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					The Bank of Punjab




                1
                                 The Bank of Punjab




    Topics                            Page No.


   Mission Statement                       3

   History                                 4

   Constitutional Base                     6

   Scope of the Bank                       8

   Management of the Bank                  9

   Emblem                                  9

   Objectives                              10

   Future Outlook                          11

   Subsidiaries & Sponsorship              13




                                                 2
                                                   The Bank of Punjab




 Be a dynamic resource of economic development and growth for

stakeholders through service excellence achieving high standards of

       professionalism, dedication integrity and team work.



Core Values

                    Integrity

                    Dedication

                    Transparency

                          Team work
                                                                      3
                                                              The Bank of Punjab


History

      The Bank of Punjab started functioning with the inauguration of its first

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

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

inauguration.

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

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

growth The ailments related to the budgetary deficit and public debt, both

foreign and domestic are in addition. Interestingly even such adverse

circumstances growth of real sector during the preceding year registered a

favorable change, which speaks of hidden potential and strength of economy

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

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

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

the effective conduct of monetary policy.

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

done two important services to the nation.




                                                                                4
                                                         The Bank of Punjab


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

   investment opportunities have increased.

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

   improved considerably so that now consumer are left with extensive

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

   view quality of their services.

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

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

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

Currency, Client Deposit in Foreign Currency, Remittances, and Advances

to Business, Trade, Industry and Agriculture. The Bank of Punjab has

indeed entered a new era of science to the nation under experience and

professional hands of its management. The Bank of Punjab plays a vital role

in the national economy through mobilization of hitherto untapped local

resources, promoting savings and providing funds for investments.

Attractive rates of profit on all types of deposits, opening of Foreign

Currency Accounts and handling of Foreign Exchange business such as

Imports, Exports and Remittances, Financing, Trade and Industry for

working capital requirements and money market operations are some

facilities being provided by the Bank. The lending policy of Bank is not


                                                                           5
                                                          The Bank of Punjab


only cautious and constructive but also based on principles of prudent

lending with maximum emphasis on security. As agriculture is considered

as backbone of our economy the Bank of Punjab has introduced "Kissan

Dost        Agriculture        Finance        Scheme"          to       small

farmers.

   The Bank of Punjab has the privilege to discharge its responsibilities

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

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

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

distinction of taking the lead. In the short span of time the Bank has been

able to evolve a distinct corporate culture of its owned-based policies, which

are realistic and are on highly professional footings.




Scope of the Bank.

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

functions as are attributed to commercial banking institution both in the area

of resource mobilization, loans, and investment. The Bank is thus providing

all type of advances to business, trade, and industry on seasonal and annual

basis, and is ensuring, through the prudent policy, the safety and protection




                                                                            6
                                                           The Bank of Punjab


  of its loan portfolios, as the resources base of the bank expands, project

  financing will also be brought into its fold.




Management of the Bank.

     At the level of Decision-making and implementation, senior management

  of the bank is drawn from highly accomplished bankers with rich experience

  in the banking profession both domestic and international.

     The entire responsibilities of policy formulation and management have

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

  be heartening to know that Mr. Nawaz Sharif, during his chief Minister ship

  of the province of Punjab issued special instructions to the political and

  executives echelons not to interfere in The Bank of Punjab, thereby ousting

  the possibility any pressure which may be put on the management of the

  bank in respect of recruitment of staff or provision of credit. These

  instructions have become an essential part of the culture of the bank.




                                                                            7
                                                           The Bank of Punjab


   Emblem & Objectives

   EMBLEM.

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

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

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

and the spikes of wheat in the emblem is firstly to represent the fact that the

economy of the Punjab stands on its agriculture produces especially cotton

and wheat and secondly to highlight the emphasis which the bank is to place

on development of agro-based industry.

OBJECTIVES.

   The Bank of Punjab being a commercial bank performs all those function

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

mobilization and investment. It is providing funds for commerce, trade,

industry, and agriculture but its main emphasis is on accelerated

development of agro-based industry. So the main objective of the bank is to

channelize the resources into sectors, which have suffered from neglect.

Other objectives included.

1. To provide speedier services to the common man.

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

   good profitable growth.


                                                                             8
                                                             The Bank of Punjab


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

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




            YEAR 2003 & FUTURE OUTLOOK


      The newly elected Government has pledged to continue economic

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

enhanced ability to engineer its economic future, which reinforces the

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

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

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

bringing about a greater degree of optimism amongst investors and the business

community.

      Although The Bank of Punjab are optimistic about the future outlook for

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

yet the geopolitical situation particularly with reference to Iraq the year 2003


                                                                               9
                                                              The Bank of Punjab


appears to be far more challenging where the factors beyond our control may

adversely affect our economy. Moreover, the prevailing money market scenario

with extremely low interest rates and stagnant private sector credit is a serious

deterrent to the banking sector growth. This situation will force the banks to

shift their focus from conventional banking approach to retail based consumer

finance products and service and the banks taking lead in this shift process will

be least affected by the prevailing unfavorable interest rate scenario.

      The mission to transform The Bank of Punjab into a modernized business

oriented institution is sailing smoothly and in this direction by now

computerization of 156 branches has been completed successfully while the

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

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

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

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

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




                                                                              10
                                                           The Bank of Punjab




                   SUBSIDIARIES AND SPONSORSHIP



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

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

incorporated in Pakistan under the Modaraba companies and Modaraba

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

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



      The Bank is one of the sponsors of Trust Leasing Corporation Limited

   a public limited company established under the Companies Ordinances,

   1984. Authorized paid up capital of the company is Rs. 250 million and Rs.

   100 million respectively.




                                                                            11
                                                        The Bank of Punjab


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

under Companies Ordinance. 1984 and register under Moderate Companies

and Modaraba (Flotation and Control) Ordinance, 1980 is wholly owned

subsidiary of the bank. Authorized fund of this Modaraba is Rs. 500 million

where as paid up fund is Rs 200 million.




