Original Internship REPORT Ztbl Graph Final
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Transcript of Original Internship REPORT Ztbl Graph Final
Chapter # 1
Introduction
[1]
ZTBL History
Zarai Taraqiati Bank Limited (ZTBL) erstwhile Agricultural Development Bank of Pakistan
(ADBP) is the premier financial institution geared towards the development of agriculture sector
through provision of financial services and technical knowhow. The restructuring of former
ADBP is being carried out with the aim to uplift the agriculture and rural sector by raising farm
productivity, streamlining the institutional credit and increasing income generating capacity of
the farming community. ZTBL was incorporated as a Public Limited Company on 14th
December, 2002 through repeal of ADB Ordinance of 1961.
The new corporate structure redefines the bank's status as a public limited company registered
under companies Ordinance'1984 with an independent Board of Directors which aims at
ensuring good governance, autonomy, delivering high quality
ZTBL is a key R.F.I of Pakistan providing affordable, rural and agriculture financial/non-
financial services to the rural Pakistan, comprising 68 % of the total population. The Bank
through a country-wide network of 358 branches is serving around half a million clients annually
and over one million accumulated account holders with the average loan size of around
Rs.89,000 serving 65%, 31% & 4 % of subsistence, economic and large growers respectively.
The total assets of the Bank stand at Rs.84 billion with authorized capital of Rs.25 billion as of
31.12.2005, with a nation-wide working strength comprises 5500 employees. The share of ZTBL
in total national institutional agricultural credit remains around 35%.
ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through repeal
of formal Agricultural Development Bank of Pakistan Ordinance of 1961. Thereby transforming
the bank as a corporate entity to serve as a R. F.I.
[2]
Transformation of ZTBL to R.F.I of the country and road to excellence
Healthy and well-functioning rural finance markets are directly related to achieving the two key
national policy objectives of accelerating rural/agriculture growth and reducing poverty. The
realization of these objectives depends on the simultaneity of developments in rural finance and
non-financial markets to foster the creation of diverse sources of rural finance to build
sustainable financial institutions, and stimulate products and capital flows in the rural sector. For
this, rural finance must be seen as an integral part of equitable development within a framework
of macroeconomic stability. The ongoing corporatize restructuring lays the basis for fundamental
reforms for rural finance market development.
The recurring financial drain, pursuing the old rural finance paradigm and the narrowing fiscal
space have also promoted a shift in Government strategy that now seeks viable intermediaries for
enhancing outreach.
For the majority, access to affordable rural finance services is also important to enable them to
compete in the post-World Trade Organization scenario. Inability to compete because of high
financial costs could reduce income of the majority of farmers and rural clients, particularly the
small and subsistence clients. Lack of access to affordable rural finance services will also
prevent the clients from switching to non-farm activities.
The ZTBL restructuring plan covering the following; (i) governance: establish an environment
that facilitates good governance and accountability; (ii) systems: modernize operations through
use of technology, networking, and communication tools; (iii) business processes: streamline
products and delivery systems so as to reduce transaction costs, simplify operations, and increase
[3]
outreach; (iv) products and services: introduce products and services that are financially
economically viable; (v) human resource development: improve standards and skills of
management and staff and strengthen training capacity; and (vi) IT: establish new hardware and
software platform to support MIS, accounting system including forensic accounting, and risk
management functions.
The reforms shall establish ZTBL as a key R.F.I of the country, aiming to outreach annual rural
clientele to 600,000 by the end of year 2008. By expanding its private sector role, the bank aims
to establish network of high tech rural and agri. financial services through intermediations under
public private participation and whole-sale -retail lending mechanism.
[4]
Board of director
Muhammad Zaka Ashraf President ZTBL
Muhammad Saleem Khan Director
Muhammad Javed Malik Director
Iskandar Muhammad Khan Director
Muhammad Zakria Kasi Director
Ejaz Hussain Rathore Director
Mr.jan Ali khan Junejo Director
Mr.Mansoor Khan Director
[5]
Corporate Vision
Dedicated to serve the needs of the farming community, by delivering financial products and
technical services on a competitive and sustainable basis, in a convenient, efficient and
professional manner, leading to success of the Bank and the farmers
Corporate Mission
To play effective role in the promotion of economic growth, by enhancing the availability of
credit to the agriculture sector, through reliable access to sustainable financing, special lending
programs, technical assistance, and other products & services, and to promote career
development opportunities for increasing professionalism and technical proficiencies of
employees.
Corporate Objectives
Develop and operate as a financially and operationally sustainable R.F.I of the country.
Assist rural community, particularly the small farmers, in raising their productivity and income
levels through timely delivery of credit, advisory and ancillary services.
Build ZTBL's image as a proactive, client friendly, financially & operationally sustainable with
indigenous product deployment.
Establish and provide backward and forward linkages to strengthen agri. value added commodity
[6]
chains.
Engage in public - private and wholesale - retail partnership to deepen outreach and reduce
operating cost.
To function as a rural commercial bank to mobilize rural capital formation and to commercialize
the agri. sector by delivering the true value of credit to the client. Provide a wide range of risk
insurance products to its clients.
Open up it venues of operation to Domestic & International Banking Industry to avail
comparative advantages.
Branches
ZTBL has a large network of branches, which extend to the remotest areas of the country,
currently with an integrated network of 342 branches; ZTBL gives direct access to a
comprehensive range of better banking facilities
[7]
Subsidiary
Kissan support Services Ltd was incorporated as a ZTBL owned subsidiary with an authorized
capital of Rs.100 million fully subscribed by the bank it aim at providing support to ZTBL
management to focus on core banking business and assign non-core activates to its subsidiary.
