HISTORY OF BANK OF PUNJAB

  

The Bank of Punjab started functioning with the inauguration of its first branch of 7-egerton road, Lahore on November 15, 71989. The architect of the bank was Mr. Nawaz Sharif Chief Minister of Punjab at that time performed the inauguration. The emergence of new bank on the national scene in the early 1990s has done two important services to the nation. The savings base of the economy has effectively enlarged and hence the investment opportunities have increased. The services of the banks in the fact of severe competition have improved considerably so that now consumer are left with extensive choice to do or undo their business relations with these banks keepings in view of the services.

CONTD


The Bank of Punjab is working as a scheduled commercial bank with its network of 260 branches at all major business centers in the country. The bank provides all types of banking services such as deposits in local currency, client deposits in foreign currency, remittances, and advances to business, trade, industry and agriculture. The Bank of Punjab has indeed entered a new era of science to the nation under experience and professional hands of its management.

CONTD


The Bank of Punjab plays a vital role in the national economy through mobilization of hitherto untapped local resources, promoting savings and providing funds for investments. Attractive rates of profit on all types of deposits, opening of foreign currency accounts and handling of foreign exchange business such as imports, exports and remittance, financing, trade and industry for working capital requirements and money market operations are some facilities being provided by the bank. The lending policy of bank is not only cautious and constructive but also based on principles of prudent lending with maximum emphasis on security. As agriculture in considered as backbone of our economy the Bank of Punjab has introduced Kissan Dost Agriculture Finance Scheme to small farmer and cultivators.

MISSION STATEMENT
Be a dynamic resource of economic development and growth for stakeholders through service excellence, achieving high standards of professionalism, dedication, integrity and team work.

VISION STATEMENT

To be a customer focused bank with service excellence.

CORE VALUES
 

  

Our Customer As our first priority. Profitability For the prosperity of our stakeholders that allows us to constantly invest, improve and succeed. Corporate Social Responsibility To Enrich the Lives of community where we operate Recognition and Reward For the talented and high performing employees Excellence In every thing we do. Integrity In all our dealings. Respect For our customers and each other.

MAJOR CUSTOMER OF BOP



  

  

Some of the major customers of Bank of Punjab are: Educational Institutes Agriculturists Pakistan Telecommunication Private Limited WAPDA Pharmaceutical Companies WASA

WORLD WIDE WEB SITE

 

http://www.punjab http://www.punjab bank.com/

This is the official website of The Bank of Punjab-established Punjabin 1989, in pursuance of The Bank of Punjab Act 1989 and was given the status of scheduled bank in 1994. The Bank of Punjab is working as a scheduled commercial bank with its network of 260 branches at all major business canters in the country. The Bank provides all types of banking services such as deposit in local currency, client deposit in foreign currency, remittances, and advances to business, trade, industry and agriculture. Information regarding the share holder, foreign currency rates, branch networks, balance sheet etc can be accessed through links on this website.
 

E-mail: bop@lhr.comsats.net.pk

PRODUCTS AND SERVICE

VERTICAL ANALYSIS OF BOP

Balance sheet
Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments - net Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Total Assets

2011 8% 1% 1% 33% 50% 4%

2010 9% 1% 1% 22% 59% 4%

5% 100%

4% 100%

CONTD
Liabilities Bills payable Borrowings Deposits and other accounts SubSub-ordinate loan Deferred tax liabilities Other liabilities Net assets Total Liabilities 1% 3% 14% 100% 0% 5% 13% 100% 2011 2% 9% 72% 2010 2% 5% 74%

HORIZONTAL ANALYSIS OF BOP

Balance sheet Assets Cash and balances with treasury banks Balances with other banks Lending to financial institutions Investments - net Advances net Operating fixed assets Deferred tax assets - net Other assets - net 98% 149% 73% 173% 97% 104% 116% 115% 100% 100% 100% 100% 100% 100% 100% 100% 2011 2010

CONTD
Liabilities Bills payable Borrowings Deposits and other accounts Deferred tax liabilities Other liabilities Liabilities Net Assets 78% 197% 111% 732% 74% 114% 119% 100% 100% 100% 100% 100% 100% 100%

HORIZONTAL ANALYSIS OF BOP INCOME STATEMENT

Profit & Loss Account MarkMark-up / return / interest earned MarkMark-up / return / interest expensed Net mark-up / interest income markProvisions & write off Net mark-up / interest income after provisions markNon-markNon-mark-up / interest income Non-markNon-mark-up / interest expenses Profit before taxation Taxation Profit after taxation

