutions
in accordance to customers needs.
Investment banking:
The investment banking group is responsible for developing and executing investment
banking strategy to enhance and maximize shareholder wealth and customer satisfaction.
Ibg has the specialty in providing innovative and unique advice to its clients to facilitate
them in meeting challenges in a dynamic market. The team of qualified and well trained
professionals operates under a strict risk management framework, following best
practices of their fields and continuously striving for excellence
Cash management service:
The process of collection and payments on behalf of customers, using the branch network
is known as cash management. The primary objective is to facilitate organizations with
multiple collection points in gathering cash / funds and making them available in the
customer operating account.
Utility service:
The customers have the facility to pay the bills of telephone, gas and electricity at any
branch from 9:00am to 5:00 pm. These bills can also be paid using the drop box facility
which the individual can drop the check along with the bill at the branch and collect the
receipt in the evening.
Bop locker:
It is one of the utility services that bop provides to their customers for keeping
Jewellery, important documents and other valuables.Other services provided by the bank are:
Atm facility
On-line banking
Lockers facility
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Demand drafts
Letter of credit
Pay order
Mail transfer
Debit card
Collection of utility
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CHAPTER # 04
DEPARTMENTS IN BOP
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DEPARTMENTS IN BOP
Following are the key departments of BOP:
1. Cash department
2. Remittance department
3. Account opening department
4. Clearing department
5. Advances/Credit department
6. Bills remittance department
Function and Purpose of Each Department in BOP
1. Account Opening Department
Bank of Punjab has subsequent kinds of customers under this department. Some are
as Companies, Businessmen, Firms, Trust, Professionals, staff, individuals etc.
Functions of Account Opening department:
Opening an account after verification of customer from NADRA database.
Recording account number and name of applicant in account opening register.
Issuing letter of thanks
Recording first deposit with the bank by customer in general ledger.
Closing account after receiving application from customer.
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2. Clearing Department
Functions of this department
The Bank of Punjab collects cheques on behalf of its customers and this system of
collection of cheques is known as clearing. The representatives of all banks get
together in the clearing house and settle the receipt and payment of cheques
drawn on each other
The main branch receives the cheques from all of its branches and arrange their
collection
Main branch sends these cheques to the state bank of Pakistan, where a
clearinghouse exits
In this clearinghouse, the representatives receive their cheques and go back to
their bank's main branch
Later on, the main branch sends these cheques to their relevant branches where
the validity of these cheques is verified and the accounts of the relevant clients are
affected.
Remittances Department:
Functions of this department
This department deals with the transfer of funds from one place to another place
It is done through Demand draft, Mail transfer, Telegraphic transfer, Pay order
etc.
3. Credit Department:
Functions of this department
The BOP credit department facilitates people by providing loans and financial
facilities to them. The types of loans, their duration and conditions are various as
well as different for every sector.
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BOP Quick cash, BOP Car loan, BOP House loan, BOP SME loan, BOP Aasaish
loan, BOP House loan for federal government, running finance, cash finance,
Agricultural finance.
4. Bill Remittance Department:
Functions of this department
This department deals with the collection of various utility bills like PTCL,
WASA, SNGPL, LESCO
PTCL telephone bills are collected by the bank. These bills are entered in the
system with the consumer record and the bill earns a commission of Rs.2 per billWASA, the water bill are also collected by the bank. They are also entered in
system with consumer record and commission of Rs.2 per bill is earned.
LESCO, the electricity bills are collected by the bank with the commission of
Rs.2 per bill
SNGPL, the sui gas bill are also collected in the same manner as mentioned above
:
5. Cash Department
Functions of this department
Cash department of BOP is given the complete responsibility of handling all
receipts & disbursement of cash. As a result of transaction in both local & foreign
currency. As a consequent it is also responsible for the book keeping of this
transaction &the cash receipt for received deposits and encashment of cheques
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BOP Branch, Wah Cantt Detail:
Branch Name BOP, Wah Cantt
Branch Code 0177
Address Civic center, the Mall, Wah Cantt
Phone no. 051-4902261
Fax no. 051-490226
Tehsil Taxila
District Rawalpindi
Province Punjab
Status Online
Web mail bop.com.pk
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Departments of BOP Wah Cantt Branch
Here, I will discuss those departments which I observed during my internship in BOP
Wah Cantt branch. It is located in civic center the mall, wah cantt. This branch faces
intense competition as there are other banks in similar area. Other banks located in
this area are Habib bank, National bank, Silk bank, Muslim commercial bank. So
there is intense rivalry and competition among all the branches in this area. Masses
that belong to this area are salaried individuals and government employees.
