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Virtual University of Pakistan

Evaluation Sheet for Internship Report


SPRING 2014
FINI619: Internship Report (Finance)
Hours: 3
Name of Student:

Students ID:

Mustansar Azim

Mc110202847

Credit
Evaluation Criteria

Result

Report writing

Pass

Presentation & Viva


voce
Final Result

Pass
Dear Mustansar,

Your report has been evaluated and accepted. You have done a Good
work.
Carefully read Lesson No.6 and prepare your presentation slides
accordingly. Template of PPTs is available in downloads link for your
guidance about how to prepare the presentation slides. Very soon an
assignment will be opened for PPTs submission. Regularly check course
announcement and assignment page for this.
Prepare well for your presentation & viva voce session just like you
prepared your internship report.
Important Points:
You should read your report thoroughly at least 3 to 4 times or until you
understand all the details given in it before delivering the presentation.
You should clearly understand that how to interpret the results.
You should have full command on the activities that you have performed
during your internship and mention in this report (in Training Program).
Keep checking your VU Gmail account. You will be informed about
presentation and viva voce call by email.
For any relevant query and information, you can contact us via MDB, Email
(fini619@vu.edu.pk), SKYPE and telephone (92-042-36373047-49 (Extension: 8855) in
this regard.
You may also contact us via SKYPE. We are providing you additional facility for
communication. You are advised to send us your SKYPE ID via your VU email so that
we add and send you request. Also note your SKYPE ID preferably be your VU ID.

Internship Report
The Bank of Punjab

Internship report of the Bank of Punjab


A REPORT SUBMITTED TO THE DEPARTMENT OF MANAGEMENT
SCIENCES, VIRTUAL UNIVERSITY OF PAKISTAN IN PARTIAL FULFIMENT
OF THE REQUIREMENTS FOR THE DEGREE OF MASTERS IN BUSINESS
ADMINISTRATION

Submitted by:
Mc110202847
Mustansar Azim
Spring 2014
05.08.2014
Department of management sciences,
Virtual university of Pakistan

ii

Internship report of the Bank of Punjab

iii

Internship report of the Bank of Punjab

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Internship report of the Bank of Punjab

Dedication

I would like to dedicate my work to my dear mother,


To her struggled life and daily household routine,
Inspired and motivated me
In every step of life

Internship report of the Bank of Punjab

Acknowledgement

By the Grace of Almighty Allah, I have completed my internship period for the degree of
MBA. First of all I am thankful to Almighty Allah for his countless blessings who is the
most Merciful the most Beneficial.
I would like to acknowledge and thankful to all whom helped me during my student
career. I would appreciate support and cooperation of my dear Mona, family and
guidance of teachers. I would like to acknowledge all my Virtual university teachers for
their great lectures and appreciate their efforts that able me today to reach at this stage.
I would like to acknowledge and appreciate to all staff of The Bank of Punjab for their
kind cooperation and support. I would like to express my great appreciation to branch
manager Mr. Nadeem Mirza.
I would like to offer my special thanks to branch operation manager Mr. Mlik Amjad, Mr.
Irfan Kyani and cashier Mr. Raja Jhanzaib for their kind support and guidance for the
completion of this paper. I am particularly grateful for the assistance provided by Mr.
Mohsin in remittances and clearing departments.

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Internship report of the Bank of Punjab

Executive summary

This is an internship report of The Bank of Punjab, its brief history, product line,
introduction of its different departments; its last three years ratio analysis, conclusion and
recommendations according to mine learning and understanding during internship
program.
I have used primary (such as direct observation and discussion with bank staff) as well as
secondary data (such as annual reports, brochures of bank and internet) for the
preparation of the report.
During my training session I observed that the customers are ignored due to work burden
which would be due to poor management therefore there should be training program for
employees monthly. Technology is old and should be improved for efficient and effective
operation.
Ratio analysis is used as a method of analysis and it includes net profit margin, debt ratio,
debt to equity ratio, return on assets, return on equity, spread ratios, price earning ratio
and earning per share etc. All the calculations and working can be found in ratio analysis
part.
Result of data analyzed show that an increasing trend in net profit margin, gross spread
ratio, spread ratio, non interest to interest income, return on asset and return on equity.
Debt ratio is too much high. Equity is too much low. Advance to deposit ratio, times
interest earned, operating cash flow ratio and earnings per share is not in good position
and declining.
The report found, that the organization is growing and not in very strong position yet. The
major weak areas require future investigation and diagnosis of problem and then remedial
action by management.
Recommendations discussed include that the bank can improve its profitability by:

Increasing equity

Increasing advances

Decreasing non performing loan and interest expense

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Internship report of the Bank of Punjab

Decreasing debt

Improve its operation for the improvement of operating cash flow

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Internship report of the Bank of Punjab

Table of content

Chapter.1. Brief introduction of organizations business


sector
11
2. Overview of the Organization

13

a. Brief history
13
b. Organizational Hierarchy chart .. 14
c. Business volume (Total number of stock, shares, bonds/
commodities, future
contracts planned for a particular
period,
etc.).
. 15
d. Product lines . 16
e. Competitors.....17
f. Brief Introduction of all the departments 18
g. Comments on the organizational structure ........................ 22

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Internship report of the Bank of Punjab

Chapter.3. Plan of my internship program

23

Chapter.4. Training program

26

a. Reason for selecting the organization: Why did you choose


this specific organization (the organization in which you
done your internship) and how
Will

it
benefit
your
goals...26

career

b. Duties performed: Describe in detail the duties and


responsibilities that you have performed during your
internship either on daily or periodical basis i.e. on weekly
basis
27
OR
Describe in detail the description of the project (s) assigned to
you
during
the
internship
program

Chapter.5. Learning experiences

34

a. Knowledge Gained: Briefly describe the knowledge you


gained/acquired as a result of your training experience and
relate this knowledge to what you learned in specific
courses
at
Virtual
University
of
Pakistan.
.. 34
b. Skills Learned: Describe the skills and any careerspecific abilities you increased during your training.
Discuss any skills that you learned as part of a course at
Virtual
University
of.. 34
c. Attitudes Observed/Values Gained..35
d. Most Challenging Task Performed35

Chapter.6. Ratio analysis

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Internship report of the Bank of Punjab

Chapter.7. Future Prospects of the Organization

62

Chapter.8. Conclusion

64

Chapter.9. Recommendations for improvement

66

Chapter.10. References & Sources

68

entries found.

