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`

INTERNSHIP REPORT
ON
THE BANK OF KHYBER
HAYATABAD PESHAWAR

SESSION 2010-14
SUPERVISED BY:
MADAM : ROMANA SARWER
LECTURER QACC

SUBMITTED By:
RAZAQ UR REHMAN

BS COMMERCE ( Finance )
ROLL NO: 36

QUAID-E-AZAM COLLEGE OF COMMERCE
UNIVERSITY OF PESHAWAR
1

`

HAYATABAD MAIN BRANCH
Supervisor:
Signature:

_______________________________

Name:

Madam : Romana sarwer___________

Designation:

Lecturer QACC, UOP______________

External Examiner:
Signature:

_______________________________

Name:

________________________________

Designation:

________________________________

Principal
Signature:

_______________________________

Name:

Sir
...
5
ACKNOWLEDEMENT
...
7
Executive Summary
...
10
Introduction to the Report
...
1 BACKGROUND OF THE STUDY
...
10
…
...
2 Purpose of the Study
...
3 Scope of Work
...
12
An overview of the Report
...
1Departments of the Bank
...
2 Products & Services
...
1 Home Remittance Department
...
2 Account opening
...
3
...
16
3
...
2 PAY ORDER
...
3
...
17
3
...
17
3
...
1MURABAHA
...
4
...
18
3
...
3 DIMINISHING MUSHARIKAH
...
4
...
19
3
...
5 BANK GUARANTEE
...
5 CLEARING
...
5
...
20
3
...
2 OUT WARD CLEARING BOOK:
...
6 CASH DEPARTMENT
...
6
...
20
3
...
2 PAYMENTS:
...
22
BALANCE SHEET
...
1 LIQUIDITY RATIO
...
1
...
25
4
...
2 CASH RATIO
...
2 ACTIVITY RATIOS
...
2
...
26
4
...
26
4
...
1 RETURN ON ASSETS
...
3
...
27
4
...
3 EARNING PER SHARE
...
29
4
...
1 DEPOSITS GROWTH
...
4
...
29
4
...
3 PROFIT GROWTH RATE
...
5 OTHER RATIOS
...
5
...
30
4
...
2INVESTMENT TO TOTAL ASSETS RATIO
...
4
...
2 INVESTMENTS TO DEPOSITS RATIO
...
6 TREND ANALYSIS
...
6
...
34

...
6
...
36
4
...
37
4
...
1BALANCE SHEET
...
7
...
40
4
...
41
4
...
1 STRENGTHS
...
7
...
44
4
...
3 OPPORTUNITIES
...
7
...
47
Conclusions and Recommendations
...
1 CONCLUSIONS
...
2 RECOMMENDATIONS
...
2
...
49
5
...
3 INTRODUCTION OF MANAGEMENT BY OBJECTIVES (MBO)
...
2
...
49
5
...
5 PROPER JOB ANALYSIS
...
2
...
50
5
...
8 BETTER WORKING CONDITION
...
2
...
50
5
...
10 OTHER RECOMMENDATIONS
...
51
BOOKS
...
52
WEBSITES
...
I am only been able to complete this lengthy and enormous
task for the talent, intellect and mental powers that He gifted to me
...
Hamid ali shah
...
Her
wisdom, kind consideration and unique insight were invaluable and her real world experience
added an extra advantage to my report
...

Razaq ur Rehman
BS Commerce (Finance)

6

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PREFACE
The development of skills to perform well in professional life has become a dire need of every
business graduate
...

As a requirement of BS Degree in Commerce, I opted to join The Bank of Khyber, to fulfill my
degree requirement
...

In this report I tried to explain briefly different functions of the bank and to make financial and
SWOT analysis of the bank
...


