Download - Prime Bank

Mission/ vision statement

“STRONGER BANKING RELATIONSHIPS, INCREASING CUSTOMER CONFIDENCE”

Prime Bank is a prominent Pakistani bank, providing

exceptional value to its customers, shareholders and

employees.

Prime bank competes in selected market niches on the basis of

superior service, innovation, specialized products and

professionalism.

Prime Bank’s activities focus on dedicated banking services for

the middle market and middle market and middle to large

corporations for there banking requirements.

Prime Bank is a socially responsible institution firmly believing

in the protection of the environment, peaceful coexistence,

and respect for human rights.

Team spirit, initiative, performance drive, and customer

orientation are key characteristics of the Prime Bank’s

employee and the Prime Bank’s culture.

BUSINESS PHILLOSOPHY

The bank is committed to being a sophisticated, prominent and

professional institution, providing a one-window service to its

customers.

The bank visualizes itself to grow into a specialized institution

catering to the needs of niche markets.

Prime bank’s activities primarily cover the provision of

dedicated banking services to the commercial middle market

Hailey College of Commerce 5

segments of the economy; however, selective focus is also

given to the corporate finance sector.

Prime bank’s operating strategy is focused on continuous

improvement of inter4nalprocedures and operating systems to

ensure a better control on the quality of its business and

operations.

ANALYSIS OF MISSION, VISION AND BUSINESS PHILLOSOPHY OFPRIME COMMERCIAL BANK LIMITED.

The mission statement of prime commercial bank limited expresses its purpose in a

way that inspires support and ongoing commitment.

It is a short and specific mission that is clear in its meaning and purpose. The

statement is articulated in a way that it is convincing and easy to grasp. The mission

statement is short enough to be recalled by anyone connected to Prime Commercial

Bank Limited.

The mission statement of Prime Commercial Bank Limited emphasizes on the

following elements:

BUSINESS

The mission statement answers the basic question i.e. the business the business of

the organization is to provide banking and financial services. The purpose or target

is to be the leading bank through strong commitment towards high quality services.

PURPOSE AND VALUES

Customers are the major stakeholders for and organization. This mission statement

focuses on the objective of the bank to increase the confidence of their customers by

creating strong banking relationships. This creates a sense of importance amongst

the customers and they get more inclined towards the organization.


The mission statement does not directly refer to any products or services provided

by prime commercial bank limited but view it in broader perspective. Strong

banking relationships mean providing better services and offer the best of the

products to its valuable customers.

Prime commercial bank has a mission/vision statement that clearly identifies its long

term as well short term objectives. It provides a focused dimension by narrating the

banks objectives and purpose with a clear picture of what it wants to achieve in

future. This statement resonates with the people working in and for the bank as well

as with different constituencies that it hopes to effect.

It covers the following elements:

CUSTOMERS

Customers is the major source of revenue for a commercial bank therefore it is the

bank’s strong commitment to provide exceptional services to its customers. The

vision of the bank is to be a prominent bank in Pakistan as far as satisfaction of

customers is concerned.

PRODUCTS AND SERVICES

Providing superior service, innovation, specialized products and professional

guidance is the main objective of the bank.

MARKETS

PCBL focuses on middle markets and middle to large corporations. It competes in

selected mark etches and caters to their financial requirements.

TECHNOLOGY


Bringing innovation in their existing products and services and introducing new

ones is the mission of the mission of the bank.

CONCERN FOR SUVIVAL, GROWTH AND ROFITABILITY

PCBL keeps on improving upon its internal as well as external working and

operations in order to keep up with the pace of changing banking requirements.

That is the bank is committed towards growth and financial soundness.

PHILLOSOPHYPCBL is committed to provide professional services to its worthy customers. Having

greater control over the quality of the business and providing better management

direction is its basic philosophy.

SELF CONCEPTPCBL is a sophisticated, prominent and professional financial institution that

provides a one-window service to its customers. It is the banks distinctive

competence or major competitive advantage.

CONCRN FOR PUBLIC IMAGEThe bank is actively responsive to social, community and environmental concerns. It

is highly concerned towards environment protection, peaceful coexistence and

human rights.

CONCERN FOR EMPLOYEESTeam spirit, initiative, performance, drive, and customer orientation are key

characteristics of the prime bank employee and the prime bank culture. PCBL

treats it employees as valuable assets and focuses much on employee satisfaction and

motivation.


HISTORY AND PRESENT STATUS

Within the framework of the government’s policies, private sector groups were

invited to set up new commercial banks in the country.

Availing this opportunity, a group of Pakistani professionals with extensive

domestic and international banking and finance experience, decided to pool their

resource and latent with a sector group of influential, but like minded, business

houses in Pakistan and overseas to for the PCBL.

From inception, the professionals determined that Prime Commercial Bank Limited

would remain a “Management Driven Bank”, and indeed, drew up the terms of

reference for this collective partnership on that basis. Our strategy is focused on

continuing improvement of internal procedures and operation structures to have a

greater control on the quality of our business and to provide better management

direction.

Prime bank is the vision of a group of Pakistani professionals with extensive

domestic and international banking and finance experience. They teamed up in 1992

with a select group of successful and like-minded business houses in Pakistan and

overseas. Some of the foreign investors belong to a highly regarded, very sizeable

and well-diversified business group of Saudi Arabia.

During the initial years, prime commercial bank’s strategy was focused on

continuing improvement of internal procedures and operating structures, to ensure

a greater control over the quality of its operations. Commercial banking activities

were initiated at the time of inception in 1992. During 1993, two more business


divisions’ i.e. corporate banking and financial services were added. By 1996, PCBL

countrywide network of seventeen branches was in place and consumer banking

activities were accordingly launched.