                Topics                                       Page No.


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




                                                                         12
                                                  The Bank of Punjab




                  DIVISION AND DEPARTMENTS



            DIVISION                    DEPARTMENTS




   ADMINISTRATIO N               ORGANIZATIO N & METHO DS

   OPERATIO NS                   INFORMATIONAL & TECHNO LOGY




                                                                 13
                                                       The Bank of Punjab


    BUSINESS DEVELO PMENT             O FFICERS TRAINING INSTITUTE

    CREDIT                            SHARES

    INTERNATIO NAL                    LAW

    FINANCE                           STATIO NERY

    RECO VERY                         PLANNING RESERCH & PUBLICATION

    AUDIT & INSPECTIO N

    TREASURY




HEADED BY: -                      HEADED BY: -



GENERAL MANAGER                   CHIEF MANAGER




                           REGIONAL CHIEFS

                           BRANCH NETWORK
                    (243)
        REGIONAL NET-WORK




                                                                         14
                                    The Bank of Punjab




 FAISALABAD           LAHORE
Total Branches   34     Total Branches   64


 GUJRANWALA           MULTAN

Total Branches   43     Total Branches   60

 KARCHI / QUETTA      RAWALPINDI
Total Branches   05     Total Branches   36




           Topics                  Page No.

                                                   15
                                             The Bank of Punjab


          Administration                           21

          Operations                               22

          Business Development                     23

          Credit                                   24

          International                            25

          Finance                                  26

          Recovery                                 27

          Audit And Inspection                     28




Administration/Human Resource Division

                         G.M



           Admin &             Officer’s Training
         Establishment              Institute



                                                            16
                                                             The Bank of Punjab


      This division deals with the problems relates to the staff administration.

The main function of this department is to arrange a comprehensive training

program for recruited staff. Others function includes:

          Recruitment

          Staff remuneration

          Placing the staff

          Providing and defining the opportunities for career development

             and growth

          Devising and implementing services rules.

          Promotion and demotion

          Suspension and termination

          Transportation

          Security, health and benefits.

                          Operations Division

                                        G.M

                                                         Computer Dept.




                                                         Stationary Dept.



                                                         Engg. & Maintenance
                                                                           17
                                                              The Bank of Punjab




      This Division is concerned with the operational working in general

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

problem or ambiguity arise in any branch working are rectified and suggested

for correction by this division. This Division usually takes technical procedures

involved the decisions like commissions. And also.



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

    Opening new branches and their maintenance.

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



                Business Development Division
                                    G.M



                   Marketing                        PRP
                     Cell                        Department




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                                                              The Bank of Punjab


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

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

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

banking. This division fixes the deposits target of every branch by keeping and

eye over the potential customers in the area. It gives motivation to branches to

achieve their targets through different campaigns and schemes like cash prizes

and special increments. It publishes a bulletin in which those branches are

encouraged who achieves their monthly targets. The main function is to

develop and attract the customers and depositors. It also manages:

    Advertising policy

    Sales promotion.

    Schemes offered by the bank.




                             Credit Division

                                    G.M

                          Agriculture Credit Wing




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                                                              The Bank of Punjab


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

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

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

concerning with the credit.

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

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

approves it after making a through analysis. It also



    Prepare the policies regarding the sanctioning loan

    Monitor loans and credit

    Look after the portfolio of the bank

    Define credit limits against specified securities.




                       International Division
                                   G.M

                                                       International wing



                                                          Forex Money
                                                             Market
                                                           Investment
                                                                             20
                                                              The Bank of Punjab




   This division is providing important services to the bank regarding the

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

cheque etc.

    It develops “ Correspondent Relationship” with others on commission

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

      business.

    It handles treasury operations.

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

      bank, are showing positive results in terms of achieving foreign currency

      deposit targets and other foreign related business.


                          Finance Division

                                       G.M

                                                        Balance Sheet
                                                      Results Monitoring
                                                       SBP Affairs, and
                                                         Compliance.

                                                            Shares Dept.
                                                                             21


                                                       Company Affairs
                                                              The Bank of Punjab




      It controls the routine financial matters. The permission of special

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

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

not only estimates the profit and loss of every branch but also prepare overall

income statement and balance sheet of the complete bank. It also keeps record

of total deposits of the bank and then their classification in the form of loans

into different sectors of economy. The basic functions are:

    Monitoring the fiscal and financial policies of the bank.

    Deals in exploring means for investing surplus bank funds.

    Maintenance and investment of Gratuity and Pension Funds of the

      employees.

                           Recovery Division

                                      G.M


                                    Law
                                 Department


                                                                               22
                                                              The Bank of Punjab




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

regularizing the difficult loan accounts, has rendered valuable services in this

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

accordance with the guidelines issued by the State Bank of Pakistan Moreover,

recovery cells at regional levels have been set up to assist the head office. This

division looks after the matters of recovery of loans with the assistance of legal

advisors.




                     Audit and Inspection

                                   G.M
                                  Division


                     Audit of                    Rectification
                     Branches                   and Persuasion
                                                                               23
                                                            The Bank of Punjab




      This department ensures appropriate system of checks and balances. It

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

regulations formed by the Government of Punjab. For this purpose it doesn‟t

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

and comprehensive audits of the branches. This strategy has improved working

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

solve it. Surprise audit maintain a good check on the over all working of the

branch especially of the side of finance.




                                                                             24
                                                           The Bank of Punjab


                   Topics                                       Page No.


                  Service Provide to Customer                        30
                  Deposit Section                                    31
                  Nature of Deposit                                  33
                  Account Opening Section                            34
                  Clearing Department                                35
                  Remittance Department                              37
                  Advances/Credit Department                         43
                  Securities for Advances                            44
                  Agriculture & Economy                              50




    SERVICES PROVIDED TO CUSTOMERS

The following are the services being provided to the claims.

