I dedicated this report to my beloved mother without her encouragement and support I was not

able to achieve this goal. . For me accomplish this task within the specific time limit. I was
provided with every facility by my mother who was necessary in order to complete this
challenge assignment.

I am very thankful to Almighty Allah the most beneficent, the most mercy full who has given
the strength to complete this task. I am also thankful to branch manager and operational manager
respectively of the bank of the Punjab circular railway road sheikhupura. Without whose
guidance and support it would not have been possible for me to accomplish this assignment.

Furthermore, I am indebted to the staff of the staff of the Bank of the Punjab. From whom I have
gained much experience regarding operational work of bank is concerned.

The last but not the last I convey my credit and thankfulness to the virtual universities
Authorities. Without whose well in time support and guidance it would be much difficult for me
to achieve this task successfully

The bank of Punjab (BOP) established in 1989 and got the status of scheduled bank in 1994. The
bank of Punjab offer number of products in their customer. There are 293 branches of BOP in the
whole country. Functionally the bank of Punjab is divided in the division and the each division is
headed by the general managers
The government of the Punjab holds the majority of the shares in BOP. It is doing business in
commercial banking and the retail banking. Corporate banking treasury and investment and trade
finance. The shares of BOP are traded in all three stock Exchanges of the Pakistan.

My internship program period is 3rd January 2015 to 14th February 2015. During internship, I
worked in Accounts opening Department, Accounts Department, Clearing Department,
Remittance Department, Advance and Credit Department and Bill for Collection Department.

As for as the different ratios of the Bank Of the Punjab, they all give the healthy sign regarding
financial position of the Bank as well as the operation results of the different financial years. All
ratios are fully in accordance with the banking industrys standard and norm which is a yard stick
to measure the performance of any bank. These ratio depict and indicate that the financial
strength of the on a higher side and further prospect of the Bank is brighter.

At the end the conclusion and the recommendations are the part of the report. Bibliography is the
part, which contain all the references from I, obtained data to prepare this report

Section

Description

Title page

Letter of undertaking

Internship certificate

Dedication

Acknowledgement

Executive summary

Table of contents

Brief introduction of the organizations

business sector

Overview of the organization

Brief history

Organizational hierarchy chart

Business volume
Product & services
Competitors
Brief introduction of all departments
Organizational structure
10

Plan of internship program

Brief introduction of branch
Starting& Ending date of internship
Training duration and departments

11

Training program
Account opening department
Remittance department
Clearing department

12

Learning experience
Knowledge gain
Skills learned
Attitude learned /value gained
Most challenging task performed

13

Ratio analysis

14

Future prospects of the organization

15

Conclusion

16

Recommendations for improvement

17

Reference and sources used

18

Annexes

Banking plays a major role in a countrys economy. After partition of India

and Pakistan British governments commission distribute the reserves
between Pakistan and India.
In August 1947, various Banks transferred their headquarters and funds to India. Before partition
of Pak-o-Hind, some Banks were operated which were Chartered Bank, Grind-lays Bank,
Imperial Bank of India, Australasia Bank and Habib Bank. After the independence of Pakistan,
Muslim Commercial Bank Limited, Bank of Bahawalpur Limited, Punjab National Bank and
National Bank of Pakistan were providing banking facilities to general public.
The State Bank of Pakistan was inaugurated by our great leader Muhammad Ali Jinnah. On 1 st
July 1948. Australasia Bank and Habib Bank were providing facilities to the Pakistans nation.
After some period, Australasia Bank Limited was converted into Allied Bank of Pakistan.
State Bank of Pakistan is a Central Bank of Pakistan. Other Banks are Commercial Banks,
Specialized Bank and Investment Banks.
Now a day in Pakistan, fifty four banks are operated with thousands of branches. Banks are
providing Banking facilities to their customers and clients by offering different services and
packages.
Pakistans banking sector consisting of Islamic Banks, Private Banks, Public Sector Banks, and
Micro Finance Banks. These Banks are doing Corporate Banking, Trade Financing, Lease
Financing and some Banks are providing online banking facilities, ATM facility and money
transfer facilities also.
Banking sector is a back bone of our economy. If this sector is making progress than whole
economy is also growing a lot. Our Agricultural sector, Industrial sector, Mining sector, Export
sector all depend on the banking industry because Banks provide long term funds as well as short
term funds to all these sectors to meet out their short term as well as long term requirement.
Hence, banking progress is necessary indeed.

History

The Bank of Punjab started functioning with the inauguration of its first branch of 7-Egerton
Road, Lahore on November 15, 1989. The founder of the bank Mr. Nawaz Sharif performed the
inauguration.
The Bank of Punjab is working as a scheduled bank with its 273 branches in all major cities of
the country. The bank provides all types of banking services such as Deposit in Local currency,
Client Deposits in Foreign currency, Remittances and Advances to businesses, trade, industry
and agriculture. The Bank of Punjab is entered into a new era of science to the nation under the
experienced and professional hands of its management.
The Bank of Punjab has played a vital role in the national economy through mobilization of
untapped local resources, promoting savings and providing funds for investments.
The Bank of Punjab has played a vital role in the economy through mobilization of untapped
local resources, promoting savings and providing funds for investment.
The Bank of Punjab has the privilege to discharge its responsibilities towards national prosperity
and progress. Within the couple of years of its scheduling, the bank has not only carved out for
itself prominent niche in the mainstream banking of the country but in certain areas it has the
distinction of taking the lead. In short span of time the Bank has been able to evolve a distinct
corporate culture through of its owned-based policies, which are realistic and are on highly
professional footings.