Under the banks on going branch expansion program fifteen new branches have

been added during the years 2001 and 2002 while one more branch will open in

December 2002. This would raise the total number of branches to thirty three

focusing primarily on the middle market commercial banking segment while

blending in the fast growing consumer banking market.

Keeping in view the past performance and the probable future prospects prime

bank is focusing on rapid expansion to cater with those market segments, which are

still to be explored. Prime commercial bank’s initial objectives were capturing the

market by improving upon its internal procedures and to increase it financial

services span. Now it has acquired a comparatively larger market share and

customer confidence, therefore the next objective is to maintain this confidence

through strong and improved external as well as internal operations.

The main objectives of the management are now:

To make the bank customer focused

To plug the leakage of revenues and expenses

To correct the structural flaws in the balance sheet

To ensure internationally accepted accounting standards are followed in the

bank.

The bank would continue to maintain its primary focus on the middle-market

segment essentially targeting the commercial banking business of the segment. With

a view to getting into the consumer banking in a significant manner, the bank has

recently commissioned an independent consulting study for this purpose. Bank’s

operating procedures, credit processing and internal controls are being reviewed


and these studies have been instituted in order to further improve the quality of our

operations.

FACTS AND FIGURES

Prime commercial bank has completed ten successful years of its banking

operations. Now it is the 11th year of providing continuous customer services and

building stronger banking relationships within them. After ten years of well

controlled, yet sure and successful operations, the bank is now poised to move

forware rapidly to be at the cutting edge of financial services combining highly

efficient delivery systems with continuos product innovation. Therefore,

development of superior human skills and the latest information technology

platform are the cornerstones of Prime Bank’s overall strategy to be in the exclusive

club of winning banks of the future

Total assets of prime bank during the period from June 1992 to September 2002

grew at an annual compound rate of about 36 percent to Rs.19.5 billion. Within this

[period, shareholders’ equity grew from rs3300 mission to Rs.1.5 billion, deposits to

Rs.13 billion and advances (net) to Rs.8.1 billion. Profit before tax grew from Rs.1

million for the half year to June 1992 to Rs.235 million for the nine months ended

30th September 2002.

10 YEARS AT A GLANCE

Years 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Advances 1.0 1.5 2.2 2.6 3.1 4.4 5.0 5.6 6.8 6.9Deposits 1.2 3.2 3.8 4.4 5.3 6.9 7.9 7.8 8.3 10.4Assets 2.1 4.7 5.7 6.0 6.9 9.0 10.1 10.6 10.9 14.5Profit After tax

30.6 71.0 99.3 70.3 73.2 128.3 84.9 69.1 96.1 152.5


DEPOSITSDuring the past ten years i.e. from 1992 to 2001 prime bank witnessed a stable

growth rate in its deposits portfolio. If we look at the growth rate of deposits during

the past ten years we find out that the deposits in 2001 are approximately 9 times of

what they were in 1992. The total deposits held by rime bank in 1992 were Rs.1.2

billion and this figure rose up to Rs.10.4 billion in 2001. The annual compounded

rate of over 27%.

Initial 6 years of rime bank experienced a compounded growth rate of 25% in its

deposits. The fiscal year July 1998 to June 1999 witnessed a poor economic

performance and rapid decline following the nuclear testing by Pakistan in May

1998. In this backdrop the overall banking industry witnessed certain fundamental

changes. The reason for decline in prime bank’s deposits portfolio in 1999 was this

recession in the economy. Prime bank deposits of all these adverse factors managed

to register a 6.5% increase in its overall deposits over the last year. And in 2001 the

bank’s deposits crossed the mark of Rs.10 billion which is 25% over the previous

year.


Advances

The advances of the bank increased at an average rate of 48% during the first two

years of its operations. After that, this rate came down to 19% in 1995 and 1996.

The advances increased by 42% in the 1997 but this increase could not be

maintained in the following years. The advances increased by 1.5% in 2001, which is

the least growth rate amongst all the previous years. This was due to the recession

faced by the economy during the second half of the year due to the external shock of

September 11th event. The bank continued its policy of conservative provisioning

against non-performing loans in accordance with state bank of Pakistan’s

prudential regulations. The bank is adequately capitalized, comfortably meeting the

minimum paid-up capital requirements of SBP as well as the internationally

accepted minimum capital adequacy requirements with the capital adequacy ratio

measuring approximately 16% at the year-end as compared to the mandatory

requirement of 8%.


ASSETSThe bank’s assets increased at a gradual and stable rate during the initial years, but

this rate declined during 1998, 1999 and 2000 due to the uncertainty prevailing in

the country. During 2001 the assets of the bank increased by 33% over 2000. This

was the result of opening of new branches. The bank’s strength lies in its expansion

policies and an increase in assets as a result.

The bank’s assets remained more or less unchanged during the recession

years due to uncertain envioriment prevailing in the country. The need of the hour

was to create and improve customer confidence in the policies of the banking sector.

Prime Bank very successfully managed to increase is assets form Rs. 10.9 billion to

Rs.14.5 billion in 2001 and a similar increase is expected in the following years.

Profit After Tax


Profit after tax shows he performance of the banks. An adverse decline in profit

after tax was experienced in 1995,1998 and 1999. But the bank managed to recover

from this recession and its profit after tax increases by 59% in 2001. This was made

possible due to improvement in net interest margin and non-interest income, each

increasing by over 21% over the previous year. Control over staff and

administrative costs was also maintained which increased by just 11%despite

additional expenses incurred pertaining to the planned opening of six new branches

during the year. The reduction in the corporate tax rate by 8% in the last Federal

Budget further encourager the bank’s management to undertake the expansion

plans and still shows a growth in profit after Tax.