    Acceptance of deposits



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                                                             The Bank of Punjab


    Granting of loans

    Transaction Foreign Exchange Services

    Remittance – Collection

    SPEDFAX- instant Fund Transfer Service

    Lockers facility

    Utility Services



      The Bank of Punjab attaches specials importance to the fee earning

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

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

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

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

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

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

commission.




                        DEPOSIT SECTION

      In modern times very few business enterprises are carried out solely with

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


                                                                              26
                                                              The Bank of Punjab


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

banking system is based on it. The borrowed capital of the bank is much greater

then their own capital. Banks borrowing is mostly in the form of deposits.

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

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

is lent out the greater of the profit margin of the bank. Furthermore, the larger

the deposit the larger will be the funds available for employment; larger the

funds lent out the greater will be the profit of the bank.

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

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

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

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

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

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

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

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




                       NATURE OF DEPOSITS


    CURRENT DEPOSITS


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                                                            The Bank of Punjab


    PROFIT & LOSS SHARING ACCOUNT

    SHORT NOTIC TERM DEPOSITS

    CALL DEPOSIT

    TERM DEPOSIT RECEIPTS (TDR).



CURRENT DEPOSITS:

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

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

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

Usually this type of account is opened by the business.



PROFIT & LOSS SHARING ACCOUNT.

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

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

    PLS Saving Account

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

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

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

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




                                                                             28
                                                             The Bank of Punjab


      Under PLS saving account the depositor undertakes to share profit or

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

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

PLS deposits are invested in non-interested channels.



SHORT NOTICE TERM DEPOSITS (SNTD)

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

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

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

deposited period.



CALL DEPOSIT

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

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

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

some fixed period.



TERM DEPOSIT RECEIPTS (TDR)




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                                                            The Bank of Punjab


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

for short period (7- 30 days) while TDR is for long period (1 month up to 5

years).

              ACCOUNT OPENING SECTION


      Account opening is the first step towards establishing a relationship

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

two types of account:

    CURRENT DEPOSIT ACCOUNT

    PROFIT & LOSS SHARING ACCOUNT

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

with the bank, is introduction, which is preferably by the bank officers or any

account holder of the bank. The different categories of accounts that are

available are as under.



    INDIVIDUAL account

    Joint Account

    Partnership Account

    Limited Company Account

    Clubs, Society, Association, or Trust Account


                                                                            30
                                                           The Bank of Punjab


    SNTD

    TDR

    Foreign Currency Deposit


                       CLEARING DEPARTMENT

      Clearing is the most important department of the bank performing

various function.

Clearing House:

      A clearinghouse is an organization of the member banks, working under

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

transmission of funds from one bank to another. The branch cheque/instruments

are credited into the account of the customer. The clearing can be:

    Outward

    Inward

Outward Clearing

      The instrument collected or stored bank wise and a schedules is prepared

separately for each bank mentioning the total number of instruments and the

amount of the instruments. Then these are recorded in a register called

“OUTWARD CLEARING REGISTER” then a main schedule is prepared



                                                                           31
                                                          The Bank of Punjab


showing the total number of cheque and their aggregate amount being

presented in the clearing.

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

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

customer immediately. The branch on receiving credit advice debits the

clearing account and credit the respective customer accounts.

Inward Clearing

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

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

with the main schedule received from central clearing branch.

      These cheque/instrument are entered in “INWARD CLEARING

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

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

central clearing branch.

Reserves at State Bank of Pakistan.

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

balances. Rather than physically transferring funds between banks, check

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

account at SBP.



                REMITTANCE DEPARTMENT                                     32
                                                               The Bank of Punjab




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

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

commercial life particularly and in everyday life generally.

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

income in the form of service charges.



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

     Demand Draft (DD)

     Mail Transfer (MT)

     Telegraphic Transfer (TT)

     Pay Order

Now we discuss all these in detail: -



DEMAND DRAFT (DD):

      Demand draft is a written order given by the one branch of a bank on

behalf of customer to another branch of the same bank to a certain amount to

the certain person.



Procedure for Prepare Demand Draft.


                                                                              33
                                                            The Bank of Punjab


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

                 Name of the parties involved

                 Date

                 Amount to be sent

                 Account number (if DD is crossed)

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

        commission.

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

        and credit vouchers.

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

        department and the account records the amount paid in his cash

        scroll.

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

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

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

        to the officer along with the DD for authentication.

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

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

        the DD in the concerned branch its payment could be made.

Parties involved in the Demand Draft


                                                                            34
                                                            The Bank of Punjab


The following parties are involved in demand draft;

   1. Purchaser or Sender

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

      payable at a certain branch.

   2. Issuing or Drawing Branch

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

      the same bank.

   3. Drawer Branch

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

   4. Payee

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

      demand draft in the drawer branch.



MAIL TRANSFER (MT):

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

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

amount is directly credited to the receiver‟s account.




Procedure



                                                                            35
                                                             The Bank of Punjab


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

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

      date.

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

      according to the amount of the mail transfer.

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

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

      cash stamp and writing the amount in red ink.

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

      MT to his assistant.

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

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

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



TELEGRAPHIC TRANSFER (TT):

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

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

this case the sender request the manager of the branch to issue TT.



Procedure;



                                                                              36
                                                              The Bank of Punjab


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

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

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

the conformation the concerned branch makes the payment to the receiver. If

the sender wants to convey the same message through telephone then he has to

pay the charges of telephone along with the TT charges. First the person deposit

the TT amount along with the charges through the credit voucher then his TT

sent to the relevant branch.



Pay Order (PO):

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

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

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

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

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

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

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

branch.



Procedure.



                                                                               37
                                                              The Bank of Punjab


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

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

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

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

small then the branch manager has discretionary power to select the party

whose rate is lowest. After finishing the work the contractor submits the bill of

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

the contactor gets the amount from the issuing branch.




