INTERNSHIP REPORT

ON

THE BANK OF KHYBER

(Main Branch Peshawar)

By
NAJEEB KHAN
Class#39
MPA
(HRM)

INSTITUTE OF MANAGEMENT STUDIES

UNIVERSITY OF PESHAWAR-PAKISTAN
SESSION: 2013-15

INTERNSHIP REPORT
ON

THE BANK OF KHYBER

(Main Branch Peshawar)

By
NAJEEB KHAN
Class#39
MPA
(HRM)
An internship report submitted to the IMS, University of Peshawar in practical and
fulfillment of the requirement for the degree of

MASTER IN PUBLIC ADMINISTRATION (HRM)

Approved by:
Advisor sign

_____________________________________

Advisor Name: Sir Zia Obaid

Department:

IMS university of Peshawar

INSTITUTE OF MANAGEMENT STUDIES

UNIVERSITY OF PESHAWAR-PAKISTAN
SESSION: 2013-15

DEDICATION
Every challenging work needs self efforts as well as guidance
Of elders especially those who were very close to our heart.
My humble effort I dedicated to my Sweet and Loving

Father & Mother

Whose affection, love, encouragement and prays of day
and night make me able to get such success and honor.

Along with all hard working and respected

Teachers.

Najeeb Khan

ACKNOWLEDGEMENT

Every praise is to Almighty Allah, the kind and merciful and the Holy Prophet Hazrat
Muhammad Peace Be upon Him who is forever a Lantern of guidance and knowledge
for humanity as a whole. I feel pride in expressing my deepest sense of gratitude to
my honorable advisor Dr. Zia Obaid, who is the source of initiation of this internship.
Her consistent advice, encouraging behavior, valuable suggestion, personal interest
and dynamic supervision enabled me to complete the present report. This internship
report was hard to be accomplished without her cooperation.
I offer my sincere thanks to Mushtaq Ahmad, VP / Chief Manager of The Bank of
Khyber, Main Branch Peshawar and all other members of the staff.
Last of all no acknowledgement could never express my obligation to my loving
Parents, Brothers and my Friends because my success is really the result of their
devoted prayers.
I can never compensate their unlimited love and kindness.

NAJEEB KHAN
(MPA HRM)

PREFACE

Banking has always been the main field of interest for most of the students of
Business Administration. Todays banking holds many challenges as well as
opportunities for young enthusiastic executives. The corporate banking, the changes of
public behavior towards saving schemes and extensive use of paper money have made
banks most important institutions.
The Bank of Khyber (BOK) established in 1991, its objectives included promotion of
saving and investment in the KPK. In 1994 it acquired the status of a scheduled bank
that allowed at opening branches outside KPK become a member of the clearing
house, and engaged in trade finance activities directly.
The Bank of Khyber (Main Branch) is one of the outstanding and profitable branch of
the Bank of Khyber. This branch has excellent working condition, corporate and
professional environment. The purpose on undertaking this internship is basically to
aid the students in their MPA program, and to prepare / furnish them with some
experience of the practical work. The second purpose is to know complete picture and
general description of the Bank of Khyber.
I felt that the knowledge that I have gained through this experience is an excellent way
of teaching the students to think analytically for solution of the problem and day-today life. The bank itself is a huge organization comprising of numerous departments.
It is impossible to study each one in detail and include everything in the report.
I have produced the knowledge about the working of the Bank of Khyber, which
enable me to put down my observation in the shape of internship report. Which will
hopefully serve as guideline for all those who are interested in a job of banking sector.

I would like to express my gratitude to the bank management who guided me about
the banking structure and procedure of the Bank of Khyber. My special thanks to Dr.
Arsalan Khan, for his guidance and co-operation that provided me all the requisite
information and data needed for this report.
In the last but not least my high gratitude is to my Advisor Dr. Zia Obaid under his
supervision and full support in the completion of this report.

EXECUTIVE SUMMARY
The Bank of Khyber was established in 1991 after a resolution was passed in the
provincial assembly in the year 1994 it became a scheduled bank which allowed it to
open branches outside KPK, engage in various Trade finance activities and become a
member of the clearing house. The Head Office is situated at 24- The Mall, Peshawar
Cantt. KPK-Pakistan. This bank has been playing an important role for the
development of different sectors in Pakistan and especially in KPK. It has a network
of 104 branches, which are located at different main cities of our country.
A distinguished factor of BOK is that not only is it a scheduled commercial bank but it
also plays the role of a development agent, through systematic process of long term
lending, especially to small and medium size business as well as now making grounds
to enhance Islamic Banking.
The main purpose of this study is to so I got the opportunity in BOK, Main Branch
Peshawar which is one of the profitable branch, because its location at one of the
central business place of Peshawar. It has the following departments, which are
operated by various officers of the bank i.e. Cash dept, Remittances dept, Advances
dept, Deposit dept.

The report is divided into six chapters:

Chapter One includes some basic information regarding the process of preparation of
the report. It includes some basic information about the topic under discussion. This
chapter has further divided into five headings. Background of study, Purpose of study,
Scope of study, Methodology of study.
Chapter Two describes the existing situation of the organization under review. The
information of this section has been collected through relevant documents of the bank
and by interviewing people. This chapter has further divided into six headings. Brief
history, Nature of the organization, Business volume, Product lines, Competitors,
Brief introduction of the branch.

Chapter Three includes the overall structure of the organization, number of

employees, its main branches location, and a brief view of departments and their
functions, Organizational hierarchy chart of H/O, Organizational hierarchy chart of
Branch, Number of employees, Main offices, Introduction of the department, Function
of the department
Chapter Four consists of Ratio analysis; Net Working Capital Ratio, Current Ratio,
Cash Ratio, Investment Deposit Ratio, Advance Deposit Ratio, Dept to Asset Ratio,
Dept to Equity Ratio, Gross Profit Margin Ratio, Net Profit Margin Ratio, Return on
Assets, Return on Equity, Asset Turnover Ratio
Chapter Five consists of SWOT analysis; (Strengths, Weakness, and Opportunities,
Threats)
Chapter Six is the most important part of the report. This section of the report
consists of; Suggestions, Recommendations according to the SWOT analysis and
Ratio analysis

LIST OF ACRONYMS
A.V.P

Assistant Vice President

ATM

Automatic Teller Machine

BOK

Bank of Khyber

BOD

Board of Directors

CAD

Credit Administration Department

CDA

Current Deposit Account

CMD

Credit Management Division

CF

Consumer Finance

DSL

Demand Salary Lone

DCF

Demand Consumer Finance

E.V.P

Executive Vice President

Govt

Government

HO

Head Office

HRD

Human Recourse Development

HRM

Human Recourse Management

IBD

Islamic Banking Division

KPK

Khyber Pakhtunkhwa

KIBOR

Karachi Inter Rank Offer Rate

LC

Letter of Credit

LG

Letter of Grantee

MD

Managing Director

MIS

Management Information System

NBP

National Bank of Pakistan

NIFT

National Institute of Facilitation Technology

OG-1

Officer Grade One

OG-2

Officer Grade Two

OG-3

Officer Grade Three

P&E

Personal and Training

PLS

Profit & Lose Saving Account

RF

Running Finance

SMEDA

Small & Medium Enterprise Development Authority

S.V.P

Senior Vice President

T&D

Training and Development

V.P

Vice President

S.No.