Total Assets of Prime Bank during the period from June1992 to

september2002 grew at an annual compound rate of about 36 percent to

Rs.19.5million. Within this period, shareholder’s Equity grew from Rs.300 million

to Rs.1.5million Deposits to Rs.1.3million and Advances (net) toRs.8.1million. Profit

before ax grew from Rs.1million for the half-year t June 1992 to Rs. 235 million for

the nine months ended 30th September 2002.


Banking Sector in Pakistan

The financial sector in Pakistan can be grouped into banking and non-banking

financial institutions (NBFIs). Banking institutions include large public sector

scheduled banks; private sector naks and foreign banks while NBFIs include

development finance instructions (DFIs), private sector investment banks, leasing

companies and Modarabas.

PUBLIC, PPRIVATE AND FOREIGN BANKS The large public sector scheduled commercial banks, namely National Bank of

Pakistan, Habib Bank of Pakistan and United Bank Limited are owned by the

government of Pakistan. Although two other banks, Muslim Commercial Bank and

Allied Bank Limited were privatize in1992 the GOP still has significant stakes in

them. These five large banks are dominant in terms of total number of branches,

deposits and advances, collectively accounting for 78% and 77% of total deposits

and advances respectively. However, they are relatively less profitable than private

sector banks and foreign banks.

Private sector banks are relatively new compared to public sector banks. The Sharif

government opened up banking t the private sector in 1991. The new banks formed

as a result of this liberalization policy included Askari Commercial Bank, Bank Al

Habib, Siberu Bank, Prime Bank, Bolan Bank, Metropolitan Bank, Mehran Bank,

Schon Bank, Union Bank and Platinum Commercial Bank. There have been hiccups

along the way though as the corporate banking culture was still new to the country

and we had fiascoes like Mehran Bank and Capital Bank.

These banks are still very small in terms of branch network and level of operations.

They focus on very selective market segments where they are quite successful.


Despite a lower profile in total deposits and advances, these banks account for 22%

of the total profitability of the sector.

Owing to the inefficiencies of the public sector scheduled banks which stem form

their nationalization in the 70’s the relatively lower standing of the private sector

banks and the dollarisation of the economy, foreign banks have been able to

perform extremely well by expositing gaps in the local banking sector. There are 16

foreign banks operating in the country. ABM AMRO, American Express Bank,

ANZ Grindlays, Banks of America, Banquets Indosuez, Citibank, Deutsche Bank,

Doha Bank, Emirates Bank, AL-Mashriq Bank, Hong Kong & Shahnghar Banking

Corporation, Standard Chartered Bank, Rupali Bank, Societe Generate, IFIC Bank

and Habib Bank AG. The foreign banks have a strong presence in all the major

cities and are targeting high worth individuals and blue chip companies. Their

strategy is quite successful as they account for 34% of total sector profits, despite

having only 15% of deposits and 16% of advances.

FUTUTRE PROSPECTS The recent wave of liberalization and financial reforms has raised questions about

the future prospects of the financial industry in general and the banking industry in

particular. In just four years the banking industry has expanded tremendously and

now there are more than two dozen commercial and investment banks functioning

in the country.

In times of slow economic activity and high inflation as is the case with Pakistan, the

financial sector as a whole is likely to experience depression with shrinking interest

margins and troubled assets because of bad debts.

Though the commercial banks in the private sector have so far given a satisfactory

performance since their inception, registering an overall growth in the deposit base

and profits and are maintaining healthy credit portfolios, the question that needs to

be bowered is about future profitability of the industry in times of intense

competition for chasing cheap deposits and risk worthy borrowers.


The savings rate in the country at about 15% remains one of the lowest compared to

other emerging economics like India (22%) Thailand (30%) and Indonesia (40%).

For a stable deposit base, which is imperative of the smooth functioning of the

financial sector to extend affordable credit o different sectors of the economy, the

country must have satisfactory savings rate.

At the same time deposits are becoming increasing expensive and lending rates, with

or without a cap on them cannot be raised by banks beyond a certain limit. Blue

chip clients, whom constitute the major portion of most of the banks borrowers, d o

not pay beyond a certain lever of interest and hence banks are facing a tight

squeeze.

The average cost of deposits for a bank in Pakistan is 8 to 10 percent; prime lending

rates vary from 13 to 14 percent. The rate of returns on government securities is

fairly attractive, where all scheduled commercial banks are required by prudential

regulations to keep 20 percent of their time and demand liabilities.

The key to success for commercial banks is their deposit base and this is where the

real crunch is expected, particularly for the newer banks. The deposit base is

expected to grow but will probably not be able to maintain a rate of 20 percent while

the established banks should not have a problem. The new commercial banks like

AL-Habib, Soneri, Askari, Union and Bank of Punjab are no expected to be any

major competitors for the established their share in the national deposit base is

expected to stay meager at around5% with the share of foreign banks at less than

25%. The nationalized banks have the lions share and along with ABL and MCB

account for about 80 percent of the national deposit base. Still, costs remain

extremely high in the public sector banks. Inefficiencies and a carefree and

indifferent attitude as service is concerned are matters that have yet to be controlled

b the top management of most of Pakistan; s public sector banks. Foreign banks do

have a small share, but his is more by choice than by chance. The policy in general is

to maintain deficiency and keeping costs at a minimum.

Also, as opposed to local banks, foreign banks do not really have to work very hard

to reap in rewards because of the inefficiencies in the lager public sector financial

institutions. This advantage however, may not last much longer as most public


sector banks are to be privatized and they are already undergoing a transformation

of attitudes towards service and efficiency.