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Internship report of the Bank of Punjab

Brief introduction of organizations business sector


The bank of Punjab is a banking company and comes under banking sector. Banking
companies ordinance 1962 section 5(b) define bank as, Banking means the accepting for
the purpose of lending or investment of deposits of money from the public, repayable on
demand or otherwise, an draw able by checks, drafts order or otherwise.
In other words a bank is a institution which accepts deposit on lower interest rate and
give advances at higher rate of interest.

History
At the time of independence, the immediate task of the Government of Pakistan was to
establish a Central Bank so it should have an independent currency and banking system.
As the newly sovereign infant state had to tackle innumerable complex problems arisen
on account of the Sub-continent, it was decided with India that the Reserve Bank of India
would continue to act as the Central bank and currency authority for Pakistan till the
establishment of its own Central Bank. The transitional arrangement of having one
Central bank for two independent countries was promulgated by Governor General of
undivided India on August 14, 1947 by an order called Monetary System and Reserve
Bank Order 1947.
The Governor General of Pakistan late Quaid-e-Azam Muhammad Ali Jinnah issued
order for the establishment of State Bank of Pakistan on 1st July, 1948. This order of
1948 has been substituted by the State Bank of Pakistan Act, 1956 which requires the
Bank to regulate the monetary and credit system of Pakistan and to foster its growth in
the best national interest with a view to securing stability and full utilization of the
countrys productive resources and to perform not only the usual Central Banking
functions but will also be entrusted with the prosperity, stability and growth of domestic
economy.

Growth of banking in Pakistan


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Internship report of the Bank of Punjab

At the time of partition, the total number of commercial banks was 38, out of these the
Pakistani banks were 2, Indian Banks 29 and exchange banks 7. The total deposits of
Pakistani banks stood at Rs. 800.0 million whereas the advances were Rs. 198.0 million.

Commercial Banking in Pakistan


Commercial banks play a key role in the generation of economic, resource mobilization,
short term self-liquidating loans to finance business, agriculture and industry. At the time
of independence most of commercial banks were the branches of foreign banks. There
were only two commercial banks, Habib Bank and Australasia Bank. With the
establishment of State Bank there were visible signs of improvement in the banking and
other financial institution in Pakistan.
The banking system of Pakistan now comprises commercial banks, foreign commercial
banks, development financial institutions, and investment banks, leasing companies,
discount houses and modarabas.
According to our countrys perspective which is still in the initial stages of economic
development, a well organized banking system is the need of the day. There is acute
shortage of capital in Pakistan. The banks can play an important role in promoting capital
formation, in controlling speculation and in directing physical resources into desired
channels.
In advanced countries of the world like America, Japan, Germany, the rate of capital
formation ranges from 12% to 25% of their Gross National Product whereas in Pakistan
the rate of savings has varied from 12% to 17.6% only. In order to accelerate the rate of
economic development, the banks by launching a vigorous campaign both in villages and
cities can mobilize the idle savings and can increase the investment rate.

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Internship report of the Bank of Punjab

Overview of the Organization


a. Brief history
The Bank of Punjab was established in 16 November, 1989 pursuant of The Bank of
Punjab Act 1989 and was given the status of retail bank in 1994. The Bank of Punjab was
founded by Tajammul Hussain and it functions as a scheduled commercial bank. The
Government of Punjab is a majority shareholder of the Bank of Punjab. It has a network
of 334 branches in major business centers throughout the country. It is the 7th largest
commercial bank of Pakistan. It provides a wide range of banking products and services
including deposits, trade, industry and agriculture.
First Punjab Modarba (FPM) a wholly owned subsidiary of bank was established in 1992
and is being managed by Punjab Modarba services (Pvt) Ltd.
During the year 2013, The Bank of Punjab entered into a new era by setting up new
Islamic Banking Operations.

b.

Organizational Hierarchy chart

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Internship report of the Bank of Punjab

Chairman

President

Director

Director

Director

Director

Director

Director

Secretary
to
The Board

Audit
Committee
Chairman

Member

Member

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Internship report of the Bank of Punjab

c. Business volume
2013 Rs. mn 2012 Rs mn.

2011 Rs mn

352698
157286
123956
12577
905
306561
22802

332111
149605
129519
10733
1638
266056
44684

280998
127130
92581
10135
638
237897
24964

24228
20209
4019
3596

24666
22523
2143
3191

20685
21073
(388)
1990

base 5280

4558

3711

against (673)

(965)

(3164)

profit/loss 3001

1404

523

before tax
Net profit/loss after 1938

1634

348

tax
Other information
EPS
No. of branches
Staff strength
Breakup
value

2.63
306
5491
4.82

0.66
284
4999
4.55

Balance sheet
Total assets
Advances
Investments
Equity
Reserves
Deposits
Borrowings
Operating Results
Interest earned
Interest expense
Net markup income
Non-markup base
income
Non-markup
expense
Provision
NPLs
Net

2.36
334
6092
5.58

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Internship report of the Bank of Punjab

per/share
d. Product lines
Products and Services
The Bank of Punjab is offering a wide range of products and services, customized to the
needs of respective target markets, through its nationwide network. The Bank keeps a
close eye on its product lines and regular revamping takes place in a line with market
dynamics.