KSSL Vision
Dedicated to serve the needs of the farming community, by delivering financial products and
technical services on a competitive and sustainable basis, in a convenient, efficient and
professional manner, leading to success of the Bank and the farmers
KSSL Mission
To play effective role in the promotion of economic growth, by enhancing the availability of
credit to the agriculture sector, through reliable access to sustainable financing, special lending
programmers, technical assistance and other products & services and to promote career
development opportunities for increasing professionalism and technical proficiencies of
employees.
[8]
Chapter # 2
Products and Services Offered by ZTBL
[9]
Crop Maximization Project
An agreement was executed between Ministry of Food & Agriculture (CMP-II M1NFA) and
ZTBL on 06.6.2009 for implementation of Crop Maximization Project-II in which both have
agreed to participate in establishment and Operationalization of Revolving Fund.
To implement the decision a new saving scheme under the name and style of “MINFA
Revolving Fund Deposit Account” (MRFDA), “M1NFA Special Saving Deposit Account”
(MSSDA.) and Member Farmers Saving Account (MFSA) have been exclusively designed for
Government's Crop Maximization Project-TI (CMP-II M11'JFA).
Crop Loan Insurance Scheme
ZTBL has launched Crop Loan Insurance scheme (CLIS) as per instructions of Government/
SBP.
Kissan Dost Scheme
Kissan Dost Scheme (KDS) has been launched with immediate effect on concessional rate of
mark-up for financing crop production loans, (seed, fertilizer, pesticides & other etc.). The
financing would be for one season crops i.e. either Rabi or Kharif.
Sada bahar scheme
In order to facilitate the farmers and provide the timely inputs (seed, fertilizer, pesticides,
insecticides, POL and labour charges etc) for crops loan under Sada Bahar Scheme(SBS) are
[10]
provided. Besides, working capital for dairy, poultry and fishery are provided to the interested
borrowers under the scheme.
White Revolution- ZTBL & Nestlé
Zarai Taraqiati Bank Ltd has been financing Milk Processing Units for UHT as well as
pasteurized besides conventional dairy farming in the country since long. Bank has now
embarked upon to bring white revolution in the country through integration of dairy farmers and
milk processors.
In order to increase milk supply, mitigate poverty in the country and improve the living standard
of the rural populace, as a first step, modalities of Strategic Partnership of Bank with M/s. Nestlé
Pakistan Ltd. have been worked out and an agreement to this effect has been executed.
Green Revolution Scheme
In order to achieve the aim of providing farm machinery and implements to encourage the
mechanized farming for the enhancement of agriculture productivity as compared with
traditional tillage system a Memorandum of Understanding between Zarai Taraqiati Bank Ltd.
and Department of Agriculture.
[11]
Red Meat Financing Package for Sheep/ Goat Rearers
Pakistan’s economy is predominantly agrarian. The agriculture sector contributes 21% to the
GDP. Livestock being the largest sub-sector of the agriculture accounts for 50% of value
addition. 35 million rural populations depend directly on this sector. Thus this scheme has been
launched to promote this sector.
Awami Zarai Scheme (AZS)- Farm Credit
Mandatory for all new borrowers and optional for existing borrowers of crop production loan
under Sada Bahar Scheme to avail revolving limit under Awami Zarai Scheme to get inputs
through M/s Kissan Support Services Limited (KSSL) - a subsidiary of ZTBL under kind
system.
Financing Package for Karachi
A financing package for the branches falling under Karachi Zone has been notified through
which financing for Fisheries, Dairy, Poultry Farming, Feed Mill, Horticulture, Vegetable raising
& Nursery for Orchards, Covered Horticulture, Cut Flower, Ornamental Plants, Agri. Machinery,
Irrigation Schemes & Milk Collection CentresS, is advanced to accelerate the ir development.
Rural Development Scheme
In order to provide Credit Assistance for Dairy, Poultry, Sheep & Goat Farming in the rural areas
of the State of Azad Jammu & Kashmir, a Memorandum of Understanding between Zarai
Taraqiati Bank Limited and Azad Kashmir Small Industries Corporation has been signed. The
following are the salient features of the scheme.
[12]
Banking Services
ZTBL also provide complete banking services to its customers it has a large network of 342
branches nationwide. Services provided at branches are..
Current Account
This is a business account by nature under which there is no restriction of cash withdrawals and
deposit in a day or period under current account. it is a non-remunerative account so attracts no
profit on its balance kept with the bank.
Saring Saving Deposit Account
This is a sharing account by nature under which profit is paid on PLS-sharing saving at rates
declared but the bank from time to time.
Zarai Bachat Account
This scheme is offered to individual sole proprietors firms and limited companies minimum
initial deposit for ZBA is Rs.20000].
Business Deposit Account
Bank accept money from general public for opening of business deposit account by allowing
facilities of current account as well as of PLS saving bank account
[13]
Chapter # 3
Internship Experience
[14]
Duties and Responsibilities
As an internee you have to do many things instead of just one or tow responsibilities, as I was
getting under the two person, that why I had to help the manger as well as to the deputy manager
of the head office branch. So my duties and responsibilities changed from time to time. the
internship has no doubt been a great learning experience for me. as part of my rotation I was
assigned to work in the different department of ZTBL
My main duties which I performed are as fellows
Internal audit of vouchers
Preparation of vouchers\
Cash collection
Cheque management
File management
Accounts maintenance
Tax and interest calculation
I joined the ZTBL as an internee, so I had to perform different duties to assist my advisors and
office staff.