Vision and Mission statement

Vision Statement

To be a customer focused bank with service Excellence

Mission Statement

To exceed the expectation of our stakeholders by

Leveraging our relationship with the government of
Punjab and delivering a complete range of professional
Solutions with a focus on program driven products
And services in the agriculture and middle markets
Through a motivated team"

Organizational Hierarchy chart

Chairman

Board of
Directors
Chief Executive
Officer
Executive
Committee
Executive
Incharge
Area Manager
North

Area Manager
South

Business Volume
Total Number of Stock Holders

Directors

Provincial Government

269,686,662

Associated Companies

Foreign Shareholders

37,567,609

Individuals

62,526,255

Insurance Companies/Modaraba Mutual

Funds

32,993,540

Leasing Companies

957,701

Charitable Trust

273,911

Cooperative Societies

16,011

NIC Units

3,205,607

ICP

99,00

Joint Stock Companies

19,846,888

Others

101,713,292

Total number of shares

528,798,376

Product Line

Deposits Products

Current Account
Basic Banking Account
Tijarat Account (LCY)
Supreme Current Account (FCY)
Young Loin Saving Account ( New Product 2010 )

Deposits Products

Current Account
Basic Banking Account
Tijarat Account (LCY)
Supreme Current Account (FCY)
Young Loin Saving Account ( New Product 2010 )

Profit Loss Sharing Term Account

Profit and Loss sharing Term Accounts offered by Bank of Punjab are:

PLS Saving Account

Senior Citizen Account
Gharayloo Saving Account
Ziada Munafa Saving Account
PLS-Saving Profit plus Account
Corporate Premium Account
Supreme Saving Account (PLS)
Supreme Saving Account (FCY)
Corporate Premium Account

Consumer Finance

Types of consumer finance offered by Bank of Punjab are:

Aasaih Loan
Quick Cash
Car Loan
House Loan
Small Cash Personal Loan
BOP Motorcycle Loa
The Bank of Punjab offers following Commercial Financing Loans:

Running Finance
Cash Finance
Demand Finance
CNG Filling Station Scheme
Auto Lease Financing Scheme
Car Lease Financing Scheme
Karobar Barao Scheme
Fertilizers Dealers Financing Scheme
Ali Akbar Group_ Franchise Financing Scheme
Atlas Honda Limited _Authorized Dealers Financing Scheme
Financing Scheme_ Purchase of Office/Shops

Electronic Banking

Electronic Banking provides non-stop banking convenience, twenty four hours a day, seven days
a week.

Visa Debit Card

Internet Banking
ATM Network
BOP Quick pay
CallCenter

Services

The Bank of Punjab is dedicate in its efforts to provide a quality banking experience to our
customer via a range of unique Banking Services

Commercial Banking
Online Banking
Cash Management Services

Utility Bills
Locker
Treasury
Western union Money Transfer

Agriculture Credit

Agriculture credit is provided to the farmers and livestock organizations.

Bank of Punjab provides following agriculture loans with a specific markup rate:

Green Tractor Lease Finance

Agri Finance Branch
Agri Finance Scheme
Kissan Dost Finance Scheme
Second Hand Tractor Lease Finance Scheme
Kissan Dost Aabiari Scheme
Kissan Dost Mechanization Support Scheme
Kissan Dost Farm transport Scheme
Kissan Eslahi-e-Erazi Scheme
Kissan Dost Live Stock Development Scheme
Livestock Breed Improvement Trough VVW
Kissan Dost Commercial Agro Services
Kissan Dost Agri Mall Finance Scheme
Corporate Farming Finance Scheme
Commercial Lease Finances Tractor Scheme
Demand Finance Sheds Construction and Civil Work
Lease Finance Facility for Milked Animals
Running Finance Livestock Poultry
Kissan Dost Model dairy Farms (PDDC)
Kissan Dost Model Milk Centre (PDDC)
Kissan Dost Green House Finance Facility
Kissan Dost Cold Storage Finance Facility
Scheme for Controlled Shed
Lease Finance Facility for Installation of Bio-gas Plant
Group Finance to Small farmers

Clean Credit Facility through Syngenta Franchises

Zarkaashat Drip Irrigation System
Markup of Schemes

Trade Finance

Trade finance is a loan provided to the importers and exporters to make their
transaction
effective. This enhances the global business. The Bank of Punjab makes some trade processing
centers to cooperate the exporters and also to the importers in different cities of Pakistan such as
Lahore, Islamabad, Rawalpindi and Karachi.

Competitors

The competitors of the Bank of Punjab are the other commercial banks in Pakistan such as:
Muslim Commercial Bank Limited,
Soneri Bank Limited,
United Bank Limited,
Allied Bank Limited,
Askari Bank Limited,
Faisal Bank Limited,
Standard Chartered Bank Limited,
Habib Bank Limited,
Habib Metropolitan Bank Limited,
Bank Al-Habib Limited

Introduction to All Departments

The departments and divisions of Bank of Punjab are as follows:

Retail Banking Division

Special Assets Management Division

Credit Administration Division

Human Resource Division

Finance division

Information Technology Division

Operations Division

Credit Risk Management Division

Corporate Banking Division

Control and Compliance Division

Training, Research, Communication and Public Division

Consumer banking Division

Audit and Inspection Division

Law Division

Retail Banking Division

Retail banking division of the bank deals with the customers and executes their transaction
directly. It provides the services of saving account, mortgage loans, personal loans, debit cards,
accounts checking, credit cards, ATM cards.
Special Assets Management Division
The Bank will invest on behalf of its clients and give them access to a wide range of traditional
and alternative product offerings that would not be to the average investor. It includes the
automatic sweep of cash balances into a money market fund, as well as brokerage services.
Credit Administration Division

In this division, banks deals with the credit, banks give loans to individuals and to the
corporations.
Human Resource Division
This division performs the duty of hiring the employees, training the employees as well as
retaining the employees and if necessary, firing the employees.