Retail Banking

PLS saving bank account

PLS pension direct account

PLS saving profit plus account

BOP senior citizen saving account

Corporate premier account

PLS supreme saving account

Current deposits-------- BOP Tijarat Account

BOP Life current Account

BOP Salary plus Account

Saving Deposits

Term deposit

Agriculture credit department

Corporate banking

Commercial banking

Islamic Banking

Payment services
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Internship report of the Bank of Punjab

e. Competitors

Muslim Commercial Bank

Allied Bank Limited

United Bank Limited

Habib Bank Limited

Faissal Bank Limited

Bank Alfalah

Askari Bank

Summit Bank

f. Brief Introduction of all the departments

Departments of the Bank of Punjab


The Bank of Punjab as a whole organization has following important departments:

Retail Banking Department

Corporate Department

Special Asset Management Department (SAM)

Credit Administration Department

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Internship report of the Bank of Punjab

Credit Risk Management Department

Marketing Department

Operation Management Department

Human Resource Management Department

Finance Department

Information Technology Department

Audit and Inspection Department

Law Department

Retail Banking Department


Retail banking department deals with its individual and corporate customers. It deals with
day to day transaction. It provides different kind of product and services such as PLS
saving accounts, corporate and individual accounts, credit card, and debit card ATM cards
etc.

Corporate and Investment Department


Corporate and investment department deals with relationships with their corporate
customers and also deals with making decision regarding investments in different
portfolios.

Special Asset Management Department (SAM)


While recognizing the importance of early regularization of NPLs, a comprehensive
strategy has been implemented to recover and restructure the NPLs by ensuring
adherence to the following principles:

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Internship report of the Bank of Punjab


Banks approved credit policy manual
SBP guidelines and prudential regulations
Where applicable, prior due diligence to ensure acceptable NPV/IRR

Credit Administration Department


Credit administration department deals with credit. Its main function is to facilitate and
monitor the individual and corporate loans.

Credit Risk Management Department


Corporate Risk management is a structured and disciplined approach aligning strategy,
people, processes, technology and knowledge for evaluating and managing uncertainty
that an organization faces as it creates value. The banks risk strategy is based on clear
understanding of various risks, disciplined risk assessment and measurement procedure
and continuous monitoring. The policies and procedures established for this purpose are
continuously benchmarked with best practices and SBP guidelines.

Marketing Department
For the preparation and implementation of marketing strategy, the organization has a
separate marketing department for the fulfillment of needs of customers.

Operation Management Department


Operation management department controls processes for the convenience of customers.
It controls cash activities, cheques, clearing remittances and other activities.
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Internship report of the Bank of Punjab

Human Resource Management Department

The Bank of Punjab, while recognizing the importance of effective Human Resource
management system, has implemented comprehensive HR policies with a view to
encourage a healthy competitive working environment. Human Resource strategies of the
bank are based on the principles of merit, transparency and equal opportunity for all to
help transform individual hard work of staff members into cohesive team effort.
The Human Resource Policies have been formulated in a manner to ensure recruitment of
best talent available in the market, continuously imparting quality training and patronage
of the career of each staff member. The overall goals set in the Strategic Business Plan
are broken into individual goals and communicated down the line with a
comprehensive mechanism of monitoring Key Performance Indicators (KPIs). The
Human Resource polices ensure that each and every staff contributing toward the
achievement of organizational goals is adequately rewarded.

Finance Department
Finance department deals with all financial matters of the organization. It includes the
decisions related to investments capital budgeting and capital structure etc.

Information Technology Department


The bank fully acknowledges the role and importance of information technology in the
modern banking. The Bank has a network of 334 online branches along with 166 ATMs
to help customers enjoy the convenience of 24/7 banking services. The branch network
has been provided with backup connectivity arrangements to ensure uninterrupted online
services to the clients. Further, the Bank has a comprehensive IT Security Policy to
ensure safety of customers data and facilitate execution of banking transactions in a

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Internship report of the Bank of Punjab


secured environment. A Disaster Recovery Site has also been established in line with the
Business Continuity Plan of the Bank. A robust Management Information System has
been made available

by the Banks IT Division, providing timely and valuable

information to assist the Management in decision making. In order to further strengthen


its core banking operations, the process for acquiring of a state of the art core
banking software is in progress.

Audit and Inspection Department


Internal audit and inspection department deals with the annual audit relevant to financial
statement as well as the personnel.

Law Department
Law department deals with the lawsuits against organization. Competent and prudent
lawyers hired for this purpose.

g. Comments on the organizational structure

The structure of The Bank of Punjab is fulfilling the requirement of an organization. The
management of bank is fully aware and understands the international as well as national
level change in economy therefore; they arrange and organize their hierarchy according
to this change.
The Bank of Punjab is structured as divisions and departments and each and every
division and department controlled by its head or manager. Each department reports to
central department, central department reports to the head office. Communication among

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Internship report of the Bank of Punjab


departments and head office and between department is very easy and friendly therefore,
very effective.

Plan of my internship program

I did my internship at The Bank of Punjab GTS chock cantt. Branch Jhelum. The branch code is
2110.The branch is fully centralized through computerized system. The branch operations are
controlled by branch manager. Operations of branch are managed by operation manager with the
help of other officers and cashiers. Following is the hierarchy of branch:

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Internship report of the Bank of Punjab

Branch
Manager

Branch
Operational
Manager
Officer
Grade I

Officer
Grade II

Business
development
officer

Cashier

Cashier

The bank of Punjab Jhelum cantt. Branch has following departments:

Remittances department

Clearance department

Advance department

Cash department

Accounts department

Starting and ending dates of internship program


I started my internship program on 06 June, 2014 and ended it 18 July, 2014.

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Internship report of the Bank of Punjab

Names of departments

S no.
1

Department
Introduction to General

week
1

2
3

Banking
Account opening
Remittances

2
3- 4

13-20 June
20 June 04July

Clearing
Cash department

04- 11 July

Deposit &Marketing

11 - 18

and

Date
6-13 June

The duration of internship was 6 weeks and I have got almost awareness of all the major
departments of a branch.
In week one, I was introduced to all the staff of the branch and observe how the work is taking
place in it. In this starting week I learned how to fill a debit, credit voucher and cheque.
In week two, I got training in account opening department. I learned here how to open an
account, how to operate and close an account.
In week three and four I worked in remittances department. Here I learned how to make a
remittance instrument and observed its entry in the system.
In week four, I worked with clearing department where I learned inward and outward clearing
process.
Finally week five, I got training in cash department where I learned how cash received and
making payment to customers.
In last week I revised all the activities done during training and got experience of deposit and
marketing. I visited a customer at his work place for deposit with the branch manager. Here I
also learned marketing techniques.