Jobs and Responsibilities:
Mr. Tahir Hussain is the branch manager, and Mr. Ahmed Nadeem is the assistant
branch manager of BOP Wah. He is a very responsible, kind and talented person. He
is a good leader and motivates the employees and staff to work hard and is also very
supportive. Following activities are performed at BOP by the branch manager.
Reviewing reports
Develops objectives for staff
Performance evaluation of staff
Supervision of all branch affairs
Inspection of work to maintain effectiveness
Developing strategy for marketing business/deposit development and public
relations
Operations Manager:
Mr. Kamran Hameed is the operation manager at the BOP Wah. He oversees the
working and operations of all the departments. He reports to branch manager and all
the staff works under him. He is responsible for:
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Zakat deduction on this account
No service charge deduction even if deposited amount is below than
Rs.10,000
3. Basic business account(BBA):
Following are the features of this account:
Minimum start up deposit amount of Rs.1000
Can do two transactions per month i.e. either deposit or withdrawal
No zakat deduction
No interest payments
No deduction of service charges even if deposited amount is less than
Rs.10,000
Remittances Department:
It is very important department of the bank. Remittance is a transfer of funds from one
place to another or from one person to another. The BOP deals with the following type
of remittances:
Demand Draft (DD)
Mail Transfer (MT)
Telegraphic Transfer (TT)
Pay Order
Demand draft (dd):
The demand draft is a written order that is given by the one branch of a bank on behalf of
customer to another branch of the same bank to a certain amount to the certain person
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Mail transfer (mt):
it is the transfer of money from one branch to another branch of the same bank throughmail service is called mail transfer.
Telegraphic transfer (tt):
The most urgent method of remitting money from one place to another place. It is used
when the sender desires to send urgently.
Pay order:
Pay order is a written order issued by the bank on its own branch, payable by itself to
pay a specified sum of money to the person. The purpose of pay order is to transfer the
fund from one place to another
Bills Remittances Department:
This department deals with the collection of various utility bills like WASA, SNGPL,
LESCO, and PTCL. This department facilitates people by providing them with the
opportunity of submitting their bills with much ease. The bank earns a commission of
Rs.2 per bill on the submission on each sort of these bills.
Clearing Department:
The BOP Wah branch also has clearing department where they collect cheques on behalf
of customers, arrange the lot, send it to main branch of BOP from where they are sent to
SBP clearing house. In this clearinghouse, the representatives receive their cheques and
go back to their bank's main branch. Later on, the main branch sends these cheques to
their relevant branches where the validity of these cheques is verified and the accounts of
the relevant clients are affected.
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CHAPTER # 05
WORK DESCRIPTION
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WORK DESCRIPTION
Learning as an Internee:
I did my eight weeks internship in Bank of Punjab Wah Cantt branch, during the summer
breaks.
Operations at BOPBranch:
There are four main departments in BOP Wah branch
1. Account opening department
2. Remittances department
3. Clearance department
During my internship I mostly I worked in account opening department and opened the
account of people in BOP which includes PLS account, current account and basic
business account. I observe the working of all other departments and from which what I
am able to understand, is below in the detail:
Account Opening Department:
It is very important department because of daily or monthly transaction people need to
open their account. I am going to briefly explain the account opening procedure. As
following are the requirements for account opening in BOP:
Basic Requirements for Account Opening:
Copy of ID card of the individual.
Verification of ID card from NADRA.
ID card copy (mothers)
ID card copy (kins)
Copy of electricity bill or gas bill.
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Witness (guarantor) who should already have an account in the bank (for minor
account holder).
For salary individual, copy of pay slip
Cheque book would be issued after 4-5 days
Letterhead pad and stamp in case of a account for business/ organization
Account opening procedure:
Firstly account opening form is filled
All required documents attached to the form
Signature on form is taken by the person whose account is going to be open and
on Specimen Signature Card (SSC)
Signature of operation manager and branch manager
Account opening form number is registered in recordAuthentication( generation of account number in system) done by operation
manager
Deposit slip handed over to customerCustomer submit a copy of deposit slip on cash counter
After one week issuance of cheque book.