Finance Division

This division controls the overall activities relating to finance i.e. monitoring the investment
activities, financing activities, Debit and Credit of funds and reasons there of with proofs.

Information Technology Division

This department controls and record the data related with the bank. The backup of all branches is
sent to IT department on daily basis.

Operations Division

In this division of BOP, lawyers are employee to solve the cases

This division controls the whole operation of all the branches and controls the cash activities,
cheques, account opening and other things about operations.
Training, Research, Communication & Public Division

This division conducts research on new products, trains newly hired employees, train old
employees on new and innovative circulars in banking sector. It also provides training on
customer relation management.
Audit and Inspection division
This department of bank includes the Audit of all the branches; they do audit of the branches and
give some opinions to execute their transactions.

Functional Hierarchy of the Bank of Punjab

Chairperson of Board of
Governor
President of BOP

Internatio
nal
Division
Risk
Managem
ent

Retail
Banking
Division
Regions

Areas
Branches

Special
Assets
President
Management Division

of BOP

Commerci
al Assets
Managem
ent

Corporate
Assets
Managem
ent

Credit
Administration
Division

Audit
Divisio
n

RCAD
Departme
nt

Regio
nal
Teams

Hu
b

HR
Divisio
n

Financ
e
Divisio
n

IT
Divisio
Finance
IT
n
Divisio
n

Report to
State Bank of Pakistan

Report to

State Bank of Pakistan

Comment on Organizational Structure of Bank of Punjab

Division of Labor

The structure of the Bank of Punjab is divided into division and these divisions are further
divided into departments. This type of structure helps the management in controlling the
operations of the bank effectively. Each division is responsible for its respective duties.

Span of Control

Span of control among hierarchical structure is clearly defined. Each department reports to the
central department and then this central department reports to the head office.
Communication
Communication among the organizational departments is easy. Horizontal and vertical
communication among departments is very effective.

Brief introduction of the branch:

My internship in bank of Punjab is very good for gaining experience. This

bank is situated railway road, SKP and its branch code is 0211.I has done my
internship under the management of very efficient and skilled staff. Manager
and operational manger is very co-operative. The bank provides its services
to its customer and these services fulfill the customers requirement
according to their needs. There are a great number of accounts of traders
who make deposits and payment on daily basis. The bank provides some
facilities; Loan facility, payment of utility bills, transfer of funds within city or

outside the city. So bank of Punjab facilitating their customer by given that
excellence of services and fully satisfies customers need.

Starting & ending dates of internship:

Starting date of internship: January 3rd, 2015
Ending date of internship: February 14th, 2015

Training duration and departments:

Customer services department

2015

3rd January 2015 to 20th January

Remittance department:

21nd January 2015 to 5th February 2015

Clearing department:

6th February 2015 to 14th February 2015

I worked in three departments during my internship program which are

following:
Account opening department
Remittance department
Clearing department
Account opening Department:
My first learning in this department is that I have gain is what is the
procedure of account opening? Being an internee I was not allowed to open
the account for customer because this task required professional experience.
Miss Mamoona rauf is the in charge of this department. He guides me
regarding methods and procedure of account opening. I also filled some
forms of account opening for the customers. There are many types of
accounts are opened like; individual, sole proprietorship, partnership,

business accounts, companies account. There are Current deposit account,

saving account and fixed deposit account.
Process of account opening:
Account opening form includes all the necessary information and details
must be examined. First of all account opening form filled .There are different
important information related to form includes account title, mailing address,
contact numbers and permanent address. There is some personal
information which includes gender, marital status, nationality, country,
applicants name and father/husbands name. Know your customer form is
also filled in which value of transaction, sources of fund and transaction
mode. Some documents are required which is following; photocopies of CNIC,
passport size photographs, photo copy of mother/father s CNIC, pay slip,
student card and other documents according to accounts nature.SS card on
which customers sign is required is also attached with form. At the end
mangers signature and stamped on the account opening form. When all the
documents completed it sends to head offices.
Remittance department:
I have spent two weeks in this department. In this department I have just
observed the activities, because internees are not allowed to perform any
task. Miss Hina is the in-charge of this department. I learned that remittance
can be made by:
Pay order
(PO)
Demand draft (DD)
Call deposit receipt (CDR)

Payment order

Pay order is drawn on the city in which it is being presented. It is neither

negotiable nor transfer anybody. It must be payable to the payee name
therein Branch manager has approval for unlimited issuance of pay orders.

Branch teller module is a system which use for issuance of pay order. The
process of issuance of payment order is following;
Teller receives fund transfer application (FTA) along with cash from the client
than verifies FTA to certify that all the compulsory information has been
provided. It is essential to count cash and verify that all the notes to be real
than appends the cash received stamp on FTA and bring acknowledgement
to client. So the application is sent to GBO for more processing.
If transaction amount exceeds the GBOs limit than branch operational
manager approves the transaction. GBO uses Branch teller module to issue a
payment order. Since issuing the PO all details of beneficiary must be
entered in the system than complete the transaction and signs the PO & FTA.
Demand draft:
Demand draft is drawn on the branch in which it is being offered.GBO
perform this duty. The bank provides this facility to the account holders and
non account holder.DD charges differ for both. It is made in the favor of
remitter and beneficiary. Head office account would be debit and remitter
account would be credit at the time of issuance. After that head office
account is debit and remitter account would be credit at the presented time
Call Deposit Receipt:

Call deposit receipt is used for tender. The call deposits are offered on the
agreement as assurance or safety from the bank that money is deposited in
the bank. It is made in favor of contacting parties or any other person. There
is no interest rate is applicable to the customer. CDR has some related
information like applicant and beneficiary name, account name, amount,
date of issue and authorized signature. The authority letter sends for
collection in form of demand draft or pays order and call deposit order.