LIST OF CONTENTS
SCHEME OF REPORT

CHAPTER 1

INTRODUCTION TO THE REPORT

1.1

Background of study

1.2

Purpose of study

1.3

Scope of study

1.4

Methodology of study

CHAPTER 2

ORGANIZATIONAL REVIEW

2.1

Brief history

2.2

Nature of the organization

2.3

Business volume

2.4

Product lines

2.5

Competitors

2.6

Brief introduction of the branch

CHAPTER 3

ORGANIZATIONAL STRUCTURE

3.1

Organizational hierarchy chart of H/O

3.2

Organizational hierarchy chart of Branch

3.3

Number of employees

3.4

Main offices

3.5

Introduction of the department

3.6

Function of the department

CHAPTER 4

CRITICAL ANALYSIS

4.1

Net Working Capital Ratio

4.2

Current Ratio

4.3

Cash Ratio

4.4

Investment Deposit Ratio

4.5

Advance Deposit Ratio

4.6

Debt to Asset Ratio

4.7

Gross Profit Margin Ratio

4.8

Net Profit Margin Ratio

4.9

Return on Assets

4.10

Return on Equity

4.11

Asset Turnover Ratio

CHAPTER 5

SWOT ANALYSIS

5.1

Strengths

5.2

Weakness

5.3

Opportunities

5.4

Threats

CHAPTER 6

CONCLUSION & RECOMMENDATIONS

Table No.

2.8.1

LIST OF TABLES
Six Years Financials Highlights (Rs. In Millions)
Livestock Loan Scheme

2.9.4.1
Dairy Storage Loan Scheme
2.9.5.1
Working Capital Ratio = Current Assets Current Liability
4.1.1
Current Ratio = Current Assets / Current Liabilities
4.2.1
Cash Ratio = Cash / Current Liabilities * 100
4.3.1

Investment Deposit Ratio = Investment / Deposit * 100

4.4.1
4.5.1

Advance Deposit Ratio = Advance / Deposit * 100

4.6.1

Debt to Asset Ratio= Total Debt/ Total Assets*100

4.7.1

Gross Profit Margin Ratio = Gross Profit / Total Revenue * 100

4.8.1

Net Profit Margin Ratio = Profit after Tax / Total Revenue * 100

4.9.1

Return on Assets = Profit after Tax / Total Assets * 100

4.10.1

Return on Equity = Profit after Tax / Total Equity * 100

4.11.1

Asset Turnover Ratio = Total Revenue / Total Asset * 100

Bank of Khyber`

SCHEME OF REPORT
CHAPTER 1: INTRODUCTION TO THE REPORT
Chapter one includes some basic information regarding the process of preparation of the
report. It includes some basic information about the topic under discussion. This chapter has
further divided into five headings. These headings are:
1.

Background of study

2.

Purpose of study

3.

Scope of study

4.

Methodology of study

CHAPTER 2: ORGANIZATIONAL REVIEW

This chapter describes the existing situation of the organization under review. The
information of this section has been collected through relevant documents of the bank and by
interviewing people. This chapter has further divided into six headings. These headings are:
1.

Brief history

2.

Nature of the organization

3.

Business volume

4.

Product lines

5.

Competitors

6.

Brief introduction of the branch

CHAPTER 3: ORGANIZATIONAL STRUCTURE

Bank of Khyber`

This chapter includes the over all structure of the organization, number of employees, its
main branches location, and a brief view of departments and their functions.
1.

Organizational hierarchy chart of H/O

2.

Organizational hierarchy chart of Branch

3.

Number of employees

4.

Main offices

5.

Introduction of the department

6.

Function of the department

CHAPTER 4: CRITICAL ANALYSIS

This chapter of report consists of Ratio analysis
Those are:
1.

Net Working Capital Ratio

2.

Current Ratio

3.

Cash Ratio

4.

Investment Deposit Ratio

5.

Advance Deposit Ratio

6.

Debt to Asset Ratio

7.

Gross Profit Margin Ratio

8.

Net Profit Margin Ratio

9.

Return on Assets

10.

Return on Equity

Bank of Khyber`
11.

Asset Turnover Ratio

CHAPTER 5: SWOT ANALYSIS

This chapter of report consists of SWOT analysis
1.

Strengths

2.

Weakness

3.

Opportunities

4.

Threats

CHAPTER 6: CONCLUSION & RECOMMENDATIONS

This is the most important part of the report. This section of the report consists of:
Suggestions, Recommendations according to the SWOT analysis and Ratio analysis

CHAPTER-1
INTRODUCTION
1.1

BACKGROUND OF THE STUDY

It is the common practice at the universities that during their MPA (Fin) program
students are given exposure to different practical fields related to their studies. The
undertaking concern of this report is to an internship at the Bank of Khyber 24- The Mall,
Main Corporate Branch Peshawar. The study is about the general operation and management
of Bank of Khyber 24- The Mall, Main Corporate Branch Peshawar, and focuses on the
online banking and ATM (Automated Teller Machine), which was conducted through
interviews in the branch.

Bank of Khyber`

The study is carried out to familiarize the students with the working of banks and
banking environment and to produce a comprehensive report on it.

1.2

PURPOSE OF THE STUDY

The primary purpose of the study is to understand the nature of a specific business

organization and give the possible remedial action as this study as to find all facts upon which
analysis of the organization is to be based.
Second basic purpose is to work in an organization and to compare the theory and
application of the management knowledge in real life situation.
Another purpose is to improve personal skill i.e. human relation and communication
skills that are to interview and work with them similarly. The reports purpose is also to
develop analytical skills by analyzing the working of the organization through financial
analysis.

Specific Purpose

A partial fulfillment as a requirement for the completion of BBA (HONS) degree in

banking and finance sector.

To objectively observe the operations of Bank of Khyber in general and the

operations.

To make recommendations or implementations plans for the improvements of the

operations of BOK in the light of our professional studies.

1.3

NATURE OF STUDY
The study is critical in nature. It was conducted to investigate critically in to the

operation of Bank of Khyber and it also explain that how BOK provides facilities of online
banking to its customers. The annual reports or the consolidation data of the BOK has not
been focused in specific because it does not reflect on the operational performance of
branches. However, they have been referred to as when and where required.

Bank of Khyber`
1.4

SCOPE OF STUDY
The internship of eight weeks is not long time for understanding the overall

organization functioning. However, main emphasis of this study is on the working of the
Bank of Khyber 24- The Mall, Main Corporate Branch Peshawar .More specifically, the
operation department and credit department of the above mentioned bank branches is the
major emphasis study. The scope of this particular study is confined to the Bank of Khyber
24- The Mall, Main Corporate Branch Peshawar. . As the functions of financial institution are
much wider in scope so it is very difficult to clearly understand all these function in a limited
time.

1.5

METHODOLOGY OF STUDY
The data/ information for the internship report was gathered through different sources

i.e. primary as well as secondary, Majority of the data presented in this report is collected
through primary data sources. Primary data is collected when there is insufficient secondary
data available.

1.5.1

PRIMARY DATA:-

Primary Data refers to the data obtained for the first time and used specifically for the
particular problem or issue under study. Primary data is collected directly from people and
organization via
1. Questionnaires
2. Personal observation
3. Discussion with staff
4. Informal interviews with branch manager or staff member
e.g:

Bank of Khyber`

Questions from Staff members

Name: Ahsan Raza Designation: OG1 Export Desk in Bank of Khyber Main
Branch.
Q. Name of Book Used for Rule of law of Banking Sector?
Answer: Book Name UCP 600 (Rules Book) Book for law for Bank, Exporters and
Importers.
Q. Why Export / Import must be necessary?
Answer: Because the things which are varied in the state then the country export
these things & Import more things which are necessary to state / country.
Q. why bank involve in this?
Answer: Because the banks are guarantor.

Name: Noman Designation: OGII Import Desk in Bank of Khyber Main Branch.

Discussion about LC (Letter of Credit)

Letter of Credit or guarantee letter issue from bank in favor of beneficiary (exporter) on the
behalf of applicant (importer).
INVOICES:> Indend / Agent
> Performa / Quotation Invoice
> Commercial Invoice

Bank of Khyber`

Name: Ahsan Raza Designation: OGI Export Desk in Bank of Khyber Main Branch.
SITRS: Software used for Date Feeding of advance payment voucher of export. In SITRS
date saved in Monthly, Yearly basis.
SITRS Table:1) Data entry 2) Print Reports
5) Merge/ Export Data

3) Switch Period

6)Setup

4) Period Maintenance

7)View verification report

8) Exit.

E-Reporting:Microsoft excel software which is also used for data of exporters advance payment voucher.