ATM and E-banking Services provided on option
Formalities of account opening:
Verysis, that is authentication of the individuals ID card from NADRA
NAB, FAQ authentication
KYC(Know your customer) analysis
Issuance of Letter of Thanks on behalf of manager to the customer
SSC scanned and uploaded in system in the customer account option.
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Bills Remittances Department:
This department deals with the collection of various utility bills like PTCL, WASA,
SNGPL, and LESCO. In addition this department also collects the annual fee payments
of local schools and colleges. The bank earns a commission of Rs.2 per bill, and
commission on fee collection is also earned. The records of all the bills and fee payment
are maintained in the system of the bank.
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CHAPTER # 06
SWOT ANALYSIS
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SWOT ANALYSIS
SWOT analysis is done to measure or find out the strength, weaknesses, opportunity and
threat of business venture or any project. This explains the favorable and unfavorable
internal as well as external factors to achieve to objectives. The SWOT stands for the
internal Strengths and Weaknesses of a business and environmental Opportunities and
Threats faced by the business. This is based on the logic that an effective strategy
maximizes the business strengths and opportunities and at the same time minimizes its
weaknesses and threats. Environmental and industry analysis provide the information to
identify key opportunities and threats of the firms external environment. Here with a
particular reference to BOP, I am going to discuss the concept of SWOT analysis.
STRENGTHS
Biggest customer of BOP:
The Government is the biggest customer of BOP. Bank handles all the transactions
related to government. Act on the behalf of government for the daily money related
transactions. Pay money to other on the behalf of government and take money as well.
Excellent customer services:
The behavior of all the staff with the customer is very helpful and supportive. The
customer is made to feel privileged and superior by treating them in a friendly fashion.
ATM facility:
One of its strength is ATM facility which is now provided by BOP to its customers. Due
to this ATM machine installation, customer feels comfortable because he dosent need to
take his cheque book with him everywhere.
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Credit rating:
BOP is one of a few banks who have very good long run and short run credit rating
Large customer base:
BOP is government bank so it is enjoying the benefit of customer satisfaction. Customer
mostly relies on bop as compared to other banks as it is supported by government of
Pakistan. They feel secure for transacting with the BOP. Therefore it has a large customer
base.
Online banking services:
BOP also provides the facility of online banking to its customers, which is a huge
advantage in todays fast paced and high technology environment
Innovation:
The bank enjoys a strategic competitive position due a variety of products and services
over all domestic players by virtue of its leadership and technological innovations.
WEAKNESSES
Lack of Rewards and incentives:
BOP Wah branch does not provides enough bonuses and incentives to its employees due
to which they are not highly motivated to do their jobs.
Lack of Advertising and Promotion:
BOP has formulized a lot of products and services for its customers, even more than other
commercial banks, but any advertisement on electronic media has not been seen
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Working atmosphere:
The working atmosphere at BOP Wah branch is not cooperative or supportive. The
employees do not freely share information, expertise or knowledge with each other.
There is a lack of team spirit and synergy.
Work distribution:
In BOP Wah branch I observed that some of the employees are overworked, and have too
much work load on them while the others dont have that much responsibility. The tasks
and duties are not properly distributed.
OPPORTUNITIES
Foreign operations:
Bank has no foreign branches so it should open its branches outside the country
BOP has government back:
As it has support of government. It should cash this opportunity by utilizing the support
of government to improve its position in market y increasing its share and their value.
Enhance branch network:
BOP can enhance its local operations by increasing its branches across the country. Not
only in urban areas but in rural areas as well
THREATS
Increase in competition:
Private Banks is increasing in numbers day by day which results in competition. All the
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private banks are providing same facilities to the customers. So it is a big threat for BOP
to deal with.
Lack of promotion and advertisement:
The lack of proper advertisement can seriously undermine the competitive position of the
bank, as well as its image.
Employee turnover:
Lack of job security and job dissatisfaction can be a leading cause for employee turnover.