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Internship report of the Bank of Punjab

Training program
a. Reason for selecting the organization:
Internship would be a capstone experience for a student which gives the opportunity to
integrate the knowledge and practical experience simultaneously before face to real work
environment. It provides a ground for students to enhance their managerial as well as
analytical skills in real life work environment under experienced supervision.
Following are the main reasons for the selection of the organization:

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Internship report of the Bank of Punjab

As the Bank of Punjab is a government organization and due to a lot of work, a


student can learn a lot here.

To get practical exposure of working environment

To get practical experience of computerized environment

To enhance the interpersonal communication skills and how to handle the


stressful condition in work place

To get practical observation of organizational hierarchy and communication


process between the organization

To integrate the theoretical knowledge and real world work place

To enhance my understanding about banking and its role in developing economy

My internship program will be very helpful and beneficial in my career. I learned here
how an organization runs. Here I cleared a lot of concepts with practical experience. I
learned and observed technical aspects of many courses which I was studied during study.
I enhance here my interpersonal communication skills, managerial skills and leadership
qualities which would be benefit me in my future career. During training I learned moral
values and business ethics which would be also helpful in my career.

b. Duties performed:

sS no.
1

Department
Introduction to General

week
1

2
3

Banking
Account opening
Remittances

2
3- 4

13-20 June
20 June 04July

Clearing
Cash department

04- 11 July

Deposit &Marketing

11 - 18

and

Date
6-13 June

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Internship report of the Bank of Punjab

I started my internship on 6th June, 2014 and ended it on 18 July, 2014 at the Bank of
Punjab. In first week I was introduced by operation manager to all the employees and told
me their designation and visited to all the departments. The branch operation manager
briefed me about some rules and regulations about branch. He told me working hours and
working days of branch. He said to me that I should stay on reception at least a week for
the better understanding of branch working. First week I learned how to fill a debit
voucher, credit voucher and a checque. I learned how to communicate with seniors and
how to deal and convince the customers. This first week provide me a ground for next
weeks where I worked real work of banking.

Account opening department


In second week from 13 June to 20 June 2014, I worked in account opening department.
Here I learned how to open an account for new customer or close the account for existing
one.

Types of accounts
There are basic three types of accounts:
Current account
Profit and loss account
Fixed account

Types of account holder:

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Internship report of the Bank of Punjab


Following are the main categories of accounts:
Individual account
Joint account
Partnership account
Company account
Club, society, Association or Trust account

Individual account
Any individual or proprietor of a business can open an individual account in the Bank of
Punjab. This account only operated by individual. Individual has to an account opening
form, a copy of National Identity Card, if a person is illiterate than two passport size
photos are also required.

Joint account
When more than one person opens a single account it is called a joint account. The
names of both persons are written on the title of account. It would be operated by both
persons.

Partnership account
Partnership account can be opened with Bank of Punjab. Account title will be the name of
partnership firm. Copy of partnership deed, copy of registration certificate and authorized
signature of partners are the requirements of the partnership account.

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Internship report of the Bank of Punjab

Company account
Private and public limited companies can also open an account with bank of the name of
company. Following documents are required to open an account for companys name:
One copy of certificate of incorporation
Memorandum and Article of Association
List of directors of company
Copy of board resolution
The companys certificate of commencement of public company
Signature specimen cards

Club, society, Association or Trust account


Any club, society, association or trust can open a bank account at their name.

Account opening procedure


Following are the essential steps for account opening:

Account opening form:


When the customer approaches to bank for account opening of any kind, an account
opening form is provided and filled by him. He/ She should have fill in the form the
required information being asked in different sections in the form. Form has to be signed
by customers at different section of the form by the account opening officer.
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Internship report of the Bank of Punjab

Completion of form:
Account opening form is rechecked by bank officer and than verified by branch operation
manager.

Signature specimen card (SSC):


Signature specimen card is compulsory for opening the any bank account. This car holds
the authorized signatures of all account holders for a particular account. After taking two
signatures on the card, the card is verified by the bank officer. After this verification SSC
is uploaded on database where it is used whenever it is required.

Computerized verification of customer:


All customers identity and record is being verified through online verification system by
bank officer. An online database is provided by NADRA to the bank to verify each
customer.

Verification

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Internship report of the Bank of Punjab


After fulfilling the entire requirement, the form is verified by branch operation manager
and branch manager. Than all information and data is uploaded on banks operating
system.
After being uploaded the information by operation manager, the system allots the account
number to the customer against his request.

Issuance of letter of thanks


After account being opened, a letter of thanks is issued to customer for his interest in
banks services.

Issuance of cheque book:


The cheque book request is uploaded online. It is issued by branch itself within a week.

Issuance of ATM card:


The Bank of Punjab provides the ATM facility to its customers. They can withdraw their
money any time through ATM machines. For the issuance of ATM, either customer has to
mark the option on account opening form while submission, otherwise an additional form
is filled by him. In 10 to 15 days branch will receive ATM from head office which is
given to customer.

Procedure for closing an account:

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Internship report of the Bank of Punjab

If a customer wants to close his/ her account he should fill up a account closing form and
sign then after taking the approval by branch manager, the account would be closed.

Remittances and Clearing department:


I worked in remittances and clearing departments from 20 June to 04 July. The bank of
Punjab also provides the facility to transfer money. Following instruments are used for
transferring money.
Demand draft (DD)
Pay order
Telegraphic Transfer (TT)
Mail Transfer (MT)
During internship I learned and introduced all these instruments. I observed that how to
make DD, pay order, TT and MT. DD is a written order to pay certain amount by the
bank branch on behalf of customer to other bank branch. The customer fills the
application form which include sender name, beneficiary name and account number. The
customer deposits the amount of deposit than DD is given to customer.
Pay order are issued for local or with in city for the transfer of money.
TT is instant transfer of funds. Customer can transfer funds from one place to other place
through telecommunication. MT is the transfer of funds from one place to other place in
the shape of document through mail. Its procedure is similar to TT.
I also worked in clearing department. Here I observed how clearing of cheques takes
place. A national institutional facilitation technology (NIFT) is a leading service provider
in IT industry for modern payment system in Pakistan. The major function of clearing
department is to receive the cheques which are drawn on some other banks. The bank
accepts the cheques and collects the amount drawn by other bank through clearing. The
bank charges some fee for providing this service.