Codes
Exporters export their merchandise like Matches, Culled Chicken, Vegetable Ghee, Woolen
Carpets, and Machinery etc. These Merchandise have own codes these codes shown in
advance payment voucher with full detail of Amount, Quantity, Shipment Date and advance
payment date.

e.g:

Country ID/Code

Country Name

1880

Sudan

Bank of Khyber`

1920

Switzerland

0010

Afghanistan

Purpose ID/Code

Details

84071000

Aircraft Engines

84351000

Machinery

93012000

Rocket Launcher/ Grenades

Name: Muhammad Aneel Designation: JO in Bank of Khyber Main Branch.

Dispatch
Dispatch is a word which is used for sending the documents from one organization to
another organization / Department. There are two type of Dispatch
1) Inward:- Use for those documents or files which come from the outside
organizations / department for the bank of Khyber.
2) Outward:- use for those documents which the bank of Khyber sent to other
organizations.
1.5.2

SECONDARY DATA

Secondary data refers to information gathered from sources that has already existed.
There are several sources of secondary data including
1. Annual reports of The Bank of Khyber 2011, 2012, 2013.
2. The Bank of Khyber official website
3. Manuals

Bank of Khyber`

4. Broachers & Relevant books

5. Asfar H. Siddiqi, (1993) practice and law of Banking in Pakistan. Pp-50
6. Mr. Ahsan Raza, Export Desk, The Bank of Khyber
7. Mr. Noman, Import Desk, BOK Main Branch
8. Mr. Anil JO , BOK Main Branch Peshawar.
9. Nauman Amin, Session (2007), IMS Peshawar, pp 49-51
10. The Bank of Khyber Employees Service Rules (1998) The Bank of Khyber, Annual
Report, 2013 pp-69
11. The Bank of Khyber, Recruitment Policy 2008, pp-92
12. The Bank of Khyber, Information Memorandum 2008, pp-98
13. The Bank of Khyber Employees Service Rules (1998), pp 6-8
14. The Bank of Khyber Employees Service Rules (1998), pp 9-12
15. The Bank of Khyber Employees Service Rules (1998), pp 13-16
16. The Bank of Khyber Employees Service Rules (1998), pp 20-22
17. The Bank of Khyber Information Memorandum 1998, p-5
18. The Bank of Khyber Annual Report, 2013, p-21

Bank of Khyber`

10

CHAPTER-2
HISTORICAL BACKGROUND OF THE BANK OF KHYBER
2.1 DEFINITION OF BANK
A financial institution, which deals with money and credit, broadly speaking, Banker
draws surplus money from the people who are no using it at the time and lend to those who
are in a position to use it for productive purposes
Banks can play an important role in the economic development of a country. If the banking
system of a country is unorganized and inefficient, it creates maladjustment and impediments
in the process of development.

2.2 HISTORICAL BACKGROUND OF THE BANK OF KHYBER

The Bank of Khyber was established through the Bank of Khyber Act passed by the
Provincial Assembly in June 1991. It is the only Bank in Pakistan having its head office at
Peshawar. It has different branches in all over Pakistan. It also deals in Islamic mode of
financing.
The BOK was established to:

Meet demand of the business community to have a bank with its head office in the
province.

Have accessibility of local businessmen to senior management of the bank for the
prompt credit decision making there by accelerating investment in KPK.

Have maximum utilization of funds generated in the Province for the economic
development of KPK.

2.3 SCHEDULED BANK STATUS

Up to 1994 the Bank was operating at provincial level as unscheduled bank under the
auspices of the provincial government. But in 1994 it got the status of the scheduled bank and

Bank of Khyber`

11

came under the regulatory framework of SBP, currently operating at the national level. Due to
this status the BOK is also engaged in foreign trade business directly.
2.3.1 Benefits of Scheduled Bank
Following are the benefits of scheduled bank status achieved by the BOK.

Membership of the State Bank of Pakistan

Compliance with the reserve requirements of State Bank of Pakistan

Ability to engage in foreign trade business directly

Ability to open branches outside the KPK

2.4 VISION STATEMENT OF BOK

A vision statement is a long-term goal that a company wants to achieve. A vision
statement should answer the basic question, What do we want to become? The vision
statement of bank is as follows:
To become a leading bank providing efficient and dynamic services in both Islamic and
conventional banking through expanded nationwide network.

2.5 MISSION STATEMENT OF BOK

The mission statement is declaration of organizations reason for being. It is an
enduring statement of purpose that distinguishes one organization from other similar
enterprises. It answers the pivotal question, What is our business? The mission statement of
bank is as follows:
To increase shareholders value and provide excellent service and innovative products to
customers through effective corporate governance, friendly work environment, and
contributing towards an equitable socioeconomic growth.

Bank of Khyber`

12

2.6 CORE VALUES OF BOK

The core values of BOK are as follows

Highest quality of service

Professionalism

Integrity

Team work

Innovation and utilization of latest technology

Risk Mitigation

Corporate Social Responsibility

2.7 OBJECTIVES OF BOK

Under the Bank of Khyber act of 1991 of provincial assembly of KPK the banks objectives
are as follows:
i.

To mobilize private savings and public funds for diverting the same into productive
channels and ensure their availability.

ii.

To promote industrial agricultural and socio-economic processes through the active

participation of private and public sector in the province.

iii.

Help under-developed areas and create employment opportunities, especially in the

areas of KPK. Further, to guide and assist the people of KPK serving overseas to

Bank of Khyber`

13

effectively and profitably invest their foreign savings in the province as well as in
others of Pakistan.
iv.

Create a diversified and sound portfolio for idle funds and their investment in the
existing and new ventures especially in the pioneering of high-tech agro-based
oriented and engineering projects to ensure maximum returns.

v.

Participate and seek the share of the province in the capital market of Pakistan by
way of subscription through locally pooled resources in the leading stock exchanges
of the country and eventually paving the way for establishing a stock market in the
KPK.

2.8 BUSINESS VOLUME

The initial paid up capital of the Bank was Rs. 153 million, which has now risen to
billions.

Six Years Financials Highlights (Rs. In Millions)

Table 2.8.1

2013

2012

2011

2010

2009

2008

Deposits

77,218

60,043

45,548

36,981

26,286

24,732

Advances

35,450

26,722

22,288

18,238

11,836

12,644

Investment

53,363

45,672

36,685

19,853

17,926

8,985

108,170

82,178

68,424

50,794

38,811

31,339

s
Total

Bank of Khyber`

14

Assets
Capital and 11,913

10,776

9,700

5,604

5,041

5,678

1,669

1,572

1,285

713

(799)

206

1,154

1,078

872

563

(637)

137

10%

9%

10%

-12%

2.4%

Reserves
Profit/loss
Before Tax
Profit/loss
After Tax
Return

on 10%

Equity
Source: BOK Annual Report 2013.

2.9 PRODUCTS AND SERVICES

ADVANCES

Fund Based

Non-Fund Based

Bank of Khyber`

2.9.1

Consumer Finance

Agriculture Finance

Micro Finance

15

FUND BASED

Running Finance
This is a working capital finance facility available for one year and renewed subject to
satisfactory utilization thereof.
Cash Finance
Cash finance is extended to manufacturing concerns for meeting their seasonal
requirements (against pledge).
Export Refinance
This facility is encouraged to boost exports of the country. Funds are made available
from SBP credit facilities.
Demand Finance
It is a term loan disbursed in lump sum or tranches and repayable in the form of
monthly or quarterly installments.
Loan against Salaries
BOK provides loan against salary to employees of Government / Semi- Government
organizations for personal domestic consumptions. The employee must be confirmed having
minimum of three years of service. However, the remaining service period of the employees
must not be less than terms of the loan. To avail this facility, the employee must be account
holder of the bank. Loan limit is up-to 15 Take Home Salaries but not exceeding Rs. 1.00

Bank of Khyber`

16

million. This facility is available for a maximum period of 4 years but can be allowed for a
shorter period.
2.9.2

NON-FUND BASED

Documentary Letter of Credit

Import and Export Letter of Credit Facility enhances trade with our countries.
Letter of Guarantee
Letter of Guarantees is issued on behalf of customers to meet their commitments.
2.9.3