2011

2010
100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

VERTICAL ANALYSIS OF BOP INCOME STATEMENT

Profit & Loss Account MarkMark-up / return / interest earned MarkMark-up / return / interest expensed Net mark-up / interest income markProvisions & write off Net mark-up / interest income after provisions markNon-markNon-mark-up / interest income Non-markNon-mark-up / interest expenses Profit before taxation Taxation Profit after taxation

2011 100% -31% 69% -14% 55% 11% -21% 45% -15% 30%

2010 100% -29% 71% -10% 61% 14% -21% 55% -16% 38%

INTERPRETATION
 

   

The interpretation of Vertical and Horizontal analysis Vertical analysis is used in comparing the financial statements of the firms they differ in size. As in balance sheet the assets as well as the liability and equity are each expressed as a 100% and each item in these categories is expressed percentage of the respected total while in Income statement its in percentage of Sale. The Horizontal financial statement analysis is done by restating amount of each item or groups of items as a percentage are calculated by selecting a base year and assign a weight of 100 to the amount of each item in the base year statement. When we compare the BOP position with the previous year net assets are increasing continuously. When we compared the other liabilities of the BOP we see that decrease in the present year. The total liabilities increases as compared to previous years. BOP position in current year is not good because profit as compared to the previous years is low.

RATIO ANALYSIS


The relationship of one item to another expressed in simple mathematical form is known as a ratio. A single ratio in itself is meaningless because it does not furnish a complete picture. A ratio becomes meaningful when compared with some standard. So we have taken ratios and percentage of the BOP based in its record of the past financial and operating performance. On the following pages, I make the analysis of the financial statements of BOP by using related items for the last five years.

LIQUIDITY RATIOS

 Liquidity ratios means to measure e short

term solvency of the company. Ability of the company to pay off its short term debt. Following ratios are calculated in order to measure the short term m solvency of the company

CURRENT RATIO


Current assets=cash and balance terarey banks + balance with other+ banks+ lending to financial institution+ short investment+ short advance+ other assests.

LEVEARAGE RATIO


    

These ratios show the capital structure of the firm. Through these ratios we find that how the firm finance their activities. It is more important for the lender to assess that the firm can repay the loan amount ort not. increasing debt increases the likelihood of bankruptcy of the firm. Following ratios falls under this category, Time interest earned Debt ratio Debt to equity ratio Debt to tangible ratio Total capitalization ratio

TIME EARNED INTEREST RATIO



 

Year 2009=Rs.4,768,721/Rs.7,573,722= 2009=Rs.4,768,721/Rs.7,573,722= 0.63 Year 2010=Rs.4,855,569/Rs.13,939,377 2010=Rs.4,855,569/Rs.13,939,377 = 0.35 Year 2011=(Rs.16,832,906)/Rs.16,614,000 2011=(Rs.16,832,906)/Rs.16,614,000 = -1.01

DEBT RATIO


   

Total Debt = Bills Payable + Borrowings from financial institutions + Deposits & other accounts + Subordinate Loans + Liabilities against assets subject to finance lease + deferred tax liabilities+ Other liabilities Year 2009=Rs.148,729,423/Rs.164,855,137 = 2009=Rs.148,729,423/Rs.164,855,137 90.21% Year 2010=Rs.215,978,767/Rs.234,990,675 = 2010=Rs.215,978,767/Rs.234,990,675 91.90% Year 2011 =Rs.182,165,419/Rs.185,909,120 = 97.99%

DEBT/ EQUITY RATIO



Deposits & other accounts + Subordinate Loans + Liabilities against assets subject to finance lease + deferred tax liabilities+ Other liabilities
Total Debt = Bills Payable + Borrowings from financial institutions Total Equity = Share Capital + Reserves + UnUnappropriated Profit
Debt to Equity Ratio = Total Debt / Tot al Equity Year 2009 =Rs.148,729,423/Rs.10,658,968= 13.95 Year 2010 =Rs.215,978,767/Rs.15,126,567 = 14.27 Year 2011 =Rs.182,165,419/Rs.5,040,949 = 36.13

 

STRENGHTS
  

The major shares of BOP are owned by the Government of the Punjab, so it can develop a good image & trust among its customers. Stability of Bank is strength of any bank. The Bank of Punjab has growth since its establishment. The Bank of Punjab provides the loan facility on sound basis that is very crucial for any bank to recover the loan. The Bank of Punjab has conservative policy for advances. So there are very few bad debts. Personal selling has key role in banking services. The officers of the Bank of Punjab go to the potential customers to develop the business. By the relationship with customers, they achieve the deposit targets. The promotion criteria of the bank are on the basis of the efficiency and passing the diploma examination of Institute of Bankers, Pakistan.