The industry trends should be an eye opener for all. Pakistani banks have an almost

80perecnt of the market share, but one needs to look at profit margins of both

foreign and local banks to really assess the inefficiencies or the lack thereof.

Many of the newer banks have no provisions in their portfolios for bad debts, which

might not appear important at present but in a period of say three t four years,

when loan recovery starts this shortcoming in the portfolio could become a serious

threat to earnings. The prospective investor should definitely keep this in mind

when playing the stock Market. Perhaps it would be prudent if the State Bank of

Pakistan makes it mandatory for all banks to make their portfolios public. Most of

the commercial banks are nor expected to make any significant pay off in the near

future as they are in the growth phase, building their equity base for maintaining

capital adequacy, 10 percent for new banks and 7.5 percent for established ones.

The recent mushrooming of banks in the country could have become a boon if the

growth in the economy had been proportional. Unfortunately the growth in the

industry has been slow and hence banks have had to fight for customers. The race

for intensifying deposits has already started and the trend in 1996 shows that people

are moving away from long term deposits making it increasingly difficulty for the

smaller banks to develop a strong deposit base. With the economy so far not

showing any substantial and fundamental improvements and with retardation in

industrial growth, banks should not be looking at a significant growth in the shot

term. However, with prospects of an improvement in the operational side as well as

the hope that industrial growth will pick up, banking is looking at a bright future in

the country.

In comparison with other emerging economies, Pakistan has a relatively

underdeveloped financial sector in terms of the depth of the financial system and the

extent of financial intermediation. The depth of a financial institution refers to the

use of money and close money substitutes such as savings and time deposits, which is

very low in Pakistan.


However, with the steps being taken to improve financial infrastructure in the

country, the drive to streamline the large public as well as private sector banks has a

greater probability of being implemented.

ORGANIZATIONAL STRUCTURE OFPRIME COMMERCIAL BANK LIMITED.

Separate page


MANAGEMENT HIERARCHY

The management of Prime Bank has been divided into different divisions and departments that wok under the following heads:

Head of Risk Management Mr. Khalid Imran Exective Vice President

Commercial Banking Group & Mr. Amanullah Khan General Manager Branches Exective Vice President

International Banking & Treasury Mr. S.M. Azam Zaidi

Exective Vice President

Chief Financial Officer Mr. Hamid ImtiazSenior Vice President

Audit Mr. M. Shafiq NaeeemSenior Vice President

Mr. Moghis Bokhari Human Resourse & Management Senior Vice President

Credit Administration Mr. M Usman Senior Vice President

Operations Mr. F.S. Azam Ali Senior Vice President

Compliance Mr. Gul M.Khan Group Vice President


Legal & Corporate Affairs Ms. Shaheen Ali Group Vice President

Systems & IT Syed Hassan Rizvi Group Vice President

The network of Prime Bank is being divided into different regions according to the location.

These regions: Lahore region

It includes 7 branches. Central region

It includes 5 branches Northern region

It has 6 branches. Karachi region

It includes 10 branches. Southern region

It has 4 branches

The chart on the next page illustrates the heads of each branch under its respective region.


BRANCH HIERARCHY OF PRIMECOMMERCIAL BANK G.T Road Branch Gujranwala.


Branch Manger

Managers

Manager Operation

Assistant Manager

Assistant officers

Officers

Deputy officers

Clerks

Peons and Guards

The branch manager is the head of the branch is assisted by the manger operations in carrying out the man functions of the branch. Remaining organizational structure is divided according to the requirements of different departments. There are currently three managers, two deputy managers, eight offices, 5 deputy officers and 2 assistant officers working in the branch. The total number of employees working in the branch is 20.

EMPLOYEE NUMBER AND DESIGNATION The total number of employees working in the Prime Bank’s network is above

1000at present.

Prime Bank, New Garden Town Branch has a total of 20 employees working with it.

These employees are working in the following departments.

Cash and deposits Account opening Accounts Foreign Remittance Foreign Trade Credits Financial Services Compliance

There are 6 employees in the cash and deposits department, 2 in accounts, 1 in

account opening, 1 in foreign remittance, 2 in foreign trade, 2 in credits, 2 in

financial services and 1 in compliance department. The manager operations

monitors the departments related to bank’s day-to-day operations and the branch

manager monitors the foreign trade and credits. All the employees are permanent

except for tow. These two employees have been recruited on contract basis and their

contract is renewed every year. Amongst the permanent employees, 3 are managers,

2 are deputy managers, 8 are officers, 5 are deputy officers and 2 are assistant

officers.


MARKETING MIX

Marketing is the task of creating, promoting and delivering goods and services to consumers and businesses. Organizations identify and profile distinct group of buyers who might prefer or require varying products and marketing mixes. The customer seeks for value and satisfaction. The organizations can increase the value of the customer offering in several ways e.g. raising benefits, reducing costs etc. marketing mix is a set of marketing tools that the firm uses to pursue its marketing objectives in the target market. These marketing tools are known as 4 p’s of marketing. These four marketing tools are viewed as4c’s by the consumers.

4 P’s 4 C’sProduct/ Service Customer SolutionPrice Customer CostPlace ConveniencePromotion Communication

To identify the customer needs and fulfilling hem is the basic objective of an organization. Marketing is not just satisfying your customers, you have to delight them and this can be done by acting upon this phrase.

“Under Promise and Over Deliver”

Prime Commercial Bank provides a winning combination of products and services to its prime customers. It is one of the country’s leading commercial banks in private sector, which ensures complete security, and reliability in all-financial transactions.