CONSUMER FINANCE
The Bank of Khyber is offering Consumer Finance to the general Public and

Government Employees for meeting their personal and domestic financial requirements.
BOK offers 3 loan facilities i.e. Loans Against Salaries, Car Finance and Suhana Ghar under
consumer finance.
Loan against Salaries
The Bank provides loan against salary to employees of federal / provincial
governments, autonomous & semi-autonomous bodies and corporations listed on stock
exchange for personal and domestic consumptions.
2.9.4

AGRICULTURE CREIDIT SCHEMES

1. Sada Bahar Zarai Loan Scheme

This is a Revolving Finance Facility for input requirements of production nature such as
seeds, fertilizers, feed etc. for small farmers. Maximum Loan Limit is Rs. 5 Million and the
rate of return is 3-6 months KIBOR + 400 BPS. Loan tenor is 3 years. Mark up is recoverable
after 6 months whereas principal is adjusted annually with automatic renewal for next day.
2. Credit Guarantee Scheme
This is a Revolving Finance Facility for working capital requirements of production
nature such as seeds, fertilizers, feed service charges etc. Maximum Loan Limit is Rs.

Bank of Khyber`

17

500,000/- and the rate of return is 3 months KIBOR + 300 BPS with no upper cap. Loan
tenor is 3 years. Mark up is recoverable after 6 months whereas principal is adjusted annually
with automatic renewal for next day.
3. Agriculture Refinance Loan Scheme (for war affected areas of Malakand)
This is a one year Demand Finance Facility for working capital requirements of
production nature such as seeds, fertilizers, feeds, service charges etc. There is no maximum
loan limit and rate of markup is 8% p.a. however, market rate will be changed in case of
default. Loan is repayable in lump sum in 9 months for crop loans and yearly in case of
orchards and off farm activities.

4. Livestock Loan Scheme

Table 2.9.4.1

i. Nature of Facility.

Demand Finance Facility

ii. Maximum Limit.

Rs. 2.5 Million.

iii. Rate of Return.

3-6 months KIBOR + 400 BPS.

iv. Tenor.

5 Years including 3 months grace period.

For Milk Production it is recoverable with in maximum

v. Repayment.

period of 5 years in monthly installments. It is recoverable

in quarterly/ half yearly installments with grace period of 3
months for Meat Production.

vi. Purpose.

Purchase of animal heads for milking and fattening, Dairy

Farm, machinery / equipment.

Bank of Khyber`

18

5. Dairy Storage Loan Scheme

TABLE 2.9.5.1

i. Nature of Facility.

Demand Finance Facility.

ii. Maximum Limit.

Rs. 2.4 Million.

iii. Rate of Return.

3-6 months KIBOR + 400 BPS.

iv. Repayment.

v. Down Payment.

Recoverable with in maximum period of 5 years in monthly, quarterly,

half yearly or yearly installments.

At least 10% of the price of the vehicle. Machine/cost of civil work.

For construction/acquisition of facilities required for storage of dairy

vi. Purpose.

products and by-products like Milk storage chilling tanks, refrigeration

plants and milk carrying containers, refrigerated meat.

2.9.5. MICRO FINANCE

Micro Finance has proved to be one of the most effective tools for facilitating socioeconomic development through increased access to financial services. The economic
landscape of KPK is characterized by a number of flourishing small-scale economic activities
scattered throughout the cities, towns and rural areas. However, these smaller enterprise
entities have never been a focused market for formal financial institutions operating in this
region.
Contributing significantly to income and employment generation, The (BOK)
considers the promotion of micro-enterprises as one of the alternative economic development
strategies for the province. For this purpose the BOK launched its micro business
development in 1995 and rural financial services in 1997. This was the first formal and

Bank of Khyber`

19

structured initiative by a commercial bank to broaden the base for micro enterprise market.
The initiative was further strengthened and encouraged by various multilateral institutions
such as Asian Development Bank (ADB), International Fund for Agricultural Development
(IFAD), KFW (German Development Bank) and Swiss Agency for Development Cooperation
through

credit

lines

and

technical

assistance.

BOK aims to be the largest Micro Finance provider in KPK on sustainable basis. Our
main Objective is providing access to financial services to the low income and disadvantaged
segment of the society to raise their standard of living with specific emphasis upon women.
The pursuit of this objective will significantly contribute to the improvement of employment
opportunities, income generating activities and subsequently poverty alleviation.
Pursuing its objective the BOK provides micro enterprise and group loans for existing
and new enterprises engaged in value addition process, requiring technology improvement or
working capital. BOK has made a modest beginning but a great potential for growth is still to
be explored over the years. It has disbursed total loans of Rs. 1.3 billion to more than 27,000
borrowers with majority of the loans below Rs. 50,000 per client.

2.10 DEPOSITS
2.10.1 Current Deposit Account
The BOK current deposit account allows the facility of unlimited withdrawals up to the
extent of the balance in account. There will be no tax deducted on the funds that some on
chooses to keep in these accounts. Balance in current accounts are payable on demand. Any
amounts can be with drawn without prior notice. Similarly there is no restriction on number
of transaction during the day.

All individuals including foreigners , firms and corporate bodies are entitled to open
and maintain current accounts

No profit is paid on current accounts

Overdrafts are allowed on this account

2.10.2 Saving Deposits Account

The BOK rupee saving deposit account allows the facility of multiple withdrawals up
to the credit balance, while accruing profits on deposits

Bank of Khyber`

20

Types of saving deposit account

Profit and loss sharing (PLS savings) account

Special deposit account (SDA)

PLS seven days notice deposits

PLS 30 days notice deposits

Profit is paid bi-annually on minimum monthly balance (Jan June & July-Dec)
which is announced in July and January respectively.

Generally, withdrawals from this account are allowed on demand that is without any
prior notice of with drawl.

Overdraft is not allowed on this account

2.10.3 BBA (Basic Banking Account)

The minimum initial deposit will be Rs. 1000/-

Will be non-remunerative account.

No limit on minimum balance, incase, where balance in BBA remains nil for
a continuous six months period, such accounts will be closed.

No fee for maintaining BBA.

Maximum two deposit transaction and two chequing withdraws are allowed,
free for charge, through cash/clearing per month

Unlimited, free of charge, ATM withdrawals from the banks own ATMs,
incase of withdrawal from BBA through the ATM machines of other banks.
The respective other banks may recover charges for such transactions.

Statements of account will be issued once in a year.

2.10.4 Be-Baha Mahana Amadani (BBMA)

Salient Features of the Be-Baha Mahana Amadani (BBMA)

Tenor of the scheme will be 3 months, 6 months and 1 year.

Minimum deposit requirement is Rs. 1, 00,000/-.

Expected rate of profit will be 10.50 % per annum for 3 months, 11.00 % per annum
for 6 months and 11.50 % per annum for 1 Year.

Bank of Khyber`

Profit payable on monthly basis.

With-holding tax and Zakat to be deducted as per the Government rules.

21

Value added features

Free issuance of Cheque-book

Free issuance of ATM Card

Free quarterly statement of account

90 % financing Facility will be made available to the depositor.

