Group Members

Umair Shahid Umar Munir ButtRao Umer ShehzadZubari Abdullah Khan Zahid Adnan Malik

Submitted to:

Sir Wasim ullah MBA (LUMS) Incharge Department of Finance

Introduction

Incorporated on October 09, 1991

Bank principally engaged in the banking business

Army welfare trust directly and indirectly holds it

Network in more than 95 countries

Overview of the Banking Industry

The loan portfolio (net) declined by 5.6 percent over the quarter while investments in Govt. papers increased by 20 percent.

 Accordingly, the capital impairment ratio i.e. net NPLs to capital, went up to 17.9 percent for commercial banks, signifying that banks’ inability to recover NPLs and further deterioration in their credit quality could impose on solvency.

Accordingly, capital adequacy ratio improved to 12.9 percent (12.2 percent in Dec-08) and ROA registered a slight improvement to 1.8 percent (1.7 percent for 2008).

Nevertheless, the system is expected to remain profitable though the levels, the pervasiveness of earnings among different market players will remain constrained

Service Offered

Consumer Banking Services.

Islamic Banking Services.

Agriculture Finance Solution.

Corporate and Investment Banking.

SWOT Analysis

Strengths

Weaknesses

Opportunities

Threats

Strengths

Leading Private Sector Bank

Automatic Operation

Electronic Banking

Ethical Concern and Public Image

Weaknesses

Manual Book Keeping

Centralization

Lack of Training Facilities

Opportunities

It deals in bulk business.A large amount of foreign investment is

attracted.Strong potential for growthSteady increase in Customer DepositsOverseas OperationsBranches In Remote AreasIslamic BankingSharp increase in imports and exports

Threats

High Employees Turnover

High charges

Less attractive rate of return

Stiff Competition Less Experienced Staff

MICHEAL PORTER’S MODEL

Investment Portfolio

Investment Portfolio

Federal Government SecuritiesFully paid up ordinary shares

Fully paid preference shares Listed companiesTerm Finance Certificates

Foreign Securities

Return on Equity (ROE):

0

0.05

0.1

0.15

0.2

0.25

0.3

2006 2007 2008 Peer Group

Prof itability Ratios

ROE using Break down

Profitability Ratio

-5.00%0.00%5.00%

10.00%15.00%20.00%25.00%30.00%

Ret

urn

On

Asse

t (R

OA)

Net

inte

rest

m

argi

n

Net

ope

ratin

g m

argi

n

2006

2007

2008

Peer Group

Debt Management Ratio

0.0002.0004.0006.0008.000

10.00012.00014.00016.000

2006 2007 2008 Peer Group

Debt to Assets

Debt to Equity

Solvency Ratio

0.000%20.000%40.000%60.000%80.000%

100.000%120.000%

2006 2007 2008 Peer Group

Equity to Assets

Equity to Deposit

Earning Assets to Deposits

Provision for Loan Losses Ratio

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

2006 2007 2008 Peer Group

Provision / Total Assets

Provision / Average total Loan and leases

Earning Spread

0.000

0.020

0.040

0.060

0.080

2006 2007 2008 Peer Group

Earning Spred

Earning Spred

Credit Risk

-

0.20

0.40

0.60

0.80

1.00

2006 2007 2008 Peer Group

Non-Performing Assets to total loans

Annual provision for loans losses to eqiuty capital

Non Performing assets to equity capital

Recommendations

Banks would have to manage their credit disbursement policy prudently in order to minimize the non performing loans.

SBP has tightened the monetary policy. The bank should require making more prudent

investments. SBP should maintain the interest rates. Bank should control their administrative expenses. As there is sign of recession in the economy the bank

should adopt prudent policies. the bank should be efficient in collecting the outstanding

loans. Bank should adopt the careful loan distribution policy

Conclusion

2007 was a volatile year for the banking sector in terms of profitability

interest income was much higher in this yearnon-interest income share in the total income is also

increasing the bank is either not very efficient at collecting the

outstandingbank may face considerable credit risk from its loan

defaulters