The Bank of Punjab

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 The Bank of Punjab

Topics Page No.

Mission Statement 3

History 4

Constitutional Base 6

Scope of the Bank 8

Management of the Bank 9

Emblem 9

Objectives 10

Future Outlook 11

Subsidiaries & Sponsorship 13

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 The Bank of Punjab

Be a dynamic resource of economic

development and growth for stakeholders

through service excellence achieving high

standards of professionalism, dedication

integrity and team work.

Core Values

Integrity

Dedication

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 The Bank of Punjab

Transparency

Team work
History

The Bank of Punjab started functioning with the inauguration of its

first branch of 7-Egerton Road, Lahore on November 15, 1989. The architect

of the bank Mr. Nawaz Sharif then, the Chief Minister of Punjab, performed

the inauguration.

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

investment and balance of trade deficit has posed serious threat to the target

levels of growth The ailments related to the budgetary deficit and public

debt, both foreign and domestic are in addition. Interestingly even such

adverse circumstances growth of real sector during the preceding year

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

of economy

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

and properly institutionalized system, which is the major vehicle not only for

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mobilization of resources to finance trade, agriculture, and industry but also

for the effective conduct of monetary policy.

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

has done two important services to the nation.

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

the investment opportunities have increased.

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

improved considerably so that now consumer are left with extensive

choice to do or undo their business relations with these banks keeping

in view quality of their services.

The Bank of Punjab is working as a scheduled commercial bank with

its network of 243 branches at all major business centers in the country.

The Bank provides all types of banking services such as Deposit in Local

Currency, Client Deposit in Foreign Currency, Remittances, and

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

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

experience and professional hands of its management. The Bank of

Punjab plays a vital role in the national economy through mobilization of

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 The Bank of Punjab

hitherto untapped local resources, promoting savings and providing funds

for investments. Attractive rates of profit on all types of deposits, opening

of Foreign Currency Accounts and handling of Foreign Exchange

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

Industry for working capital requirements and money market operations

are some facilities being provided by the Bank. The lending policy of

Bank is not only cautious and constructive but also based on principles of

prudent lending with maximum emphasis on security. As agriculture is

considered as backbone of our economy the Bank of Punjab has

introduced "Kissan Dost Agriculture Finance Scheme" to small

farmers.

The Bank of Punjab has the privilege to discharge its responsibilities

towards national progress and prosperity. Within the couple of years of its

scheduling, the bank has not only carved out for itself prominent niche in

the mainstream banking of the country but in certain areas it has the

distinction of taking the lead. 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.

Scope of the Bank.

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 The Bank of Punjab

Being a commercial Bank, The Bank of Punjab performs all such

functions as are attributed to commercial banking institution both in the

area of resource mobilization, 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.

Management of the Bank.

At the level of Decision-making and implementation, senior

management of the bank is drawn from highly accomplished bankers

with rich experience in the banking profession both domestic and

international.

The entire responsibilities of policy formulation and management

have been placed, under the law, with the Board of Director. Furthermore

it will be heartening to know that Mr. Nawaz Sharif, during his chief

Minister ship of the province of Punjab issued special instructions to the

political and executives echelons not to interfere in The Bank of Punjab,

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 The Bank of Punjab

thereby ousting the possibility any pressure which may be put on the

management of the bank in respect of recruitment of staff or provision of

credit. These instructions have become an essential part of the culture of

the bank.

Emblem & Objectives

EMBLEM.

The sun rising over the five wavy lines symbolizes the dawn of

new era of progress and prosperity for the land of five rivers and hence

for Pakistan. Furthermore the main objectives of the inclusion of cotton

flowers and the spikes of wheat in the emblem is firstly to represent the

fact that the economy of the Punjab stands on its agriculture produces

especially cotton and wheat and secondly to highlight the emphasis

which the bank is to place on development of agro-based industry.

OBJECTIVES.

The Bank of Punjab being a commercial bank performs all those

function as are attributed to such banking institutions both in the areas of

resources mobilization and investment. It is providing funds for

commerce, trade, industry, and agriculture but its main emphasis is on

accelerated development of agro-based industry. So the main objective of

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 The Bank of Punjab

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

from neglect. Other objectives included.

1. To provide speedier services to the common man.

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

good profitable growth.

3. To enter into financing contracts and to mobilize resources in local

and now in foreign currencies consistent with the objects of the bank.

YEAR 2003 & FUTURE OUTLOOK

The newly elected Government has pledged to continue economic

reforms and policies of the previous regime resulting in the Government’s

enhanced ability to engineer its economic future, which reinforces the

confidence that has emerged during 2002. The success and growth, however,

largely depends on the degree to which the Government can deliver on its

political agenda and how smoothly the transition of power can work towards

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bringing about a greater degree of optimism amongst investors and the

business community.

Although The Bank of Punjab are optimistic about the future outlook

for Pakistan and are confident that expected GDP growth target will be

achieved yet the geopolitical situation particularly with reference to Iraq the

year 2003 appears to be far more challenging where the factors beyond our

control may adversely affect our economy. Moreover, the prevailing money

market scenario with extremely low interest rates and stagnant private sector

credit is a serious deterrent to the banking sector growth. This situation will

force the banks to shift their focus from conventional banking approach to

retail based consumer finance products and service and the banks taking lead

in this shift process will be least affected by the prevailing unfavorable

interest rate scenario.

The mission to transform The Bank of Punjab into a modernized

business oriented institution is sailing smoothly and in this direction by now

computerization of 156 branches has been completed successfully while the

remaining 87 branches will also be computerized before the 2003 year end.

Moreover, during 2003 we will also introduce ATM facility at our selected

branches for which your bank has joined MCB switch and the agreement has

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been signed. In addition to offering ATM facility we have aggressively

embarked on providing real time inter-branch banking services within 2003.

SUBSIDIARIES AND SPONSORSHIP

The bank is one of the sponsors of Trust Management Services Pvt.

Limited besides being a co-sponsor of Trust Modaraba a Modaraba

company incorporated in Pakistan under the Modaraba companies and

Modaraba (Floatation and control) Ordinance, 1980. Authorized Modaraba

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 The Bank of Punjab

Fund and paid up Fund of the said unit in Rs. 500 million and Rs. 150

million respectively.

The Bank is one of the sponsors of Trust Leasing Corporation

Limited a public limited company established under the Companies

Ordinances, 1984. Authorized paid up capital of the company is Rs. 250

million and Rs. 100 million respectively.

First Punjab Modaraba Services (Pvt) Ltd. established in Pakistan

under Companies Ordinance. 1984 and register under Moderate

Companies and Modaraba (Flotation and Control) Ordinance, 1980 is

wholly owned subsidiary of the bank. Authorized fund of this Modaraba

is Rs. 500 million where as paid up fund is Rs 200 million.

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 The Bank of Punjab

Topics Page No.

Management Hierarchy 14
Categories of Services 15
Division and Departments 17
Regions 18

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 The Bank of Punjab

DIVISION AND DEPARTMENTS

DIVISION DEPARTMENTS

♦ ADMINISTRATION ♦ ORGANIZATION & METHODS

♦ OPERATIONS ♦ INFORMATIONAL & TECHNOLOGY

♦ BUSINESS DEVELOPMENT ♦ OFFICERS TRAINING INSTITUTE

♦ CREDIT ♦ SHARES

♦ INTERNATIONAL ♦ LAW

♦ FINANCE ♦ STATIONERY

♦ RECOVERY ♦ PLANNING RESERCH & PUBLICATION

♦ AUDIT & INSPECTION

♦ TREASURY

HEADED BY: - HEADED BY: -

GENERAL MANAGER CHIEF MANAGER

REGIONAL CHIEFS
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BRANCH
 The Bank of Punjab

REGIONAL NET-WORK

FAISALABAD LAHORE
Total Branches 34 Total Branches 64

GUJRANWALA MULTAN

Total Branches 43 Total Branches 60

KARCHI / QUETTA RAWALPINDI

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 The Bank of Punjab

Total Branches 05 Total Branches 36

Topics Page No.