Clearing Department

I spent two weeks in clearing department. This department is under the

supervision of Mr. Talha. Collection and payment of Cheques, demand draft
and pay order is cleared in this department. All clearing related working is

computerized. The clearing cheques and slips are entered in the separate
ledger.
The cheques number and name of branch on which is drawn is must be
checked. The cheques are stamped carefully appended because sometimes
it has been returned. Inward and outward clearing is main two types of
clearing. Inward clearing is that in which our banks cheques are presented in
other banks and outward clearing is that in which other cheques are
presented in our branch. NIFT is an agent carries Inward Clearing instruments
to the Central Processing Unit (CPU).Deposit slip is filled for deposit of
crossed cheque and related instrument that customer needs to deposit by
bank. If cheque is returned than a memo is attached with cheque on which
reasons are mentioned for returning of cheques. There are three types of
clearing; normal clearing, same day clearing, inter city

Knowledge gained:

I obtain lot of knowledge about the account opening department. How we

can open new accounts and its whole process. There are some documents
like photographs; CNIC photocopies etc. are required for this process and
process of issuance of cheque books. I learned about how accounts are
closed, bank sends reminder letter to accountholder before close of
accounts. I learned more about how clearing is made and know the
difference between intercity cheques and transfer cheque.

Skills Learned:

I learned many new skills by the internship program which is very helpful for
opportunities of employment and able to meet any competition.
It helps to prepare both by giving us the experience and skills to build a
strong and the confidence to give an outstanding interview. When we discuss
our knowledge, skills and abilities, we can speak from experience, not
conjecture. We improved our ability to work under pressure by internship.
Our communication skills get better by the working in this organization.
Communication with manager and colleague with remain our self in the loop
of office communications. Team work skills improve by the working within
many people. When we talk with different kind of customers, our
communication skills would be improved.
The ability to dealing customer would improve. My problem solving
techniques also improved by the internship program and improves written
and verbal skills. By the Internship program, I gain a lot of knowledge and
experienced for success in future and improved the interpersonal skills.
Attitudes Observed/Values Gained:

I got the practical experience about how to work in an organization. It gives

me the opportunity to shape my behavior, attitude and my thoughts. I learnt
the expert attitude of the people by internship program
.It is necessary to know the importance of our effort and time because
students have no value of time in student life. In reality, professional life is
different from student life. We act like professional. Be pleasing and polite
attitude is one of the important factor for successful employment. Know
when to listen and when to speak .Contribute to the formal and productive
employment. Dont detract from it. We manage our self in moments of
stress, maintain a positive attitude.
Hard working employees are capital of organization and are inclined to wipe
off on all and it has positive impact on all over the association. When we
show the enthusiastic attitude towards colleague than it makes good
atmosphere at this work place.

I learned new techniques regarding this field. Punctual attitude is best for
professional life. Now I am cable to work with efficiently and effectiveness so
we can show responsible and cooperative attitude.

Most challenging task performed:

The Filling of account opening is very challenging task to me because I face
some difficulties at the beginning. Some errors are occurs repeatedly like
over writing, omitting some fields, unintended spell mistakes because
everything is totally new to me. But with the passage of time I learned much
about the whole task.

In order to analysis the financial performance of the bank, investors and management use the
ratio
analysis in which following ratios are calculated:

1) Net profit Margin

Introduction
Net profit margin is the percentage of revenue remaining after all operating expenses,
interest, taxes and preferred stock dividends have been deducted from companys total
revenue.
Formula:
Net profit margin= Net profit after tax/net Sales*100
Calculation:
2012

2013

2014

Net profit after tax=1,938,007

Net profit after tax=1,633,841

Net profit after tax=2,787,449

Net Sales=24,227,721

Net Sales=24,666,024

Net Sales=29,521,719

=Net profit after tax/net Sales)*100

=(1,938,007 /24,227,721)*100
=8%

=Net
profit
after
tax/net =Net profit after tax/net Sales)*100
Sales)*100
=(2,787,449 /29,521,719 )*100
=(1,633,841/24,666,024)*100
=9%
=7%

8%

9%
7%

Graphical Representation:

Interpretation
The net profit margin of BOP is decreasing in 2013 is 7 % due to increase in the non mark-up
interest expenses and taxes which are not efficient to converting revenue into actual profits. The
net profit margin of BOP is increasing in 2012 and 2014 respectively. Due to decreasing in non
mark-up interest expenses and taxes are proficient to converting its revenue into actual profits.
As we know, the profitability of business will be higher when the net profit margin ratio high. `

2) Gross spread ratio:

Introduction
Gross spread ratio looks at the spread of interest between borrowing and lending. Banks
make money by borrowing short-term money from depositors and then using these funds
to make long-term loans to businesses, consumers and homeowners. One way to analyze
gross profit rates of banks is to look at the spread between the loan rates and deposit
rates. Further, through ratio analysis, you can use the gross spread ratio to determine the
profitability, liquidity and leverage of a bank
Formula:
Gross spread ratio=spread/revenue*100
Spread=interest earned-interest expensed
Calculation:

2012

2013

2013

Spread=2,143,106

Spread=4,019,034

Spread=8,995,936

Revenue= 24,666,024

Revenue=24,227,721

Revenue== 29,521,719

=Spread/Revenue*100

=Spread/Revenue*100

=Spread/Revenue*100

=2,143,106/24,666,024*100

=4,019,034
24,227,721*100

=8.68%

/ =8,995,936/29,521,719 *100
=30.47%

=16.58%
8.68%

30.47%
16.58%

Working of Gross spread ratio:

Spread=Interest earned-interest expensed
2012) Spread =24,666,024-22,522,918=2,143,106
2013) Spread= 24,227,721- 20,208,687= 4,019,034
2014) Spread = 29,521,719 -20,525,783= 8,995,936

Graphical Representation:

Interpretation
The gross spread ratio of BOP is 8.68%, 16.58%& 30.47% in years 2012,
2013 & 2014.It is viewing that the gross spread ratio of BOP is not constant
and is going to increase day by day due to decrease in interest expenses.
This ratio was low in 2012 but due to decrease in interest expenses and
increase in 2013 and 2014 that is a good sign for the BOP.