Razaq ur Rehman
BS Commerce (finance)

7

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Executive Summary
Bank is inevitable for making economy stronger and efficient
...
The Bank of Khyber is
one of the modern organizations
...
It is a centralized
organization and the authority flows from top to bottom
...
In the Bank of Khyber
Islamic banking karkhano branch there are the Operation department, Credit department, Foreign
Exchange department and Internal Audit departments which are in operation fully and efficiently
and effectively
...
The Bank of Khyber
offers Express Money, Western Union, Malik Exchange and Placid services for Home
remittances
...
The bank also gives different types of utility services as Electricity bills, Gas bills, and
telephone bill
...
The credit department is the
busiest department of The Bank of Khyber which gives the products like Murabaha Financing,
IjaraCar, IjaraMotorcycle, Diminishing Musharika Letter Of Credit, Letter Of Guarantee
...
The investments and Operating fixed assets are almost double from 2010 but not much
increase in financing and a decreasing trend in other assets of the bank
...
The revenues of the bank are showing an
increasing trend which is 65% from 2010
...
The administrative expenses are
increased with a high change 146%
...

The earnings per share of the bank is above Rs1
...
78 that of the bank
which is highly attractive
...
At the end, some
recommendations are also given for the improvements of performance of the Bank
...
1 Background of the Study
Banking is an important industry in today’s world
...
In Pakistan too, banking is considered very important
...
Bank is inevitable for making economy stronger and
efficient
...
The network of its branches is spread all over the country
...
The problems faced
by this organization and the possible remedial actions, as the study is to find all the facts upon, which
analysis of the financial statements of the organization is to be based
...



...
1
...

The primary purpose of this report is to gather relevant information to compile a report on The Bank of
Khyber
...
e
...
Similarly, the report’s purpose is also to develop analytical
skills by analyzing the financial statements of the organization through different ratios, trend and
common size analysis and SWOT analysis
...


1
...

However, the main focus of my study is on general banking procedures and the financial analysis of the
bank
...

This report will be beneficial to the students in general and banking students in particular seeking
guidance about general banking procedures
...


11

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Chapter 2
An overview of the Report

The Bank of Khyber was established in 1991, Islamic banking was started by BOK in 2004 under the
license issued by SBP to operate an Islamic Banking Group within this commercial Banking entity
...
The manager of the
branch is Mr Sami-Ur-Rehman, who is an experienced knowledgeable banker
...


2
...


Manager
Operation

Complince
Deptt
...


Credit Deptt
...


General Banking
(operation)
Deptt
...


Cash Deptt
...


12

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2
...
Current Accounts
2
...
Riba Free Certificates
4
...
Riba Free Special Deposit
...
Ijarah
2
...
Diminishing Musharakah
4
...
Mudarabah
6
...
Share Purchase
8
...
Foreign Currency (FCY) Transactions

13

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10
...
Export Refinance Scheme
12
...
I spent two months here
and tried to learn about the following functions and procedures of the bank
...
1 Home Remittance Department
I have learnt some basic things which helped me in understanding the procedure of banking
system
...

Over here remittances from all over the world through Express Money, Western Union, Malik
Exchange
...

The 1st thing is they check out the code number which consists of specific number of digits which
is issued to receive the money by his/her relative
...
The 3rd thing the
bank checks out is when money exceed from 2 lack (200,000), then bank ask from person who
withdraws the money that for what purpose you are going to take Such amount of money and
what is your relation with the sender, bank takes contact number and sign of customer and Bank
keep it as a record with itself
...
2 Account opening
This department of the bank is very important as the customer bank relation starts from here
...


15

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Then the source of income is asked and evidence is verified by checking all related documents
...
House wife, contractors, money changers , landlords etc are considered as highly risky
customers
...
Government employees are low risk customers for
the banks according to the rules
...


...
3

Remittance Department

Remittance means a sum of money sent in payment for something
...
BOK offers the following forms of remittances
...
3
...
The customer fills the application form
...
The customer deposits the
amount of DD in the branch
...
BOK
officials note the transaction in issuance register on the page of that branch of BOK on which DD is
drawn and will prepare the advice to send to that branch
...
DD are of two types
...
3
...
Pay order is the most convenient, simple and secure way
of transfer of money
...
3
...
SDR is issued against tender
...
In case of fraud and after end of tender, the government returns the money
back to customer
...

Credit Deposit in charge is another important seat from where the cash transactions up to
100000/ is authenticated and controlled
...