I was working under the supervision of tow person at the time first one is the finance manger and
the second person was the deputy manager head office branch
[15]
Head office Accounts Department
Function
This department deals with the preparation or maintenance of head office employee payroll after
deduction medical allowance house rent allowance conveyance allowance utility bills
This department also provides advance and loan on the specified rate of interest to their own
employees clerical or non clerical car loan motorcycle loan and house building loan and advance
payment of salaries etc
The function of this department is to deal with employee fund unit payment unit and inter branch
reconciliation unit too.
Major tasks learnt
I was placed In accounts department I learnt the various function carried out by the department
and got an opportunity to help in the various daily weekly and monthly activates under the
supervision of deputy manager.
Payroll Calculation
In the payroll unit department I had the opportunity to maintain or preparation of gross salaries
after deduction for each clerical and non clerical employees of the head office branch on the
basis of different allowance and the rate allowable to the employees.
[16]
Fund Allotment
The activities I performed and learnt in the employers fund unit were
Maintenance of books of accounts
Finalization of financial statement of these trust funds
Entertaining the best way for investment of surplus fund in approved schemes
Maintenance of employee’s contributory fund general provident fund contributory
provident fund, employee’s provident fund.
Payment Orders
The activates I performed and learnt in the payment unit are
To make payments at head office level
Maintain account books
Response of advices H.O.level
Collection of zakat from branches and deposit in state bank of Pakistan
Collection of federal tax duty
Maintains of vouchers
Deduction of withholding tax from the parties
Data processing
To coordinate with the auditors in respect of head office audit
[17]
Inter Branch Reconciliation
I learnt the transaction make in branch to branch and head office to branch and vice versa. All
Outstanding entries in inter branch transaction account and in suspense account are reconciled
and taken into the proper head of account whit in a maximum period of time 30 days from the
date of recording transaction.
Settlement and adjustment of outstanding entries mean unsettled entries that are incurred due to
the following reasons wrong branch contra code. Advice to not reach to concerns on time wrong
contra date wrong.
Central Accounts Department
Function
Formulation of accounting policies and procedures with a view to present the true financial
position of the bank in financial statement Formulate and maintain accounting policies and
procedures manual In line with applicable accounting standards ensure dissemination and
implementation across the bank
Preparation of financial statements as per requirement of state bank of Pakistan and security and
exchange commission of Pakistan
[18]
Major task learnt
I had the opportunity to work in the central accounts department under the supervision of
assistant manager central accounts department and leart a lot regarding the procedure required to
formulate the policies these procedure are as follows
Providing guidelines for adjustment of suspense account
Devise accounting procedure regarding accounting in the branches as wells at the head
office
To arrange payment to the external auditors
Coordinate with the external auditors
Prepare bank charges schedule and circulation thereof amongst the branches and
submission to SBP on half yearly basis
Coordinate with the credit rating company for providing information for credit rating of
the bank
Maintain the personal file of the employees
Tax
During my internship I were placed in the tax unit of central account department I performed the
following task
Guide branches for settlement of tax issues
Pursue the tax refund case with income tax officer
Preparation of annual tax statement
Coordinate with the tax consultant
[19]
Budgeting and Funds Management Department
Function
To arrange adequate recourses for maintenance of adequate liquidity for efficient disbursement
trimly discharge of liabilities and operation of the bank Preparation of financial plan for bank
credit limit funds and their application.
Major task learnt
I was placed in the budgeting and funds management department and carried out the different
activities regarding budget like budget planning budget analysis and funds reconciliation.
Budget Planning
During my internship In ZTBL I worked under the supervision of assistant manager in the
budget planning unit and learnt the experience to plan for the budget for the budget
Plan for the budget and budgeting techniques’ were assigned the following task
Revise department polices
Procedure for financial management
Develop budget planning process and parameters
Communicate with the administrative and governance group on the budget process and
budget issue
Issuing of budget call memos
[20]
Budget Analysis
In the budget department I learnt the analysis coordinating and assessing data reflecting
performance of department wise financial activities.
And had the opportunity to see the different monitoring trends in expenses for ensuring financial
discipline. And step taken by the remedial administrative financial for excess expenditure and
communication with administrative and governance groups and develop assumption and strategy
for the future budget cycle
Fund Reconciliation
I already had the experience of reconciliation of bank account that I performed in the accounts
department also for the reconciliation funds unit and further I had the opportunity for responding
to the advices issued but the branches relating to unit claimed deposit and preparation of daily
cash position relating to remittance of funds monitoring of reconciliation of bank account of
branches with other commercial bank
[21]
Regulatory reporting department
Function
Compliance to the statutory reporting requirement
Periodic financial reporting to the management
Prompt and accurate analysis to aid decision making
Improve effectiveness in meeting statutory reporting obligation
Major task
I were placed in the regulatory reporting department and learnt different activities carried in the
same department.
Reporting
I was placed in the reporting regulatory reporting department for one week and I learnt the
various activities carried out by the concerns and report them to the top level management like
implementation of internal reporting mechanism. Coordinating redesign system of data
capturing, Its consolidation and subsequent reporting as per regulatory requirement.
[22]
Head office Model Branch
The head office model branch is like a commercial bank. head office model branch is a fully
computerized branch.
I was placed in the depositing department I learnt various function carried out by the
department and got an opportunity to help in daily activity the depositing department handled by
two officers
Major task learnt
I was placed in the depositing department I learnt various function carried out by the
department and got an opportunity to help in daily activity the depositing department handled by
two officers.