Administration 21

Operations 22

Business Development 23

Credit 24

International 25

Finance 26

Recovery 27

Audit And Inspection 28

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 The Bank of Punjab

Administration/Human Resource Division

G.M

Admin & Officer’s Training

Establishment Institute

This division deals with the problems relates to the staff

administration. The main function of this department is to arrange a

comprehensive training program for recruited staff. Others function

includes:

♦ Recruitment

♦ Staff remuneration

♦ Placing the staff

♦ Providing and defining the opportunities for career

development and growth

♦ Devising and implementing services rules.

♦ Promotion and demotion

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♦ Suspension and termination

♦ Transportation

♦ Security, health and benefits.

Operations Division

G.M

Computer Dept.

Stationary Dept.

Engg. & Maintenance

O & M Department

This Division is concerned with the operational working in general

banking, which is concerned with the routine working of the bank. Any

problem or ambiguity arise in any branch working are rectified and

suggested for correction by this division. This Division usually takes

technical procedures involved the decisions like commissions. And also.

♦ The maintenance of the existing building owned by the bank.

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♦ Opening new branches and their maintenance.

♦ It also deals with the stationery problems of the bank.

Business Development Division

G.M

Marketing PRP
Cell Department

It is the other name of the marketing division. It promotes the bank cause

i.e. deposits and work for the over all development of the bank. Deposits are

the lifeblood of any bank. Without deposits bank cannot perform any

function of banking. This division fixes the deposits target of every branch

by keeping and eye over the potential customers in the area. It gives

motivation to branches to achieve their targets through different campaigns

and schemes like cash prizes and special increments. It publishes a bulletin

in which those branches are encouraged who achieves their monthly targets.

The main function is to develop and attract the customers and depositors. It

also manages:

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♦ Advertising policy

♦ Sales promotion.

♦ Schemes offered by the bank.

Credit Division

G.M

Agriculture Credit Wing

This division control over all credit operations like sanction of loans,

Inland Bill Purchased (IBP) and also keeps check over securities mortgage,

hypothecating or pledge. It also fix the rate of mark-up and other decisions

concerning with the credit.

There is a credit committee, which consists of senior officers;

Branches send the credit proposal to head office credit division. Credit

committee approves it after making a through analysis. It also

♦ Prepare the policies regarding the sanctioning loan

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♦ Monitor loans and credit

♦ Look after the portfolio of the bank

♦ Define credit limits against specified securities.

International Division
G.M

International wing

Forex Money
Market
Investment

Engg. &
Maintenance

This division is providing important services to the bank regarding the

matters of International Trade, Import, Export Letters of Credit, Travelers

cheque etc.

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 The Bank of Punjab

♦ It develops “ Correspondent Relationship” with others on commission

basis and this helps to deal with the clients having import export

business.

♦ It handles treasury operations.

♦ The Marketing and Spot Inspection cell, which were introduced by the

bank, are showing positive results in terms of achieving foreign

currency deposit targets and other foreign related business.

Finance Division

G.M

Balance Sheet
Results Monitoring
SBP Affairs, and
Compliance.

Shares Dept.

Company Affairs

It controls the routine financial matters. The permission of special

expenditure incurred in the branches, and other such cases. The daily

position and HO Extracts are daily sent to this division by all the branches.

This division not only estimates the profit and loss of every branch but also

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prepare overall income statement and balance sheet of the complete bank. It

also keeps record of total deposits of the bank and then their classification in

the form of loans into different sectors of economy. The basic functions are:

♦ Monitoring the fiscal and financial policies of the bank.

♦ Deals in exploring means for investing surplus bank funds.

♦ Maintenance and investment of Gratuity and Pension Funds of the

employees.

Recovery Division

G.M

Law
Department

The recovery division, which was established in 1994 to assist in

regularizing the difficult loan accounts, has rendered valuable services in

this respect. To effect recoveries in an efficient manner, a policy has been

framed in accordance with the guidelines issued by the State Bank of

Pakistan Moreover, recovery cells at regional levels have been set up to

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assist the head office. This division looks after the matters of recovery of

loans with the assistance of legal advisors.

Audit and Inspection

Division
G.M

Audit of Rectification
Branches and Persuasion

This department ensures appropriate system of checks and balances. It

checks all the irregularities, errors and forgeries if any, under the rules and

regulations formed by the Government of Punjab. For this purpose it doesn’t

only keep and eye on the branches in their vicinity but also conduct surprise

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and comprehensive audits of the branches. This strategy has improved

working at the branch level. It not only points out the discrepancies but also

tries to solve it. Surprise audit maintain a good check on the over all

working of the branch especially of the side of finance.

Topics Page No.

Service Provide to Customer 30

Deposit Section 31
Nature of Deposit 33
Account Opening Section 34
Clearing Department 35
Remittance Department 37

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Advances/Credit Department 43
Securities for Advances 44
Agriculture & Economy 50

SERVICES PROVIDED TO CUSTOMERS

The following are the services being provided to the claims.

♦ Acceptance of deposits

♦ Granting of loans

♦ Transaction Foreign Exchange Services

♦ Remittance – Collection

♦ SPEDFAX- instant Fund Transfer Service

♦ Lockers facility

♦ Utility Services

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 The Bank of Punjab

The Bank of Punjab attaches specials importance to the fee earning

business and business base remuneration. As part of diversification of the

banks utility services, the collection of bills of INSTAPHONE (mobile

phone network) was added to existing collection arrangements for WAPDA,

SUI GAS, WASA, PTCL, and PAKTEL. By using bank’s extensive branch

network, effort have been to made to maximize the exploitation of this

source in view of its rich potential of yielding business and deposit direct

earning of

commission.

DEPOSIT SECTION

In modern times very few business enterprises are carried out solely

with the capital of the owners. Borrowing funds from different sources has

becomes an essential feature of today business enterprise. But in the case of

a entire banking system is based on it. The borrowed capital of the bank is

much greater then their own capital. Banks borrowing is mostly in the form

of deposits.

These deposits are lent out to different parties. The larger the

difference between the rate at which the deposits are borrowed and the rate

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at which they is lent out the greater of the profit margin of the bank.

Furthermore, the larger the deposit the larger will be the funds available for

employment; larger the funds lent out the greater will be the profit of the

bank.

To receive the deposit is the basic function of all commercial banks.

The bank does not receive these deposits for save keeping purpose only, but

they accept deposits as debts. When banks receive deposit from a customer,

the relationship of a debtor and creditor is established where by the customer

become the creditor and the bank a debtor. When the bank receives amount

of deposit as a debtor, it becomes the owner of it. It may, therefore use it as

deems appropriate. But there is an implicit agreement that the amount owned

would be paid back by the bank to the depositor after a specified period.

NATURE OF DEPOSITS

♦ CURRENT DEPOSITS

♦ PROFIT & LOSS SHARING ACCOUNT

♦ SHORT NOTIC TERM DEPOSITS

♦ CALL DEPOSIT

♦ TERM DEPOSIT RECEIPTS (TDR).

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CURRENT DEPOSITS:

In this type of account the client to allowed to deposit or withdraw

money as and when he likes. Because of their nature, these deposits are

treated as the current liabilities of the bank. There is not profit on such

deposits. Usually this type of account is opened by the business.

PROFIT & LOSS SHARING ACCOUNT.

This type of accounts is one step towards the Islamization of banking

system in Pakistan. There are two types of PLS Accounts.

♦ PLS Saving Account

♦ PLS-TDR (Profit & Loss Sharing Term Deposit Receipts).