A bank’s performance lies in its performance and commitment to its charter and its customers. As Prime Bank enters the second decade of services these core values remain the cornerstone of the bank’s philosophy.


PRODUCT

A product is anything that can be offered to a market to satisfy a want or need and

a service is an act or performance that is essentially intangible and does not result in

the ownership of anything. What products or services have to be offered to the

target market depends on the market requirement and also the organization’s

profits. The organization will offer those products and services, which result in

maximum profits and minimum costs.

A bank is an organization rather a financial institution that provides products such

as different types of deposits and services like foddering financing facilities to its

customers.

Prime Commercial Bank offers a diversified line of products and services to its

customers. The products and services offered by Prime Bank are:

Consumer banking Corporate finance Financial Services Current Accounts Saving Accounts Visa Cards Master Cards Traveler’s Cheques Foreign Currency Accounts Online Banking SWIFT

Prime Bank continues to grow and today ranks in the top tiers of all banks. Prime Bank’s deposit rates are flexible, secure and have high returns.

Current Account

It is the major type of account, which provided by almost every bank. The requirements and procedure for opening a current account are given in the


functions of account opening department. The minimum requirement for current account is RS.5000. But lesser amounts are also accommodated to attract more clients.

SAVSING ACCOUNT

Prime bank offers various saving and fixed accounts. Minimum requirement for a saving account is Rs.5000. Examples of these saving accounts are Primax anchor, Primax classic, Primax exclusive and other deposits. Requirements are a different for each of these depending bases of calculation is given on the next page.Prime bank’s three special deposits are:

Primax classic Primax anchor Primax exclusive

PRIMAX CLASSIC

The most popular scheme is that of Primax classic. A special product offered by prime commercial bank to its clients. The profit is paid monthly on daily product basis. There is no restriction on withdrawals. The rates are given below:

TIERS PROVISIONSL RATESRs: 10000000 & above 7.00%Rs: 1000000 to Rs: 9999999 6.75%Rs: 100000 to 999999 6.50%Rs: 1 to Rs: 99999 1.00%

PRIMAX ANCHORThe profit is paid monthly on minimum balance basis. This practice of payment of profit on minimum balance is adopted to attract maximum amounts from the customers at any time of the month. The following table shows the rates.

TIERS PROVISIONSL RATESRs: 50000000 & above 7.75%Rs: 25000000 to Rs: 49999999 7.50%Rs: 5000000 to 24000000 7.25%


Rs: 500000 to Rs: 4999999 7.00% Rs: 1 to Rs: 499999 1.00%

PRIMAX EXCLUSIVE

It is a specialized term deposit scheme introduced by Prime Commercial bank. Profit is paid on maturity. The rates for profit are given as follows:

TIERS 3MONTHS 6MONTHSRs: 5000000 and above 8.50% 8.75%Rs: 1000000 to Rs: 4999999 8.00% 8.50%Rs: 100000 to Rs: 999999 7.75% 8.00%Rs: 25000 to Rs: 99999 7.25% 7.50%

SPECIAL NOTICE DEPOSITSThese are the deposits, which can be drawn from the bank by giving a prior notice to the bank. Minimum balance required for these types of deposits is Rs.5000. The profit is paid on maturity of period. The rates on the bases of which the profit is paid are:

7 to 29 days notice 5.50%30 days notice 6.50%

OTHER TERM DEPOSITSThese term deposits are offered for satisfying all classes of customers. The minimum balance require=Ed for this type of account is Rs.5000 and the profit is paid on maturity according to the following rates.

1 month 7.75%

1 year 9.00%

5 years 10.00%

SAVING DEPOSITSThese are the deposits on which profit is paid after every six months on minimum valance of the month.

TIERS Rates

From Rs: 5000 and above 8.00%


From Rs: 1 to Rs: 4999 1.00%

All these profit rates quoted above are provisional rates with affect from November 01, 2001.

VISA AND MASTER CARDSPrime Bank issues

Master gold Master silver Visa gold Visa silver

The procedure for issuance of these cards is given in the following pages.

ONLINE BANKING

Prime bank offers the online banking facility to its customers in limited number of branches.

Cash deposits Cash withdrawals Transfer of funds Account enquires

Statement of account on requecurrently 8 branches is working online.

SWIFTPrime bank provides a fast system for opening a letter of credit by using SWIFT, society for world wide international financial transactions.

FINANCIAL SERVICES

Prime Bank deals in the stock market on behalf of its customers. The brokerage facility is provided to the clients.

ROREIGN CURRENCY ACCOUNTS

Prime bank also offers to its customers the facility of opening an account in any foreign currency. Usually US $, pound sterling and euro are preferred by the bank, but if a client requests for opening an account in any other currency, it is being allowed after having permission from the treasury.Minimum requirement for a current and saving US $ account is $5000. Minimum requirement for saving and current accounts in euro is 10,000 euros.

TRAVELER’S CHEQUES


Prime bank does not have any traveller’s cheques of its own but it issues the AMES traveler’s cheques.

CREDIT CARDSPrime bank does not have its own visa master cards. It issues two basic types of credit cards.

PROCEDURE:

The procedure of issuing a master card or visa card is as follows. Prime bank issues the credit cards through Arab financial services (AFS)

Bahrain. The function of issuance of credit cards is being centralized in PCBL new

garden town branch. A request for the issuance of credit cards is received. It can be with or

without photograph. A photograph is a must in case of shaky signatures. Then this request along with al the necessary documents is sent to the head

office for approval, with a covering letter after blocking the amount. The amount blocked is double the amount of the credit card as security plus

charges.Charges are 2-3%

The request after approval is sent to AFS Bahrain. The credit card is then issued. Settlement with AFS is done through treasury. Other branches recover the dues from their client, send to treasury and they

are then being sent to AFS. Clients can make complaints if the card is being miss utilized or lost.