Daily Activities
Debit and credit vouchers are posted pertaining to customer deposit
Cheque are issued to customers are daily basis
Accounts are closed and activated by the department
Cheque received and clearing are also deposited by the deposit department
Signature of the customers is also up to date from this department
The maintain and look after the account opening files of the customers
Change in address or customers missing CNIC and changes in also are checked
[23]
Demand Draft
It is an instruments payable on demand for which values has been received issued by the branch
of the drawers bank payable at some other place of the same bank if the tow banks are involved
then the DD are sent to another bank.
Procedure and issuance of DD is like
DD can be issued by filling application from the customer. Then bank apply some charges such
as commission excise duty according to the schedule of charges, if he fills the tax exemption
from tax is not charged then the cashier account the amount and sign the DD application and
enter in the register
Maintains of Cheque Book
Cheque books are maintained on daily basis’ also made the cheque book the procedure of
maintain the cheque book is that if account is newly open the cheque book requisition slip is
filled by the customers there is clearly mention the leaves of the cheque book.
Daily number of customers gives request for new cheque book if the customer has an old cheque
book then he will fill the cheque that is present in the cheque book and give it the cheque book
issuance counter. Time for receiving new one in one week.
[24]
Business Deposit Account (BDA)
Bank accepts money from general public for opening of business deposit account by following
facilities of current account as well as PLS saving bank account
Feature of BDA
Minimum initial deposit is Rs.10000
No limited transaction
Zakat will be deducted
Income tax as source will be deducted rate of return announced by head office
will be applicable on daily product basis
Learning
Positive learning
This internship increase our exposure
We learn how to make public relatio
The team work is very much effective for the efficiency
The way we should dress up in a corporate level is improved
Good image building skill
Willingness to compromise and show flexibility
Maintains time
Marinating stress
[25]
Computer skill during internship significant portion of my work was on computer
and due to this I got full command on MS office
Knowledge about ZTBL business after working in the ZTBL I came know about
the banking businesses and their working style
Knowledge about the organization culture
Knowledge about the organization policies and rules
Knowledge about the reward system of the bank
How to perform the task under pressure and rush areas
Ability to deal with complexity
Self confidence after dealing with the customers and colleagues
Negative learning
Officers does not sometimes take care about Ego of their subordinates
Employees used to give their work load to internee and this become Burdon for internee
No proper place for offering prayer
Without any reference they did not call any internee for internship
Unsatisfactory working condition
On time incentives are not granting
Food provided in the cafeteria is not hygiene
Lengthy credit processing and documentation procedure
[26]
Experience
I joined the ZTBL after completing my two semester of MBA fiancé though six week was a
short time to properly understand all the function of the department but I learned and understand
the most of the them.
Working ZTBL was a great experience and I learned a lot and staff was very cooperative and
they helped me at each and every step general things which I learned during internship were
discipline and rules and regulation of bank.
I learned the business communication that how to communicate with branches and distant
office’s also learned that how to handle work load and I learned how to deal with customers
Internship developed confidence in my personality and I learned how to interact with
organization employees customers how information passes from upward to downward and
downward to upward in organization hierarchy.
[27]
Chapter # 4
Business Analysis
[28]
SWOT Analysis of ZTBL
SWOT is useful tool for providing a framework for analysis of an organization SWOT stands for
strength weakness opportunities and threats it is a common approach to make assessment in
terms of internal and external environment of the organization and to formulate strategies
analyzing its internal strength and weakness external opportunities and threats coming up is the
SWOT analysis for the ZTBL.
Strengths
ZTBL is a key player in delivering high quality and viable financial services to the rural
population and thus playing a significant role in national development
ZTBL has a visible role in turning around agriculture sector in terms of farm
mechanization, self sufficiency in wheat rice cotton sugarcane dairy
Market leader in the agriculture credit with over one million Clint base
Bank has a wide spread network in rural areas with 25 zonal office 342 branches and
1269 MCO to provide agriculture credit to farming community at their doorstep
Bank loans are fully secured mostly against tangible security
Adequate legal provision is available for securing bank credit advancement
ZTBL has a well trained experienced and dedicated manpower mobile credit officer
ZTBL has established IT organization structure compiling with good market practice and
well established knowledge of IT business processes for bank core competence
[29]
Weaknesses
Due to sharp fluctuation 111 prices of agricultural produce at the time of harvest, ZTBL
borrowers' often fetch low price as compared to their investments which adversely affect
the recoveries.
Huge portion of Non-performing loan portfolio.
The Bank has weak deposit base due to inadequate products, less attractive rates of
return, improper infrastructure and location of branches outside commercial areas.
Announcement of relief packages, declaration of certain areas as calamity affected by the
Government including write-offs and delays in reimbursement of claims adversely
affects
the recoveries and the financial health of the Bank.
Increasing restrictions by the regulator on various business activities including capped
mark-up rates.
Political and extraneous influences in operational/administrative matters of the Bank.
Bank's business is more prone to natural calamities, therefore, recovery of Bank's dues
are at risk.
Low margin of profit over the funds borrowed from SBP.
Restriction of disbursement up to 90% of the amount recovered each year resulting in
gradual decrease in disbursement.
No effective tool/authority with the Bank for quick recovery of outstanding dues.
Lack of centralized computer system to prepare management information reports and
financial statements.
[30]
Lack of motivational factor i.e. career advancement, effective appraisals and effective
awards distribution to the staff.
Lack of training, development process and updating of IT system IS hampering the
working capacity of the employees.
The major weakness of some units IS limited no. of employees carrying the unit work
activities.
Decision making process is very slow
In this computerized banking era Central Accounts Department still working manually,
which ultimately leads to low performance.
Lack of proper implementation of strategy to get the exact/desired results. \
Opportunities
In the week of current global food crisis, an opportunity has arisen to grow more food.