3
...


3
...
1Murabaha
Using Murabaha as a financing instrument, the Bank purchases certain goods (as required by the client)
and sells them to the client on a cost plus profit basis
...
levies etc
...
The profit may be added on lump sum or as a fixed percentage of the cost
...
The bank is neither entitled
to take more profit than that pre-determined profit nor it can legally take
...
4
...
Lexically, it means 'to give something on rent'
...


The type of Ijarah, which relates to the usufructs of assets and properties, and not to the services
of human beings, is relevant for Islamic banking
...
' In
this case, the term 'Ijarah' is analogous to the English term 'leasing'
...
But there
are basic differences between conventional Leasing and Ijarah-wa-Iqtina
...
Therefore in conventional leasing the rentals start from
the day the Lessor makes payment for the machinery/property whereas in Ijarah-wa-Iqtina the
rental starts from the day the property is handed over to the lessee so that he is able to use that
property or machinery
...
4
...
The
partner uses the asset and gives rent to the bank for his share and also use to buy units of the
assets from the Bank paying with the rent
...
The rent increases when the KIBOR increases
...
The rent decreases as the ownership
stake of tenant increases
...
4
...
It is used for business
purposes
...
Banks issue letter of credit as a way to insure sellers that they
will get the payments
...
The bank promise on behalf of the customer that he will pay the money
...


3
...
5 Bank guarantee
Bank guarantees are the most important instrument for protecting companies against nonperformance of underlying contract, or to ensure financial obligations
...
5 Clearing
When you pay a cheque into your account it has to be sent to the drawer's bank for payment; for
that bank to decide if they will honor the cheque
...
This process is known as the central
cheque clearing cycle and normally takes three working days
...


19

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3
...
1 In Ward Clearing Book:
The bank uses this book for the purpose of recording all the cheques that are being received by the bank
in the first clearing
...


3
...
2 Out Ward Clearing Book:
The bank uses outward clearing register for the purpose of recording all the details of the cheques that
the bank has delivered to other banks
...
6 Cash Department
The money, which either comes or goes out from the bank, its record should be kept
...
Cash department performs the following functions:

3
...
1 Receipt
The deposits of all customers of the bank are controlled by means of ledger accounts
...
The normal Cheque is one in which there is a
drawer, a drawee banker and a payee, or no payee but bearer
...
These can also be collected through clearing
...
It can also be
collected through clearing
...
It can only be credited to the payee’s
account
...
Then the cheque will be credited to the account of

20

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the person to whom the cheque was issued and debited from the account of the person who has
actually issued the cheque
...
6
...
This paying function is one, which is the distinguishing mark of a banker and
differentiates him from other institutions, which receive money from the public
...
The payment in due course means payment in
accordance with the apparent tenor of the instrument, in good faith and without negligence to any
person in possession thereof under circumstances, which do not afford a reasonable ground of believing
that he is not entitled to receive payment of the amount therein mentioned
...


1)Cheques should be in a proper form

2) Cheque should not be crossed

3) Cheque should be drawn on the particular bank

4) Cheque should not be mutilated

5) Funds must be sufficient and available

6) The Cheque should not be postdated or stale

21

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Chapter 4
Analysis of Financial Statements
Financial analysis is the process of identifying the financial strengths and weakness of the firm by
properly establishing relationship between the items of balance sheet and profit and loss account, in
order to make rational decision in keeping with the objective of the organization, for that purpose the
management use analytical tools
...


There are some ratios in order to analyze the financial statements of an organization for different
purposes, for example to judge liquidity, measure profitability or to see how much a firms deposits are,
and SWOT analysis to see a firm’s strengths and weaknesses, opportunities, and threats
...