2.10.5 Current Benefit Account

Introducing a new business product in the name of Current Benefit Account w.e.f 1st
March 2010
The salient features of the scheme are given below:

Product Name Current Benefit Account

For Conventional Branches

Eligibility:
Current Account Holders only
(Individuals, Joint, Partnership, Corporate)

Bank of Khyber`
Minimum Balance Requirement
Rs.20, 000/- (Rupees Twenty Thousand)
(For individual/joint Accounts)
Rs.100, 000/- (Rupees One Hundred Thousand)
(For Partnerships/Companies Accounts)
2.10.6 Khyber Pak Munafa Scheme
Halal Profit on your Investment

Key Features

Minimum Investment Rs.100, 000/-

Investment for 5 Years

Profit Calculation on average Daily Balance

Profit payment on Monthly Basis

Profit Payment on every 5th working day of each month

Profit up to 14% (based on previous history)

Pre-Mature termination possible

Free On-Line deposit/ Withdrawal

Free Account Statement (once in a month)

All other service charges are 50% for Senior Citizens

22

Bank of Khyber`

23

90% financing available

2.11 SERVICES
2.11.1 ATM Service
In order to keep pace with advancements in the field of technology, The Bank of
Khyber has joined the electronic platform of 1Link switch. This will facilitate consumers by
providing them access to their funds through the existing ATM network of the country.
2.11.2 Online Banking
The Bank of Khyber offers Online Banking Facility to its customers at branches all
over Pakistan. Cash may be accepted at a branch for crediting accounts at another branch;
Cheques can be paid by a branch by debiting the customers account at another branch.
Following facilities are available at The Bank of Khybers Online Program for its customers:
1. Cheque Encashment
2. Cash Transfer
3. Transfer of Funds through Cheques among Branches.

Lockers service
Bank of Khyber also provides lockers facility in the country. The lockers
issued only to the depositors. No lockers are issued to any unknown person. The dual control
system is used for lockers. The officer has master key to apply on the locker but he cannot
open the locker of any person. The locker holder provides the bank has specimen signature.
Whenever the locker holders come to open the locker, his signatures are verified by the
officer and then will be able to open his locker. If the key of the locker is lost company
providing these lockers breaks the locker and new lock is fitted in its locker and lock is
destroyed in the presence of the locker holder and bank charges RS 2000 for that. In case the
locker holder dies, the court opens his locker in the presence of his heir as mentioned in his
will or and his belongings are given to them and the locker is closed.

Bank of Khyber`

24

2.12 COMPETITORS OF BANK OF KHYBER

Now a day there is very strong competition among all the banks. The competitors of the BOK
are all the public and private banks and financial institutions.
Those are:

National Bank of Pakistan

The Bank of Punjab

The Bank of Sindh,

Bank of Baluchistan

Habib Bank Limited ( HBL)

Muslim Commercial Bank (MCB)

Allied Bank Limited (ABL)

Standard Chartered Bank

National Investment Bank (NIB) Bank

Islamic Banks

Meezan Bank

Bank Alfalah Limited

Bank of Khyber`

25

Faysal Bank Limited & all savings centersCHAPTER

-3

ORGANIZATIONAL REVIEW

The banks ultimate governing body is Board of Directors comprising of eight

members. The government of KPK is the major stakeholder of the bank therefore the
chairman and all the members of the board are nominated by it. The Managing Director of the
Bank represents the management in the Board and acts as a member of the Board. There is a
company secretary who calls meeting of the Board of Directors. The current members of
BOD are as follows:
Chairman / Non-Executive Director

Khalid Pervez

Additional Chief Secretary, KPK

Board of Directors

Mr. Maqsood Ismail

Non-Executive Director

Mr.Sajjad Ahmad

Non-Executive Director

Mr.Javed Akhtar

Independent Director

Mr.Asad Muhammad Iqbal

Independent Director

Said Badshah Bukhari

Non-Executive Director / Secretary Finance KPK.

Dr.Ihsanul Haq

Independent Director

MANAGING DIRECTOR/ CEO (ACTING)

Mr.Imran Samad

Acting Managing Director

Bank of Khyber`

3.1

26

ORGANIZATIONAL HIERARCHY
At each position the duties, goals, function, responsibility and authority are clearly

explained.
The channels that delegate these activities are called organization hierarchy. This must be set
in such a manner to best accomplish the organizational goals.
The BOK ultimate governing body is the board of directors while the day-to-day
affairs of the bank are managed by a Managing Director appointed by the board of directors
for a term of three years on contract with the consent of the Government of KPK. Under the
supervision of MD there are executive vice presidents (EVPs) the senior most officials in the
banks hierarchy each heading a bank unit. Next to EVP there are senior vice president
(SVPs) and vice president (VPs) heading their respective divisions and departments.
At the branch network of BOK there are branch managers and assistant branch managers.
The nomenclature of various posts and the bank is as under:
1. Executive Vice President
2. Senior Vice President
3. Vice President
4. Assistant Vice President
5. Officer Grade-1
6. Officer Grade-2

Bank of Khyber`
7. Officer Grade-3
8. Junior Officer

27

Bank of Khyber`
3.2

28

ORGANIZATIONAL HIERARCHY CHART OF THE BANK OF

KHYBER (H/O)

Board of Directors

Shariah Supervisory Committee/ Shariah Advisor

Managing Director

Islamic banking
Division

Risk Management Deptt.

Credits

Operations Deptt.

Treasury

Product/ Business Development

Accounts Section
MIS

IBB(s)

Source: BOK Annual Report 2013.

Marketing

Bank of Khyber`
3.3

29

ORGANIZATIONAL HIERARCHY CHART OF THE BANK OF KHYBER

(24- THE MALL MAIN CORPORATE BRANCH)
Mushtaq Ahmed
(JVP/Chief Manager)

Manager Foreign Trade

NOT APPLICABLE

Muhammad Irfan (OG-111)

Manager Operations

Import
Hassan Raza
(OG-1)

Syed Ghous Ali Shah

In charge Credits

*Imran Baloch
Compliance Officer

Miss Faiza Kanwal

M.Yousaf (OG-3)

Accounts Opening

Credit Officer

SME/Corporate

M.Zeeshan (OG-2)

Deposits/Transfers
Online Banking
Nasir Shah Clearing/Remittances

Export
M.Arif(OG-1)
Remittances
M.Anil (J.O)

Asad Ali
Credit Officer
SME/Corporate

M.Saeed (OG-2)

Muhammad Faisal
Khan (OG-3)
* System Administrator

M.Zubair(OG-2)

Incharge Cash/Payments

SBP/ HO Returns
Dawood khan (J.O)

M.Tariq

Reciepts/UtilityBil
Khuwaja iftikhar

Payments
M.Ibrahim

Cash Sorting

Imran Messah

Sweepers

Ibrahim Khan
QASID

Shabir Khan
Telephone Operator

Bank of Khyber`
3.4

NUMBER OF EMPLOYEES IN BRANCH LEVEL

There are sixteen employees working in the Bank of Khyber Main Corporate Branch.
Those are

3.5

One Chief Manager

One Operational Manager

One Credit In charge and Two Credit Officers

One Cash In charge and Three Cash Assistants

One Account Opening Officer

One Bills & Remittances officer

One Clearing Officer

One Foreign Officer & Assistant

One Compliance Officer

One Recovery Officer.

MAIN OFFICES OR BRANCHES OF BOK

BOK BRANCHES IN PAKISTAN

Currently the Bank has One Head Office, One Hundred and four (104) Branches.
Location of Branches

Bank of Khyber`
55 KPK
32 PUNJAB
11 SINDH
3 BALOCHISTAN
3 AJ&K
KHYBER PAKHTUNKHWA

Bank of Khyber`

3.6

DEPARTMENTATION AT THE BRANCH LEVEL

The Bank of Khyber H/O is located in Peshawar, and Main branch is located

beside the Head Office, it has complete control over administrative matters and
operations as well as other areas of the Bank of Khyber. Various departments are
working in all branches of BOK to facilitate the customer. Following are the banking
departments functioning.
1. Account Opening Department
2. Cash Department
3. Remittances Department
4. Bills Department
5. Clearing Department
6. Credit Department

3.7

FUNCTIONS OF DEPARTMENT

3.7.1

Account Opening Department

The opening of an account is the establishment of banker customer relationship.

This department performs the duty of opening accounts for customer. It also issues
cheque books to customers. A person who wishes to open an account with the bank
has to fill an account opening form obtained from any branch of BOK at the time of
opening an account. The bank officer fully obtains information about character,
integrity, responsibility, occupation, and the nature of business of the respective
customer.
3.7.2

Cash Department

Bank of Khyber`
Cash department owes its importance to the fact that it is a major point of
contract between the bank and the customer, the banks most valued relationships.
This department is the showcase of the bank and conveys the first impressions about
the banks commitment to professionalism in its system and procedures and to
courteous and efficient customer service. This department performs the function of
receipts and payments.