Worldwide there is more focus on agriculture and scope of heavy investment in this
Sector.
Bridge huge untapped gap between agriculture credit required by the agriculture sector &
availability of funds from formal resources.
Extension of outreach to 6.6 million farms yet untapped for farm credit facilities.
Developing a proper marketing strategy would help the farmers in getting maximum
price for their products which would ultimately result into efficient repayment of bank's
[31]
loan.
Increased agriculture credit will lead to maximum production of food and attractive rates
to the growers resulting in good returns to ZTBL.
Potential for marketing of new product lines on commercial basis.
Exploit potential for expansion through mobilization of rural & urban savings.
To extend outreach to bring larger land area under cultivation with preferential
consideration for small provinces.
Introduction of specific projects like Corporate Farming or other mechanics of bulk
financing for onward lending to small farmers.
Appraisal system should be implemented to motivate the employees of the unit.
Threats
Government had imposed ban on arrest of small defaulters. Similarly the Bank was
authorized to disposal of mortgaged properties, agriculture lands under LACIP Act or
through Recovery & Finance Ordinance 200 I which has been suspended in case of small
farmers. This imposition has adversely affected the Bank's performance as the lending is
directly linked with recovery of dues.
Agriculture is open to calamities, vagaries, therefore in the event of drought or floods etc.
areas are declared as calamity hit and bank has to defer its recoveries. Such calamities
have badly affected bank's recoveries in Baluchistan and Sindh provinces during last
many years.
Success of different GOs especially Rural Support Programs (RSPs) is providing new
[32]
innovative channels for lending/savings with flexible repayment schedules.
ZTBL's inability to dispose collateral due to statutory limitations.
Accumulation of PLs and increasing trend in SAM (Special Asset Management)
portfolio with slow pace of recovery.
Civil unrest and law and order problems in various part of the country expose the Bank to
operational ri k.
Current recession in the economy due to fuel and food crisis resulting in delayed recovery
of Bank's dues affecting the sustainability of the Bank.
Competitor Banks are increasing their market share with latest Information &
Communication technology solutions.
As ZTBL is a government owned entity, so there is a pressure from Government while
giving loans.
[33]
Risk Management
The primary objective of risk management is to support senior management 111 correctly
identifying, adequately measuring, effectively limiting and properly monitoring and controlling
risk taking throughout the Bank. The Bank ensures systematic and integrated risk management.
This is based on the following structured process risk identification, risk measurement, risk
management and control, risk monitoring and risk reporting.
Credit Risk
Credit risk is the risk that arises from the potential that an obligor is either unwilling to perform
on an obligation or its capability to execute such obligation is impaired resulting in economic
loss to the Bank. Principally, exposures are only approved when reasonably assured for
repayment capacity of counter party. Standardized procedures are adopted and under no
circumstances it exceeds approved credit lines. The Bank credit appraisal structure comprises of
well-defined credit appraisal, approval and review methods for the purpose of prudence in its
lending operations and ensuring credit across the bank. The Bank pays particular concentration
to the management of NPLs. An independent Special Asset Management (SAM) department is
operational at the head office.
[34]
Market Risk
Market risk is the risk of loss arising from movements in market variables including observable
variables such as interest rates, exchange rates and equity indices, and others which may be only
indirectly observable such as volatilities and correlations.
The Bank is not involved in commercial activities like underwriting, trading and discounting
operations. The Bank operates foreign currency transactions through SBP 111 local currency by
paying exchange fluctuation risk fee to the SBP. The Bank is not exposed to interest rate risk as
it has a fixed lending rate portfolio of advances and investments/placements are being placed in
held to maturity securities/investments. Correspondingly the borrowing from SBP is in the
process of restructuring. Liquidity position of the Bank is closely monitored by the Asset
Liabilities Management Committee (ALCO) on periodic basis.
Foreign Exchange Risk
The Bank is not directly exposed to foreign exchange risk as the Bank is not engaged in foreign
operations. Foreign transactions, i f any, are undertaken through S B P.
Equity position Risk
The Bank is not exposed to equity position risk as all the shares are held by Federal and
Provincial Governments. Its securities are not publicly traded.