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MY LEARNING EXPERIENCE
This internship was done by me as a requirement for BBA. I did the internship for 42
days and enjoyed the practical work and also learned how to behave in work
environment. Following are some of the things that I learned during the course of my
internship:
Dealing with customer
Practical exposure of workplace
reporting to the bossA useful experience for future job
How to manage work that is I learned how to create work life balance
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CHAPTER # 07
FINANCIAL ANALYSIS
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FINANCIAL ANALYSIS
Analysis is done to examine systematically, breaking a complex substance into small
parts to gain a better understanding of it and studying the interrelations. Evaluating
feasibility, performance as well as profitability of business or a project is called financial
statement analysis or financial analysis. Professionals take information from the financial
statements and other sort of reports to execute financial analysis, which is presented to
top management. This helps management to making decisions. Analysis is done for
different sort of clients, as creditors concern about liquidity of firm and investors concern
about long term profitability of firm. The concern of the management is the overall
financial health of the firm, in order to deal with the outside stakeholders and potential
investors of the firm.
Financial Analysis of BOP:
Following are the BOPs 5 years (2007-2011) data consisted of balance sheets and
income statements. This data is taken from annual reports from the main website of BOP.
Financial Analysis will include following analysis
1. Common size analysis
Horizontal analysis
Vertical analysis
2.Ratio analysis
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Bank of Punjab
BalanceSheet (Consolidated)
As at December 31, 2011
Assets Dec31,2007 Dec31,2008 Dec31,2009 Dec 31,2010 Dec31,20
Cash and Balance with treasury
banks 14,210,302 10,685,058 13,043,705 14,069,601 16,698,3
Balance with other banks 1,927,662 2,178,455 2,185,782 3,276,234 3,607,10lending to financial institutions 2,450,000 633,333 1,053,550 7,309,587 7,447,37
Investment 73,461,693 22,689,608 57,923,172 56,359,404 92,581,3
Advances 133,899,143 131,724,113 121,303,368 120,796,694 127,129,
Operating Fixed Assets 3,252,759 3,471,838 3,427,267 3,534,660 3,597,48
Deferred tax Assets - 8,388,162 11,921,146 14,063,694 13,886,7
Other Assets 5,789,116 6,122,406 5,770,905 9,721,900 16,049,6
Total Assets 234,990,675 185,892,973 216,628,895 229,131,774 280,997,
Liabilities
Bills payable 937,647 1,219,801 875,618 581,100 850,569
Borrowing 17,842,915 12,278,773 14,040,014 11,526,783 24,963,5
Deposit and other Account 191,968,377 164,071,732 190,858,087 208,176,902 237,896,
Subordinated loans - - - - -
Liabilities against assets subject to
finance lease 40,321 30,632 19,907 13,887 7,831
Deferred tax liabilities 2,205,530 - - - -
Other liabilities 2,983,977 4,564,481 4,700,569 5,223,152 6,506,27
Total 215,978,767 182,165,419 210,494,195 225,521,824 270,224,
Share Capital 4,230,379 5,287,974 5,287,974 5,287,974 5,287,97
Reserves 7,427,232 7,427,232 573,779 2,012,492 1,914,95Inappropriate profit 3,468,956 (7,674,257) (10,372,082) (14,411,509) (14,067,8
Share deposit money - - 10,000,000 10,000,000 17,000,0
Surplus on revaluation of asset 3,885,341 (1,313,395) 645,029 720,993 637,501
Total Liabilities/O.E 19,011,908 3,727,554 6,134,700 3,609,950 10,772,5
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Bank of Punjab
Profit and Loss Statement
Years Dec31,2007 Dec31,2008 Dec31,2009 Dec31,2010 Dec31,2011
Mark-up/return/interest earned 17,539,538 17,752,652 15,640,701 18,217,583 20,682,06
Mark-up/return/interest expenses 13,939,377 16,614,000 19,022,494 18,801,642 21,073,27
Net markup/interest income 3,600,161 1,138,652 (3,380,662) (584,059) (391,210)
provision against loans and advances 1,616,421 18,863,580 9,241,653 559,604 (3,164,234
provision for diminution in the value
of investment 24,479 388,757 955,744 2,767,341 576,597
Bed debts 246,869 - - - -
1,887,769 19,252,337 10,197,397 3,326,945 (2,587,637)
Mark-up income after provisions 1,712,392 (18,113,685) (13,579,190) (3,911,004) 2,196,427
Non Markup/Interest Income
Fee, commission and brokerage
income 659,488 579,520 657,114 562,469 724,499
Dividend income 1,812,870 2,025,160 920,943 404,111 286,375
Income from dealing with Foreign
Currency 377,233 324,327 247,570 134,488 160,089
Sales and redemption of securities 2,039,535 733,787 (124,238) 293,303 330,025
Unrealized gain/ loss on revaluation of
investment - - (1,193) 18,020 (5,383)
Other income 547,635 526,186 518,553 473,055 494,103
Total No mark-up/interest income 5,436,761 4,188,980 2,218,749 1,885,446 1,989,708
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Common Size Analysis
In the common size analysis vertical and horizontal analysis is performed. In the vertical
analysis an item like total asset or net sales is taken as base value and all other values are
compared to this value by dividing them from this base value. In the horizontal analysis
one year is taken as base year and all other years data is compared with value by dividing
the all years value by the base year values.I have done the following horizontal and vertical analysis of five years from 2007 to 2011
with the help of consolidated statements.