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Internship report of the Bank of Punjab

Cash department
I also got some experience of cash department. I worked here from 04 July to 11 July 17,
2014.Cash department consists of three main parts. Cash receipt, Token department and
cash payment. One cashier for cash receipt, one cashier for cash payment and a officer for
assigning token number are work in this department.

Deposit and Marketing department


I got working experience of deposit and marketing department from 11 July to 18 July
17, 2014. Here I observed how to convince a customer to deposit their funds. Customers
of foreign remittances are specially target for the deposit. I also went with manager to a
customer for the collection of deposit. In this department I also learned marketing
techniques.

Learning experiences:
a. Knowledge Gained:
The internship program was the practical and real experience of all the courses that I was
studied at Virtual University of Pakistan.
As I completed my internship program in a banking organization, in this regard the
money and banking course taken at Virtual University was very helpful to me. I learned
about money and financial system and how they work collectively in an economy. I
gained knowledge about banking industry and how it works for the growth and
development of countrys economy. I experienced and analyzed the financial statements
of a bank.
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Internship report of the Bank of Punjab

b. Skills Learned:
.
I learned and enhanced my communication and managerial skills during my internship
program. I observed the practical applications of basic and advanced accounting concepts
which I was learned during my study at Virtual University of Pakistan. I got practical
exposure of my specialization subjects to real life financial statements analysis. I
practiced how to analyze and interpret the annual reports for different users for better
decision making.
I enjoyed the computerized environment of the bank and saw practical working of
concepts which I studied in the subject introduction to computing and information system
during study.
I observed and enjoyed the knowledge and practical experience about the organizational
behavior which was subject and part of our course. In this scenario, I got experience how
to work with diverse work force with different backgrounds. I learned that how to work
within the team and as a team player how to perform well.
In nutshell, the internship program was a real life and observed experience of all the
courses which were the part of our course at Virtual University of Pakistan.

c.

Attitudes Observed/Values Gained:

During my internship program I gained some golden values which would be helpful for
the success in my career even throughout life. Hardworking is the value which I observed
and learned from all banks staff. I learned integrity and honesty from the seniors during
internship. I learned motivation and cooperation during work. I learned how to remain
calm and work effectively during stressful working environment.

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Internship report of the Bank of Punjab

d.

Most Challenging Task Performed:

I think internship program was itself a challenging task. In first week it was very difficult
to me to face customers. In first week I did my duty at reception where I engaged in so
many customers. The most challenging and difficult task was to convince the customers
to open an account in this bank which has already account in another bank.

Ratio analysis
Ratio analysis is very helpful tool for internal (Managers, employees etc) as well as
external users (Creditors, shareholders and customers etc).
Internal users use ratios for planning control and to understand that how firm can get its
funds from various sources.
External users like trade creditors focus on liquidity of firm, bondholders focus on long
term cash flow of the firm and shareholders focus on profitability and long term health of
the firm.
I did financial statement analysis of The Bank of Punjab for the years of 2011, 2012 and
2013. I got these statements from annual reports. Annual reports were downloaded from
the web site of the Bank of Punjab.

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Internship report of the Bank of Punjab

1. Net Profit margin


Net Profit = Profit after Taxations
Total Revenue = Markup/return/interest earned

Formula:
Net Profit margin = Net Profit/ Total Revenue* 100
Year 2011
347973/20685011*100=
1.68 %

Year 2012
1633841/24666024*100=
6.62 %

Year 2013
1938007/24227721=
7.80 %

Working: Net profit and total revenue is taken from the profit and loss account

Interpretation:
Net profit margin is increasing from previous two years as shown in graph. In 2011, the
net profit margin was very low which was 1.68% then later years 2012 and 2013 it was
increased. Higher profit margin indicates more profitable the company. It also shows that
the company has better control over its cost. The bank has controlled its expenses in 2013
as compared to previous years therefore as a result increase in net profit margin.

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Internship report of the Bank of Punjab

2. Gross Spread Ratio


Gross Spread Ratio= Net Markup Margin / Interest Earned

Year 2011

Year 2012

(388260) / 20685011*100=

2143106 / 24666024*100=
8.69 %

-1.88 %

Year 2013
4019034/ 24227721=
16.59 %

Working:
Net Markup Margin = Markup/ Interest Earned - Markup/ Interest Expense

2011= 20685011 21073271 = (388260)


2012= 24666024 22522918 = 2143106
2013= 24227721 20208687 = 4019034
Interest Earned = 2011= 20685011

2012= 24666024
2013= 224227721

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Internship report of the Bank of Punjab

Interpretation:

The graph is showing that the gross spread ration of BOP for the FY2011, 2012 and
2013 is respectively -1.877, 8.688 and 16.588 which is showing an increasing trend.
This is good sign for the BOP. The management has controlled its interest expense.

3. Spread Ratio
Spread Ratio= Interest Earned/Interest expense

Year 2011
20685011/21073271*100=

Year 2012
24666024/22522918*100=

Year 2013
24227721/20208687=

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Internship report of the Bank of Punjab


1.09 times

1.19 times

0.98 times

Working:

Interest Earned and Interest expense are taken from profit and loss

account

Interpretation:
The graph is showing the spread ratio for the FY2011, 2012 and FY2013 which is
0.98, 1.09 and 1.19 times respectively. An increasing trend is shown in the graph
which is showing that management has controlled its interest expenses as compared
to interest earnings.