3.7.3

Remittances Department
Funds transfer facility or remittances of funds are one of the functions of the

bank all over the world. Remittances through banking channels save time, costs less
and eliminate the risks involved in physical; transportation of money from one place
to another. Bank of Khyber transfers money in the following ways:
1.

Pay order (P/O)

2.

Demand draft (DD)

3.

Mail transfer (MT)

4.

Telegraphic transfer (TT)

5.

Foreign currency demand draft.

6.

Foreign currency telegraphs transfer.

1.

Pay Order / Cash Order

If funds are to be transferred with in a city then Pay Order is used. It is an

instrument like DD and payment is made by cash / cheques payment.

2.

Demand Drafts
It is order cheque (instrument) drawn by one branch of the bank upon another

Bank of Khyber`
branch or any other bank in Pakistan. It is negotiable instrument and can be made
payable to bearer and it is only credited in the account of drawer himself or in the
third party account.
If DD amount exceed fifty thousand or more than a test telegram is issued to the
bank to ensure prompt payment to payee. Demand draft is safe, secure and
convenient to send carry instead of cash.
3. Mail Transfer (MT)
It is another quick way to transfer the funds from one station to another. In this
mode the funds are transferred through main and may take two or more than two day.

4. Telegraph Transfer
When customer desires to send funds one place to another place on urgent basis. Such
funds are transferred through TT from one account. Through TT money is transferred
with is 24 hours and this is purely inter-bank / inter-branch transaction.
5.

Foreign Currency Demand Draft

It is an order cheque drawn by a branch of the bank upon another branch of the same
bank or any other in a country other than Pakistan. Other functions are approximately
the same as Demand Draft.
6. Foreign Currency Telegraphic Transfer
When customer of one country wants to send funds from one place to another in
other country on urgent basis, such funds is transferred through this mean. The
remaining functions are same as telegraphic transfer.
3.7.4

Bills Department
The bills department deals with the collection, purchase and discounting of

bills on behalf of the customers. The collection of cheque and other instruments has
become a very important service that commercial banks render to their clients. While

Bank of Khyber`
collecting cheque and other instruments, a bank acts as an agent of its customers and
therefore, the banker-customer relationship to the agent principal relation.
The collection of bills usually involves two banks; the collection bank and the
paying bank. Both, collecting as well as paying, banks have certain obligations to
each other and to their customers. They have certain legal rights also and legal
protection is available against fraudulent transactions under section of Negotiable
instrument Act, 1881
3.7.5

Clearing Department
BOK along with their daily business activity also provides the facility of

collection credit claims for customers i.e. when a customer deposits a cheque or draft
for collection, which is of the some other bank. Then bank collects this instrument for
its customer through clearing and similarly in case of payments, the bank makes the
payment through clearing for the instruments (cheque or draft), which are given by its
customers for his obligation fulfillment customer of some other bank.

3.7.6

Credit Department
The bank is profit seeking organization. It attracts surplus balance from the

customer at low rate of interest and makes advances at a higher rate of interest to the
individual and business firms. Credit and extensions are the most important activity
of all the financial institution, because it is the main source of the earning. Credit
department is one of the most sensitive and important department of the bank. The
major portion of the profit is usually earned through this department. The job of this
department is to make proposals about the loans; the credit management division of
H.O directly controls all the advances.
Facilities provided by BOK.

Running Finance ( for one year)

Bank of Khyber`

Demand Finance ( 3 to 5 years)

CAD makes a check list and asked the credit officer to contact the party to complete
the said documents. They are

Letter of continuity

Personal Guarantee

Letter of Hypothecation of stock

D.P Note

Mortgage Deed

NIC of executants and witness

Stock report

Insurance policy

Party profile
After completion of charge documents CO send it to CAD. When they found

it correct, they issue sanction letter. Sanction letter is sent to CO and party account is
opened and debit transaction starts.

Bank of Khyber`

CHAPTER-4
FINANCIAL ANALYSIS
Financial analysis is the process of identifying the financial strengths and weaknesses
of the firm by properly establishing relationship between the items of balance sheet
and profit and loss account.
The analysis of bank statements is undertaken by analyst, depositors,
regulatory authorities, stockholders, borrowers, the bank management etc. A
depositor is interested in the solvency of the bank, i.e. the safety and availability of
his funds.
The regulatory authorities desire to assure themselves that the banks are
operating in accordance with the requirements of the law and are in sound financial
conditions. Stockholders are interested in the general financial condition of the bank

Bank of Khyber`
and the earning, the dividends, and the managements policy with reference to the
accumulation of surplus. The borrower is interested in knowing the extent of
available funds and the use that is made of the banks resources.
Financial ratio that relates two accounting numbers and is obtaining by dividing one
number by the other
ASSUMPTION
1.

Ratios are calculated for three (#) years i.e. 2011, 2012, 2013.

2.

All the figures are taken in thousand i.e. Rs. In 000.

3.

Figures are rounded off up to 2 decimal points.

FINANCIAL RATIOS

4.1.

WORKING CAPITAL RATIO

Working Capital Ratio = Current Assets Current Liability

Table 4.1.1
Years

Current Assets

Current Liabilities

Working
Ratio

Capital

Bank of Khyber`
2011

65,103,396

56,221,447

8,881,949

78,623,797

68,021,222

10,602,575

104,195,594

92,896,541

11,299,053

2012
2013
Source: BOK Annual Report 2011, 2012, 2013.
There are two concepts of working capital. The first define the working capital as the
investment in current assets. Current assets mean which can be converted into cash
with in an according period and include cash, short-term securities, debtors, bill
receivable, stock etc. According to the other concept working capital is the excess of
current assets over current liabilities.
Interpretation
The net working capital in the 2011 is 8,881,949 and in 2012 net working capital is
increased to 10,602,575. While in 2013 the net working capital continuously
increased to 11,299,053.

4.2

CURRENT RATIO
Current Ratio = Current Assets / Current Liabilities

Table 4.2.1
Years

Current Assets

Current Liabilities

2011
65,103,396
56,221,447
2012
78,623,797
68,021,222
2013
104,195,594
92,896,541
Source: BOK Annual Report 2011, 2012, 2013.

Current ratios
1.17
1.15
1.12

Interpretation
Current assets are those assets which can quickly convertible to cash are very near to
cash such as account receivable, inventory, investment, and advances etc. When the
current assets are divided by current liability of the same year we find the current

Bank of Khyber`
ratio. In the year 2011 the current ratio shows a positive figure of 1.17. And in the
year 2012 and 2013 the current ratio is 1.15 and 1.12 it is due to Increase in current
assets.

4.3

CASH RATIO
Cash Ratio = Cash / Current Liabilities * 100

Table 4.3.1
Years

Cash

Current liabilities

Cash ratio

2011

2,802,781

56,221,447

4.98%

2012
2013

3,108,819
4,068,678

68,021,222
92,896,541

4.57%
4.37%

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
This ratio analyzes the cash and current liabilities that whether we
can pay our current liabilities by cash or not. In 2011 the cash ratio
is 4.98% while it decreases in 2012 and 2013.

4.4

INVESTMENT DEPOSIT RATIO

Investment Deposit Ratio = Investment / Deposit * 100

Table 4.4.1
Years

Investment

Deposit

Investment
Ratio

2011

36,684,689

45,548,423

80.5 %

2012

45,671,700

60,043,083

76.06%

2013

53,363,163

77,217,733

69.10%

Source: BOK Annual Report 2011, 2012, 2013.

deposit

Bank of Khyber`

Interpretation
This ratio shows the comparison of investment and deposits. This is calculated as
total investment divided by total deposits. From the above table it is very much clear
that BOK is using their deposit very efficiently. In 2011 the ratio is 80.5% but in 2012
it was decreased to76.06%, while again in 2013 it decreases at 69.10% which show
the performance of BOK is very good. Deposits and investments are continuously
increasing.