3)Non interest income to total income ratio

Introduction
Non Interest / Total Income ratio measures the proportion of bank's total
income that have been generated by non-interest related activities (e.g. fees
and commission, trading gains, fore activities etc).
Formula:
Non interest income to total income ratio=Non interest income/total income*100
Total income= interest income + interest earned
Calculation:

2012

2013

2014

Non interest income=3,190,745

Non interest income=3,596,226

Non interest income=2,790,430

Total Income=27,856,769

Total Income=27,823,947

=Total Income=32,312,149

=non-Interest
income*100

income/Total =non- Interest

income*100

income/Total =non-Interest
income*100

income/Total

=3,190,745/27,856,769*100

=3,596,226/27,823,947*100

=2,790,430/32,312,149*100

=11.45%

=12.92

=8.63%

11.45%

12.92%

Working of total income:

Total income=interest income + interest earned
2012) Total Income= 3,190,745+24,666,024 = 27,856,769
2013) Total Income= 3,596,226 +24,227,721= 27,823,947
2014) Total Income =2,790,430 +29,521,719 =32,312,149

Graphical Representation:

8.63%

Interpretation
This graph is shows that the non interest income to total income ratio of BOP
for the year of 2012 is 11.45% and for the year of 2013 it is 12.92% & in
2014 it is 8.63% . It is showing that this ratio of BOP is not constant in all
over the years. It indicates that non mark-up income is how percent of total
income of the BOP. In 2014, this ratio is low but in 2012 and 2013.this ratio is
high it means in 2014 BOP is not gaining more non interest income like
commission ,brokerage income & income from dealing in foreign currencies
etc due to which this ratio is decreasing in 2014.

4)Spread Ratio
Introduction
An options trading strategy. It involves buying options and then selling a different
quantity of options. The options that are sold have different strike prices but have
the same expiration dates. They can be either puts or call
Formula:
Spread Ratio= interest earned/interest expensed
Calculation:
2012

2013

2014

Interest earned=24,666,024

Interest earned= 24,227,721

Interest earned=29,521,719

Interest expense=22,522,918

Interest expense= 20,208,687

Interest expense= 20,525,783

=interest
expensed

earned/interest =interest earned/interest expensed

= (24,227,721/ 20,208,687)

= (24,666,024/22,522,918)

=interest
expensed

earned/interest

= (29,521,719/ 20,525,783

= 1.19 times

=1.09 times

=1.43 times
1.19
1.09

Graphical Representation:

1.43

Interpretation
The spread ratio of BOP is 1.09, 1.19 &1.43 times for three years
respectively. It is showing that the spread ratio of BOP is not constant and
increasing day by day. This ratio is much high in 2014.It is showing that the
interest expenses in 2012 and 2013 are more than 2014 that is becoming
cause the decrease the ratio in these years.

5)Return on assets
Introduction
An indicator of how profitable a company is relative to its total assets. ROA gives an
idea as to how efficient management is at using its assets to generate earnings.
Calculated by dividing a company's annual earnings by its total assets, ROA is displayed
as a percentage. Sometimes this is referred to as "return on investment".
Formula:
Return on assets=Net profit after tax/Average total assets*100
Calculation:

2012

2013

2014

Net profit after tax= 1,633,841

Net profit after tax= 1,938,007

Average Total Assets=166,055,527

Average
Total
176,349,072

Net profit after tax=2,787,449

Assets= Average Total Asset=210185094

= Net profit after tax/ Total assets

*100
= Net profit after tax/ Total
assets *100
=1,633,841/166,055,527*100
=191,938,007/176,349,072*100
= 0.98%
= 1.09%
0.98%
1.09%

= Net profit
assets*100

after

tax/

Total

=2,787,449/210185094*100
3=1.32%
1.32%

Working of total assets:

Total assets:
Details

2012

2013

2014

Cash and balances with treasury banks

17,298,251

23,820,864

23,622,411

Balances with other banks

3,101,170

4,265,296

2,239,170

Due from financial institutions

1,562,946

11,407,448

32,748,623

Investments

129,518,999

123,956,143

154,874,757

Islamic financing and related services

149,605,002

157,285,598

170,312,593

Operating fixed assets

3,473,491

3,514,801

Deferred tax assets

13,070,614

12,627,352

9,845,426

Other assets

14,480,581

15,820,643

21,237,087

Total Assets

332,111,054

352,698,145

420,370,188

Average total assets:

Formula:
=Total assets/2

5,490,121

Year 2012:332,111,054/2=166,055,527
Year 2013: 352,698,145/2=176,349,072
Year 2014: 420,370,188/2=210,185,094

Graphical Representation:

Interpretation
Return on assets ratio indicates that how the bank can make use of its assets
for generating much profit. The graph shows that the ratio is 0.98%, 1.09% &
1.32% in the year 2012, 2013& 2014 respectively. This ratio shows varying
trend in assets and profits with the passage of time. In 2013 & 2014
organizations position is very well but in 2012 it is not good. There are
increasing trend in 2013 & 2014 but it would be decrease in2012.It is
indicating that the management of BOP is not using its assets in an
professional manner in generating earnings and revenues for the BOP.