4. Non-Interest income to Total Income Ratio


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Internship report of the Bank of Punjab

Non-Interest Income to Total income ratio = Non-interest income / Total interest income

Year 2011
1989708 / 22674719 *100=
8.78 %

Year 2012

Year 2013

3190745 / 27856769 *100= 3596226 / 27823947 * 100=


11.45 %

12.92 %

Working:
Total income = total non interest income + total interest income
2011 = 1989708 + 20685011 = 22674719
2012 = 3190745 + 24666024 = 27856769
2013 = 3596226 + 24227721 = 27823947
Total non interest income
2011 = 1989708
2012 = 3190745
2013 = 3596226

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Internship report of the Bank of Punjab

Interpretations:
The graph is showing a positive trend in non interest income to total income which
was 8.78 %, 11.45 % and 12.92 % for the FY2011, 2012 and 2013 respectively. It is
showing that how non mark up income like commission, brokerage income, fees and
other bank charges contributing in banks profit. It is a good indicator for bank.

5. Return on Assets
Net Income = Net profit after tax
Average total Assets= Opening assets + closing assets / 2

Formula:
Return on Assets= Net Income/ Average Total Assets*100
Year 2011

Year 2012
1,633,841/306,554,292.5*1

Year 2013
1,938,007/342,404,599.5*10

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Internship report of the Bank of Punjab


347,973/255,093,902*100 00
=

0=

=
0.53 %

0.57 %

0.14 %

Working:

Items taken from profit and loss account and Balance sheet

Net income for FY2011: 347,973


Net income for FY2012: 16, 33,841
Net income for FY2013: 1,938,007
Average total assets = Opening assets + closing assets / 2
Average assets for FY 2011: 229,190,273 + 280,997,531 / 2
= 255,093,902
Average assets for FY 2012: 280,997,531 + 332,111,054 / 2
= 306,554,292.5
Average assets for FY 2013: 332,111,054 + 352,698,145
= 342,404,599.5

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Internship report of the Bank of Punjab

Interpretation:
Return on Assets (ROA) is a measure of profit per dollar of assets. An increasing trend on
ROA but the ratio is very low yet. The company earns 0.57 % on each rupee of
investment so the earnings of year 2013 are greater and growing than previous years. It is
indicating that the management is not utilizing its assets efficiently.

6. The Du Pont Return on Assets


Dupont Return on Assets =
Net Profit / Net Sales * Net Sales / Average total Assets
or = Net profit margin * Total asset turnover

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Internship report of the Bank of Punjab


Average total Assets = according to balance sheet
Year 2011
1.68 % * 0.08 =

Year 2012
6.62 % * 0.08 =

0.14 %

0.53%

Year 2013
7.80 % * 0.07 =
0.55 %

Working:
Net Profit margin
2011 = 1.68 %
2012 = 6.62 %
2013 = 7.80%
Net Sales / Average total Assets
2011 = 20,685,011 / 255,093,902 = 0.08 times
2012 = 24,666,024 / 306.554, 292.5 = 0.08 times
2013 = 24,227,721 / 342,404,599.5 = 0.07 times

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Internship report of the Bank of Punjab

Interpretation:
The graph is showing the ratio of the dupont return on assets for the FY2011, 2012
and FY2013 which is 0.14 %, 0.53 % and 0.57 %. The ratio is very low but and
upward trend. The management is not utilizing its assets for the generating the
revenues.

7. Return on Equity
Net income = net profit after taxation
Total Equity = total shareholders fund

Return on Equity=Net Income/ Total Equity

Year 2011
347973/ (6864911)*100=
-5.07 %

Year 2012
1633841/(6266957)*100=

Year 2013
1938007/576748*100=

-26.07 %

336.13%

Working:
Net income is taken from profit and loss account and total equity is taken from
balance sheet
Total equity = share capital + reserves + UN appropriated profit / loss
2011 = 5287974 + 1914956 + (14067841)

= (6864911)

2012 = 5287974 + 1187433 + (12742364)

= (6266957)

2013 = 10551132 + (263158) + 1539659 + (11250885) = 576748

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Internship report of the Bank of Punjab

Interpretation:
Return on equity (ROE) is a measure of profit per dollar of equity. The graph is
showing the ROE for the FY 2011, 2012 and FY2013 is-5%, -26.07% and
336.13%respectively. In last two years ROE was negative but in FY2013 an
increasing trend on ROE.

8. Total Debt Ratio


Total Debt Ratio = Total Debt / Total Assets

Year 2011
270244941/280997531*100=

Year 2012
319739551/332111054* 100=

Year 2013
339216847/352698145 *100=

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Internship report of the Bank of Punjab


96.16 %

96.27 %

96.17 %

Working: Items taken from Balance sheet


Total Debt = bill payable + borrowing from financial institutions + deposits and other
accounts + liabilities against finance lease + other liabilities

2011

= 850569 + 24963566 + 237896700 +7831 +6506275 = 270224941

2012

= 1500709 + 44683826 + 266055781 + 3601 + 7495634 = 319739551

2013

= 1506335 + 22802482 + 306560767 + 2386 + 8344877 = 339216847

Total Assets = cash and balances with treasury banks + balances with other banks +
lending to financial institutions + Investments + Advances + operating fixed assets +
other assets
2011 = 16698333 + 3607107 + 7447375 + 92581306 + 127129501 + 3597483 +
13886769 +16049657 = 280997531
2012= 17298251 + 3101170 + 1562946 + 129518999 + 149605002 + 3473491 +
13070614 +14480581= 332111054
2013 = 23820864 + 4265296 + 11407448 + 123956143 + 157285598 + 3514801 +
12627352 + 15820643 = 352698145

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Internship report of the Bank of Punjab

Interpretation:
Debt ratio is the measure of debt with the total assets. The Bank of Punjab has almost
96 % debt against its total assets from last three years. Which means BOP financing
more through debt and it is too high and not good indicator for the BOP. The higher
this ratio indicates the higher the financial risk.