4.5

ADVANCE DEPOSIT RATIO

Advance Deposit Ratio = Advance / Deposit * 100

Table 4.5.1
Years

Advances

Deposits

Advance
ratio

2011

22,287,799

45,548,423

48.93%

2012

26,721,733

60,043,083

44.50%

2013

35,450,201

77,217,733

45.90%

deposit

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
This ratio show that how much efficiently the banks advances the deposits of their
customer to borrower. In 2011 the advance deposit ratio is 48.93% which is decreased
in 2012, while in 2013 the advance deposit ratio is little increased to 45.90%, this
show that the bank has small concentrate on providing the loans to the customers due
to lack information about the background and assets of customers.

4.6

DEBT TO ASSET RATIOS

Bank of Khyber`
Debt to Asset Ratio= Total Debt/ Total Assets*100
Table 4.6.1
Years

Total debts.

Total assets

Debt to assets ratio

2011

58,058,972

68,424,466

84.85%

2012

70,450,839

82,177,638

85.72%

2013

95,613,371

108,170,168

88.39%

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
The debt to total assets ratio measures the percentage of the firms assets that are
financed with debt. In 2011 is the debt to assets ratio is 84.85%, in 2012 the debt to
asset ratio is increasing at small rate at 85.72%,while in 2013 it increases to 88.39%
shows that the remaining 11.61% of financing came from equity investor.

4.7.

GROSS PROFIT MARGIN RATIO

Gross Profit Margin Ratio = Gross Profit / Total Revenue * 100

Table 4.7.1
Years

Gross Profit

Total revenue

2011
12,85,458
6,946,827
2012
1,572,076
7,204,937
2013
1,669,230
7,406,787
Source: BOK Annual Report 2011, 2012, 2013.

Gross profit margin

ratio
18.50%
21.8%
22.53%

Interpretation
The gross profit margin measures how much profit remains out of each sales dollar

Bank of Khyber`
after the cost of the goods sold is subtracted. This ratio show how will a firm generate
revenue compared to its cost. The higher the ratio, the better the cost controls
compared to the sales revenue. In 2011 the gross profit ratio is 18.50% which
increases in 2012 to 21.8% and 22.53% in 2013. This shows the quality performance
of BOK in generating gross profit

4.8.

NET PROFIT MARGIN RATIO

Net Profit Margin Ratio = Profit after Tax / Total Revenue * 100

Table 4.8.1
Years

Profit after tax

Total revenue

2011
872,308
6,946,827
2012
1,078.058
7,204,937
2013
1,154,039
7,406,787
Source: BOK Annual Report 2011, 2012, 2013.

Net profit margin

ratio
12.55%
14.96%
15.95%

Interpretation
The net profit margin measures how much profit out of each sales dollar is left after
all expenses are subtracted by dividing profit after tax by sales revenue. Net profit of
BOK is fluctuating trend in 2013 are 15.95% as compared to 2011 and 2012. This
means that selling price has increased the other expenses of the bank.

4.9.

RETURN ON ASSETS
Return on Assets = Profit after Tax / Total Assets * 100

Table 4.9.1
Years

Profit after tax

Total assets

Return on assets

Bank of Khyber`
872,308

68,424,466

2011

12.74%
1,078.058

82,177,638

2012

1.31%
1,154,039

108,170,168

2013

1.06%

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
The return on assets ratio indicates how much income each dollar of assets produces
on average, it show whether the business is investing in its assets effectively, the
return on assets is calculated by dividing profit after tax by the total assets of the
firm, in 2013 the average income is 1.066% this return on assets figure may seen low
as compared to 2011 and 2012.

4.10. RETURN ON EQUITY

Return on Equity = Profit after Tax / Total Equity * 100
Table 4.10.1
Years

Profit after tax

Total equity

Return on equity

872,308
2011

10,365,494

8.41%

1,078.058
2012

11,726,799

9.19%

12,556,797

9.19%

1,154,039
2013

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
The return on equity ratio measure the average return on the firm capital contribution
from its owners. It indicates how many dollars of income were produced for each
dollar invested by the common stockholders. It is calculated by dividing net income

Bank of Khyber`
by stockholder equity. In2011 the return on equity is 8.41% which increased in 2012
and 2013 with equal change at 9.19%.

4.11. ASSET TURNOVER RATIO

Asset Turnover Ratio = Total Revenue / Total Asset * 100
Table 4.11.1
Years

Total revenue

Total assets

6,946,827

68,424,466

2011

Asset turnover ratio

10.15%

7,204,937

82,177,638

2012

8.76%
7,406,787

108,170,168

2013

6.84%

Source: BOK Annual Report 2011, 2012, 2013.

Interpretation
The total asset turnover ratio measures how efficiently a firm utilizes its assets. If a
company has many assets that do not generate revenue, then the total asset turnover
ratio will be low, in 2011 the assets turnover ratio is 10.15% but in 2012and 2013 it
was decreased to 8.76% and 6.84%

CHAPTER 5
SWOT ANALYSIS
SWOT analysis is a strategic development tool that matches internal organization

Bank of Khyber`
strengths and weaknesses with external opportunities and threats. SWOT analysis is
based on the assumption that if manages carefully review such strengths, weaknesses,
opportunities, and threats a useful strategy for ensuring organizational success will
become evident to them. SWOT analysis is an important too to analysis the overall
situation in which organization is conducting its affairs; each issue remains relevant
and useful of corporate strategy formulation.
The purpose of strengths & weaknesses analysis is to express, quantitatively or
qualitatively which areas of the business have

Strengths that should be exploited by suitable strategies;

Weaknesses for which strategies should be developed to improve them

The purpose of an external appraisal (opportunities & threats) is to identify profitmaking opportunities, which can be exploited by the organizations strengths, and
also to anticipate environmental threats, which will affect competitors and the
organization as well. Thus internal and external appraisals are brought together in a
SWOT analysis.

5.1 STRENGTHS
ANALYSIS OF STRENGTHS OF BOK
Strengths are the internal capabilities that promote organization objective in a
competitive industry. BOK enjoys the following strengths.

The Bank of Khyber emphasis on consumers banking by providing them with

innovative saving scheme, products and services suiting best to their life style.

The BOK also has many government accounts due to which its reputation and
image becomes stronger & more positive. Examples of such accounts are
Traffic Challan accounts, TV License accounts, secretariat account and
NADRAs accounts.

The BOK also obtained membership of SWIFT (Society for World Wide

Bank of Khyber`
Inter-Bank Financial Telecommunication), which facilitates the settlement of
cross border transactions pertaining to international trade and foreign
exchange business. That is why most of the Importers and exporters are
availing the facility of letters of credit on which the BOK earns a lot of
revenue.

Extension and improvement in services to domestic as well as foreign

customers.

Attractive and higher interest rates and prize on various accounts and
producers.

Best optional policies and attractive compensation packages for an employee,

which has really improved their commitments, dedication and headwork
towards the accomplishment of bank objectives.

Human resources development and employment of technology towards

modern development.

Rupee traveler cheques (RTCS) that minimize the degree of risk.

Attention and sensitivity prevailing in the country.

An efficient and experienced private management group also involved in

other interest like; textile and cement industries.

Individual and personals attention.

The BOK provides consume ring financing which contract with AYS in cant
and city, which is very good for middle class group.

5.2 WEAKNESS
ANALYSIS OF WEAKNESSES OF BOK
Weaknesses are just the opposite of strengths and include all those internal factors

Bank of Khyber`
that restrict the accomplishment of organization objective. The bank has the
following weaknesses.

Most of the employees consider themselves to be government employees

and do not take interest in their work, which does affect the performance
of the bank (in the long run). Beside this, the behavior of the staff is
sometimes very rude to their customers and naturally the customers want
to wind up their accounts in the BOK as a result.

Slowdown in advance growth in the short term as BOK focuses on quality

customers in the market.

Customers having accounts with small amounts are not given the same
services and dealings, which is given to those who have high accounts.

Political or government influence of pressure from some interest groups.

The BOK faces a problem of availing technological facilities because online banking system and so many.