Billing Billing is done on monthly basis. Own client is not charged any fee.

Renewal charges:Renewal charges for master card are $ 70 and for visa cards $ 50.


MASTER CARD VISA CARDSilver SilverGold Gold

PRICE

It is second important tool of marketing mix because it plays a major role in

determining the customer’s choice. Also it is the only marketing tool that results into

revenue. The banks offer advances to their clients by charging ascertain rate of

mark up or interest. This mark up or interest charged is the price. The customer

makes a comparison between the prices offered by other financial institutions and

Prime Bank and then selects the most suited offer.

The charges are stated in a schedule of charges for every facility. Some of them are

given on the next pages. These charges relate to

International banking Domestic Banking

In Banks, price can be categorized under different head such as:

Handling charges Commission Mark up


International Banking(Schedule of charges)

Letter of Credit:

Rates First Quarter Each Subsequent Minimum Or part thereof Quarter charges Or part thereof

1. Annual L/C volume Upto Rs: 25 million

0.40% 0.15% Rs:500

2. Annual L/C volumes over Rs: 25 m upto Rs: 50 million

0.30% 0.10% Rs:500

3. Annual L/C volumes over Rs: 100 million

0.25% 0.10% Rs:500

Import L/C Service charges On foreign exchange Transactions

0.10%(flat), min Rs: 150

Exports:

Processing charges For Export Registration

Rs: 200(flat)


Letter of Credit (a) Advising Rs: 350(flat) (b) Amendment Rs: 250(flat) (c) Conformation 0.25% per quarter or part thereof min.

Rs: 250(d) Transfer of export

L/C Transfer Rs: 350(flat)

C. Collections: (Foreign currency)(i) Outing clean/cheques(ii) Outgoing Documentary/export

Rs: 100 or equivalent to foreign currency Rs: 200(flat)

Remittance:(Foreign currency)

(i) Outward (a) F.T.T.----US$ 5 or equivalent Fcy+Foreign Telex/ Fax/SWIFT charges Rs: 300/- (b) F.D.D.---US$ 5 or equivalent Fcy Rs: 250 (flat) or equivalent US$ 5 or equivalent (ii) (a) Inward Nil, If proceeds are credited to an account with us.

(b) Home Rs: 3 plus cost of money order or reimbursement Telegram charges when TT is requested. No

charges If funds go to Prime Bank Branch.

(iii) Traveler’s Cheques (a) Issuance 1.00% (b) Encashment 0.50%


Domestic Banking(Schedule of charges)

Remittances:

(i) Drafts, MTs and TTs upto Rs: 10,000 Rs: 20 (flat)(ii) Drafts, MTs and TTs from Rs: 10,001to Rs: 100,000 0.10%, Minimum Rs: 200(iii) Rs: 100,001 & over 0.05% Minimum Rs: 200(iv) Cancellation of pay order/demand draft Rs: 20or customers request(v) Issuance of State Bank of Pakistan cheque Rs: 500(vi) Issuance of counter cheque (loose cheque) Rs: 100(vii) Inter-branch cheque Encashment facility Rs: 250 Minimum 0.10%of Transaction value(viii) Online inter-city Transaction upto Rs: 250(flat) 0.10%of value Over Rs: 250,000 transaction

Miscellaneous(i) (a) Stop payment Instruction Rs: 200 per instruction (Rupees account Or US$ 5 for foreign currency account (b) Cheques /Instruments returned unpaid (due to Insufficient balance) Inward clearing Rs: 200 per item Inter-branch Rs: 200 per item Over the counter Rs: 200 per item(ii) Out of pocket expenses (for banking service not otherwise Actual Minimum Rs: 50 specified)(iii) (a) Inspection charges (1) Actual +Rs:500(within municipal limits) (2) Actual +Rs: 1000(outside municipal limits) (b) Godown rent Actual


(c) Godown staff salaries Actual (d) Delivery charges in absence of Godown keeper (e) Issuance of Delivery order Rs: 200 per Delivery Order(iv) Services chargers of 0.50%flat shall be collected On all applicable Government securities Encashed within 90days of issuance

(v) Postage and Telex charges (a) L/C import Short Telex/SWIFT Rs: 700 Short Telex/SWIFT Rs: 1500 (b) L/C import Amendment Rs: 500 (c) L/C Export Postage charges Rs: 100 (d) L/C export/Collection Telex/SWIFT charges Rs: 300 (e) Mailing/delivery of Cheque book Rs: 100

Schedule of charges for Financial Services Department1. Share Brokerage & Safe Keeping Charged

“Physical Share”(a) Individuals 0.5% per annum safe keeping handing charges Based on market value off portfolio size at the Quarter end. 0.50% Activity charges on value of transaction. (b) Institution 0.25% p.a (to be charged quarterly) 0.125% p.a. (to be charged quarterly) on Portfolio size of Rs: 100 million and over2. Share Brokerage Charges(a) (for Regular Transactions) 0.8% on value of transaction “one way commission in case Minimum Rs:0. 08 per share for share prices of Trading in same settlement” less than Rs:15 +out of pocket expenses(b) Shares Brokerage Charges Share Price Range Commission (for trading-within clearing) Upto Rs: 14.99 Rs:0. 08/Share Rs: 15 upto Rs: 29.99 Rs:0. 08/Share Rs: 30 upto Rs: 99.99 Rs:0. 08/Share Rs: 100&above Rs:0. 08/Share


CDC ChargesDescription ChargesInitial Deposit Fee Rs:0. 01 per ShareTransaction Fee Rs:0. 006 per Share (No fee in case of trading In same settlement)Month and Custody Fee 0.01%p.a. (charged monthly)Withdrawl charges Rs:0. 1per Share (for physical) Rs:0. 1per Share (from CDC)

Sub Account Fee(a) Individual Rs: 1000 (one time)(b) Institution Rs: 5000 (one time)

Monthly Fee For Account(a) Individual Rs: 200(b) Institution Rs: 500CDC Statement Print Rs: 15 per shareCourier Charges As per Schedule of ChargesShare Transfer Stamps Actual

Free Banking Services

Customers maintaining deposit balance of Rs.1,000,000/- and over or equivalent in other approved currencies in personal accounts (which exclude partnership account and company accounts) will receive the following services free of change:

Inward and / or outward remittances (foreign currencies).