PLS saving accounts can be opened with the minimum sum of Rs. 100

and PLS-TDR account can be opened for a sum of Rs. 1000 or above. Profit

is paid on both types of the PLS account on half yearly basis.

Under PLS saving account the depositor undertakes to share profit or

loss on the deposits earned or sustained by the bank. Secondly the bank is at

the liberty to invest the funds of the deposits in any avenue, it deems fit. The

PLS deposits are invested in non-interested channels.

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SHORT NOTICE TERM DEPOSITS (SNTD)

This kind of deposit is for a short period. The depositor may withdraw

his deposit at any time by giving seven days notice to the bank. This type of

deposit facilitates the depositor to withdrawn his amount with interest of the

deposited period.

CALL DEPOSIT

Call deposits are the sorts of deposits, which are deposited with the

banker against any tender. This is without interest deposit. This may be with

interest provided the depositor has agreed to keep this amount with the bank

for some fixed period.

TERM DEPOSIT RECEIPTS (TDR)

This type of deposit is same as the SNTD. The difference is that

SNTD is for short period (7- 30 days) while TDR is for long period (1 month

up to 5 years).

ACCOUNT OPENING SECTION

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Account opening is the first step towards establishing a relationship

between the customer and the bank. The Bank of Punjab is offering basically

two types of account:

♦ CURRENT DEPOSIT ACCOUNT

♦ PROFIT & LOSS SHARING ACCOUNT

The necessary condition for a customer, who wants to open an

account with the bank, is introduction, which is preferably by the bank

officers or any account holder of the bank. The different categories of

accounts that are available are as under.

♦ INDIVIDUAL account

♦ Joint Account

♦ Partnership Account

♦ Limited Company Account

♦ Clubs, Society, Association, or Trust Account

♦ SNTD

♦ TDR

♦ Foreign Currency Deposit

CLEARING DEPARTMENT
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Clearing is the most important department of the bank performing

various function.

Clearing House:

A clearinghouse is an organization of the member banks, working

under SBP and which is for the purposes of setting inter banks claim

resulting from transmission of funds from one bank to another. The branch

cheque/instruments are credited into the account of the customer. The

clearing can be:

♦ Outward

♦ Inward

Outward Clearing

The instrument collected or stored bank wise and a schedules is

prepared separately for each bank mentioning the total number of

instruments and the amount of the instruments. Then these are recorded in a

register called “OUTWARD CLEARING REGISTER” then a main schedule

is prepared showing the total number of cheque and their aggregate amount

being presented in the clearing.

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The cheque/instruments are handed over the clearing branch. Central

clearing branch issue CREDIT ADVICE to the branch for passing credit to

its customer immediately. The branch on receiving credit advice debits the

clearing account and credit the respective customer accounts.

Inward Clearing

On receiving cheque/instruments from central clearing branch, the in

charge checks the number and amount of cheque received in clearing must

tally with the main schedule received from central clearing branch.

These cheque/instrument are entered in “INWARD CLEARING

REGISTER” for the cheque/instrument passed in clearing is a credit advice

for the aggregate amount of cheque passed in clearing is prepared, drawn on

central clearing branch.

Reserves at State Bank of Pakistan.

Deposit held by bank at SBP serves as check clearing and collection

balances. Rather than physically transferring funds between banks, check

clearing and collection can be done by simply debiting or crediting a bank’s

account at SBP.

REMITTANCE DEPARTMENT

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Remittance is a major function of the bank. It is the transfer of money

from one place to another place. The need for remittance is commonly felt in

commercial life particularly and in everyday life generally.

By proving this service to the customers the Bank of Punjab earns a lot of

income in the form of service charges.

The Bank of Punjab deals with the following type of remittances: -

 Demand Draft (DD)

 Mail Transfer (MT)

 Telegraphic Transfer (TT)

 Pay Order

Now we discuss all these in detail: -

DEMAND DRAFT (DD):

Demand draft is a written order 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.

Procedure for Prepare Demand Draft.

1. A draft voucher is filled which contains the following information

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 Name of the parties involved

 Date

 Amount to be sent

 Account number (if DD is crossed)

2. A credit voucher is filled in order to get the excise duty and

exchange commission.

3. The sender deposits the total amount of the two vouchers i.e. the

debit and credit vouchers.

4. Then the cashier sends the cash receipt voucher to the accounts

department and the account records the amount paid in his cash

scroll.

5. Accountant gives the DD leaf along with the DD voucher to his

assistant who records the sender’s name, amount and receiver’s

name. After writing all the information in the DD register he gives

it to the officer along with the DD for authentication.

6. After authentication the DD is handed over to the sender and bank

sends the advice to the concerned branch. So when the party

presents the DD in the concerned branch its payment could be

made.

Parties involved in the Demand Draft

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The following parties are involved in demand draft;

1. Purchaser or Sender

The purchaser is the person who sends the money to a particular

person payable at a certain branch.

2. Issuing or Drawing Branch

The branch from where the demand draft is issued to another branch

of the same bank.

3. Drawer Branch

Branch in which the draft has drawn and called upon to pay the

amount.

4. Payee

The person who is entitled to receive the amount after presenting the

demand draft in the drawer branch.

MAIL TRANSFER (MT):

It is the transfer of money from one branch to another branch of the

same bank through mail service. In mail transfer there is no need of advice

as the amount is directly credited to the receiver’s account.

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Procedure

1. First a voucher is filled in whish the sender writes the amount to be

sent, name, account number of the receiving person with the branch

name and date.

2. A credit voucher is filled in order to deduct exchange, postage

charges according to the amount of the mail transfer.

3. The sender deposits the total amount in the cash department.

4. The cash officer gives the vouchers to the officer after affixing

received cash stamp and writing the amount in red ink.

5. Then the officer writes the amount paid in the cash scroll and gives

the MT to his assistant.

6. MT leaf is filled according to the information provided in credit

voucher. He also writes the same information in the MT register. Then

he gives the MT leaf and MT register to the officer for authentication.

TELEGRAPHIC TRANSFER (TT):

This is the most urgent method of remitting the money from one place

to another place. This method is used when the sender desires to send

urgently, in this case the sender request the manager of the branch to issue

TT.

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Procedure;

For sending the TT the manager and officer apply a test. In the test the

manager and officer uses a coding technique. They write their own code

numbers, which is allotted, to them as the bank branch code. After making

all the conformation the concerned branch makes the payment to the

receiver. If the sender wants to convey the same message through telephone

then he has to pay the charges of telephone along with the TT charges. First

the person deposit the TT amount along with the charges through the credit

voucher then his TT sent to the relevant branch.

Pay Order (PO):

A pay order is a written order issued by the bank on its own branch,

drawn upon and payable by itself to pay a specified sum of money to the

person. The purpose of a pay order is to transfer the fund from one place to

another. It is usually not issued in favor of the parties of other cities. Usually

the pay order is issued for the local transfer of money from one person to

another or from the person to any other department. It is used for different

purposes. The purpose may be the repairs of the branch or renovation of the

branch.

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Procedure.

The procedure of a pay order varies with the nature of the purpose. If

the work is of huge amount then first the manager writes a letter to the Zonal

Chief in order to get sanction of the work. Then the advertisement of the

work is given in the newspaper in order to invite the contractors. But if the

work is small then the branch manager has discretionary power to select the

party whose rate is lowest. After finishing the work the contractor submits

the bill of work on his stamp pad. Then the bank issues a pay order, against

the pay order the contactor gets the amount from the issuing branch.

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ADVANCES / CREDIT DEPARTMENT

“Major source of bank’s Income”

It is the loan function, which produces the major person of bank’s

income, and as such it is the major areas of professional banker’s concern

and attention.

Principles while advancing

Basically there are five principles that must be duly observed while

advancing money to borrowers.