In foreign countries the BOK has no branch and this creates problem for
importers and exporters.

System of recruitment and selection is not transport and few training

programs in junior level officers.

5.3 OPPORTUNITIES
ANALYSIS OF OPPORTUNITIES TO BOK
Opportunities are the external circumstances, events or situations that offer an
organization the chance to achieve its objective. The bank has following opportunities
that can be availed.

They have the opportunity to open new branches in the country as well as in
foreign countries. They should open new branches at least al the district level.

Bank of Khyber`
Besides this they have the opportunity to take an NOC from SBP and open
new branches in Afghanistan.

Growing policies of governments on business and commerce sector provided

BOK an opportunity to efficiently meet with the business peoples
requirements of instant cash and financing facilities.

Foreign exchange department can be open in those cities branches where

foreign activates are developing.

The BOK has the opportunity to hire skilled, professional and educated
persons who are specialized in the course of banking and accountancy like
CAs (Chartered Accountants) & MBAs.

Customers feed back on different products and accounts has really improved
the bank performance and encourage the atmosphere for other future polices.

BOK also has an opportunity to expand new technology.

5.4 THREATS
ANALYSIS OF THREATS TO BOK
Treats are the opposite of opportunities. These are external factors. Forces or situation
that might potentially create problems, harm the organization, endanger its ability to
achieve its objectives. The bank faces the following threats.

Competitors are increasing in the private sector banking in Pakistan due to

privatization of the domestic bank.

The step of Islamic banking in Pakistan is a big threat for the BOK. Because
the whole banking system will be changed.

Increasing number of competitors as the form of foreign bank in Pakistan,

whose services are move advance on modern techniques and they provide

Bank of Khyber`
highly specialized and attractive services to their customers.

Un-consistency in government policies regarding to business and economic

sector.

Rapid growth of advanced global technologies.

Strict regulation by the government over credit facilities to the customer as

well as to meet the prudential regulation.

Hors of confidence of overseas prospects and customers due to freezing of

accounts.

Changing the customer needs.

After SOWT analysis the top management of the bank should make a committee for
the proper research and development to identify the customer needs and design some
new schemes and strategies to overcome the stated weakness and use the
opportunities. BOK should take some steps to face the threats and they have to
properly plan for the growth of the bank and introduce some new scheme which has
very effective. If BOK gives proper attention to their customer then in few years this
bank will be the leading bank in Pakistan.

Bank of Khyber`

CHAPTER 6
CONCLUSION AND RECOMMENDATIONS
The Bank of Khyber has an enthusiasm among the young business graduated to adapt
banking as a promising career. This is because or its dynamic strategies that give
totally new look to the banking industry of Pakistan.
During the internship program of two months at the Bank of Khyber 24- The Mall
Main Corporate Branch Peshawar. I learned a lot about the banking concepts. During
the work in various departments of the branch and interaction with the employees as
well as with customers helped a lot to understand the various operation of the bank.
However, due to interaction with the staff and personal observation as well as from
financial analysis specially, some key factors are pointed which are dropping the
financial carrier of the BOK in this era of competition. And after that I am giving
some suggestion that can help BOK in becoming the better institution among the
leading banks of Pakistan.
SUGGESTIONS & RECOMMENDATIONS
In this section, some suggestions are given to BOK for improvement of the bank
overall situation. These suggestions include the application of most advance
information technology and other factors of management, which can really contribute
in the improvement of the performance of BOK.

6.1 QUALIFIED STAFF

The first priority is to be given to highly qualified staff. The Bank of Khyber should
acquire highly qualified persons for its banking operations. They should never
compromise on lower level of management. The bank should hire well and
experienced persons for its management, because management plays a huge role in
the improvement of an organization.

Bank of Khyber`
6.2 E-BANKING
The bank has a golden opportunity to start Internet Merchant Accounts in the
country, as State Bank of Pakistan (SBP) has asked bankers to start it, but yet fewer
banks has come up practically. So the Bank of Khyber if started Internet Merchant
Accounts will get a good size of business from the market of E-commerce and also
Image will be enhanced.
Similarly also other functions of E-banking like providing different services to the
customers on internet, this can increase the customers of the bank, because of the
growing number of internet users in the country, and The Bank of Khyber will
capture the market.

6.3 ADVANCES
The bank should introduce new scheme, of advances for self employment and also
the bank should increase micro level credit, in which there is less risk of default and
this also helps in poverty alleviation, thus strengthens the overall economy of the
country along providing employment to the people, like Garmin Bank has done in
Bangladesh. So BOK can think of his project too. Similarly the bank should offer
loans to IT / Software developing firms and individuals, which will create a new
segment of the customers.

6.4 SERVICES
In this area The Bank of Khyber can work on problems to improve the bank
performance and image like, reduction in customers time utilization in, on the
counter services by providing quick and efficient over counter services.

6.5 UNIFORM DRESS CODE AND OUTLOOK

Proper, modern dressing and outlook also helps in the improvement of banks image.
The employees should look smart and well dressed, so that it gives a sound gesture to
the customer.

6.6 CLARITY OF PLANS/STRATEGIES

Bank of Khyber`
The management should clearly discuss plans/strategies and once adopted the
plans/strategies should be clear to all levels of management in the bank, as this
improves the implementation of plan/strategy.

6.7 PROPER JOB ANALYSIS

The job of the employees should be lucid and clear to them, similarly proper job
analysis for the job of every member of the staff setting of targets as tasks for each
job, thus invoking professionalism and removing lethargy from the staff.

6.8 NEW COMPETITIVE SCHEMES

The Bank of Khyber should introduce new schemes especially new deposits schemes,
with more features than competitors, targeting the low-income level segment and
small savers. This will also increase the deposit base of the bank.

6.8 INCREASE MARKETING ACTIVITIES

The Bank of Khyber should increase marketing activities, through reminder
advertisement, increasing customer relations, promotional campaigns with products,
and other tools of marketing. This will increase the credibility and image of the bank.

6.9 DELEGATION OF POWERS

Business environment has changed and time is one of the most important factors for
the businessmen. The bankers have to exercise due care in transaction while dealing
the customer, and the people want bankers to provide the needed service at the
earliest. But delegating of authority to the lower level of management can relieve
this. So that at branch level manager can decide about the short time decisions and
the unnecessary delays can be reduced to a minimum.

6.10 TRAINING OF STAFF

Employees should be provided constant on job training, refresher courses and
workshops, so to get the required knowledge. Every member should be provided with
a particular department, training.

Bank of Khyber`
6.11 INTERNATIONAL BANKING
The Bank of Khyber should expand its branches. They should expand their branches
not only in Pakistan but also outside the country to provide better services of
Pakistanis living there.

6.12 USE OF MEDIA

The Bank of Khyber is new organization. In order to increase its customers and add
to its publicity, it is recommended that the bank should advertise itself and introduce
its services in detail through media.

6.13 MODES OF FINANCING

The bank should introduce more new modes of financing in its Islamic Banking
Sector. By doing so, the profitability ratio will be increased and the bank will be able
to compete in the challenging environment.

a. RATE OF RETURN
The rate of return plays a vital role in a financial institute and especially in banking
sector. The bank should improve its rate of return on deposits and should reduce the
mark-up rate on advances. By doing so, it will attract a large number of customers.

6.14 SHORTAGE OF EMPLOYEES

Shortage of employees increases the work load on existing employees and ultimately
reduces the output and motivation level of employees. To overcome this problem job
description should be revised and grouped together in order to create new jobs.
Recruitment should be done fin order to fill up these new vacancies. In this way the
workload on employees will be reduced, operations will be stream lined and
employees will feel comfortable in performing their duties more effectively.

Bank of Khyber`

REFERENCES
1. Broachers of the Bank of Khyber
2. Manuals of the Bank of Khyber
3. The Bank of Khyber Annual Reports
4. The Bank of Khyber Annual Financial Statements
5. www.BOK.com.pk
6. www.banking/history/pakistan.com
7. www.google.com.pk.
8. www.business/dictionary.com
9. www.answer.com