             ADVANCES / CREDIT DEPARTMENT
                                                                              38
                                                           The Bank of Punjab




                        “Major source of bank’s Income”

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

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

and attention.

Principles while advancing

      Basically there are five principles that must be duly observed while

advancing money to borrowers.

    Safety

    Liquidity

    Disposal

    Remuneration

    Suitability

Forms of Lending

              Many there are two types of advances:

    Short-term (maturity within one year)

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



However they are further classified as:


                                                                             39
                                                              The Bank of Punjab


    Running Finance

    Demand Finance

    Cash Finance

    Letter of Guarantee


Running Finance

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

customer requires the temporary accommodation, his bank allows withdrawal

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

running finance occurs. The accommodation is thus allowed collateral security.

When it is against collateral securities, it is called a “Secured Running Finance”

and when the customer cannot offer any collateral security except his personal

security, accommodation is called a “Clean Running Finance.” The customer is

in advantageous position in running finance because he has to pay the mark-up

only the balance outstanding against him on daily product basis.

Demand Finance.

      This is common form of financing to commercial and industrial concerns

and is mad available either against pledge or hypothecation of goods produce or

merchandise. In Demand Finance the party is financed up to a certain limit




                                                                               40
                                                             The Bank of Punjab


either at once or as and when required. The party due to facility of paying

mark-up only on the amount it actually utilizes prefers this form of financing.

             Ordinary Shares

             Preferred Shares

It can be

             Quoted or Unquoted

             Registered

             Bearer

             Inscribed



Advances Against Immovable Property (Mortgage).

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

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

By way of loan, and existing debts or the performances of the engagement this

may rise the pecuniary liability.

   The transfer is called the „mortgager‟ and the transferee the „mortgagee‟ the

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

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

mortgage deed.




                                                                             41
                                                             The Bank of Punjab




        Availability of adequate flows of credit for industry and agriculture are

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

added importance when agriculture is the mainstay of the economy as also the

sector where the bulk of the poor are concentrated. Growth and productivity in

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

serious concern given its importance for the economic prosperity of the

country. Apart from various other weaknesses in the infrastructural support of

the agricultural sector, inadequacy and lack of efficacy of credit, flows to

support agriculture related activities has been a major constraining factor.



                                                                               42
                                                              The Bank of Punjab




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

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

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

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

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

is suffering from a number of maladies and is consequently witnessing

stagnation in productivity.



         Due   to policy and administrative exigencies, the savings in the

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

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

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

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

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

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

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

and in Punjab in particular are, therefore, suffering from severe under-

development. Under a desirable development model, Punjab can:



                                                                              43
                                                              The Bank of Punjab


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

      essential foods items and industrial raw materials.

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

      addition;

    Generate additional employment opportunities in rural as well as

      adjacent small towns/cities;

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

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

      problems for the urban areas.

    Elevate poverty and improve the income generating capacity of the agri-

      based population.

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

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

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

stability. Supply of credit by Financial Institutions for meeting the specific

needs of agriculture and rural sectors are essential components for improvement

in both short and long-term development of the country. This has assumed even

greater importance in the present situation of declining water availability. Per

acre, production is plummeting. The per acre yield of most of the crops is



                                                                               44
                                                           The Bank of Punjab


stagnant rather diminishing. The most important factors responsible for this

downward trend in productivity are: -



FACTORS RESPONSIBLE FOR LOW YIELD PER ACRE:




              *      Imbalanced fertilizer use

              *      Lack, availability of certified, and good quality seeds

             *       Improper control of pests and weeds




SCARCITY AND INEFFICIENT USE OF WATER:




              *      Natural and mechanical water resources.



NON-USE OF MECHANIZED FARMING PRACTICES:

      LACK OF EDUCATION AND RESOURCES, MOTIVATION TO USE ADVANCED

       TOOLS FOR AGRICULTURE:

      HIGH COST, LOW OUT PUT, UNSKILLED LABOUR INTENSIVE

      NON-AVAILABILITY OF CREDIT AND FINANCIAL ASSISTANCE TO THE

       AGRICULTURE SECTOR

   .




                                                                           45
                                                               The Bank of Punjab


       The importance of availability of credit to the agriculture sector has

always been recognized by Government and given Top Priority. Specialized

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

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

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

that The Bank of Punjab through well thought out policies ensures that it does

not repeat the follies of the past.

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

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

much needed support to the agriculture sector but with a difference. The

difference being that instead of subsidizing the needs we will be active

participants in economically viable projects thereby safeguarding the

investments of the Bank.

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

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

important to ensure against any multiple borrowing and more importantly to

restrain the borrower from falling into a debt trap.

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

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


                                                                                46
                                                              The Bank of Punjab


the State Bank of Pakistan approved/eligible programmes for the

assistance/help of the agriculture farmers.

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

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

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

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

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

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



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



        ►Farm Credit. And

        ►Non-Farm Credit

Farm Credit is further bifurcated into:

    Short-Term

    Medium-Term

    Long-Term Credit.

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

given here under;



                                                                              47
                                                             The Bank of Punjab


EXISTING:        (Kissan Dost Agriculture Finance Scheme) Product /purpose

of Finance) Seeds, Fertilizers, Pesticides, Herbicides, Weedicides. All types of

labor and water charges are already embodied in our package financing, i.e.,

8000 Per Acres (no change)

PROPOSED:

               (Product /purpose of Finance)

1.     Orchard and Nursery       2.      Manual Sprayers

3.     Sericulture               4.      Apiculture



EXISTING:                    Tractors

              (Product/purpose of Finance)

PROPOSED:

               (Product & Purpose of Finance)

                             Tube-Well

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

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

equipment for sprinkle/trickle/drip irrigation system.

Mechanization Support

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

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


                                                                             48
                                                              The Bank of Punjab


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

machines for wheat straw and dry fodders.