22

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Balance sheet
The Bank of Khyber

Statement of Financial Position- Islamic Operations
As at December 31, 2012
Assets
cash and balance with treasury banks
balance with and due from financial institutions
due from financial institutions
Investments
Islamic financing and related assets
operating fixed assets
deferred tax assets
other assets

Liabilities
bills payable
due to financial institutions
deposits and other accounts
current accounts
saving accounts
term deposits
Others
deposit from financial institutions
other liabilities
net assets
represented by
Islamic banking fund
inappropriate profit
surplus/ deficit on revaluation of assets

2012
1099279
505487
1200000
9643191
3211717
165394

(Rupees in ‘000)
2011
2010
823049
740522
530736
554970
7722833
3058221
157084

4612539
2912144
86453

407517
16232585

320665
12612588

499076
9405704

135187

71223

40525

4635304
5860672
1729823
735268
363268
441140
13900662
2331923

3253099
5053747
1488255
189105
74368
604509
10734306
1878282

2350805
4049422
882325
132860
281416
310020
8047373
1358331

460000
1871893
2331893
2331893

460000
1390135
1850135
28147
1878282

460000
898330
1358330
1358330

23

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Profit and Loss account
Profit and Loss Account - Islamic Operations

(Rupees in ‘000)

For the year ended December 31, 2012
Income / return / profit earned
Income / return / profit expensed

2011
1,249,127
-393,780
855347
28,887

2012
1,420,741
-481,526
939,215
(Reversal of provision) / provision against non-performing financing -5,787
Provision for diminution in value of investments
-5,787
Net Income / return / profit after provisions
945,002
OTHER INCOME
Fee, commission and brokerage income
57,814
Dividend income
19,584
Income from dealing in foreign currencies
25,819
Unrealized gain / (loss) on revaluation of held-for-trading securities 340
Gain on sale of securities
4,624
Other income
16,936
Total other income
125,117
1,070,119
OTHER EXPENSES
Administrative expenses
588,347
Other charges
14
Total other expenses
588,361
Profit before taxation
481,758
Inappropriate profit brought forward
1,390,135
Profit available for appropriation
1,871,893

28,887
826,460

2010
858,664
-295,702
562,962
-28,524
-1,950
-30,474
593,436

44,850
7,853
14,162
-1,820
1,512
22,976
89,533
915,993

36,718

424,188

238,737

424,188
491,805
898,330
1,390,135

62
411,477
486,853
898,330

7,225

12,897
56,840
650,276

4
...
They compare
short-term obligations to short term (or current) resources available to meet these obligations
...


24

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4
...
1 Current Ratio
The current ratio is one of the most frequently used liquidity ratios
...

2010

2011

2012

Current Assets

8820175

12134847

24659674

Current Liabilities

7323077

9866324

13096250

Current Ratio in %

120
...
00

188
...
1 Current Ratio Analysis
Interpretation: the ratio shows that the bank has more current assets against its current
liabilities, which is a good sign for investors and for the bank
...
1
...

2010

2011

2012

Cash

1295492

1353785

1604766

Current Liabilities

7323077

Cash Ratio in %

17
...
72

13096250
12
...
2: Cash Ratio Analysis
This ratio shows a decreasing trend on annual bases which is not good at one side but has a good
effect on the other side as it shows that more cash is being invested in profitable projects
...
2 Activity Ratios
Activity ratios, also known as efficiency or turnover ratios, measure how effectively the firm is
using its assets
...
2
...

This ratio tells the relative efficiency with which the bank utilizes its total assets to generate
revenue
...
7

10
...
52

Table 4
...
1: Total Asset Turnover Analysis

Interpretation: In the ratios there is an increasing trend from 2010 to 2011 as usual which
shows the good performance of the bank
...
And which will have positive effect on the next years
...
3 Profitability Analysis
4
...
1 Return on Assets
The ROA is primarily an indicator of managerial efficiency; it indicates how rapidly the
management of the Bank has been converting its assets in to net earnings or we can say that it
indicates the profitability on the assets of the firm (after all expenses and taxes)
...
937281

3
...
327782

Table: 4
...
1: Return on Asset Analysis
Interpretation: It is quite clear that the return on per rupee of asset is declining from the last
three years because of increase in operations and growth (i
...
increase in number of branches),
assets have increased but on the other hand expenses have increased that has decreased the Profit
After Taxation and another reason of this decline is that as those new branches are freshtothat
areas and not well-known in these areas, their relative operating expense-to-income is more,
which has lowered the Profit After Taxation
...
3
...
The higher the profit margin, the more
pricing flexibility a firm may have in its operations or the greater cost control initiated by
management
...