9. Debt Equity Ratio


Debt Equity Ratio= Total Debt / Total Equity
Year 2011
270224941/(6864911)=
-39.4 times

Year 2012
319739551/(6266957)=
-51.09 times

Year 2013
339216847/576748=
588.15 times

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Internship report of the Bank of Punjab

Working:
Items taken from Balance sheet

Total Debt = bill payable + borrowing from financial institutions + deposits and other
accounts + liabilities against finance lease + other liabilities

2011= 850569 + 24963566 + 237896700 +7831 +6506275 = 270224941


2012= 1500709 + 44683826 + 266055781 + 3601 + 7495634 = 319739551
2013= 1506335 + 22802482 + 306560767 + 2386 + 8344877 = 339216847

Total equity = share capital + reserves + UN appropriated profit / loss


2011 = 5287974 + 1914956 + (14067841)

= (6864911)

2012 = 5287974 + 1187433 + (12742364)

= (6266957)

2013 = 10551132 + (263158) + 1539659 + (11250885) = 576748

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Internship report of the Bank of Punjab

Interpretation:
As discussed in debt ratio that the debt is too much high. In debt- equity ratio we
compare debt with equity. As graph is showing, an increasing trend of debt-equity
ratio. Debt exceeds 588.15 times in 2013 which is very critical situation for company.

10. Times Interest Earned Ratio


Times Interest Earned Ratio =

Year 2011
21596018 / 21073271=
1.02 times

EBIT / Interest

Year 2012
23926810 / 22522918=
1.06 times

Year 2013
23209969 / 20208687=
1.15 times

Working:
Items taken from profit and loss account

EBIT = Profit before Tax + Interest expense


2011 = 522747 + 21073271 = 21596018
2012 = 1403892 + 22522918 = 23926810

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Internship report of the Bank of Punjab


2013 = 3001282 + 20208687 = 23209969
Interest = 2011 = 21073271
2012 = 22522918
2013 = 20208687

Interpretation:
Times Interest Earned (TIE) ratio refers to the ability of the firm to cover its interest
obligations from EBIT. The graph is showing that the TIE of BOP for the FY2011,
2012 and FY2013 is 1.02, 1.06 and 1.15 times respectively which should be at least
1.5. The company has not (very low) enough EBIT to meet its interest expenses. TIE
of company is not in good position.

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Internship report of the Bank of Punjab

11. Advance / Deposit Ratio


Advance / Deposit Ratio = Net Advances / Total Deposits
Year 2011
127129501/237896700=
0.53 times

Year 2012
149605002/266055781=
0.56 times

Year 2013
157285598/306560767=
0.51 times

Working: items taken from balance sheet

Interpretation:
The advance to deposit ratio is used to calculate a lending institutions ability to cover
widrals made by customers. The graph is showing that the advance to deposit ratio of
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Internship report of the Bank of Punjab


BOP for the FY2011, FY2012 and FY2013 which was 0.53, 0.56 and 0.51 times
respectively. These indicate that the BOP is not using its deposits efficiently in
advancing to borrowing. The ratio should be 1:1.

12. Operating Cash Flow Ratio


Operating Cash Flow Ratio = CF from Operation/ Current Liabilities

Year 2011
32984625 / 203709219=
0.16 times

Year 2012
20546543 / 241238175 =
0.09 times

Year 2013
3,731,609 / 247,832,961 =
0.02 times

Working:
Cash flow from operation (taken from cash flow statement):
2011 = 32984625
2012= 20546543
2013= 3731609

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Internship report of the Bank of Punjab


Current liabilities are taken from maturities of assets and liabilities

2011
Bill payable
Borrowings
Deposits
Portion of liabilities
against

2012

2013

850569
24055899
172757623
4026

1500709
43968561
190565772
1084

1,506,335
220,664,408
219,222,506
1,270

6041102
203709219

5302049
241238175

5,036,442
247,832,961

assets

finance lease
Other liabilities
Total

Details of Current liabilities for FY2011

Up

to

1 Over

month

Over

3 Over

1month to 3 months to 6 months to 1


months

months

Bills payable
Borrowings
Deposits and

850,569
19,456,240

2,879,451

1,652,900

other

38,876,481

45,516,576

38,553,721

year
67,308
49,810,845

850,569
24,055,899
172,757,623

accounts
Liabilities
against
assets
subject

323

660

1,022

2,021

4,026

to

finance lease
Deferred tax
liability
Other

liabilities
5,439,033
Total current

602,069

0
6,041,102

liabilities

203,709,21
9

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Internship report of the Bank of Punjab

Details of Current liabilities for FY2012

Up

to

1 Over

month

Over

3 Over

1month to 3 months to 6 months to 1


months

months

Bills payable
Borrowings
Deposits and

1,500,709
38,017,652

3,281,043

2,561,926

other

45,984,904

46,197,025

47,609,208

84

171

266

year
7,940
50,774,635

1,500,709
43,868,561
190,565,772

accounts
Liabilities
against
assets
subject

563

1084

to

finance lease
Deferred tax
liability
Other
liabilities
Total current
liabilities

4,779,158

25,514

479,377

0
5,302,049
241,238,175

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Internship report of the Bank of Punjab


Details of Current liabilities for FY2013

Up

to

1 Over

month

Over

1month to 3 months to 6 months to 1


months

Bills payable
1,506,335
Borrowings 14,833,228
Deposits and 62,249,483

3 Over

months

year

4,979,067
58,503,528

2,243,417
46,700,450

10,696
51,769,045

1,506,335
22,066,408
219,222,506

98

201

311

660

1270

4,529,358

2,333

501,899

0
5,036,440

other
accounts
Liabilities
against
assets
subject

to

finance lease
Deferred tax
liability
Other
liabilities
Total current

2,852

247,832,961

liabilities

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Internship report of the Bank of Punjab

Interpretation:
The graph is showing the operating cash flow ratio for the FY2011, FY2012 and
FY2013 which is 0.16 times, 0.09 times and 0.02 times respectively. The graph is
showing the downward trend from previous two years. The ration is less than 1 which
means the organization is not generating enough cash from its operation to meet its
liabilities

13. Dividend P/ Share


In last three years the bank of Punjab had not paid any dividend to its shareholders.