♦ Safety

♦ Liquidity

♦ Disposal

♦ Remuneration

♦ Suitability

Forms of Lending

Many there are two types of advances:

♦ Short-term (maturity within one year)

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♦ Long term (maturity with the period of more than one year)

However they are further classified as:

♦ Running Finance

♦ Demand Finance

♦ Cash Finance

♦ Letter of Guarantee

Running Finance

This form of finance was previously known as “overdraft”. When a

customer requires the temporary accommodation, his bank allows

withdrawal his account in excess of credit balance, which the customer has

in its account, a running finance occurs. The accommodation is thus allowed

collateral security. When it is against collateral securities, it is called a

“Secured Running Finance” and when the customer cannot offer any

collateral security except his personal security, accommodation is called a

“Clean Running Finance.” The customer is in advantageous position in

running finance because he has to pay the mark-up only the balance

outstanding against him on daily product basis.

Demand Finance.

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 The Bank of Punjab

This is common form of financing to commercial and industrial

concerns and is mad available either against pledge or hypothecation of

goods produce or merchandise. In Demand Finance the party is financed up

to a certain limit either at once or as and when required. The party due to

facility of paying mark-up only on the amount it actually utilizes prefers this

form of financing.

♦ Ordinary Shares

♦ Preferred Shares

It can be

♦ Quoted or Unquoted

♦ Registered

♦ Bearer

♦ Inscribed

Advances Against Immovable Property (Mortgage).

A mortgage is the transfer of and interest in specific immovable property

for the purpose of securing the payment of the money, advanced or to be

advanced. By way of loan, and existing debts or the performances of the

engagement this may rise the pecuniary liability.

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The transfer is called the ‘mortgager’ and the transferee the ‘mortgagee’

the principal money and interest of which payment is secured for the time

being and instrument by which the transfer is effected, is called the letter of

the mortgage deed.

Availability of adequate flows of credit for industry and agriculture

are a sine qua non for the growth and development of an economy. This

acquires added importance when agriculture is the mainstay of the economy

as also the sector where the bulk of the poor are concentrated. Growth and

productivity in Pakistan's agriculture has slowed down in recent years and is,

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therefore, of serious concern given its importance for the economic

prosperity of the country. Apart from various other weaknesses in the

infrastructural support of the agricultural sector, inadequacy and lack of

efficacy of credit, flows to support agriculture related activities has been a

major constraining factor.

Agriculture is the largest sector of the economy. It contributes 25

percent to GDP, provides raw materials to 80 percent of industry and

employment to over 50 percent of the population. This is a sector that has

the shortest gestation period for investments and, therefore, a remarkable

capacity to bring about a turn around in the economy. This important sector

in Pakistan is suffering from a number of maladies and is consequently

witnessing stagnation in productivity.

Due to policy and administrative exigencies, the savings in the

agriculture sector remain low and, therefore, the sector has perpetually

remained capital starved. The pricing of input and output in agriculture over

the years has forced the majority of farmers in Pakistan to plough back their

incomes into agriculture and non-institutional credit, and has more often

than not served to sap their potential earnings. Needless to say, that shortage

44
 The Bank of Punjab

of savings and lack of availability of capital is one of the major reasons for

poverty in the country. The agricultural and rural sectors in Pakistan in

general and in Punjab in particular are, therefore, suffering from severe

under-development. Under a desirable development model, Punjab can:

♦ Increase agricultural production to meet the country's requirement of

essential foods items and industrial raw materials.

♦ Develop agro-based industry in the rural sector for economic value

addition;

♦ Generate additional employment opportunities in rural as well as

adjacent small towns/cities;

♦ Control massive migration to the urban centers that in turn is causing

a number of social, administrative (i.e. law and order) and economic

problems for the urban areas.

♦ Elevate poverty and improve the income generating capacity of the

agri-based population.

Never before in the history of Pakistan, has the development of the

agricultural and food sectors been as critical as at this juncture and

appropriate short and long term measures are necessary for its revival,

sustenance and stability. Supply of credit by Financial Institutions for

45
 The Bank of Punjab

meeting the specific needs of agriculture and rural sectors are essential

components for improvement in both short and long-term development of

the country. This has assumed even greater importance in the present

situation of declining water availability. Per acre, production is plummeting.

The per acre yield of most of the crops is stagnant rather diminishing. The

most important factors responsible for this downward trend in productivity

are: -

FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:

* Imbalanced fertilizer use

* Lack, availability of certified, and good quality seeds

* Improper control of pests and weeds

SCARCITY AND INEFFICIENT USE OF WATER:

* Natural and mechanical water resources.

NON-USE OF MECHANIZED FARMING PRACTICES:

46
 The Bank of Punjab

♦ LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE ADVANCED

TOOLS FOR AGRICULTURE:

♦ HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE

♦ NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO THE

AGRICULTURE SECTOR

The importance of availability of credit to the agriculture sector has

always been recognized by Government and given Top Priority. Specialized

institutions have been in place for a number of years. However, these

institutions have failed to realize the full potential from the sector and at

times contributed to its further deterioration. It is therefore of paramount

importance that The Bank of Punjab through well thought out policies

ensures that it does not repeat the follies of the past.

A number of institutions are in the field yearning to obtain results.

We in The Bank of Punjab will support the role of the Government in

providing much needed support to the agriculture sector but with a

difference. The difference being that instead of subsidizing the needs we will

be active participants in economically viable projects thereby safeguarding

the investments of the Bank.

A precondition to lending by the Bank will be an undertaking from

the customers/borrowers not to borrow from any other source whatsoever.

47
 The Bank of Punjab

This is important to ensure against any multiple borrowing and more

importantly to restrain the borrower from falling into a debt trap.

The Bank of Punjab has been at the forefront in contributing to the

Agriculture Sector at a limited scale and has initiated schemes in harmony

with the State Bank of Pakistan approved/eligible programmes for the

assistance/help of the agriculture farmers.

Presently, the Bank is financing farmers in some specific areas only.

The State Bank of Pakistan has expanded the scope of its scheme and

included a number of items eligible for credit under Agri-finance Schemes.

In terms of the importance, priority and current needs. We have short

listed the items from the State Bank of Pakistan's list provided under cover

of its Circular letter No. ACD/1044/1050/PD/P-08/2001 dated 26.04.2001.

The list of eligible items for Agri-Credit is mainly divided in two sectors; i.e.

►Farm Credit. And

►Non-Farm Credit

Farm Credit is further bifurcated into:

♦ Short-Term

48
 The Bank of Punjab

♦ Medium-Term

♦ Long-Term Credit.

The priority items, which are recommended for inclusion in our schemes,

are given here under;

EXISTING: (Kissan Dost Agriculture Finance Scheme) Product

/purpose of Finance) Seeds, Fertilizers, Pesticides, Herbicides, Weedicides.

All types of labor and water charges are already embodied in our package

financing, i.e., 8000 Per Acres (no change)

PROPOSED:

(Product /purpose of Finance)

1. Orchard and Nursery 2. Manual Sprayers

3. Sericulture 4. Apiculture

EXISTING: Tractors

(Product/purpose of Finance)

PROPOSED:

(Product & Purpose of Finance)

Tube-Well

49
 The Bank of Punjab

Installation of Tube-Well, water management, equipment, modules &

culvert, lining of channels etc. Solar energy plants and pumps for irrigation,

equipment for sprinkle/trickle/drip irrigation system.

Mechanization Support

Agri-implements, Equipment, i.e. trailers and

thrashers, power tillers, power & boom sprayers, ploughs and cultivators,

ridggers / drills, rotavators, diggers, saw machines for crates making, press

machines for wheat straw and dry fodders.

Farm Transport

Lease finance for purchase of Motor Cycles and small Vans for

Milk and other agri products transportation to local market.