[35]
PROFIT LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31,2008,2009 & HORIZONTAL ANALYSIS
FINANCIAL YEARS % Incr IOcr 10 Incr 2008 2009 2010 2008 & 09 08 & 09
Mark-up/return/interest earned 6,822,719 5
,996,030
7,022,360 (12.12) 17.12 Mark-up/return/interest expensed 391,738 2 3,418,023 615.47 21.95 Net mark-up/interest income 6,430,981 3 3,604,337 (50.35) 12.87 Provision against non-performing
loans and advances 4,731,992 1 3,090,206 (62.65) 74.86 Write offs under Government relief packages 1
,482,448
567,445 (61.72) 3 3,657,651 12.55
Net mark-up/interest income after provisions 1,698,989 (5 (53, (103.32) (5.53)
NON MARK-UP/INTEREST Fee, commission and brokerage
income
3,157 2,544 2,338 (19.42) (8.08) Dividend income 6,458 6,458 2,153 - (66.66) Other income 828,519 5 5,729,582 565.53 3.91
Total non mark-up/interest income 838,134 5 5,734,073 558.97 3.82 2,537,123 5 5,680,759 115.47 3.92
I
N
MARK-UP/INTEREST
EXPENSES Administrative expenses 2,612,337 2 3,788,935 5.67 37.26 Provision/(reversal) for diminution in
the
" value of investments, net (585) 10,110 (686) (1,828.21 ) (106.79) Provision against other assets 12,936 2,048,971 72,149 15,739.29 (96.48)
Other charges 3,802 306 5,849 (91.95) 1,811.58 Total non mark-up/interest ex pens 2,628,490 4,819,839 3,866,247 83.37 (19.78)
(91,367) 646,803 1,814,512 (807.92) 180.54 U USUAL ITEM - 30,366 PROFIT BEFORE TAXATION (91,367) 646,803 1,784,146 (807.92) 175.84 Taxation - Current 38,434 217,539 631,484 466.01 190.29
- Prior years - 8,285 - Deferred (607) 9,458 111,561 (1,658.15) 1,079.54
37,827 226,997 751,330 500.09 230.99 PROFIT AFTER TAXATION (129,194) 419,806 1,032,816 (424.94) 146.02
Unappropriated profit brought
forward
861,549 702,355 1,008,200 (18.48) 43.55
Profit available for appropriation 732,355 1,122,161 2,041,016 53.23 81.88
Basic earnings per share (Rupees) (0.11 ) 0.350 0.870 (418.18) 148.61
Horizontal Analysis
[36]
ZARAI TARAQIATI
BANK LIMITED
Blance sheet as at December 31, 2008, 2009, 2010
FINANCIAL YEARS % Iner lDer % Iner lDer 2008 2009 2010 2008 & 09
2009
2008 & 09
2009 ASSETS Rupees in '000
Cash and balances with treasury
banks
1,585,421 1,295,464 2,103,682 -18.29 62.39 Balances with other banks 7,813,844 7,781,056 11,943,898 -0.42 53.50 Investments 12,820,668 5,634,499 7,604,233 -56.05 34.96 Advances 52,925,286 60,839,057 61,313,006 14.95 0.78 Operating fixed assets 690,141 817,003 865,293 18.38 5.91 Deferred tax assets 1,829 -100.00 Other assets 6,667,463 9, I 00, 195 9,556,224 36.49 5.01
Total Assets 82,504,652 85,467,274 93,386,336 3.59 9.27 LIABILITIES
Bills payable 235,741 276,333 392,726 17.22 42.12 Borrowings 51,257,213 51,257,213 51,257,213 0.00 Deposits and other accounts 2,644,647 2,882,384 4,323,150 8.99 49.99 Sub-ordinated loans 3,204,323 3,204,323 3,204,323 Deferred tax liability - 7,629 119,191 Other liabilities 12,100,331 14,239,221 19,134,241 17.68 34.38
Total Liabilities 69,442,255 71,867,103 78,430,844 3.49 9.13 Share capital 11,869,612 11,869,612 11,869,612 Reserves 245,387 359,348 565,911 46.44 57.48 Unappropriated profit 702,355 1,008,200 1,834,453 43.55 81.95 Surplus on revaluation of assets 245,043 363,011 685,516 48.14 88.84
Total Liabilites & S.H.E. 82,504,652 85,467,274 93,386,336 3.59 9.27
[37]
ZARAI T ARAQIA TI BANK LIMITED PROFIT AND LOSS ACCOUNT FOR THE YEARS ENDED DECEMBER 31, 2008, 2009 & 2010
VERTICAL ANALYSIS
FINANCIAL YEARS Taking 2008 as Base 2008 2009 2010 2008 2009 2010
Mark-uplreturn/interest earned 6,822,719 5,996,030 7,022,360 100 87.88 102.93 Mark-up/return/interest expensed 391,738 2,802,785 3,418,023 100 715.47 872.53
Net mark-up/interest income 6,430,981 3,193,245 3,604,337 100 49.65 56.05 Provision against non-performing loans and
advances 4,731,992 1,767,234 3,090,206 100 37.35 65.30 Write offs under Government relief packages 1,482,448 567,445
3,249,682 3,657,651
et mark-up/interest income after
provisions 1,698,989 (56,437) (53,314) 100 -3.32 -3.14 NON MARK-UP/INTEREST INCOME
Fee, commission and brokerage income 3,157 2,544 2,338 100 80.58 74.07 Dividend income 6,458 6,458 2,153 100 100.00 33.34 Other income 828,519 5,514,077 5,729,582 100 665.53 691.55
Total non mark-up/interest incom 838,134 5,523,079 5,734,073 100 658.97 684.15
2,537,123 5,466,642 5,680,759 100 215.47 223.91 XON MARK-UP/I TEREST EXPENSES
Administrative expenses 2,612,337 2,760,452 3,788,935 100 105.67 145.04 Provision/(reversal) for diminution in the
value of investments, net (585) 10,110 (686) 100 -1728.21 117.30 Provision against other assets 12,936 2,048,971 72,149 100 15839.29 557.74 Other charges 3,802 306 5,849 100 8.05 153.85
Total non mark-up/interest expens 2,628,490 4,819,839 3,866,247 100 183.37 147.09 (91,367) 646,803 1,814,512 100 -707.92 -1985.96
U USUAL ITEM 30,366 PROFIT BEFORE TAXATION (91,367) 646,803 1,784,146 100 -707.92 -1952.72
Taxation - Current 38,434 217,539 631,484 100 566.01 1643.03 - Prior years 8,285 - Deferred (607) 9,458 111,561 100 -1558.15 -18379.08
37,827 226,997 751,330 100 600.09 1986.23