Issuance of drafts/ pay orders / mail transfers (domestic banking).

Cancellation / issuance of duplicate D.D & P.O (foreign currency and/ or

domestic banking).

Standing instruction fee.

Stop payment instructions

Mailing / delivery of chequebook.

Confirmation of balance to auditors.

Obtaining credit reports on behalf of customers.

Issuance of financial/credit worthiness certificate.


PLACE

The location of the bank plays a vital role in making its operations profitable. If the

bank is located in some business center then it will be very easy for it to attract

business people as its customers. Prime commercial bank is concerned either

targeting the middle market and therefore it has most of its branches at places

where it can reach its targets customer easily. The branch network of PCBL is given

as follows:

LAHORE Head office

Address: - 77-y, Phase 111, commercial Area, D.H.A.

Egerton Road

Address:- Ground Floor, Aiwan-e-Iqbal Complex, Building No.3, Egerton Road.

Gulberg

Address:- 61- Main Gulberg

D.H.A.

77-Y,Phase 111, D.H.A.

New Garden Town

Address:- Ground Floor; Block No.2, Awami Compplex, Usman Block, NGT.

Allama Iqbal Town

Address:- 20-Gulshan Block, Allama Iqbal Town

Circular Road

Address:- outside Shah Alam Gate, Main Circular Road

Township

Address:- 849-D.Faisl Town, PECO Road


Badami Bagh

Address:- 343- Circular Road, Badami Bagh

KARACHI Abdullah Haroon Road

Address:- State Life Building No.11, Abdullah Haroon Road

Jaodia Bazar

Address:- NP 12/74, Muhammad Shah Street, Jodi Bazar

I.Chundrigar Road

Address:- Nadir House, I. I. Chundrigar Road

Clifton

Address:- 13-C, 7th Zamzama, Commercial Lane, Clifton

D.H.A.

Address:- World Business Center, Main Korangi Road, Phase I, D.H.A

Sind Industrial Estate (S.I.T.E.)

Address:- Plot # B/2 Estate Avenue Sind Industrial Estate

North Nazimabad

Address:- Almas Square, Plot No. SD-5, Block G, North Nazimabad

Cloth Market

Address:- Cloth Market, New Naham Road Off. M.A. Jinnah

Shahrah-e-Faisal

Address:- Progressive Center, Shahrah-e-Faisal

North Karachi

Address:- ST-3, Sector 12-A, Industrial Area.


Islamabad

Blue Area

Address: - Redco Plaza, 78-E, Blue Area

F-10 Markaz

Address: - 7-L, F-10 Markaz

Mirpur A.K

Address:- Sector B/2, Allama Iqbal Road

Peshawar

Address:- 35-The Mal

Rawalpindi

Address:- Century Tower, 6- The Mall

Gujranwala

Address: - Al-Majeed Centre, G.T.Road Gujranwala

Gujrat

Address:- 2-Prince Fan Colony, G.T. Road

Turbat

Address:- Main Bazar

Quetta

Address:- 1-25/14-15 Qandhari Bazar

Hyderabad

Address:- CB 474, Opposite Cantt, Policy Station, Saddar

Sukhur


Address: - Shaheed Gunj

PROMOTION

Prime commercial Bank does not actively participate in promotion of its products

and services through advertisement and other promotional schemes.

Initially, the bank focused on the upper class customer’s only and offered products

for a limited class of people. But now the strategy has been changed and the bank is

now targeting the middle market also. The products offered are of diverse nature to

cater the needs of maximum number of people.

Prime Commercial Bank only advertises about the opening of its new branches.

Communication of information about new branches is being made to general public

through newspapers.

Customer Oriented Attitude

Prime Commercial Bank values its customers. Customers’ complaints are

encouraged because it gives an opportunity to know the needs of the customer and

build more confidence in them.

Most of the promotional efforts are done through

Direct marketing

Public relations

Prime bank sometimes gets suggestions and recommendations from its good

customers.

Branch layout is being designed in such a way that more and more customers are

attracted. Some of the branches of PCBL have a very good entrance and outlook but

many still need to be improved.


MANAGERIAL POLICIES

Managerial policies include all those policies which are adopted by the bank in

performing all it internal activities as well as external operations. Different policies

are required in order to introduce innovation and ensure maximum operational

efficiency at minimum cost.

Policy formulation process:

Any policy that is being suggested is to be approved by the beard of directors.

Before this, the management of the bank takes up the affairs that are to be discussed

in the board meeting and the agenda is prepared. Circular is sent to the persons

who have to attend the meeting. And the policies and issues are discussed for

possible approval or rejection in the meeting. Prime Commercial Bank has its policy

making function centralized to the upper management. The upper management

after making the policies communicates them to the respective departments and

branches. The meetings for policy making are held as and when required. Lower

management loses not take part in policy formulation but can give suggestions.