6) Du Pont returns on assets

Introduction
An expression that breaks return on equity (ROE) down into three parts: profit margin,
total asset turnover and financial leverage. It is also known as "DuPont Analysis".
Formula:

Du Pont return on assets= (Net profit/net sales)*(Net sales /average total assets)*100
Calculation:
Calculation:

2012

2013

2014

Net income= 1,744,556

Net income= 1,914,720

Net income= 2,841,535

Net sales=24,666,024

Net sales= 24,223,658

Net sales= 29,517,673

Average Total Assets= 166,055,527

Average Total
Assets=176,349,072

Average Total Assets=210,185,094

= ((net income/net sales)*

(net sales /total assets))*100
= ((1,744,556/24,666,024)*
(24,666,024/166,055,527

= ((net income/net sales)*

(net sales/total assets))*100
= ((1,914,720/ 24,223,658)*
(24,223,658/176,349,072

)*100

=(0.010)*100

= (0.010)*100

= ((net income/net sales)*

(net sales/total assets))*100
= ((2,841,535/ 29,517,673)*
(29,517,673/210,185,094)*100
= (0.013)*100
= 1.34%

=1.03 %
1.03

= 1.08%

1.34
1.08

Working of total assets:

Total assets

Details

2012

2013

2014

Cash and balances with treasury banks

17,298,251

23,820,864

23,622,411

Balances with other banks

3,101,170

4,265,296

2,239,170

Due from financial institutions

1,562,946

11,407,448

32,748,623

Investments

129,518,999

123,956,143

154,874,757

Islamic financing and related services

149,605,002

157,285,598

170,312,593

Operating fixed assets

3,473,491

3,514,801

Deferred tax assets

13,070,614

12,627,352

9,845,426

Other assets

14,480,581

15,820,643

21,237,087

Total Assets

332,111,054

352,698,145

420,370,188

Average total assets:

Formula:
=Total assets/2
Year 2012: 332,111,054/2=166,055,527
Year 2013: 352,698,145/2=176,349,072
Year 2014: 420,370,188/2=210,185,094

Graphical Representation:

5,490,121

Interpretation
The graph of Du Pont return on Assets ratio shows 1.03%, 1.08% & 1.03% in
the year 2012, 2013& 2014.This ratio shows varying trend in assets and
profits with the passage of time. In 2013 & 2014 organizations position is
very well but in 2012 it is not good. In 2012, the management of BOP is not
using its assets in an efficient manner due to which this ratio is decreasing
and is not generating much revenue for BOP.

7) Return on total equity

Introduction
The amount of net income returned as a percentage of shareholders equity.
Return on equity measures a corporation's profitability by revealing how
much profit a company generates with the money shareholders have
invested.
Formula:
Return on total equity=net profit after tax/total equity
Calculation:

2012

2013

Net profit after tax = 1,633,841

Total Equity= (6,266,95,7)
=Net profit
equity*100

after

tax/

2014

Net profit after tax= 1,938,007

Net profit after tax = 2,787,449

Total equity= 8,399,06

Total Equity= 8,519,221

Total

== 1,633,841 / (6,266,95,7)*100

=Net profit
equity*100

=-26.07 %

=1,938,007 / 8,399,06*100

=2,787,449/ 8,519,221*100

= 23.74%

=32.71%

26.07

after

tax/

Total =Net profit

equity*100

23.74

after

tax/

32.71

Working of total equity:

Total equity
Details

2012

2013

2014

Share capital

5,287,974

10,551,132

15,551,132

Reserves

1,187,433

1,539,659

2,081,243

Accumulated losses

(12,742,364)

(11,250,885)

(9,113,154)

Total equity

(6,266,95,7)

8,399,06

8,519,221

Graphical Representation:

Total

Interpretation
This ratio shows the profitability of bank from the investors point of view. It
reveals that how the bank can generate its profit by the stockholders
investment. The return on equity ratio is 26.07, 23.74% &32.71% for the
year 2012, 2013 & 2014 respectively. It is showing that the ratio is very well
year 2012 and decrease in year 2013. There are increasing trend in 2014
which is good signal for gaining more profit
8) Debt Ratio
Introduction
A financial ratio that measures the extent of a companys or consumers
leverage. The debt ratio is defined as the ratio of total debt to total assets,
expressed in percentage, and can be interpreted as the proportion of a
companys assets that are financed by debt
Formula:
Debt ratio=Total liabilities/Total assets*100
Calculation:
Formula:
Debt ratio=Total liabilities/Total assets*100
Calculation:

2012

2013

2014

Total liabilities=319,739,551

Total liabilities= 339,216,847

Total Liabilities= 401,043,481

Total assets= 332,111,054

Total assets= 352,698,145

Total Assets= 420,370,188

=Total liabilities/total assets*100

=Total liabilities/total assets*100

=Total liabilities/total assets*100

=(401,043,481/420,370,188)*100 =(339,216,847/352,698,145)*100 =(319,739,551/332,111,054)*100

=96%

=96%

96

=96%

96

96

Working of total liabilities:

Total liabilities
Details

2012

2013

2014

Bill payable

1,500,709

1,506,335

1,727,731

Borrowings

44,683,826

22,802,482

44,742,624

Deposits and other account

266,055,781

306,560,767

342,290,763

2,000,000

3,601

2,386

1,128

Sub-ordinate loans
Liabilities against assets subject finance
Deferred tax liability
Other liabilities

7,495,634

Total liabilities

319,739,551

Working of Total Assets:

8,344,877

339,216,847

10,281,235

401,043,481

Total Assets

Details

2012

2013

2014

Cash and balances with treasury banks

17,298,251

23,820,864

23,622,411

Balances with other banks

3,101,170

4,265,296

2,239,170

Due from financial institutions

1,562,946

11,407,448

32,748,623

Investments

129,518,999

123,956,143

154,874,757

Islamic financing and related services

149,605,002

157,285,598

170,312,593

Operating fixed assets

3,473,491

3,514,801

Deferred tax assets

13,070,614

12,627,352

9,845,426

Other assets

14,480,581

15,820,643

21,237,087

Total Assets

332,111,054

352,698,145

420,370,188

Graphical Representation:

5,490,121

Interpretation
The graph is shows that the debt ratio constant in all years which is 96 %.Its
showing that BOP is using much debt to finance its assets. Its ratio is too
much which is dangerous signal for BOP position. It needs to decrease to its
debts because high debt shows the BOP has high risk of default due to which
investors will not like the BOP.