27

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2010

2011

2012

Net Profit or Profit After Taxation

370329

442624

540185

Net Revenues

915504

1338660

1545858

Net Profit Margin in %

40
...
06

34
...
3
...
There is a decreasing trend in
the ratio of 2011, this decreasing trend in the ratio is because of the administrative expenses due
to the expansion in Bank’s operations
...
3
...
It shows
the per share earnings of a shareholder
...

2010

2011

2012

Net Profit or Profit After Taxation

370329000 442624000 540185000

Outstanding shares

341672340 341672340 341672340

Earnings per share

1
...
29

1
...

In 2010 it was 1
...
58
...
4
...


2010
Difference of Current - Previous 1605081

2011

2012

2361745

3265791

Year
Previous Year Deposits

6091748

7696829

10058574

Deposits Growth in %

26
...
68

32
...
4
...


4
...
2 Investments Growth
The investment growth ratio shows how increased or decreased the Bank has been investing,
relative to prior years
...
68

67
...
86
29

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Table 4
...
2: Investments Growth Analysis
Interpretation: There is a decreasing trend in the investments growth but this does not means
that the investments in 2012 is decreased with respect to prior years but it means that investments
growth is decreased with respect to investment growth of prior years
...


4
...
3 Profit Growth Rate
The growth rate of the bank is very important for the investor’s point of view
...
98

2011
72295
370329
19
...
0

4
...
5
...

2010

2011

2012

Cash and Balances with other Banks

1295492

1353785

1604766

Deposits and Other Accounts

7696829

10058574

13324365

13
...
04

Cash to Deposits Ratio in %

16
...
5
...


4
...
2Investment to Total Assets Ratio
Investments are the prime source of earning for the bank
...
For this purpose investment to Total Asset
ratio is used
...
03

61
...
40

Table 4
...
1: Investment to Total Assets Ratio Analysis

Interpretation: The ratio shows a mixed trend over the past three years span
...

31

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...
5
...
So it is of great significance that which portion of the deposits of the bank is
converted into finances
...

Investment to Deposit ratio= Investment x 100
Deposits

2010

2011

2012

Investment

4612539

7722833

9643191

Deposits and Other Accounts

7696829

10058574

13324365

Investment To Deposits Ratio In %

59
...
77

72
...
5
...
On overall basis the Bank is utilizing the deposits well in
investments
...
6 Trend Analysis
These offer insight into the improvement or deterioration in financial conditions and
performance of the firm and express them in terms of percentage by taking a base figure;
either a year is taken or a major account is taken as a base
...


33

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4
...
1 Trend Analysis of Balance Sheet
Assets
cash and balance with treasury banks
balance with and due from financial institutions
due from financial institutions
Investments
islamic financing and related assets
operating fixed assets
deffered tax assets
other assets
Liabilities
bills payable
due to financial institutions
deposits and other accounts
current accounts
saving accounts
term deposits
Others
deposit from financial institutions
other liabilities
net assets
represented by
Islamic banking fund
inappropriate profit
surplus/ deficit on revaluation of assets

2012
148
...
08366

2011
111
...
63328

2010
100
100

209
...
287
191
...
4313
105
...
6987

100
100
100

81
...
5824

64
...
0951

100
100

333
...
7508

100

197
...
7286
196
...
4156
129
...
294
172
...
6756

138
...
8017
168
...
334
26
...
9903
133
...
2787

100
100
100
100
100
100
100
100

100
208
...
6735
#VALUE!
171
...
7466
136
...
2788

100

Interpretation: First of all Cash (and Balances with Treasury Banks), from 2010 to 2012 the cash has
been increased which is a good sign, also may be bad as the amount of cash increments means not using
the cash in investments
...

The Investments are increasing , which is due to the good performance of the bank and increase in
deposits and profitability of the bank
...

There is an increasing trend in Operating Fixed Assets which is due to extension in branches network and
ATMs
...