Horizontal Analysis
Vertical Analysis
Non Mark-up/Interest Expense 7,149,153 (13,924,705) (11,360,441) (2,025,558) 4,186,135
Administrative expenses 2,255,342 2,808,835 3,038,357 3,435,049 3,959,217
Other provisions - 10,101 - - 1,121
Provision against off B/Sheet
obligation 292 - - 740,000 (244,111)
Other charges 37,950 114,700 794 1,605 205
Total non markup/interest expenses 2,293,584 2,933,636 3,039,151 4,176,654 3,716,432
Profit before Taxation 4,855,569(16,858,341) (14,399,592) (6,202,212) 469,703
Taxationcurrent 170,700 207,600 - - -
-prior year (19,921) 1,052,000 78,491 1,461 5
-deferred 250,772 (8,033,001) (4,383,406) (2,157,119) 174,774
401,551 (6,773,401) (4,304,915) (2,155,658) 174,779
Profit after taxation 4,454,018 (10,084,94) (10,094,677) (4,046,554) 294,924
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Hori zontal Analysis of Balance SheetAssets 2007 2008 2009 2010 2011
Cash and balance 100% 76% 92% 99% 118%
Balance with other banks 100% 114% 114% 170% 188%
Lending to financial institutions 100% 26% 43% 299% 304%
Investment-net 100% 31% 79% 77% 126%
Advances-net 100% 99% 91% 91% 95%
Operating fixed assets-net 100% 107% 106% 109% 111%
Other Assets-net 100% 106% 100% 168% 278%
Total assets 100% 80% 93% 98% 120%
Liabilities
Bill payable 100% 131% 94% 62% 91%
Borrowings 100% 69% 79% 65% 140%
Deposits and other accounts 100% 86% 100% 109% 124%
Liabilities against assets subject to
finance lease 100% 76% 50% 35% 20%
Deferred tax liabilities 100% - - . .
Other Liabilities 100% 153% 158% 175% 218%
Total liabilities 100% 85% 98% 105% 126%
Owners Equity
Share capital 100% 125% 125% 125% 125%
Reserves 100% 100% 8% 28% 26%
Inappropriate profit 100% (222%) (299%) (416%) (406%)
Surplus on revaluation of assets-net of tax 100% (34%) 17% 19% 17%
Total O.E 100% 20% 33% 19% 57%
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INTERPETATION:Horizontal analysis or trend analysis, in which values of balance
sheet over a definite period of time. In the above table base year is 2007 as base year and
divide the next four years with base year. The analysis shows the increasing and
decreasing trend of each item with respect to the previous year.
Hori zontal Analysis of I ncome StatementParticulars 2007 2008 2009 2010 2011Mark-up/return/interest earned 100% 102% 90% 104% 118%Mark-up/return/interest expensed 100% 120% 137% 135% 152%Net mark-up/interest income 100% 32% (94%) (17%) (11%)Provision against non-performing loans
and advances 100% 1167% 572% 35% (196%)Provision for diminution in the value of
investments 100% 1589% 3905% 11305% 2356%Bad debts written off directly 100% - - - -Net mark-up/interest income after
provisions 100% (1058%) (793%) (229%) 129%Non Mark-Up/Interest Income
Fee commission and brokerage income 100% 88% 100% 86% 110%Dividend income 100% 112% 51% 23% 16%Income from dealing in foreign currencies 100% 86% 66% 36% 43%Sales and redemption of securities 100% 36% (7%) 15% 17%Unrealized gain on revaluation of
investments classified as held for trading 100% - - - -Other income-net 100% 97% 95% 87% 91%Total non-mark-up/interest income 100% 78% 41% 35% 37%Non Mark-Up/Interest Expenses
Administrative expenses 100% 125% 135% 153% 176%(Reversal) / Other provisions 100% - - - -Provisions against off balance sheet items 100% - - 253425% (83600%)
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Other charges 100% 303% 3% 5% 0.54%Total non-mark-up/interest expenses 100% 128% 133% 183% 162%Profit Before Taxation 100% (348%) (297%) 128% 10%Taxationcurrent year 100% 122% - - -TaxationPrior years 100% (5821%) (394%) (8%) (0.02%)TaxationDeferred 100% (3204%) (1748%) (861%) 70%
Profit After Taxation 100% (227%) (227%) (91%) 7%Inappropriate profit brought forward 100%
Profit available for appropriation 100%
Basic and diluted earnings per share-after
tax 100%
INTERPETATION: Horizontal analysis or trend analysis, values of a base year are
compared of Income Statement over a definite period of time. In the above table base
year is 2007 and I divide the next four years with base year. This analysis shows the
increasing and decreasing trend of each item with respect to previous year.