9) Debt /earnings ratio

Formula:
Debt to equity ratio=Total liabilities/ shareholders equity
Calculation:

2012
Total liabilities= 319,739,551

Shareholders equity= (6,266,95,7)

2013
Total liabilities= 339,216,847

Shareholders Equity= 8,399,06

2014
Total liabilities= 401,043,481

Shareholders Equity= 8,519,221

=Total
equity

liabilities/

shareholders

= 319,739,551 (6,266,95,7)
= -51.02

=total
equity

liabilities/

shareholders

= total liabilities/ shareholders

equity
= 401,043,481/8,519,221

= 339,216,847/ 8,399,06
-51.02

= 40.38

= 47.07
40.38

47.07

Working of total equity:

Total equity
Details

2012

2013

2014

Share capital

5,287,974

10,551,132

15,551,132

Reserves

1,187,433

1,539,659

2,081,243

Accumulated losses

(12,742,364)

(11,250,885)

(9,113,154)

Total equity

(6,266,95,7)

8,399,06

8,519,221

Graphical Representation:

Interpretation
This ratio shows the relationship between borrowers funds and owners
equity. This ratio is not constant in all over the years. In 2012 the debt is
negative which is -51.02its shows that the bank reducing its debt to boost
investment in future high cash flow sates. Every 47.07 rupee of long term
debt is being backed by an investment of one rupee by the shareholder. The
bank utilizes 40.38 &47.07 rupees of debt in 2013 & 2014 respectively.

10) Time interest earned ratio

Introduction
A metric used to measure a company's ability to meet its debt obligations. It
is calculated by taking a company's earnings before interest and taxes (EBIT)
and dividing it by the total interest payable on bonds and other contractual
debt. It is usually quoted as a ratio and indicates how many times a company
can cover its interest charges on a pretax basis. Failing to meet these
obligations could force a company into bankruptcy.
Also referred to as "interest coverage ratio" and " fixed-charged coverage."
Formula:
Time interest earned ratio=Earnings before interest and tax/interest expense
Calculation:

2012

2013

2014

Earnings before interest and Earnings before interest and Earnings before interest and
tax= 23,926,810
tax= 23,,209,969
tax= 24,832,446
Interest expense= 22,522,918

Interest expense= 20,208,687

Interest expense= 20,525,783

=Earnings before interest and =Earnings before interest and =Earnings before interest and
tax/ interest expense)
tax/ interest expense)
tax /interest expense)
=23,926,810/ 22,522,918

= 23,,209,969/ 20,208,687

= 24,832,446/ 20,525,783

= 1.06 times

= 1.14 times

= 1.20 times

2.45

1.14

Working of Earning before interest and tax

Earnings before interest and tax=profit before tax + interest expensed
2012) EBIT= 1,403,892+22,522,918= 23,926,810
2013) EBIT = 3,001,282+20,208,687= 23,, 209,969
2014) EBIT = 4,306,663+20,525,783= 24,832,446

Graphical Representation:

1.20

Interpretation
This ratio shows that the interest covered in 2012, 2013 & 2014 are 2.45,
1.14 & 1.20 times earning for covered its interest charges respectively. The
interest covered rapidly in 2012
11) Advances/Deposits ratio
Introduction
For banks, it is how much they have coming in (deposits) vs. how much they have going
out (loans). The more money the bank has loaned out generates more interest income
provided the loans are to secure borrowers. Deposits are obligations (debts) the bank
has to the depositors.
Formula:
Advances/deposits ratio=Advances/deposits
Calculation:
2012

2013

2014

Advances= 149,605,002

Advances= 157,285,598

Advances= 170,312,593

Deposits= 266,055,781

Deposits= 306,560,767

Deposits= 342,290,763

= Advances/Deposits

= Advances/ Deposits

= Advances/ Deposits

= 157,285,598/ 306,560,767

= 170,312,593/342,290,763

= 0.56 times

= 0.51 times

= 0.49 times

0.56

0.51

0.49

Graphical Representation:

Interpretation
This diagram is showing the advances to deposits ratio. This ratio is in 2012,
2013 & 2014 are 0.56, 0.51 & 0.49times respectively. This ratio is varying in
all years and decreasing day by day. The standard for this ratio is 1:1.The
declining trend of this ratio shows inefficient use of deposit and services of
loan to borrower.BOP needs to increase its liquidity position and
improvement in profit.

12) Operating cash flow ratio

Into ruction
The operating cash flow ratio can gauge a company's liquidity in the short
term. Using cash flow as opposed to income is sometimes a better indication
of liquidity simply because, as we know, cash is how bills are normally paid
off.
Formula:
Operating cash flow ratio=cash flow from operation/current liabilities

Calculation:

2012
Operating
20,546,543

cash

2013

2014

flow= Operating cash flow= 3,731,609

Current liabilities= 339214461

Current liabilities= 319735950

=Operating
cash
flow/Current
=Operating cash flow/Current liabilities
liabilities
= 3,731,609/339,216,847
= 20,546,543/319,739,551
= 0.011 times
= 0.06 times
0.011
0.06

Operating cash flow= 32,357,443

Current liabilities= = 399042353
=Operating
liabilities

cash

flow/Current

= 32,357,443 / 401,043,481
= 0.08times
0.08

Working of current liabilities:

Current liabilities
Details

2012

2013

2014

Bill payable

1,500,709

1,506,335

1,727,731

Borrowings

44,683,826

22,802,482

44,742,624

Deposits and other accounts

266,055,781

306,560,767

342,290,763

Other liabilities

7,495,634

8,344,877

10,281,235

Total current liabilities

319,739,551

339,216,847

401,043,481

Graphical Representation:

Interpretation
The graph reveals the operating cash flow of BOP in three years. The operating cash
flow ratio is 0.06, 0.01, 0.08 times in 2012, 2013 & 2014. BOP has not constant in all
of the years. The standard of this ratio is 1 if it becomes less than one than it
considered as operating cash flow is not enough to cover its liabilities so the declining
trend in OCF ratio is not efficient for BOP. Therefore BOP should get better its liquidity
position by adding more assets in organization.