Farm Transport

                Lease finance for purchase of Motor Cycles and small Vans for

Milk and other agri products transportation to local market.

Islah-e-Arazi

                             Precision land leveling & reclamation, soil

improvement, embankment, land formation and land improvement, laser

leveling etc.

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

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

borrowers and established small individual farmers by financing livestock.

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

and supplement the income generating capacity of the small farmers.




                                                                               49
                             The Bank of Punjab




    Topics                        Page No.


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


                                             50
                                       The Bank of Punjab


   Categories of Shareholders                    66




                     Deposits (Rs in
        Years
                        Million)

         1995            12116

         1996            14256

         1997            15797

         1998            17101

         1999            15019

         2000            17028

         2001            19034

         2002            23767




                                                       51
                          The Bank of Punjab




        Deposits (Rs in
Years      Million)

1995         2909

1996         4208

1997         5065

1998         5612

1999         6151

2000         6144

2001         5772

2002         6621




                                         52
                                                       The Bank of Punjab




                                 6151 6144                 6621
                          5612                      5772
                 5065
          4208

  2909




1995     1996    1997     1998    1999        2000     2001       2002




                                  Deposits (Rs in
                  Years
                                     Million)

                  1995                 6649

                  1996                 5435

                  1997                 5919

                  1998                 6581

                  1999                 4991

                  2000                 7866

                  2001                 5970

                  2002                 8295




                                                                         53
                                                            The Bank of Punjab




                                                          8295
                                           7866
       6649                  6581                  5970
                      5919
              5435
                                    4991




1995     1996        1997    1998    1999     2000        2001   2002




                                       Deposits (Rs in
                     Years
                                          Million)

                     1995                   1389

                     1996                   1509

                     1997                   1672

                     1998                   1795

                     1999                   1823

                     2000                   2180

                     2001                   2391

                     2002                   2313




                                                                           54
                          The Bank of Punjab




        Deposits (Rs in
Years      Million)

1995        14340

1996        16419

1997        18512

1998        19886

1999        18215

2000        21275

2001        24802

2002        29532




                                         55
                                                      The Bank of Punjab




30000

25000

20000

15000

10000

 5000

    0
                  Deposits (Rs in Million

  1995   1996   1997    1998    1999        2000    2001   2002




                                  Deposits (Rs in
                Years                Million)

                1995                   174

                1996                   151

                1997                   163

                1998                   123

                1999                    28

                2000                   356

                2001                   222

                2002                   283




                                                                     56
                          The Bank of Punjab




        Deposits (Rs in
Years      Million)

1995         2691

1996         3955

1997         5389

1998         5389

1999         5389

2000         5896

2001         6436

2002         5891




                                         57
                                                               The Bank of Punjab




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

                              1




                          No of Share
      Categories                           Shares Held          Percentage
                           Holders
Directors/CEO/Spouse              4             11576              0.01

  Provincial Govern               1         51781427               51.57

    Foreign funds              50               3052275            3.04

      Individuals             5659          14378263               14.32

Insurance Companies               4             3453355            3.44

 Financial Institutions        28               5881765            5.85

         NBFI                  103          16547565               16.48

Modaraba & Modaraba
                                  8              9279              0.01
  Management Co


                                                                              58
                                                                 The Bank of Punjab


 Others                     28              5299821                     5.28

TOTAL                      5891           100415326                         100




                    0.01 5.28 0.01
       16.48


5.85
                                                                51.57
3.44

        14.32
                         3.04
  Directors/CEO/Spouse               Provincial Govern
  Foreign funds                      Individuals
  Insurance Companies                Financial Institutions
  NBFI                               M odaraba & M odaraba M anagement Co
  Others




          Topics                                                            Page No.


         Summarized Balance sheets                                               68
         Comparative Balance sheets                                              69
         Summarized PLS Accounts                                                 71
         Comparative PLS Accounts                                                72
         Trend Analysis                                                          41


                                                                                       59
                                                            The Bank of Punjab


                    Ratio Analysis                                    86




               THE BANK OF PUNJAB
            SUMMARISED BALANCE SHEET
                                Rs. In Million
 For the Years           2002       2001         2000      19999      1998
        ASSET
CURRENT ASSETS
Cash                    2814341    4448268       1483412   2021955   1746493
Balance with other
                        3170272      432575       458204   2071514   1968484
Banks
Account Receivable      7479833    6776167       2911000   1750000   4644966
Advances                6620988    5771526       6143664   6150648   4111500
TOTAL CURRENT
                       20085434 17428536 10996280 11994117 12471437
ASSETS
LONG TERM
                        8294651    5969947       7865794   4990619   6580583
INVESTMENT
Fixed Asset              388788      274059       248575    230646     233601
Capital work in
                           5048        2136        2641      33749      44807
progress
TOTAL FIXED
                         393836      274059       251216    264395     278408
ASSETS
Deferred Tax Debt                    185070       192077


                                                                            60
                                                                The Bank of Punjab


OTHER ASSETS                 758930   942955   881108   961312   555210
  TOTAL ASSETS             29532851 24802703 20186475 18210443 19885638
CURRENT LIAB ILITIES
Notes Payable               250144      162545       130480   872378   543309
Account Payable            1289547     2509262       312319 10745674 10009548
Accrued Liabilities          64240       18804                 67345    27857
Other Liabilities           731756      686653       535706   429930   415076
 TOTAL CURRENT
                           2335687     3377264       978505 12115327 10995790
    LIABILITIES
Deferred Liabilities         117435                               3000        3000
Long Term Liabilities      23767017 19034737 17028412          7091933     4273426
       TOTAL
                           26220138 22411998 18006917 16391753 18090723
    LIABILITIES
S TOCK HOLDERS EQUITY
Share Capital              1004154      979662       851880     851880      774436
Reserves                   1357499     1275191      1327231     971049     1020343
Unappropriated Profit         1452          05          447        225         136
Stock Holder Equity        2363105     2390705      2179558    1823154     1794915
  Total Liabilities &
                           28583243 24802703 20186475 18214907 19885638
        Equity