The Bank’s Total Assets are on increasing trend and this sign shows the perpetual succession of the Bank
...

The Bills Payable includes those amounts which the Bank has recorded for payment at the Bank’s other
branch or station in the shape of Mail Transfer, Demand Draft, Telegraphic Transfer, and written
payables, etc
...

The Deposits are overall in increasing trend, this sign shows the people trust on the Bank, but it is K
...

Other liabilities include return/ profit payable, accrued expenses, and payable to the gratuity fund, etc
...

The Total Liabilities are in increasing trend because the deposits accounts are increasing and it is a good
sign for the Bank because the Total Assets of the Bank are also increasing
...


4
...
2 Trend Analysis of Profit and Loss Account
Income / return / profit earned
Income / return / profit expensed
(Reversal of provision) / provision against non-performing financing
Provision for diminution in value of investments
Net Income / return / profit after provisions
OTHER INCOME
Fee, commission and brokerage income
Dividend income
Income from dealing in foreign currencies
Unrealized gain / (loss) on revaluation of held-for-trading securities
Gain on sale of securities
Other income
Total other income
OTHER EXPENSES
Administrative expenses
Other charges
Total other expenses
Profit before taxation
Inappropriate profit brought forward
Profit available for appropriation

2012
165
...
8416
166
...
28818
0
18
...
2424

2011
145
...
1679
151
...
273
0
-94
...
2669

2010
100
100
100
100
100
100
100

157
...
1472 100
357
...
0138 100

131
...
15
100
220
...
5176 100
164
...
8622 100
246
...
68

100

948969
...
0802
285
...
3748

100
100
100
100

684174
...
5219
184
...
7466

Interpretation: In 2011 and 2012, the Revenue of the Bank is increased as compared to base due to
increase in profit on Islamic modes of financing, Mark-up/Return earned on investments and on other
facilities, Deposits with financial institutions
...

The net income/ profit after provisions in 2011, 2012 is increased, The overall gross profit is in increasing
trend, due to relative increase in revenues as compared to expenses
...

The total income is increasing due to the good performance of the bank in all the departments
...

The Profit-before-Taxation has decreased in 2011 and 2012 due to increase in number of branches and
ATMs which has increased the cost/expenses, increase in Net Profit Loss and relative increase in other
expenses as compared to other income
...
7 Common Size Analysis
In this type of analysis, we divide all items of a financial statement by a base figure; all Balance Sheet
items are divided by Total Assets or Liabilities + Owner’s Equity and all Profit and Loss Account items
are divided by Net Revenues
...
7
...
772051

6
...
873116

balance with and due from financial institutions

3
...
207986

5
...
392538

0

0

Investments

59
...
23115

49
...
78562

24
...
96147

operating fixed assets

1
...
245454

0
...
510487

2
...
306099

100

100

100

0
...
564698

0
...
55555

25
...
9934

saving accounts

36
...
06907

43
...
65649

11
...
380744

Others

4
...
499335

1
...
237894

0
...
991972

other liabilities

2
...
792902

3
...
63431

85
...
55843

14
...
89212

14
...
833806

3
...
890649

inappropriate profit

11
...
02181

9
...
36551

14
...
44156

#VALUE!

0
...
36551

14
...
44156

Liabilities
bills payable
deposits and other accounts

net assets
represented by

surplus/ deficit on revaluation of assets

38

`
Interpretation: In 2010, the Bank has given more Islamic finances due to increase in deposits but is
decreased in the next two years by fractions
...
Cash and balances
with treasury banks is on 3rd number because the Bank has to maintained the minimum requirement
...
There is decrease in Other Assets
...

In 2012, the comparative volume of the Islamic finances has decreased due to the dues from the financial
institutions in 2012
...
There is no significant change in operating fixed
assets
...