PROFIT AFTER TAXATION (129,194) 419,806 1,032,816 100 -324.94 -799.43 Unappropriated profit brought forward 861,549 702,355 1,008,200 100 81.52 117.02
Profit available for appropriation 732,355 1,122,161 2,041,016 100 153.23 278.69
(0.11 ) 0.350 0.870
Vertical Analysis
[38]
BALANCE SHEET AS AT DECEMBER 31, 2008, 2009, & 2010
VERTICAL ANALYSIS
FINANCIAL YEARS Taking 2008 as Base 2008 2009 2010 2008 2009 2010
ASSETS Rupees in '000 Cash and balances with treasury
banks
1,585,421 1,295,464 2,103,682 100 81.71 132.69 Balances with other banks 7,813,844 7,781,056 11,943,898 100 99.58 152.86 Investments 12,820,668 5,634,499 7,604,233 100 43.95 59.31 Advances 52,925,286 60,839,057 61,313,006 100 114.95 115.85 Operating fixed assets 690,141 817,003 865,293 100 118.38 125.38 Deferred tax assets 1,829 100 Other assets 6,667,463 9,100,195 9,556,224 100 136.49 143.33
Total Assets 82,504,652 85,467,274 93,386,336 100 103.59 113.19 LIABILITIES
Bills payable 235,741 276,333 392,726 100 117.22 166.59 Borrowings 51,257,213 51,257,213 51,257,213 100 100.00 100.00 Deposits and other accounts 2,644,647 2,882,384 4,323,150 100 108.99 163.47 Sub-ordinated loans 3,204,323 3,204,323 3,204,323 100 100.00 100.00 Deferred tax liability - 7,629 119,191 Other liabilities 12,100,331 14,239,221 19,134,241 100 117.68 158.13
Total Liabilities 69,442,255 71,867,103 78,430,844 100 103.49 112.94 Share capital 11,869,612 11,869,612 11,869,612 100 100.00 100.00 Reserves 245,387 359,348 565,911 100 146.44 230.62 Unappropriated profit 702,355 1,008,200 1,834,453 100 143.55 261.19 Surplus on revaluation of assets 245,043 363,011 685,516 100 148.14 279.75
Total Liabilites & S.H.E. 82,504,652 85,467,274 93,386,336 100 103.59 113.19
ZTBL Ratio Analysis
Financial Ratios of ZTBL
[39]
Ratios 2008 2009 2010
Current Ratio 4.97 ') ')
2.20 .J . .J
Working Capital 46026416 44018633 38805564
Cash ratio 81.06% 47.5% 43.36%
Total Assets turn over 0.08 0.04 0.04
Gross profit margin 94.26% 53.26% 51.33%
Net profit margin -1.89% 7% 14.71%
Return on Assets 0% 0.5% 1%
Return on equity -1% 3% 7%
Debt Ratio 84.42% 84.09% 83.99%
Equity Ratio 5.42 4.81 5.24
Coverage ratio 0.77 1.23 1.52
ZTBL ratio Analysis
[40]
Current Ratio=current assets/current liabilities
year Current assts Current liabilities Current ratio
2008 57621721 11595305 4.97
2009 63125633 19107000 3.3
2010 71203314 32397750 2.20
Interpretation: current ratio of bank is decreased in the year 2010.in 2008 liquidity position of
bank was very good but it very much above the benchmark of 2 so some assets are kept idol due
to more increase in current liabilities in year 2009 and 2010 liquidity ratio is decreasing which is
not good but current ratio is still good and banks liquidity is good
20082009
2010
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
year
Current assts
Current liabilities
Current ratio
yearCurrent asstsCurrent liabilitiesCurrent ratio
Working Capital
[41]
Net working capital=current assts-current liabilities
year Current assts Current liabilities Working capital
2008 57621721 11595305 46026416
2009 63125633 19107000 44018633
2010 71203314 32397750 38805564
20082009
2010
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
year
Current assts
Current liabilities
Working capital
yearCurrent asstsCurrent liabilitiesWorking capital
Working capital is continuously decreasing and it shows poor management of working capital.
Management should take necessary steps this decreasing trend.
Cash Ratio
Cash ratio=cash equivalents/current liabilities
[42]
Year Cash and cash
equivalents
Current liabilities Cash ratio
2008 9399265 11595305 81.06%
2009 9076520 19107000 47.5%
2010 1447580 32397750 43.36%
20082009
2010
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
Year
Cash and cash equivalents
Current liabilities
Cash ratio
YearCash and cash equivalentsCurrent liabilitiesCash ratio
Interpretation: Cash ratio decreased during the financial period of 2008 to 2010 but decrease is
due to the payment for current and fixed liabilities
Total Assets turn over
Total assets turn over=mark up revenue/average total assets
[43]
Year Mark up revenue Total assets Total assts turnover
2008 6434981 83847887 0.08
2009 3193245 85467274 0.04
2010 3604337 93386336 0.04
20082009
2010
0100000002000000030000000400000005000000060000000700000008000000090000000
100000000
Year
Mark up revenue
Total assts turnover
YearMark up revenue Total assts turnover
Assets turn over ratio is decreased in 2009 and is same in 2010 so management should take
action for properly utilization of assets of bank are not efficiently used by the management.
Gross Profit Margin
Gross profit margin=gross profit/net revenue*100
[44]
Year Gross profit Gross revenue G.P margin
2008 6434981 6822719 94.26%
2009 3193245 5996030 53.26%
2010 3604337 7022360 51.33%
20082009
2010
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Year
Gross profit
Gross revenue
G.P margin
YearGross profitGross revenueG.P margin
Gross profit margin of bank is continuously decreasing each year which is not favorable this is
because due to the decrease in markup income bank should take necessary steps to increase sales.