VERTICAL ANALYSIS
Verti cal Analysis of Balance SheetParticulars 2006 2007 2008 2009 2010
Assets
Cash and balance with treasury banks 6.04% 5.74% 6.02% 6.14% 5.94%
Balance with other banks 0.82% 1.17% 1% 1.42% 1.28%
Lending to financial institutions 1.04% 0.34% 0.48% 3.19% 2.65%
Investment-net 32% 12.3% 27% 25% 33%
Advances-net 57% 71% 56% 53% 45.2%
Operating fixed assets-net 2% 1.9% 1.58% 1.54% 1.28%
Deferred tax assets - 4.51% 5.5% 6.13% 4.94%
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Other Assets-net 3% 3.3% 2.7% 4.24% 5.71%
Liabilities
Bills payable 0.4% 0.65% 0.40% 0.25% 0.30%Borrowings 8% 6.6% 6.48% 5.03% 8.8%
Deposits and other accounts 82% 89% 88% 91% 85%
Liabilities against assets subject to
financial lease 0.01% 0.01% 0.91 0.60% 0.27%
Deferred tax liabilities 0.94% - - - -
Other Liabilities 1.3% 2.5% 2.16% 2.27% 2.31%
Total liabilities 92% 98% 97% 99% 96.1%
Share capital 1.9% 3% 2.44% 2.30% 1.88%Reserves 3.1% 4% 0.264% 0.87% 0.68%
Inappropriate profit 1.47% (4.12%) (4.78%) (0.28%) (5%)
Share deposit money - - 4.61% 4.36% 6.04%
Surplus on revaluation of assets-net of tax 1.65% 0.70% 0.29% 0.31% 0.22%
Total equity 8.09% 2% 2.83% 1.57% 3.83%
INTERPRETATION:
In vertical analysis I divided all the items by total assets to measure the contribution of
each item in companys asset side. In the liability side, I also measure the percentage of
items in liability and owners equity by dividing the entire liability side items by total
liability and owners equity.
Verti cal Analysis of I ncome StatementParticulars 2007 2008 2009 2010 2011
Mark-up/return/interest earned 100% 100.00% 100.00% 100.00% 100.00
Mark-up/return/interest expenses 79.40% 94.00% 122.00% 103.20% 102.00
Net mark-up/interest income 20.52% 6.40% - - -
Provision against non-performing loans and
advances 9.21% 106.20% 59.00% - -
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Provision for diminution in the value of
investments 0.13% 2.18% 6.11% 15.19% 2.78%
Bad debts written off directly 1.40% - - - -
Net mark-up/interest income after provisions 9.70% - - - 10.61%
Non Mark-Up/Interest Income
Fee commission and brokerage income 3.76% 3.26% 4.20% 3.08% 3.50%
Dividend income 10.33% 11.40% 6.00% 2.20% 1.38%
Income from dealing in foreign currencies 2.15% 1.82% 1.60% 0.73% 0.51%
Sales and redemption of securities 11.62% 4.13% - 1.60% 1.59%
Unrealized gain on revaluation of investments
classified as held for trading - - - 0.09% -
Other income-net 3.12% 2.96% 3.30% 0.02% 2.38%
Total non-mark-up/interest income 31.00% - - - 9.60%
Non Mark-Up/Interest Expenses
Administrative expenses 13.00% 16.00% 19.40% 19.00% 19.40%
(Reversal) / Other provisions - 0.05% - - 0.54%
Provisions against off balance sheet items 0.16% - - 4.06% -
Other charges 0.21% 0.64% 0.50% 0.88% 0.09%
Total non-mark-up/interest expenses 13.07% 17.00% 19.43% 23.00% 18.00%
Profit Before Taxation 28.00% - - - 2.27%
Taxationcurrent year 0.97% 1.16% - - -
TaxationPrior years - - - - 0.24%
TaxationDeferred 1.42% - - - 0.84%
Profit After Taxation 25.39% - - - 1.40%
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INTERPRETATION:
In vertical analysis I divide all the items of income statement by total markup/interest
earned in order to measure the contribution of each item in companys Total sales. The
analysis indicates the contribution of all income statements item in overall companys
sales.