Islah-e-Arazi

Precision land leveling & reclamation, soil

improvement, embankment, land formation and land improvement, laser

leveling etc.

For the time being, we do not propose to extending Non-Farm

Credit, i.e. for big Dairy Farms, Poultry Farm but will accommodate existing

borrowers and established small individual farmers by financing livestock.

(Goat, sheep, cattle & fattening animals) on a limited scale to revive,

50
 The Bank of Punjab

accelerate and supplement the income generating capacity of the small

farmers.

Topics Page No.

51
 The Bank of Punjab

Deposit 59
Advances 60
Investment 61
Capital & Reserve 62
Total Assets 63
Profit 64
Growth of Shareholders 65
Categories of Shareholders 66

52
 The Bank of Punjab

Years Deposits (Rs in Million)

1995 12116
1996 14256
1997 15797
1998 17101
1999 15019
2000 17028
2001 19034
2002 23767

2002 23767
2001 19034
2000 17028

1999 15019
1998 17101
1997 Years
15797
Deposits (Rs in Million
1996 14256
1995 12116

Years Deposits (Rs in Million)

1995 2909
1996 4208

53
 The Bank of Punjab

1997 5065
1998 5612
1999 6151
2000 6144
2001 5772
2002 6621

6151 6144 6621

5612 5772
5065
4208

2909

1995 1996 1997 1998 1999 2000 2001 2002

Years Deposits (Rs in Million)

1995 6649
1996 5435
1997 5919
1998 6581
1999 4991
2000 7866

54
 The Bank of Punjab

2001 5970
2002 8295

8295
7866
6649 6581 5970
5919
5435
4991

Years Deposits (Rs in Million)

1995 1389

1995 1996 1996

1997 1998 1999 1509
2000 2001 2002
1997 1672
1998 1795
1999 1823
2000 2180
2001 2391
2002 2313

55
 The Bank of Punjab

2500

2000

1500

1000

500

Years Deposits (Rs in Million)

1995 14340
1996 16419
1997 18512
1998 19886
1999 18215
2000 21275
2001 24802
2002 29532

56
 The Bank of Punjab

30000

25000

20000

15000

10000

5000

0
Deposits (Rs in Million

1995 1996 1997 1998 1999 2000 2001 2002

Years Deposits (Rs in Million)

1995 174
1996 151
1997 163
1998 123
1999 28
2000 356
2001 222
2002 283

57
 The Bank of Punjab

Years Deposits (Rs in Million

1995 1996 1997 1998 1999 2000 2001 2002

Years Deposits (Rs in Million)

1995 2691
1996 3955
1997 5389
1998 5389
1999 5389
2000 5896
2001 6436
2002 5891

58
 The Bank of Punjab

5389 5389 6436

5896 5891
5389 1995
3955 1996
2691 1997
1998
1999
2000
2001
2002
1

No of Share
Categories Shares Held Percentage
Holders
Directors/CEO/Spouse 4 11576 0.01
Provincial Govern 1 51781427 51.57
Foreign funds 50 3052275 3.04
Individuals 5659 14378263 14.32
Insurance Companies 4 3453355 3.44
Financial Institutions 28 5881765 5.85
NBFI 103 16547565 16.48
Modaraba & Modaraba
8 9279 0.01
Management Co
Others 28 5299821 5.28
TOTAL 5891 100415326 100

59
 The Bank of Punjab

0.01 5.28 0.01

16.48

5.85
51.57
3.44

14.32
3.04
Directors /CEO/Spouse Provincial Govern
Foreign funds Individuals
Insurance Companies Financial Institutions
NBFI Modaraba & Modaraba Management Co
Others

Topics Page No.

Summarized Balance sheets 68

Comparative Balance sheets 69
Summarized PLS Accounts 71
Comparative PLS Accounts 72
Trend Analysis 41
Ratio Analysis 86

60
 The Bank of Punjab

THE BANK OF PUNJAB

SUMMARISED BALANCE SHEET
Rs. In Million
For the Years 2002 2001 2000 19999 1998
ASSET
CURRENT ASSETS
Cash 2814341 4448268 1483412 2021955 1746493
Balance with other
3170272 432575 458204 2071514 1968484
Banks
Account Receivable 7479833 6776167 2911000 1750000 4644966
Advances 6620988 5771526 6143664 6150648 4111500
TOTAL CURRENT 2008543 1742853 1099628
11994117 12471437
ASSETS 4 6 0
LONG TERM
8294651 5969947 7865794 4990619 6580583
INVESTMENT
Fixed Asset 388788 274059 248575 230646 233601
Capital work in
5048 2136 2641 33749 44807
progress
TOTAL FIXED
393836 274059 251216 264395 278408
ASSETS
Deferred Tax Debt 185070 192077
OTHER ASSETS 758930 942955 881108 961312 555210
2953285 2480270 2018647 1821044
TOTAL ASSETS 19885638
1 3 5 3

61
 The Bank of Punjab

CURRENT LIABILITIES
Notes Payable 250144 162545 130480 872378 543309
1074567
Account Payable 1289547 2509262 312319 10009548
4
Accrued Liabilities 64240 18804 67345 27857
Other Liabilities 731756 686653 535706 429930 415076
TOTAL CURRENT
2335687 3377264 978505 12115327 10995790
LIABILITIES
Deferred Liabilities 117435 3000 3000
2376701 1903473 1702841
Long Term Liabilities 7091933 4273426
7 7 2
2622013 1800691 1639175
TOTAL LIABILITIES 22411998 18090723
8 7 3
STOCK HOLDERS EQUITY
Share Capital 1004154 979662 851880 851880 774436
Reserves 1357499 1275191 1327231 971049 1020343
Unappropriated Profit 1452 05 447 225 136
Stock Holder Equity 2363105 2390705 2179558 1823154 1794915
Total Liabilities & 2858324 2480270 2018647 1821490
19885638
Equity 3 3 5 7

THE BANK OF PUNJAB

COMPARATIVE BALANCE SHEET
Rs. In Million
For the Years 2002-2001 2001-2000
ASSETS Rs Rs
%AGE %AGE
CCURRENT ASSETS (In Million) (In Million)
Cash (1633927) (93%) 2964856 170%
Balance with other Banks 2737697 139% (25629) (1.3%)
Account Receivable 703666 15% 3865167 83%
Advances 849462 20.6% (372138) (9%)
TOTAL CURRENT ASSETS 2656898 21% 6432256 51%
LONG TERM INVESTMENT 2324704 35% (1895847) (29%)
Fixed Asset 114729 49% 25484 11%
Capital work in progress 2912 7% (505) (1.12%)
TOTAL FIXED ASSETS 119777 43% 22843 8.2%
Deferred Tax Debt (185070) (96%) (7007) (3.6%)
OTHER ASSETS (184025) (33%) 61847 11%
TOTAL ASSETS 4730148 23.7% 4616228 23%

62
 The Bank of Punjab

CURRENT LIABILITIES
Notes Payable 87599 16% 32065 6%
Account Payable (1219715) (12%) 2196943 21%
Accrued Liabilities 45436 163% 18804 67%
Other Liabilities 45103 11% 150947 36%
TOTAL CURRENT
1041577 9.5% 2398759 22%
LIABILITIES
Deferred Liabilities 117435 3914%
Long Term Liabilities 4732280 110% 2006325 47%
TOTAL LIABILITIES 3808140 21% 4405081 24%
STOCK HOLDERS EQUITY
Share Capital 24492 3% 127782 16.5%
Reserves 82308 8% (52040) (5%)
Unappropriated Profit 1447 1064% (442) (32.5%)
Stock Holder Equity 27600 105% 211147 11.7%
Total Liabilities & Equity 3780540 19% 4616228 23%