39

`

4
...
2 Profit and Loss Account

...
8926
66
...
40732
0
-0
...
51473

2011
100
-31
...
47558
2
...
312575
66
...
4375
65
...
3219
-0
...
549
69
...
069285
1
...
817291
0
...
325464
1
...
806461
75
...
590508
0
...
133752
-0
...
121045
1
...
167646
73
...
276178
0
0
...
501984
6
...
73114

41
...
000985
41
...
90892
97
...
7547

33
...
95876
39
...
91663
111
...
80331
0
0
...
92061
56
...
6195

Interpretation: In the year 2010, the Returns/profit expensed is 34
...
The Other
income has increased due to expansion of operations
...


40

`
In the year 2011, the profit expensed is decreased to 31
...
Other income is
increased with the dividend income, fee commission
...
Due to these increments the profit after taxation of the BOK
decreased to 33
...

In the year 2012, the profit expensed is increased to 33
...
54% of the gross profit
...
The Other expenses were increased due to increase in
Administrative expenses
...
9% of the total revenues, which is
lesser than that of previous year
...
7 SWOT (Strength Weakness Opportunities threats) Analysis
The main purpose of doing SWOT analysis is to highlight all aspects (whether internal or external) of the
Bank
...
It is an
effective technique for analyzing the strengths, weaknesses, opportunities and threats to an organization
...
It helps the readers to understand the performance of the firm, Bank, etc
...
It forecasts the future status and points out the problems likely to come in achieving the
specific objectives
...
7
...
Sometimes it is called as internal relative superiority
...
The BoK is a scheduled Islamic Bank of Pakistan with 35 branches with in 28 cities all over the
country
...
BoK Islamic banking is an interest free banking and for the people of K
...

3
...


4
...
of KP because of which it
is not facing as many difficulties as faced by other banks and being a provincial
government’s Bank, it is more secure and it can easily access the business committees of
the province
...
Have branches in all the provincial capitals
...

6
...

7
...
which have opened new ways for the Bank to generate funds
...
The open communication system and friendly environment developed by the Management and
staff of the Bank makes it very easy for the Management of the Bank to take the right decision at
the right time, and through this communication, Bank can easily implement any strategy, and
resistance to change will never be there
...

9
...
These people, then with
their expertise, serve as assets of the bank who can handle any situation tactfully

42

`
10
...
P) can easily access to the top management
...
The Bank’s employees are mostly from the same province so they understand the environment,
culture, and language by which they can easily meet the needs of the people, etc
...
The Bank has authority to deal in foreign exchange and guarantee for imports and exports
...
Due to provincial Bank, it knows the provincial market very well as compared to other banks
...
The bank offers wide range of products like Ijarah, Murabaha, Diminishing Musharakah ,Wakala,
ijara car, ijara motor cycle, Share Purchase, Import Export under Islamic Banking,Foreign
Currency Transactions
...
Less marketing is required than conventional banking and better cost control is the result
...
Morale and commitment to serve is higher among bankers and staff due to religious value
...
7
...
It is usually because of these weaknesses that the competitors leave the firms behind
in the race
...
A lot of capital is needed to boost it in front of conventional banking, and also huge reserves have
to be maintained, to meet any loss sharing situation in Islamic finance modes of investment
...
Lack of standardization across the Muftis /scholars of the country and among the scholars and
bankers
...
Staff needs further training to serve Islamic financial services and relevant experience as well to do
their job efficiently
...
Lack of transparent system of recruitment and selection
...
Number of branches is very less as compared to other banks for the competition
...
Unattractive branch locations and interior
...
There is very high employee turnover rate because of less growth in salary structure, and having a
poor reward structure and poor carear development for employees
...
No fix tenure for promotion
9
...

10
...

When new government comes, the top management changes which causes change in culture of the
organization and there is no consistency in process of achieving the Bank’s long term goals and
objectives
...

11
...
This leaves many of their products unintroduced and un-communicated to the customers that is they have no proper advertising
...
Lack of sound training system according to organizational goals
...
Do not have proper ATM machines and online banking
...
Low level of technological capabilities
...
Over reliance on government of KP deposits, few deposits form private sectors
...
The Bank lacks active Research and Development department and relies on reports published by
different magazines and newspapers
...
Heavy amount of non-performing loan of the Bank affect is the profitability and goodwill
...