RATIO ANALYSIS
The ratio is a relationship between two numbers of the same kind or one number
expressed in terms of another. This analysis is a tool used by individuals to conduct a
quantitative analysis of information in a company's financial statements. The ratios that
are calculated are as follows:
Debt to Equity ratio
year Ratio
2007 14.27
2008 36.132009 38.34
2010 78.06
2011 26.95
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INTERPRETATION:
This ratio compares the total debt with the total shareholder equity. The lower this ratio,
the better the company's debt position. This ratio for BOP is low in 2002 which indicates
a good position of the bank but it increases substantially from 228 to 2010 up til 2011
where it finally drops indicating a sound debt paying ability of BOP.
Debt to total assets
years calculation
2007 91.90%
2008 97.99%
2009 97.16%2010 98.42%9
2011 96.20%
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INTERPRETATION:
The debt to total asset measures the firm's long term debt paying ability. It indicates how
much of the total portion of assets is financed by debt. The debt ratio of BOP is high
which shows that most of its assets are financed by debt and it has high risk because the
lower the debt paying ratio the better the is the position of an organization which is not
the case with BOP. It can be seen that the ratio is very high in all years.
Advances to total assets
years Ratio
2007 56.98%2008 70.86%
2009 55.99%
2010 52.71%
2011 45.25%
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INTERPRETATION:
This ratio shows the what is the portion of loans and advances in the total assets of the
bank. Through the years we can see that advances significantly increased from 2007 to
2008 but after 2008 there is a continuous fall in the amount of advances, which depicts
that the total assets of the bank are declining
Return on investment
Years ratio
2007 31.26%
2008 12.20%2009 26.73%
2010 24.59%
2011 32.92%
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INTERPRETATION:
Investment to total assets is basically indicates the portion of total assets used for invest
in different venues. This ratio is useful for banks.This ratio shoes mix trends. It kept
fluctuating during different years. In 2007 it was high than it decreased during the next
three years, but again increased in 2011
Advances turnover
Years Ratio
2007 13.09%
2008 13.47%
2009 12.89%2010 15.08%
2011 16.27%
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INTERPRETATION:
Advances turnover indicates the interest earned with respect to advances. How much the
bank received interest from general public and how much advances gets from general
public. This ratio shows that the interests earned by the bank significantly increased in all
years except in 2009 in which it was less as compared to other years. Otherwise it kept on
increasing till 2011.
Earning assets to total assets
Years Ratio
2007 95.06%
2008 88.86%2009 89.05%
2010 86.94%
2011 86.93%
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INTERPRETATION:
This ratio shows how well bank management puts bank's assets to work. High
performance banks have high ratios.The ratio is quite good for all the five years that is
above 85% which shows that BOP has good performance in the last five years
Interest margin to average earning assets
Years ratio
2007 1.61%
2008 0.689%
2009 -1.75%
2010 -0.29%
2011 -0.61%
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INTERPRETATION:
This ratio is the determinant of bank's profitability because it provides an indication of
management's ability to control the spread between interest income and interest
expenses.This ratio is not interpretable as the ratios in negative values do not provide any
meaningful analysis.
Equity capital to total assets
Years Ratio
2007 6.43%
2008 2.71%
2009 2.53%2010 1.26%
2011 1.07%
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INTERPRETATION:
This ratio measures the extent of equity ownership in the bank It provides a cushion
against the risk of using debt and leverage.The ratio declines from 2007 to 2011 which is
not a good indicator and shows that the bank is at more risky position than the previous
years.