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


                                                                                 61
                                                              The Bank of Punjab


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




                   THE BANK OF PUNJAB
                COMPARATIVE BALANCE SHEET
                                Rs. In Million

       For the Years                  2000-1999                   1999-1998
ASSETS                               Rs                           Rs
                                                 %AG E                        %AG E
CCURRENT ASSETS                 (In Million)                (In Million)
Cash                                (538543)        (31%)           275462      15.7%
Balance with other Banks           (1613310)        (82%)           103030      5.23%
Account Receivable                1161000             25%     (2894966)         (62%)
Advances                                (6984)     (.16%)         2039148         50%
TOTAL CURRENT ASSETS                (997837)         (8%)        (477320)      (3.8%)
LONG TERM INVESTMENT                 2875175          44%       (1589964)       (24%)
Fixed Asset                              17929         8%            (2955)    (1.2%)
Capital work in progress              (31108)       (69%)          (11058)    (24.6%)
TOTAL FIXED ASSETS                    (13179)      (4.7%)      (14013)           (5%)
Deferred Tax Debt                      192077     (100%)
OTHER ASSETS                          (80204)       (14%)         406102          73%
        TOTAL ASSETS                 1976032         10%       (1675195)       (8.4%)


                                                                               62
                                                                 The Bank of Punjab

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




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



                                                                                  63
                                                                     The Bank of Punjab


Gross Income                1392644       1259790        999004         912797       635100
Less: Operating
Expenses
Administrative Expenses         901041     837055        678675         722009       601368
Provision against non-
                                 76076      39286        143059          81230      (123615)
performing advances
Provision for diminution
                            (23472)                 0            0            0       27273
in value of investment
Bad Debts                        1574         200               33            0         337
Total Operating
                                955219     876541        821767         803239       505363
Expenses
Operating Profit                437425     383249        177237         109558       129737
Other Income                     43154      28480         21967          17269         7561
Other Charges                    4664        1460           690           2088         1683
    Profit Before Tax           431844     421275        319639         124739       135615
Less: Tax                       147870 185030            162220          96500        12500
    Profit After Tax            283979     236245        157419          28239       123115

                         THE BANK OF PUNJAB
             COMPARATIVE PROFIT & LOSS ACCOUNT

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

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


                                                                                       64
                                                          The Bank of Punjab


Less: Operating Expenses
Administrative Expenses                63986      10.6%        158380          26%
Provision against non-
                                       36790       30%        (103773)      (84%)
performing advances
Provision for diminution in
                                      (23472)     (86%)              0          0%
value of investment
Bad Debts                               1374     407.7%            167     49.5%
Total Operating Expenses               78678      15.5%          54774         11%
Operating Profit                       54176      41.7%        206012          159%
Other Income                           14674       194%           6513         86%
Other Charges                           3204       190%            770         46%

       Profit Before Tax               10569        8%         101636          75%

Less: Tax                              37160       297%          22810         183%
        Profit After Tax               47734      38.7%          78826         64%



                         THE BANK OF PUNJAB
             COMPARATIVE PROFIT & LOSS ACCOUNT

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

 Mark up/Interest, Discount &
                                    (325976)      (15%)           1162          1%
      Returned Earned
Fee Commission & Brokerage                758      .71%           2116     3.61%
Dividend Income                        90049       193%          24520         52%
Other Operating Income                 21575      82.5%          (425)    (1.6%)
Total Service Revenue               (220503)       (9%)          34282         1.4%
Less: Cost /Return on Deposit       (426801)      (24%)       (245298)      (14%)
Gross Income                           86207      13.6%        277697     43.7%


                                                                         65
                                                               The Bank of Punjab


Less: Operating Expenses
Administrative Expenses                 (43334)        (7%)         120641            20%
Provision against non-
                                          61929        50%          204945            166%
performing advances
Provision for diminution in
                                              0        (0%)         (27273)      (100%)
value of investment
Bad Debts                                    33        10%              (337)    (100%)
Total Operating Expenses                  18528       3.6%          297976            59%
Operating Profit                          67579        52%          (20179)     (15.5%)
Other Income                               4598        61%              9708          128%
Other Charges                            (1398)       (83%)              405          24%

       Profit Before Tax                194900        143%          (10976)           (8%)

Less: Tax                                 65720       525%            84000           572%
        Profit After Tax                129180        105%          (94976)       (77%)




Comparative Financial Statement

                    Comparative      financial statement      present     financial

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

analysis the statements predict about the movements and trends of the business

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

decrease. It may also help to comments about the future expectations of the

ways in which the financial and operating performance will go.

There are two type of comparative financial statement analysis.

    Horizontal Analysis


                                                                                66
                                                               The Bank of Punjab


      Trend Percentage Analysis



Horizontal Analysis

             Comparison of two or more years‟ financial statement is called

   Horizontal Analysis. It shows the changes between years both in rupee and

   percentages form. So in this way it facilitates the analyst to predict about the

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

   relationship between the reporting periods, rather than with in the reporting

   period.

             In this report I shall use this type of comparative financial

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

Trend Percentage Analysis

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

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

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

information about the business activities. By simple looking at these

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

business is making performance or not.


Comments on Comparative Analysis of 2002-2001


                                                                                67
                                                              The Bank of Punjab


      The results that I have perceived from the Comparative Analysis of

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

From Balance Sheet

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

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

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

          receivable also increases as compared to last year but other assets

          decrease i.e. 33%.

       Total Assets are increased by 23.7%.

       Fixed Assets are increased by 43%.

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

          the short-term solvency of the bank.

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

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

19% which corresponds with the increase in service revenue.


