Group Members

 Umair Shahid
 Umar Munir Butt
 Rao Umer Shehzad
 Zubari 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 growth
 Steady increase in Customer Deposits
 Overseas Operations
 Branches In Remote Areas
 Islamic Banking
 Sharp 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
Governm ent
Securities
Fully paid up
ordinary shares

Fully paid
preference shares
Listed com panies
Term Finance
Certificates

Foreign Securities
Return on Equity (ROE):

0.3
0.25
Profitability Ratios
0.2
0.15
ROE using Break
0.1
down
0.05
0
2006 2007 2008 Peer
Group
 Profitability Ratio

30.00%
25.00% 2006
20.00%
15.00% 2007
10.00%
5.00% 2008
0.00%
Peer Group
-5.00%
m
argin

m
argin
eturnO
R

N
etinrs
O
set(R
) A

N
etopraing
 Debt Management Ratio

16.000
14.000
12.000
10.000 Debt to Assets
8.000
6.000 Debt to Equity
4.000
2.000
0.000
2006 2007 2008 Peer
Group
 Solvency Ratio

120.000%
100.000%
80.000%
60.000% Equity to Assets
40.000%
20.000% Equity to Deposit
0.000%
2006 2007 2008 Peer Earning Assets to
Group Deposits
 Provision for Loan Losses Ratio

5.00%
4.00% Provision / Total
Assets
3.00%
2.00%
Provision / Average
1.00% total Loan and leases
0.00%
2006 2007 2008 Peer
Group
 Earning Spread

Earning Spred

0.080
0.060
0.040 Earning Spred
0.020
0.000
2006 2007 2008 Peer
Group
 Credit Risk

1.00
Non-Performing
0.80 Assets to total loans
0.60
Annual provision for
0.40
loans losses to eqiuty
0.20 capital
- Non Performing assets
2006 2007 2008 Peer to equity capital
Group
 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 year
 non-interest income share in the total income is also
increasing
 the bank is either not very efficient at collecting the
outstanding
 bank may face considerable credit risk from its loan
defaulters