Deposit times capital
Years Ratio
2007 12.69 times2008 32.54 times
2009 34.76 times
2010 72.05 times
2011 78.68 times
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INTERPRETATION:
This ratio indicates a bank's debt position. More capital indicates greater safety margin
and higher deposit indicates more money available for investment purpose. The higher
this ratio the better the position of the bank. The ratio significantly rises from 2007 to
2011 which is an indicator of BOP sound position
Loans to deposits
Years ratio
2007 80.69%
2008 86.85%2009 70.72%
2010 68.62%
2011 63.76%
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INTERPRETATION:
This is a type of debt coverage ratio. The lower this ratio the better it is for the bank from
risk standpoint.The ratio decreases from 2007 to 2011 in which it falls down to 60% from
80% percent, indicating a sound position of the BOP
Current ratio
Years ratio
2007 3.11
2008 3.13
2009 3.122010 3.37
2011 2.65
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INTERPRETATION:
This ratio measures the ability to pay the current financial obligations. The higher the
ratio the better is the ability of the bank to meet it's current financial obligations. The
ratio is fairly well for all; years except for 2011 in which there is a bit of drop in it,
depicting a decrease in the BOP ability to meet it's current obligations
Cash and balance with banks to total assets
Years Ratio
2007 6.86%
2008 6.91%
2009 7.03%
2010 7.57%
2011 7.22%
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INTERPRETATION:
This ratio indicates the portion of assets that is made up by cash and balances in other
banks. Over the years it can be seen that the ratio increases which is an indicator of
increase in the bank's total assets
Total deposits and other accounts to total assets
Years Ratio
2007 81.69%
2008 88.26%
2009 88.1%
2010 90.85%
2011 84.69%
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INTERPRETATION:
The ratio shows what percentage of total assets comprises total deposits and other
accounts. The ratio increased significantly from 2007 to 2008 then dropped slightly in
2009 after which it increased in 2011 and then declined in 2011.
Sales to working capital
Years Ratio
2007 19.23times
2008 25.05times
2009 17.89times2010 18.11times
2011 19.25times
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INTERPRETATION:
This ratio indicates how efficiently the working capital is used in order to generate profits
or sales. A low working capital ratio indicates the unprofitable use of the working capital.
The analysis shows that the working capital ratio for the year 2007 and 2008 was good
but it declined in the following years but it again went up in the year 2011 which shows
that the bank is efficiently utilizing its working capital
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CHAPTER # 08
CONCLUSION AND RECOMMENDATION
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RECOMMENDATIONS
After doing internship at BOP Wah I think that it is playing a vital role in serving our
country by providing numerous kinds of services. BOP is significantly contributing in the
economy of our country. But by removing certain flaws and weaknesses and improving
certain factors it can play a more effective role in serving the nation. Hence following are
some recommendations made by me based on my observation.
Rewards and incentives for employees
Employees should be given more attractive salary packages as well as bonuses andpromotions in order to boost their morale.
Advertisement
More efforts regarding advertisement as well as promotion should be made so as to create
an image and position in the market, and create awareness about the products and
services of BOP
Working atmosphere
The workplace environment should be friendlier with open communication and sharing
of ideas as well as expertise at BOP Wah. Team work should be promoted.
Enhance branch network
BOP can enhance its business by extending its branch network across other cities as well.
Currently it has branches in all major cities but not in the mediocre or small cities.
Foreign operations
BOP can also expand its business by opening its branches abroad.
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CONCLUSION
In this report I have tried to analyze all aspects of the Bank of Punjab. The factors that are
in favor of this bank and can add value in this bank are that it has numerous products as
well as services to offer its customer and attract a large customer base due to this
component of variety of offerings. It has full fledged support of the government of
Punjab on its back who also supported it right from the start. Customers have faith trust
on the bank because of its services as well as the support of government.
On the other hand BOP is not exerting much effort in marketing and promoting its
products and offerings. It can attract a larger customer base by exerting more advertising
efforts. Then it is not focusing well on its employees .The employees are not offered
attractive salary packages and are not recognized and appreciated enough, which is
extremely important to boost employee morale and enhance job satisfaction as well as to
keep them motivated. So BOP should focus on this component for further progress and
prosperity.
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REFERENCES
www.bop.com
www.google.com
Bank Manual
Annual Reports
http://www.bop.com/http://www.google.com/http://www.google.com/http://www.bop.com/