From P rofit and Loss Account

       The service revenue of the bank is increased by 1% than that of 2001,

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

          decreased less than that of return on deposits.



                                                                              68
                                                          The Bank of Punjab


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

        results in an increase of 21% of Gross profit.

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

        2001. These are increased by 194%.

     As the service revenue increased, the administrative expenses also

        increased by 11%.

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

        2001.




Comments on Comparative Analysis of 2001-2000

From Balance Sheet

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

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

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

        receivable also increases as compared to last year.

       Total Assets are increased by 23%.

     Fixed Assets are increased by 8.2%.




                                                                         69
                                                              The Bank of Punjab


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

          for the short-term solvency of the bank.

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

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

23% which corresponds with the increase in service revenue.

From P rofit and Loss Account

       The service revenue of the bank is increased by 8% than that of 2000

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

          results in an increase of 41% of Gross profit.

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

          2000. These are increased by 86%.

       As the service revenue increased, the administrative expenses also

          increased by 26%.

       Overall profit after tax also increased by 64% 2001 then that of 2000.


Comments on Comparative Analysis of 2000-1999
      The results that I have perceived from the Comparative Analysis of

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

From Balance Sheet



                                                                              70
                                                          The Bank of Punjab


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

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

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

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

        other assets decrease i.e. 14%.

      Total Assets are increased by 10%.

      Fixed Assets are increased by 8%.

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

        for the short-term solvency of the bank.

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




From P rofit and Loss Account

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

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

        service decreased less than that of Mark-up Interest.

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

        results in an increase of 14% of Gross profit.

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

        1999. These are increased by 61%.



                                                                          71
                                                             The Bank of Punjab


       As the service revenue decreased, the administrative expenses also

         decreased by -7%.

      Overall profit after tax also increased by 105% in 2000 then that of 1999.

Comments on Comparative Analysis of 1999-98
      The results that I have perceived from the Comparative Analysis of

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

From Balance Sheet

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

         decrease in Account Receivable but increased in Balance with other

         Banks i.e. 5% and cash is also increased by 15.7% which is good for

         the Short term solvency of the bank.

       Total Assets are decreased by -8.4%.

       Fixed Assets are also decreased by -1.2%.

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

From P rofit and Loss Account

       The service revenue of the bank is increased by 1% than that of 1998,

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

         decreased less than that of return on deposits.




                                                                             72
                                                           The Bank of Punjab


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

        results in an increase of 43.7% of Gross profit.

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

        1998. These are increased by 128%.

      As the service revenue increased, the administrative expenses also

        increased by 20%.

      Overall profit after tax decreased by -77% in 1999 then that of 1998.




                   THE BANK OF PUNJAB
                   TREND PERCENTAGES
     For the Years            2002/1998 2001/1998 2000/1998 1999/1998
ASSETS
CCURRENT ASSETS
Cash                                161%         254%          84%         115%
Balance with other Banks            161%          21%          23%         105%
Account Receivable                  161%         141%          62%          37%
Advances                            160%         140%         149%         150%
TOTAL CURRENT ASSETS                161%         139%          88%          96%
LONG TERM INVESTMENT                126%          90%         119%          75%



                                                                          73
                                                       The Bank of Punjab


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




                       THE BANK OF PUNJAB
                       TREND PERCENTAGES

       For the Years            2002/1998   2001/1998 2000/1998 1999/1998

     Service Revenue
 Mark up/Interest, Discount &
                                     91%         96%         85%            100%
      Returned Earned
Fee Commission & Brokerage           103%        88%        104%            103%
Dividend Income                      404%       234%        345%            152%



                                                                      74
                                                               The Bank of Punjab


Other Operating Income                   399%          224%         180%             98%
Total Service Revenue                    101%          100%          92%            101%
Less: Cost /Return on Deposit             56%            63%         61%             86%
Gross Income                             219%          198%         157%            143%
Less: Operating Expenses
Administrative Expenses                  149%          139%         112%            120%
Provision against non-
                                          61%            31%        115%             65%
performing advances
Provision for diminution in
                                         (86%)           0%           0%             0%
value of investment
Bad Debts                                467%            59%          9%             0%
Total Operating Expenses                 189%          173%         162%            159%
Operating Profit                         337%          295%         136%             84%
Other Income                             570%          376%         290%            228%
Other Charges                            277%            86%         40%            124%
       Profit Before Tax                 318%          310%         235%             91%
Less: Tax                                1182%       1480%         1297%            772%
        Profit After Tax                 230%          191%         127%             22%




      Graphically P resentation of trend Percentages

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

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



         No of Years              2002    2001    2000    1999 1998
         Total Current Assets     161%    139%     88%      96%    100%


                                                                               75
                                                           The Bank of Punjab


        Total Fixed Assets      141%       98%   90%     94% 100%
        Total Assets            148% 124% 101%           91%    100%



             180%

             160%

             140%

             120%

             100%

              80%

              60%

              40%

              20%

                0%
                         2002       2001         2000      1999        1998


               Total Current Assets        Total Fixed Assets     Total Assets


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

tax, and Net income.



          No of Years           2002 2001 2000 1999 1998
          Gross Income          219% 198% 157% 143% 100%
          Profit before Tax 318% 310% 235%              91% 100%



                                                                              76
                                                                The Bank of Punjab


             Net Income          230% 191% 127%              22% 100%




     350%

     300%

     250%

     200%

     150%

     100%

      50%

        0%
                  2002         2001         2000      1999         1998

                         Gross Income   Profit before Tax    Net Income




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

Liabilities and Long Term Liabilities during the period 1998-02



        No of Years                2002      2001 2000 1999 1998
        Current Liabilities           21%     30%    08% 110% 100%
        Long Term Liabilities 556% 445% 398% 165% 100%


                                                                               77
                                                              The Bank of Punjab


           Total Liabilities        144%     13%   99%     90% 100%




  600%


  500%


  400%


  300%


  200%


  100%


    0%

            2002         2001         2000      1999         1998


          Current Liabilities    Long Term Liabilities    Total Liabilities



                               RATIO ANALYSIS

         The relationship of one item to another expressed in simple mathematical

form is known as a ratio. A single ratio in itself is meaningless because it does

not furnish a complete picture. A ratio becomes meaning full when compared

with some standard. So we have taken ratios and percentage of the BOP based


                                                                              78
                                                                 The Bank of Punjab


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.