THE BANK OF PUNJAB

COMPARATIVE BALANCE SHEET
Rs. In Million

For the Years 2000-1999 1999-1998

ASSETS Rs Rs
%AGE %AGE
CCURRENT ASSETS (In Million) (In Million)
Cash (538543) (31%) 275462 15.7%
Balance with other Banks (1613310) (82%) 103030 5.23%
Account Receivable 1161000 25% (2894966) (62%)
Advances (6984) (.16%) 2039148 50%
TOTAL CURRENT ASSETS (997837) (8%) (477320) (3.8%)
LONG TERM INVESTMENT 2875175 44% (1589964) (24%)
Fixed Asset 17929 8% (2955) (1.2%)
Capital work in progress (31108) (69%) (11058) (24.6%)
TOTAL FIXED ASSETS (13179) (4.7%) (14013) (5%)
Deferred Tax Debt 192077 (100%)
OTHER ASSETS (80204) (14%) 406102 73%
TOTAL ASSETS 1976032 10% (1675195) (8.4%)

63
 The Bank of Punjab

CURRENT LIABILITIES
Notes Payable (741898) (136%) 329069 60%
Account Payable (10433355) (104%) 736126 7%
Accrued Liabilities (67345) (241%) 39488 141%
Other Liabilities 105776 25% 14854 3.5%
TOTAL CURRENT
(11136822) (101%) 1119537 10%
LIABILITIES
Deferred Liabilities (3000) (100%)
Long Term Liabilities 9936479 232% 2818507 66%
TOTAL LIABILITIES 1615164 10% (1698970) (9%)
STOCK HOLDERS EQUITY
Share Capital 0 0% 77444 10%
Reserves 356182 35% (49294) (5%)
Unappropriated Profit 22 163% (89) 65%
Stock Holder Equity 356404 20.4% 28239 1.5%
Total Liabilities & Equity 1971568 10% (1670731) 8.4%

THE BANK OF PUNJAB

SUMMARISED PROFIT & LOSS ACCOUNT
Rs. In Million
For the Years 2002 2001 2000 19999 1998
Service Revenue
Mark up/Interest,
Discount & Returned 2069555 2172956 1934794 2260770 2259608
Earned
Fee Commission &
60320 51937 61395 60637 58521
Brokerage
Dividend Income 189051 109804 161307 71258 46738
Other Operating Income 104581 58647 47300 25725 26150
Total Service Revenue 2423507 2393344 2204796 2425299 2391017
Less: Cost /Return on
996335 1113151 1083344 1510145 1755443
Deposit
Gross Income 1392644 1259790 999004 912797 635100

64
 The Bank of Punjab

Less: Operating
Expenses
Administrative Expenses 901041 837055 678675 722009 601368
Provision against non-
76076 39286 143059 81230 (123615)
performing advances
Provision for diminution
(23472) 0 0 0 27273
in value of investment
Bad Debts 1574 200 33 0 337
Total Operating
955219 876541 821767 803239 505363
Expenses
Operating Profit 437425 383249 177237 109558 129737
Other Income 43154 28480 21967 17269 7561
Other Charges 4664 1460 690 2088 1683
Profit Before Tax 431844 421275 319639 124739 135615
Less: Tax 147870 185030 162220 96500 12500
Profit After Tax 283979 236245 157419 28239 123115

THE BANK OF PUNJAB

COMPARATIVE PROFIT & LOSS ACCOUNT

Rs. In Million
For the Years 2002-2001 2001-2000
Rs Rs
Service Revenue (In Million)
%AGE
(In Million)
%AGE

Mark up/Interest, Discount &

(103401) (4%) 238162 10%
Returned Earned
Fee Commission & Brokerage 8383 15% (9458) (17%)
Dividend Income 79247 170% (51503) (110%)
Other Operating Income 45934 175% 11347 43.39%
Total Service Revenue 30163 1% 188548 8%
Less: Cost /Return on Deposit (116816) (7%) 29807 1.6%
Gross Income 132854 21% 260786 41%
Less: Operating Expenses
Administrative Expenses 63986 10.6% 158380 26%

65
 The Bank of Punjab

Provision against non-

36790 30% (103773) (84%)
performing advances
Provision for diminution in
(23472) (86%) 0 0%
value of investment
Bad Debts 1374 407.7% 167 49.5%
Total Operating Expenses 78678 15.5% 54774 11%
Operating Profit 54176 41.7% 206012 159%
Other Income 14674 194% 6513 86%
Other Charges 3204 190% 770 46%
Profit Before Tax 10569 8% 101636 75%
Less: Tax 37160 297% 22810 183%
Profit After Tax 47734 38.7% 78826 64%

THE BANK OF PUNJAB

COMPARATIVE PROFIT & LOSS ACCOUNT

Rs. In Million
For the Years 2000-1999 1999-1998
Rs Rs
Service Revenue (In Million)
%AGE
(In Million)
%AGE

Mark up/Interest, Discount &

(325976) (15%) 1162 1%
Returned Earned
Fee Commission & Brokerage 758 .71% 2116 3.61%
Dividend Income 90049 193% 24520 52%
Other Operating Income 21575 82.5% (425) (1.6%)
Total Service Revenue (220503) (9%) 34282 1.4%
Less: Cost /Return on Deposit (426801) (24%) (245298) (14%)
Gross Income 86207 13.6% 277697 43.7%
Less: Operating Expenses
Administrative Expenses (43334) (7%) 120641 20%
Provision against non-
61929 50% 204945 166%
performing advances

66
 The Bank of Punjab

Provision for diminution in

0 (0%) (27273) (100%)
value of investment
Bad Debts 33 10% (337) (100%)
Total Operating Expenses 18528 3.6% 297976 59%
Operating Profit 67579 52% (20179) (15.5%)
Other Income 4598 61% 9708 128%
Other Charges (1398) (83%) 405 24%
Profit Before Tax 194900 143% (10976) (8%)
Less: Tax 65720 525% 84000 572%
Profit After Tax 129180 105% (94976) (77%)

Comparative Financial Statement

Comparative financial statement present financial

information for the current period and one or more past periods. In

comparative analysis the statements predict about the movements and trends

of the business with respect to past years, whether there is increase in the

business activities or decrease. It may also help to comments about the

future expectations of the ways in which the financial and operating

performance will go.

There are two type of comparative financial statement analysis.

 Horizontal Analysis

 Trend Percentage Analysis

67
 The Bank of Punjab

Horizontal Analysis

Comparison of two or more years’ financial statement is

called Horizontal Analysis. It shows the changes between years both in

rupee and percentages form. So in this way it facilitates the analyst to

predict about the ways if the business in which it is going. It emphasis the

proportional relationship between the reporting periods, rather than with

in the reporting period.

In this report I shall use this type of comparative financial

statement analysis to analyze the performance of The Bank of Punjab.

Trend Percentage Analysis

Trend percentages state the several years’ financial data in terms of a

base year. The base years equals to 100% with all other stated as some

percentage of this base year. In this way it predict good and easy way

information about the business activities. By simple looking at these

percentages one can see the ways in which the business in going on whether

the business is making performance or not.

Comments on Comparative Analysis of 2002-2001

The results that I have perceived from the Comparative Analysis of

Balance Sheet and Profit & Loss Account of 2002-01.

68
 The Bank of Punjab

From Balance Sheet

∗ The current assets increased by 21%, this is mainly due to a higher

increase in Balance with other Banks i.e. 139%but cash is reduced

which is not good for the Short term solvency of the bank. Account

receivable also increases as compared to last year but other assets

decrease i.e. 33%.

∗ Total Assets are increased by 23.7%.

∗ Fixed Assets are increased by 43%.

∗ The increase in Balance with other banks by 139% is a good sign

for the short-term solvency of the bank.

∗ The Account receivable is increased by 15% in this period.