13. Dividend per Share

Formula:
DPS = Dividends amount / number of equity shares
BOP is not pay the dividend so its cannot b calculated

14) Earnings per share

Introduction
A valuation ratio of a company's current share price compared to its pershare earnings.
Formula:
Earnings per share=net profit after tax /outstanding shares

Calculation:

2012

2013

2014

Net profit after tax = 1,744,556

Net profit after tax= 1,914,720

Net profit after tax=2,841,535

Outstanding shares = 5,094,641

Outstanding shares = 5,094,641

Outstanding shares = 919,860

=Net profit after tax/outstanding =Net profit after tax/outstanding = net profit after tax /outstanding
shares = 1,744,556/5,094,641
shares = 1,914,720/ 5,094,641
shares
= 34.2 share

= 37.5 per share

37.5 per share

= 2,841,535/ 5,094,641
= 55.7 per share

34.2 per share

55.7 per share

Graphical Representation:

Interpretation
The earnings per share ratio shows the overall profitability of business .In 2012,
2012 & 2013; this ratio is 34.2, 37.5 & 55.7 R.s per share respectively. When net

profit is increased with the passage of time than EPS also increased like here is in
the year 2014.

15) Price earnings ratio

Formula:
P/E = Market value per share/ earnings per share
Calculation:

2012

2013

2014

Market value per share= 12.09

Market value per share = 16.05

Market value per share =12.74

Earnings per share= 34.2

Earnings per share= 37.5

Earnings per share= 55.7

=Market
value
share/earnings per share

per =Market
value
share/earnings per share

per =Market
value
share/earnings per share

= 12.09/34.2

=16.05/37.5

=12.74/55.7

=0.353

=0.428

=0.228

0.353

Graphical Representation:

0.428

0.228

per

Interpretation
The graph shows that the price earnings per share is 0.353,0.428and 0.228 in 2012,2013 and
2014 respectively.its shows that the price eranings ratio of the bop is good in 2013 not in 2012
and 2014.

BOP is important part in the banking sector of Pakistan. It acts as an important part in countrys
economic growth.BOP would offer better-quality products for enlarge its customer circle and
retain its good will.BOP needs to consume its essential resources to build up its new and
inventive products.
It would boost customer experience by providing new products and services, by providing best
ATM services and new and special credit schemes in upcoming tenure. BOP would build more
well-situated products and services for the customers to take out money through ATMs. BOP
needs to improve its current structure and network by the development of country.BOP increases
its network and ATM services in all over the Pakistan.
BOP would bring in new IT related superior products to its customer and focus on new and
different products in future. It will raise its market share by large profit and great good will.BOP
has reasonable and large amounts of assets and profits for existing in the country. Its
management is very well and well-organized to assemble its precondition. It will get better its
customer services and financial position by new and modern ideas. Financial health of BOP is

very good and is expected to be improved in the future.BOP have great up gradation system .The
future prospects of BOP are very inventive and well managed.

BOP is very well organized and successful organization due to its experienced staff and strong
structure.BOP follows its both statements, vision and mission statements and faces many
challenges by the self motivation. It has long term relationship with client due to supportive staff
team. As a financial analyst I concluded that some ratios are good for BOP while some ratios are
not good. These ratios are as following:
The Net Profit Margin of BOP in all of the years is good.
Gross Spread ratio is suffering to better position.
Non interest income to total income is better in all year.
Spread ratio is good in all the years.
Return on assets is better in all the years.
Du punt ROA ratio is well in all the years.
Return on equity is good in all the years.
Debt ratio is very high.
Debt /Equity ratio is growing to negative to better position.
Advances /Deposits ratio is not good.
Operating cash flow is not good for the bank.
Bank of Punjab not pay dividend.
Earnings per share are good in all the years.
Price earning ratio is better in all the years.
Now BOP is at the top position in spite of these obstacles. BOP takes away these obstacles it
reached at the highest position.

The banks have to focus on development of its policies or rules and regulations to congregate the
current problems by the market and its competitor. BOP needs to keep its market share by given
that improved services to its customers as a financial analyst. I will suggest that some basic
points should be improved that are as following:

MCB can increase the net profit margin by decreasing its non mark-up interest expenses and
taxes. Interest expenses would be increase for obtain better gross spread ratio. If utilization of
assets is in efficient manner than return on asset ratio and du Pont ratio can increase.
MCB limited bank need to decrease its debts to manage the debt ratio because a high debt is not
a good sign for bank. Debt to equity ratio is also very high so it should decrease its debt because
the equity investors will not invest in it due to high debt. It can increase its advances/deposits
ratio by giving advances to the customers.MCB needs to improve its liquidity by increasing assts
for operating cash flow.

Muhammad Arif Chaudhary & Sohail Afzal. (2008) .Advanced Accounting. Lahore. Pakistan.
Munir Ahmad (M.A)
Investopedia. Return on assets (ROA) http://www.financeformulas.net/Return_on_Assets.html
BOP. (2015) https://www.bop.com.pk/bop/about_bop.asp
Handouts of Corporate finance (622)
Handouts of Finance management (MGT 201)
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