Profitability vs. Investment



            Return on Assets        Net profit after taxes / Total assets

            Return on Deposits Net profit after taxes / Deposits

            Return on Equity        Net profit after taxes / Equity




        No of Years              2002    2001      2000 1999          1998
        Return on Assets          .96%    . 95% .70%        . 15% . 61%
        Return on Deposits       1.19% 1.24% .92%           . 39%     2.8%
        Return on Equity         12.01% 9.88% 7.2% 1.54%              6.7%
Remarks.

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

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

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

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



                                                                                79
                                                               The Bank of Punjab


the profitability of the bank with equity is increasing day by day. This looks to

be very positive sign.



Profitability Ratios.


            Gross Profit Margin            Gross profit      / Income

            Operating Profit Margin Ope rating profit / Income

            Net Profit Margin             Net profit        / Income




         No of Years                2002 2001 2000 1999 1998
         Gross Profit Margin
                                    57%    52%     45%      37%    27%
         Ope rating Profit Margin
                                    18%    16%         8%    5%        6%
         Net Profit Margin
                                    11%     9%         7%    1%        5%




Remarks.

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

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

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




                                                                              80
                                                                The Bank of Punjab


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

increasing year by year.

Earning Per Share


             Earning Per Share Profit after Tax / No of Shares



             No of Years          2002 2001 2000 1999 1998
             Earning Per Share
                                   2.83   2.41    1.85    .33      1.59



Comments

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

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

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

possible because it has a great importance for an investor to invest in the Bank

of Punjab.

Regulatory Ratios:


              Advances to Deposits Ratio Advances / Deposits




                                                                               81
                                                            The Bank of Punjab


             Cash to deposits Ratio          Cash / Deposits




      No of Years                     2002 2001 2000 1999 1998
      Advances to Deposits Ratio
                                      28%     30%    36%    36%      33%
      Cash to deposits Ratio
                                      12%     23%     9%    13%      42%




Remarks.

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

of loan in total deposit of the bank is not stable, 1st three year from 1998 to

2001 increase then decrease. It means that the credit (advances) circulation of

the bank has fallen from 36% to 28% during the last five years, which is a not

good sign. And the cash to deposits ratio is also decrease from 42% to 12%.




Capital adequacy Ratios:
           Equity to Asset Ratio       Total Equity / Total Assets



                                                                             82
                                                             The Bank of Punjab


            Equity to Deposit Ratio Total Equity / Deposits



        No of Years                 2002 2001 2000 1999 1998
        Equity to Asset Ratio
                                    8%       10%    11%    10%     9%
        Equity to Deposit Ratio
                                     10%     13%    13%    12%     3%



Remarks.

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

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

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

Efficiency Ratios:

       Deposits to total liabilities Ratio   Deposits/Total Liabilities

       Investment to Total Assets Ratio Investments / Total Assets



   No of Years                           2002 2001 2000 1999 1998
   Deposits to total liabilities Ratio
                                         91%       85%    95%    92%    94%
   Investment to Total Assets Ratio
                                           28%     24%    27%    27%    34%




                                                                              83
                    The Bank of Punjab




    Topics               Page No.


   Strengths                  92
   Weaknesses                 94
   Opportunities              96
   Threats                    97




                                    84
                                                              The Bank of Punjab


            In the light of the Knowledge obtained during internship and studying

the organization, the following recommendations may prove to be successful to

the bank.

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

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

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

      general public.

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

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

      parking facilities for the customer.

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

      the BOP can attract professionals, intelligent persons.

     The Bank of Punjab should minimize its expenses.

     Special awards should be given to the hardworking employees who

      performed extra-ordinary in the bank.

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

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

      what people want and what their banks are providing them.

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

      investments


                                                                              85
                                                          The Bank of Punjab


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

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

    Telephone Banking etc.

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

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

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

    computerization, fax installation.

   The authority should be delegated to the manager level.

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

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

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

    influences and should give loans on merit.

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

    fooling and recognize the recovery function.

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

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

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

   Interview should be conducted while recruiting personnel, to consider

    the personality characters, communications skills and sociability.




                                                                         86
                                                          The Bank of Punjab


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

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

    and other institutions can help to launch the studies regarding banking

    business.

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

    interruption of Provincial government.

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

    employees to the administration.




                                                                          87
The Bank of Punjab




               88
                                                              The Bank of Punjab



             The Bank of Punjab is contributing a lot towards the industrial

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

regarding the bank‟s financial performance as shows in the financial

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

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

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

and non-trading growth.

              They facilitate trade both inside and outside the country. The

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

institutions and has consistently shows tremendous growth in all area of its

activity. However after scheduling, due to its emphasis on consolidation and

controlled lending, the growth of profit has somewhat declined. But the ban‟s

performances are in line with its set goals.

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

employees are given all the possible facilities and generous compensation. In

return employees are stressed for their best efficiency. Merit policy prevails in

all the activities of the bank. Administration has studied the administration of

all other banks, and all their problems and drawbacks are planned to be

avoided. Therefore, the policies of the management are progressive and proper.




                                                                              89
                                                             The Bank of Punjab


             The progressive approach and trend towards progress and

prosperity reflects that bank will touch the zenith of development and progress.

The dedicated, enthusiastic and motivated employees can bring that time even

earlier.




                                                                             90
The Bank of Punjab




               91

				
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