As a whole total assets and total liabilities plus owner’s equity is increased

by 19% which corresponds with the increase in service revenue.

From Profit and Loss Account

∗ The service revenue of the bank is increased by 1% than that of

2001, with the decrease of –7% in the cost return on deposits. So

service decreased less than that of return on deposits.

∗ This less decrease, service revenue than that of return on deposits

results in an increase of 21% of Gross profit.

69
 The Bank of Punjab

∗ The other income of the bank also increased in 2002 then that of in

2001. These are increased by 194%.

∗ As the service revenue increased, the administrative expenses also

increased by 11%.

∗ Overall profit after tax also increased by 39% in 2002 then that of

2001.

Comments on Comparative Analysis of 2001-2000

From Balance Sheet

∗ The current assets increased by 51%, this is mainly due to a higher

increase in cash i.e. 170% but balance with other bank is reduce

which is not good for the Short term solvency of the bank. Account

receivable also increases as compared to last year.

∗ Total Assets are increased by 23%.

∗ Fixed Assets are increased by 8.2%.

∗ The decrease in Balance with other banks by –1.3% is not good

sign for the short-term solvency of the bank.

70
 The Bank of Punjab

∗ The Account receivable is increased by 83% in this period.

As a whole total assets and total liabilities plus owner’s equity is increased

by 23% which corresponds with the increase in service revenue.

From Profit and Loss Account

∗ The service revenue of the bank is increased by 8% than that of

2000

∗ This less decrease, service revenue than that of return on deposits

results in an increase of 41% of Gross profit.

∗ The other income of the bank also increased in 2001 then that of in

2000. These are increased by 86%.

∗ As the service revenue increased, the administrative expenses also

increased by 26%.

∗ Overall profit after tax also increased by 64% 2001 then that of

2000.

Comments on Comparative Analysis of 2000-1999

The results that I have perceived from the Comparative Analysis of

Balance Sheet and Profit & Loss Account of 2000-1999.

From Balance Sheet

71
 The Bank of Punjab

∗ The current assets decreases by -8%, this is mainly due to a higher

decrease in Balance with other Banks i.e. -82% and cash is also

reduced by -31%, which is not good for the Short-term solvency of

the bank. Account receivable increase as compared to last year but

other assets decrease i.e. 14%.

∗ Total Assets are increased by 10%.

∗ Fixed Assets are increased by 8%.

∗ The decrease in Balance with other banks by -82% is not a good

sign for the short-term solvency of the bank.

∗ The Account receivable is increased by 25% in this period.

From Profit and Loss Account

∗ The service revenue of the bank is decreased by -9% than that of

1999, with the decrease of –15% Mark up interest on deposits. So

service decreased less than that of Mark-up Interest.

∗ This less decrease, service revenue than that of mark-up on

deposits results in an increase of 14% of Gross profit.

∗ The other income of the bank increased highly in 2000 then that of

in 1999. These are increased by 61%.

72
 The Bank of Punjab

∗ As the service revenue decreased, the administrative expenses also

decreased by -7%.

Overall profit after tax also increased by 105% in 2000 then that of

1999.

Comments on Comparative Analysis of 1999-98

The results that I have perceived from the Comparative Analysis of

Balance Sheet and Profit & Loss Account of 1999-98.

From Balance Sheet

∗ The current assets decreases by –3.8%, this is mainly due to a

higher decrease in Account Receivable but increased in Balance

with other Banks i.e. 5% and cash is also increased by 15.7%

which is good for the Short term solvency of the bank.

∗ Total Assets are decreased by -8.4%.

∗ Fixed Assets are also decreased by -1.2%.

∗ The Account receivables are decreased by -62% in this period.

From Profit and Loss Account

∗ The service revenue of the bank is increased by 1% than that of

1998, with the decrease of –14% in the cost return on deposits. So

service decreased less than that of return on deposits.

73
 The Bank of Punjab

∗ This less decrease, service revenue than that of return on deposits

results in an increase of 43.7% of Gross profit.

∗ The other income of the bank also increased in 1999 then that of in

1998. These are increased by 128%.

∗ As the service revenue increased, the administrative expenses also

increased by 20%.

∗ Overall profit after tax decreased by -77% in 1999 then that of

1998.

THE BANK OF PUNJAB

TREND PERCENTAGES
For the Years 2002/1998 2001/1998 2000/1998 1999/1998
ASSETS
CCURRENT ASSETS
Cash 161% 254% 84% 115%
Balance with other Banks 161% 21% 23% 105%
Account Receivable 161% 141% 62% 37%
Advances 160% 140% 149% 150%
TOTAL CURRENT ASSETS 161% 139% 88% 96%

74
 The Bank of Punjab

LONG TERM INVESTMENT 126% 90% 119% 75%

Fixed Asset 166% 117% 106% 98%
Capital work in progress 11% 04% 05% 75%
TOTAL FIXED ASSETS 141% 98% 90% 94%
Deferred Tax Debt 00% 96% 100% 00%
OTHER ASSETS 136% 169% 158% 173%
TOTAL ASSETS 148% 124% 101% 91%
CURRENT LIABILITIES
Notes Payable 46% 30% 24% 160%
Accounts Payable 12% 25% 03% 107%
Accrued Liabilities 230% 67% 00% 241%
Other Liabilities 176% 165% 129% 103%
TOTAL CURRENT
21% 30% 08% 110%
LIABILITIES
Deferred Liabilities 3914% 00% 00% 100%
Long Term Liabilities 556% 445% 398% 165%
TOTAL LIABILITIES 144% 13% 99% 90%
STOCK HOLDERS EQUITY
Share Capital 129% 126% 110% 110%
Reserves 133% 125% 130% 95%
Unappropriated Profit 1067% 3% 328% 165%
Stock Holder Equity 131% 133% 121% 101%
Total Liabilities & Equity 143% 124% 101% 91%

THE BANK OF PUNJAB

TREND PERCENTAGES
For the Years 2002/1998 2001/1998 2000/1998 1999/1998
Service Revenue
Mark up/Interest, Discount &
91% 96% 85% 100%
Returned Earned
Fee Commission & Brokerage 103% 88% 104% 103%
Dividend Income 404% 234% 345% 152%
Other Operating Income 399% 224% 180% 98%

75
 The Bank of Punjab

Total Service Revenue 101% 100% 92% 101%

Less: Cost /Return on Deposit 56% 63% 61% 86%
Gross Income 219% 198% 157% 143%
Less: Operating Expenses
Administrative Expenses 149% 139% 112% 120%
Provision against non-
61% 31% 115% 65%
performing advances
Provision for diminution in
(86%) 0% 0% 0%
value of investment
Bad Debts 467% 59% 9% 0%
Total Operating Expenses 189% 173% 162% 159%
Operating Profit 337% 295% 136% 84%
Other Income 570% 376% 290% 228%
Other Charges 277% 86% 40% 124%
Profit Before Tax 318% 310% 235% 91%
Less: Tax 1182% 1480% 1297% 772%
Profit After Tax 230% 191% 127% 22%

Graphically Presentation of trend Percentages

This table and graph shows the trend of Total current Assets,

Total Fixed Assets, and Total Assets during the years 1998-02

No of Years 2002 2001 2000 1999 1998

Total Current Assets 161% 139% 88% 96% 100%
Total Fixed Assets 141% 98% 90% 94% 100%
Total Assets 148% 124% 101% 91% 100%

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 The Bank of Punjab

180%

160%

140%

120%

100%

80%

60%

40%

20%

0%
2002 2001 2000 1999 1998

Total Current Assets Total Fixed Assets Total Assets

This table and graph shows the trend of Gross Income, profit before

tax, and Net income.