45

`

4
...
3 Opportunities
Opportunities are always present in the external environment whoever grabs it first, will be the market
leader
...
As the situation in Afghanistan is getting better slowly and gradually, multinational companies
and other Rehabilitation Agencies are opening their offices in Afghanistan
...

2
...
Which is an opportunity for the BoK
...
Traditional interest based banking will have to defend through heavy marketing and advertising
in which off course reduce their profitability
...
More opportunities with creation of big sukuk and Islamic deposit
...
Conversion of existing branches to Islamic Banking
...
As the Bank is planning to step in to the Islamic Banking System totally so they should capture
this market before any competitors comes in
...
Strong promotional strategies can attract more and huge deposits for the Bank
...
The Bank can expand their branches to other industrial cities in the country
...
The bank has opportunity to invest in the new mark segments like IT business, software business,
etc
10
...

11
...


46

`

4
...
4 Threats
Threats are also part of a firm’s external environment and pose a constant danger to an organization’s
operations
...

1
...

2
...

3
...

4
...
Banking industry has been invaded by
the foreign banks as well as domestic banks
...

5
...
So, if the Bank starts the E-banking facility, it will maintain its customer base
...


There is a strong need for BOK to go along with the new technology and changes occurring in
the Banking sector
...
Political instability directly affects the overall economy of the country and as banking is the part
of the economy so it is also affected either directly or indirectly
...

8
...

9
...

10
...


47

`

Chapter 5
Conclusions and Recommendations
5
...
The
other thrust of the Muslim countries is likely to be on Zakat and other taxation measures
...
While doing all this, we must not lose sight
of the fact that all these great doctrines of Islam are not rituals; they are in fact the foundationpillars of an egalitarian and development-inducing order
...


5
...
Nothing in this world is permanent everything changes
...
It is a pain taking and time taking activity to make an institution on should basis and
to maintain its performance
...
2
...
Just on phone call, the
customers can always remain in touch
...
by
just one phone call
...
2
...


5
...
3 Introduction of Management by Objectives (MBO)
The concept of MBO is not there; therefore the concept of management by objectives should be
introduced in the bank where the subordinates should be expected to formulate objectives for themselves
...
In addition to
this, it will also help in achieving the goals because they are involved in the process of goal setting
...
2
...
They
are generally confined to their own work and do not give sufficient consideration to other departments
...
It is recommended that there must be
proper job rotation
...
2
...
This will help in identifying the training needs, evaluating the job and in
appraising the performance of the employees
...
2
...
Some authority and responsibility should be delegated to the lower
grade staff as well, so that they should also consider themselves important and responsible
...

5
...
7 Introducing Career Planning
As matter of personnel policy, personnel department of BOK should prepare a career plan
...
In this regard the employees should be given opportunities to show their performance
...
2
...
The congested place affects the
efficiency at work
...
Separate place or section should be created for each task and more space should be
provided in the branches
...


5
...
9 Promotion and Publicity
BOK should advertise itself and introduce its services in details through media to general public
...
They should adopt strong strategies for promotion and publicity of their services
they offer
...
2
...
This is an immediate and short term
step
...

Banks such as Meezan bank, BankIslami, established on interest-free basis, are in infancy stage and
their standing in this field is yet to be established
...
Safeguards to
protect the customers’ interests should be enforced, although any step to guarantee the safety of the
investor’s capital, as in Iran, would define the principles of profit and loss sharing
...


Bibliography
The following books, annual reports, and websites that I studied and took help from, during writing this
report
...
David [For SWOT Analysis]

51

`
Fundamentals of financial management, twelfth Edition, By James C
...

Wachowicz, J
...
bok
...
pk
www
...
com
www
...
net/nitu1200/functions-of-banks

http://www
...
com
...
htm
http://www
...
com
...
htm
http://www
...
com
...
htm
http://www
...
com
...
htm
www
...
com/financial-statement-analysis
https://www
...
com/computerized
...

www
...
com/terms/c/consolidatedfinancialstatement
http://www
...
org
...
reuters
...
stlouisfed
...
htm
52



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