Interpretation:
Due to some losses in previous years the bank of Punjab is not in position to
announce dividend to its shareholders which is not good sign for the company.
The BOP has not enough earnings to pay its shareholders.

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Internship report of the Bank of Punjab

14. Earning Per Share


Earning Per Share = Net Income / Total Share Outstanding

Year 2011
347973/528797=

Rs. 0.66

Year 2012
1633841/ 528797=

Rs. 3.09

Year 2013
1938007/ 10,55,113 =

Rs. 1.84

Working:

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Internship report of the Bank of Punjab

Interpretation:
The graph is indicating EPS for the FY2011, FY2012 and FY2013 is 0.66, 3.09 and
1.84 respectively. An improving trend was seen in 2012 where EPS increased 3.09
from 0.66 then again in 2013 decrease at Rs. 1.84.

15. Price Earnings Ratio


Price Earnings Ratio = Current Market Price p/share/ EPS

Year 2011
5.41 / 0.66 =
8.20 times

Year 2012

Year 2013

10.7 / 3.06 =

11.02 / 1.84 =

3.50 times

6.0 times

Working:
Current market price per share is taken from www.kse.com.pk

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Internship report of the Bank of Punjab

Interpretation:
The graph is indicating price earnings for theFY2011, FY2012 and FY2013 is 8.20 times,
3.50 times and 6.00 times respectively. The graph is indicating the upward trend in price
earning ratio. This is the price which the market is willing to pay for its earnings. This is
good for company.

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Internship report of the Bank of Punjab

Future Prospects of the Organization


The government of Punjab is the majority shareholder of the bank of Punjab. The bank of
Punjabs future is attached with government policies and economic factors. In past, the
bank had faced financial crisis and loss. In recent previous two years the government of
Punjab supported the bank therefore; it is growing toward growth and prosperity
gradually. The management has the strategies and policies to maintain growth towards all
prospects of business and achieve the benchmark performance.
The bank had increased its net markup income in 2012 and 2013 as compared to previous
years. The bank has decreased the non performing loan, increased the non interest
income. The bank has increased the number of branches in the remote areas. It has also
increase the product range according to need of customers and with market change. The
bank has increased its total assets in preceding years. As the capital adequacy ratio
remained below from last three years, but Government of Punjab as majority shareholder
of bank had injected equity to regain its equity at minimum level prescribed by the State
bank of Pakistan. For the efficient and effective operations the bank had increased its

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Internship report of the Bank of Punjab


human capital. It had arranged the training program according the need and change in the
market scenario.
Keeping in view of previous two years trend, I can say that the banks management has
the strategies for growth and for this purpose the government of Punjab is playing a
supporting role. It is a good sign for the growth and development of bank. The
management has the plan the new products for their customers and expanding their
geographical reach to remote areas. Introducing Islamic banking, online banking and
SMS banking are good step for the growth of organization. The following new projects
are in progress and expected to made operational in 2014

SMS banking

Utility bills payment system

POS acquiring network

Branchless banking

Internet banking

Mobile banking

In future the bank will follow its strategies for business expansion, improvement in asset
quality, efficiency in internal control, rebuilding the brand image and strengthening the
equity base.

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Internship report of the Bank of Punjab

Conclusion
During internship, I concluded following problems related to my training and
organization internal structure.

Old technology and methods are used in operations and work environment.

Customers are ignored

No proper human resource department

Communication between junior and high rank staff is poor

Staff is lethargic and lack of motivation

Trainees and interns are not properly guided

According to the ratios conducted from the FY2011, FY2012 and FY2013 following are
the conclusions:

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Internship report of the Bank of Punjab

The net profit margin of the bank of Punjab is growing and increasing every year
which is good indicator for organization.

Gross spread is good and improving every year because management controlled
its interest expenses.

Spread ratio is also good and improving every year because it meets its interest
expenses.

Non interest income is increasing every year and non interest income to total
income is increasing and good for bank.

Return on assets is low and increasing.

Du Pont on return on asset is also very low increasing trend.

Return on equity is good and has increasing trend from previous years

Debt ratio is very high for all years

Debt to equity ratio is extremely high.

Times interest earned is not good and improving.

Advance to deposit ratio is not good and very low

Operating cash flow ratio is very low

Dividend is not paid from previous three years which is not good and not
attractive for investors.

Earnings per share declined in FY2013.

Price earnings ratio is good and increasing

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Internship report of the Bank of Punjab

Recommendations for improvement

Following steps should be taken to improve the internal operation and maintain the
image of the organization:

There should be up gradation of technology and structure the environment


friendly to workforce for effective and efficient work.

Customers should be first priority. There should be customers relationship


management department in every branch level for the satisfaction of
customers need and wants.

Employees are the human capital for any organization and should be managed
properly therefore, there should be a human resource management department
in every branch level to observe their needs proper guidance.

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Internship report of the Bank of Punjab

There should be a smooth way of communication through out the


organization. Suggestions from employees should be encouraged and
managed.

There should be training sessions monthly. Job rotation should be done to


avoid boredom.

Interns are the future of any industry therefore; there should be proper
department for their coaching and encouragement.

In nutshell, as a financial analyst I would like to give some recommendations from


improvement as per my understanding:

The bank of Punjab can increase its profitability to decrease the non performing
loans and advances and non interest expenses.

The BOP can increase its spread ratios to decrease the interest expense.

The management should utilize its assts to increase and improve return on assets
and the du pont on return on assets.

The BOP should decrease its debt ratio as well as debt equity ratio. High debt
ratio and high debt equity ratio leads to high leverage and high financial risk
which could cause bankruptcy so BOP should decrease its debt to increase the
equity.

BOP should increase its advances to earn more profit from its deposits for the
improvement of profitability.

The BOP should increase its operating cash flow with improve its operation and
improve its liquidity to reduce its short term borrowings.

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Internship report of the Bank of Punjab

References & Sources


Financials . (n.d): The Bank of Punjab: Retrieved June 15, 2014,
From : http://bop.com.pk/view.aspx?id=1106
Nasir, M.S (2009). Money Banking and Finance, Faisalabad, ; Wasim Azam

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