No of Years 2002 2001 2000 1999 1998

Gross Income 219% 198% 157% 143% 100%
Profit before Tax 318% 310% 235% 91% 100%
Net Income 230% 191% 127% 22% 100%

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 The Bank of Punjab

350%

300%

250%

200%

150%

100%

50%

0%

2002 2001 2000 1999 1998

Gross Income Profit before Tax Net Income

This table and graph shows the trend of current Liabilities, Deferred

Liabilities and Long Term Liabilities during the period 1998-02

No of Years 2002 2001 2000 1999 1998

Current Liabilities 21% 30% 08% 110% 100%
Long Term Liabilities 556% 445% 398% 165% 100%
Total Liabilities 144% 13% 99% 90% 100%

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 The Bank of Punjab

600%

500%

400%

300%

200%

100%

0%

2002 2001 2000 1999 1998

Current Liabilities Long Term Liabilities Total Liabilities

RATIO ANALYSIS

The relationship of one item to another expressed in simple

mathematical form is known as a ratio. A single ratio in itself is meaningless

because it does not furnish a complete picture. A ratio becomes meaning full

when compared with some standard. So we have taken ratios and percentage

of the BOP based in its record of the past financial and operating

performance. On the following pages, I make the analysis of the financial

statements of BOP by using related items for the last five years.

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 The Bank of Punjab

Profitability vs. Investment

Return on Assets Net profit after taxes / Total assets

Return on Deposits Net profit after taxes / Deposits
Return on Equity Net profit after taxes / Equity

No of Years 2002 2001 2000 1999 1998

Return on Assets .96% . 95% .70% . 15% . 61%
Return on Deposits 1.19% 1.24% .92% . 39% 2.8%
Return on Equity 12.01% 9.88% 7.2% 1.54% 6.7%
Remarks.

The return on assets shows a increasing trend, which is good sign for

the BOP. Return on deposits is also not stable; in starting years it increases

and then decreases and knows again increase. This is due to an increase in

deposits and less increase in profit. The ROE ratio of five years of BOP

indicates that the profitability of the bank with equity is increasing day by

day. This looks to be very positive sign.

Profitability Ratios.

Gross Profit Margin Gross profit / Income

Operating Profit Margin Operating profit / Income

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 The Bank of Punjab

Net Profit Margin Net profit / Income

2 2 2 1
No of Years 1998
002 001 000 999
Gross Profit Margin 57% 52% 45% 37% 27%
Operating Profit Margin 18% 16% 8% 5% 6%
Net Profit Margin 11% 9% 7% 1% 5%

Remarks.

The net profit margin of five years indicates that the income of the

BOP after paying its non-productive expenses is increasing year by year,

which is a very good sign for the bank. As I see the operating profit of the

bank shows a increasing trend in ratio. This shows that the earning capacity

of the bank is increasing year by year.

Earning Per Share

Earning Per Share Profit after Tax / No of Shares

2 2 2 1
No of Years 1998
002 001 000 999
Earning Per Share 2.83 2.41 1.85 .33 1.59

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 The Bank of Punjab

Comments

Earning of BOP shows the increasing trend. This shows that the

earning capacity of a single share is increasing and shareholders are earning

increase every year. This is very good sign for BOP. This ratio should be as

high as possible because it has a great importance for an investor to invest in

the Bank of Punjab.

Regulatory Ratios:

Advances to Deposits Ratio Advances / Deposits

Cash to deposits Ratio Cash / Deposits

2 2 2 1
No of Years 1998
002 001 000 999
Advances to Deposits Ratio 28% 30% 36% 36% 33%
Cash to deposits Ratio 12% 23% 9% 13% 42%

Remarks.

Advances to deposits ratio of The Bank of Punjab shows that the

portion of loan in total deposit of the bank is not stable, 1st three year from

1998 to 2001 increase then decrease. It means that the credit (advances)

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 The Bank of Punjab

circulation of the bank has fallen from 36% to 28% during the last five

years, which is a not good sign. And the cash to deposits ratio is also

decrease from 42% to 12%.

Capital adequacy Ratios:

Equity to Asset Ratio Total Equity / Total Assets

Equity to Deposit Ratio Total Equity / Deposits

2 2 2 1
No of Years 1998
002 001 000 999
Equity to Asset Ratio 8% 10% 11% 10% 9%
Equity to Deposit Ratio 10% 13% 13% 12% 3%

Remarks.

This ratios is showing increasing trend, in 2002 it decreased. This

means that deposit of the banks are decreased in 2002 and assets are also

decreased in 2002, which is not good for the Bank of Punjab.

Efficiency Ratios:

Deposits to total liabilities Ratio Deposits/Total Liabilities

Investment to Total Assets Ratio Investments / Total Assets

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 The Bank of Punjab

2 2 2 1
No of Years 1998
002 001 000 999
Deposits to total liabilities Ratio 91% 85% 95% 92% 94%
Investment to Total Assets Ratio 28% 24% 27% 27% 34%

Topics Page No.

Strengths 92
Weaknesses 94
Opportunities 96
Threats 97

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 The Bank of Punjab

In the light of the Knowledge obtained during internship and

studying the organization, the following recommendations may prove to be

successful to the bank.

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

country, the prime objective should be awareness in the general public.

For this it should launch a well-planned advertising campaign in the

general public.

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

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

facilities for the customer.

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

the BOP can attract professionals, intelligent persons.

 The Bank of Punjab should minimize its expenses.

 Special awards should be given to the hardworking employees who

performed extra-ordinary in the bank.

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 The Bank of Punjab

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

advisable to make these products while keeping in mind the gap between

what people want and what their banks are providing them.

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

investments

 The bank should come up with such products or services in which the

customers would not have to come to the bank at any stage i.e. Telephone

Banking etc.

 The Bank of Punjab should use the latest technology because the bank

which can provide speedy, accurate and standard services in the delivery

of products, loans etc. to the customers will be successful e.g.

computerization, fax installation.

 The authority should be delegated to the manager level.

 MIS should be improved by connecting all regional offices and branches

to the head office through a network for timely delivery of information.

 Management of Bank of Punjab should try to avoid the political

influences and should give loans on merit.

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

fooling and recognize the recovery function.

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 The Bank of Punjab

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

professional qualifications such as MBA(IT)’s, M.B.A’s, C.A’s

A.C.M.A’s at the time of recruitment and selection.

 Interview should be conducted while recruiting personnel, to consider the

personality characters, communications skills and sociability.

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

research scholars who want to study the banking affairs. The universities

and other institutions can help to launch the studies regarding banking

business.

 All possible efforts should be made to protect the bank from the

interruption of Provincial government.

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

employees to the administration.

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 The Bank of Punjab

The Bank of Punjab is contributing a lot towards the industrial

development and capital formation in the country. As it is exhibit from the

data regarding the bank’s financial performance as shows in the financial

performance as shows in the financial analysis, that bank is sharing major

banking business of the country. Further more the policies and schemes as

are introduced and carried on by the bank are of great source of help in its

trading and non-trading growth.

They facilitate trade both inside and outside the country. The

Bank if Punjab has endeavored to remain in the forefront of modern

financial institutions and has consistently shows tremendous growth in all

area of its activity. However after scheduling, due to its emphasis on

consolidation and controlled lending, the growth of profit has somewhat

declined. But the ban’s performances are in line with its set goals.

The policies of the bank are uniform and going very smoothly.

The employees are given all the possible facilities and generous

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 The Bank of Punjab

compensation. In return employees are stressed for their best efficiency.

Merit policy prevails in all the activities of the bank. Administration has

studied the administration of all other banks, and all their problems and

drawbacks are planned to be avoided. Therefore, the policies of the

management are progressive and proper.

The progressive approach and trend towards progress and

prosperity reflects that bank will touch the zenith of development and

progress. The dedicated, enthusiastic and motivated employees can bring

that time even earlier.

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The Bank of Punjab

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