Net profit margin
Net profit margin=net income/net revenue*100
[45]
Year Net income Net revenue Net profit margin
2008 129194 6822719 -1.86%
2009 419806 5996030 7%
2010 1032816 7022360 14.71%
20082009
2010
-1000000
0
1000000
2000000
3000000
4000000
5000000
6000000
7000000
8000000
Year
Net income
Net revenue
Net profit margin
YearNet incomeNet revenue Net profit margin
Net profit of bank was negative in 2008 but now from 2009 it is increasing which is a good sign
bank should decrease its expense its and should increase its sale in order to be more profitable.
Return on Assets
Return on assets=net income/total assets
[46]
Year Net income Total assets Working capital
2008 129294 83847887 0%
2009 419806 85467274 0.5%
2010 1032816 93386336 1%
20082009
2010
0100000002000000030000000400000005000000060000000700000008000000090000000
100000000
Year
Net income
Total assets
Working capital
YearNet incomeTotal assetsWorking capital
In 2008 ROA was 0% which was an alarming figure and it is increased in 2009 and 2010 but
percentage is very low. it shows that assists are not fully utilized and earning are not generated
by assets.
Debt Ratio
Debt ratio=total liabilities/total assets*100
[47]
year Total liabilities Total assets Debt ratio
2008 70785490 83847887 84.42%
2009 71867703 85467274 84.09%
2010 78430844 93386336 83.99%
20082009
2010
0100000002000000030000000400000005000000060000000700000008000000090000000
100000000
year
Total liabilities
Total assets
Debt ratio
yearTotal liabilities Total assetsDebt ratio
Debt to assets ratio is decreased from 84.42% to 83.99% which is good. it shows that most of
bank are obtained from creditors.ZTBL capital structure is week it mostly assets are financed by
creditors so bank long term debt position is week.
Return on Equity
Return on equity=net income/average stockholder equity
[48]
Year Net income Average stockholder
equity
Return on equity
2008 129194 13062397 -1%
2009 419806 14955492 3%
2010 1032816 14955492 7%
2008 2009 2010-2000000
0
2000000
4000000
6000000
8000000
10000000
12000000
14000000
16000000
YearNet income
Average stockholder equity Return on equity
YearNet income Average stockholder equity Return on equity
Return was -1% in 2008 it increased in 2009 and 2010 profitability is very low dew to increasing
costs and reducing profits.Manaegment policies are weak so profitability is not very good its
improving.
Equity Ratio
Equity ratio=total liabilities/total stockholder equity
[49]
year Total liabilities Total stockholder
equity
Equity ratio
2008 70785490 13062397 5.42
2009 71867703 14955492 4.81
2010 78430844 14955492 5.24
20082009
2010
0
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
year
Total liabilities
Total stockholder equity
Equity ratio
yearTotal liabilities Total stockholder equityEquity ratio
Debt to equity ratio is decreased from 5.42 to 5.24 which is not good because equity is decreased
and in result management control over bogusness is also decreasing.
Coverage Ratio
Coverage ratio=EBIT/interest expense
[50]
year EBIT Interest expense Coverage ratio
2008 300371 391739 0.77
2009 3449588 2802785 1.23
2010 5202169 3418023 1.52
20082009
2010
0
1000000
2000000
3000000
4000000
5000000
6000000
year
EBIT
Interest expense
Coverage ratio
yearEBITInterest expenseCoverage ratio
ZTBL is able to pay its interest expenses and its coverage ratio is also increasing but its shows
very less increase. Now bank should take necessary steps to increase its incomes in order to pay
its interest obligation on time
[51]
Chapter # 5
Major Problems
Major problem are Observed
Paper work and the file work need to be computerized
[52]
Some employees are not following the bank timing properly
Date of bank is being updated on weekly batch basis instead of daily basis
No ATM services are provided by the bank
Lack of the computer skill in employees
Branches and incomplete information to head office
Non responsive attitude of ho department lack of proper implementation of strategy to the
get the desired result
Senior employee ask juniors for their personal work during the office hours
Recommendation to Problems
[53]
The tendency of late coming must be controlled which reflect and adversely on the image
of the insinuation and has posed a serious problem
Promotion are made on the base of vacant seats first and then seniority not on the bases
of the performance of the employess.promotion should be on the basis of performance
ZTBL should start online banking and ATM services for their customers
Distribution of work in not on equity basis work has not been allocated properly some
workers to work hard. so I suggest that steps should be taken to allocate the work
properly
The employee should be fair with the internees there must not be gender discrimination
Senior employee should not ask juniors for their personal work senior management
should discourage this practice
Stress management course should be added in the presentation course of employees
All the outstanding entries should be settled within the specified time as bank is currently
paying penalties against outstanding transaction
ZTBL can easily compete its competitor by offering new innovative products
There should be proper training for new employees
Loan procedure should not be cumbersome and should be made easier. so as to made ease
for customer.
Student who are eligible for internship should be selected on the basis of merit,
Communication among the different department as well as among the different branches
of ztbl should be improved I have observed in some case the bank was unable to
understand the message sent by another branch.
Conclusion
[54]
ZTBL is the best option among all the company and reason being that it is well established
organization there are more chance to learn as compare to a newly merged company. While
among the proceeding company has government touch in its management style and some
companies were at slugged phase, management ZTBL rules are specified and implemented on all
the regardless of their designation there is homogeny in all regulation aspects. There are a time to
time motivational rewards increments and acknowledgment
Bibliography
[55]
ZTBL accounts manual 2010 Islamabad
ZTBL annual reports 2008-2009-2010
ZTBL operation manual 2010 Islamabad
ZTBL staff regulation 2010 Islamabad
ZTBL Islamabad Pakistan at a glance 2008-2009-2010
www.ztbl.com.pk
Staff of the ZTBL Islamabad head office
[56]