WEAKNESS


 

The Bank of Punjab is centralized organization. The authority is not given to the branch level. Branch Managers have to take permission from the Regional office or Head office for credit except Quick Cash. Managers had to get permission if they have to given more rate of profit to the customers. So the customers have to wait for days, which may cause the change of customers. Managers cannot negotiate with customers without the permission of Head office. The Bank of Punjab has less modern technology. Most of branches are computerized but not online. Due to lack of online facility, the banks services are low and foreign banks and other online banks have large market share. In this era modern technology like Online and ATM are very necessary for competition. Salaries of the officers and staff members are less as compared to other private banks. The Bank of Punjab has very less promotional activities. Their advertising campaign is very weak. They only use personal selling and some newspapers advertisements.

CONTD


 

It has been observed that most of the staff member knowledge is limited. They only know their routine duties. If any thing other than normal routine occurs, they are confused. It has a non-professional management. nonThere is Lack of modern banking techniques like ATMs, online banking, credit cards, and traveler cheques. Employees are unsatisfied due to unfair promotion system. There is not a right criterion for promotion; many of vacancies are filled at approach basis. Employees have Lethargic attitude especially in main branches. branches.

OPPERTUNITY
 Although commercial banks have launched may products but a
gap existing between the customers want and what the banks are providing. This is an opportunity for the Bank of Punjab to move in and fill the gap between the ideal bank and the current service offerings by aggressive advertising, consumers friendly attitude products and service for attracting customers. The bank has opportunity to expand the branch network all over the county, and it would be able to develop business and can start many other schemes for investment. The Bank of Punjab has opportunity to use latest technology for providing good services to customers. There is an opportunity for more businesses if the BOP opens its branches in foreign countries. There is an opportunity for more businesses if the BOP offered credit cards. Different multinational are establishing their business in Pakistan. So there is a lot of potential for future businesses.

    

CONTD.


The presence of more technical and professional staff can help out the bank in making progress especially in marketing department which should have effect on Banks policy making, making schemes of bank successful and can stabilize down its position. BOP should concentrate more industrial sector and agriculture sector. They should provide finances to the farmers both on short term and long term basis. New schemes for deposits and finances should be introduced regularly. Proper advertising of the products of the bank.

THREATS


The salaries of the officers and staff members are less as compared to other banks. It may cause experts drain from the Bank of Punjab to other banks. Expansion of newly establishing banks like Faysal Bank, PICIC Commercial Bank, Union Bank, Bank Alfalah, Askari Commercial Bank etc., and their better performance may cause loss of the market share of the BOP. According to the World Bank report, the Pakistan has become an over banked economy. With the cutthroat competition for deposits in the industry, the battle is on for the market share. The concept of 24 hrs banking, telephone and online banking, ATM and credit card are a direct result of the intense competition. But BOP is far behind the above mentioned services and will not provide better services as compared to other banks; it will lose its market share. The Bank of Punjab is also forced to give loans on potential basis. Due to this the recovery of such loans may become very difficult.

CONTD..
 

Promotional activities of the BOP are not sufficient. Due to this it may lose market share. Due to low entry barriers, there are more competitors; also the global competition has increased. Because of unfair promotion system and absence of proper recruitment techniques competent persons may move to o Financial environment is changing day to day, new technologies are introduced by foreign banks that provide customer efficient and quick services. There is a need of proper marketing because certain schemes face failure due ignoring marketing of the product. Failure of the schemes or products is a threat because it becomes a cause of decrease in profits.

AREAS FOR IMPROVEMENTS FOR BOP

STRUCTURE TECHNOLOGY
> Work processes > Methods > Equipments > Work specialization > Departmentalization > Chain of command > Span of control > Centralization > Formalization > Job redesign

PEOPLE
> Attitudes > Expectations > Perceptions > Behavior

SUGESTIONS TO IMPROVE
       

The banks overall objectives and strategies should be formulated. Major objectives should be allocated among divisional and departmental units. Regional chiefs collaboratively set specific objectives for their units with their branch managers. Specific objective must be collaboratively set with all department members. Defining how objectives are to be achieved, are specified and agreed upon by branch managers and employees. The action plans should be implemented. Progress toward objectives must be periodically reviewed, and feedback is provided. Successful achievement of objectives must be reinforced by performance based rewards.