The policies of Prime Commercial Bank are as follows:

Financial policies

Prime Commercial Bank believes in capturing the market share through market

development. More and more branches are being opened to increase the deposit

portfolio of the bank. Providing in time and better service to the customers is also a

successful strategy to attract more deposits. Prime bank mainly focuses on

individual accounts as compared to company accounts and also they prefer current

accounts as compared to saving or term deposits. This policy is adopted because


current deposits do not cost the bank; on the other hand that bank has to pay cost

against term deposits.

Deposits Policy

The policy of Prime Bank is to raise those deposits in which its costs are lease. The

best option is that of current accounts because the bank has to pay zero return on

these deposits. Saving and term deposits are also good but since the bank has to pay

some return on them therefore only current deposits are preferred.

Liquidity Policies

Prime Bank management has a policy of keeping an adequate reservoir of liquidity instruments.

Lending Polices

Lending polices of Prime Bank are in accordance with the prudential regulations

issued by State Bank of Pakistan.

Prime Bank adopts a very conservative approach while advancing loans. The policy

is to grant loan to referred people or organizations only. This is to reduce the

element of risk.

Adequate security must be acquired before advancing any sort of loan. The nature

of the security should be such that it is readily marketable and easily transferable.

The size of the loan portfolio is to be based on rational issues.

The parameters related to the borrower for granting any financial assistance are as

follows:

Character Capacity Capital Collateral Condition


The preference of Prime Bank is to issue short term secured loans. Long-term loans

are only given to trustworthy selected clients. Usually non-fund based facilities are

preferred.

Marketing and Innovation Policies

Every person working the bank is responsible for marketing of the bank and its

products. Prime Bank has its marketing departments in very few branches. All the

employees are doing the function of marketing and publicity.

Advertising

The awareness about the products and prices is not made through advertisement.

Prime Bank does not believe in capturing market through extensive advertising. The

advertisement of new branches is given is the newspapers. I happened to come

across a prime Bank’s advertisement banner on the business recorder site also.

Prime Bank adopts a conservative approach towards innovation. For example every

other bank is providing ATM facility but it is still not available to Prime Bank’s

customers.

ACCOUNTING POLICIES

1. Status and nature of Business

Prime Commercial Bank limited (the Bank) having its registered office at 77Y,

D.H.A, Lahore (PAKISTAN) was incorporated in Pakistan on September 30,1991 as

a Public Limited Company under the Companies Ordinance, 1984 and is listed on al

Stock Exchanges of Pakistan.


The bank is fully accredited scheduled commercial bank and is principally engaged

in the business of banking. The Bank had22 branches operational at the year-end

while one more branch will be operational by end of February 2002.

2. Basis of Presentation

Accounting convention

2.1 These accounts have been prepared under this historical cost convention except

as stated in note 4 and are in conformity with the International Accounting

Standards (IASs), as applicable in Pakistan the banking companies Ordinance, 1984

in all material respects.

2.2 In accordance with the Islamic Banking System, trade related modes of

financing include purchase of goods by the Bank from its customers and immediate

resale to them at appropriate mark up in price of deferred payment basis. The

purchased and sale arising under these agreements are not reflected in these

accounts as such, but are restricted to the amount of facility actually utilized and the

appropriate portion of mark up thereon.

3. Statements of compliance

The accounts have been prepared in accordance with directives issued by the State

Bank of Pakistan, the requirements of the Banking Companies Ordinance, 1984 and

IASC, as adopted in Pakistan.

4. Basis of Measurements

Monetary values of elements of financial statements have been measured on

historical cost invention except for those items, which are required, by status or the

IASs to be reported on any other basis.

5. Summary of Significant Accounting Policies


5.1 Financial Instruments

The Bank account for regular way purchased and sales of financial assets using

“Settlement Date Accounting” by recognizing at the time the instrument is actually

transferred to the enterprise. Gains and losses on reorganization of financial assets

and liabilities are included in the profit and loss for the period in which it arises.

5.2 Investments

Held for trading securities

These are investment securities that are held for short periods of time principally for generating profit form short-term price fluctuations.

Available for sale securities

Investment securities intended to be held for an indefinite period of time, which may be sold in response to need for liquidity or change in equity prices are classified as available for sale.

Listed Securities

These are marketable securities measured at market value prevailing at the balance sheet date.

Unlisted securities

Where active market does not exist, these are stated at cost less provision for permanent diminution in value, if any.

Held to Maturity Securities

Investment securities with fixed maturity where management has both the intention and the ability to hold to maturity are classified as held to maturity.

5.3 Lending/Borrowings against Securities

Bank enters into transactions of repurchase and resale of Government Securities at contracted rates for specific periods of time with other financial institutions.

5.4 Advances

Advances are stated net of provisions against non-performing advances, if any, which is taken to the profit and loss account. Advances are written off when there is no realistic prospect of recovery.


5.5 Fixed Assets and depreciation

Tangible

(a) Owned

These are stated at cost less accumulated depreciation. Depreciation is computed at varying rate by taking inconsideration the estimated useful life of the related assets, using straight-straight-line method.

(b) Leased

Assets subject to finance lease are stated at cost less accumulated depreciation.

Depreciation on leased assets is provided from the date of the lease agreement using

straight-line method at the rates stated in note 12.

Intangible

These are stated at cost less accumulated amortization, which is, computed@20%

by taking into consideration the estimated useful life of the related assets, using

straight-line method. Gains and losses, if an, on disposal of fixed assets are taken to

the profit and loss account.

5.6 Taxation

Current

The charge of current tax is based on the result for the year as adjusted for the items which are non assessable or disallowed.

Deferred

The bank accounts for defend taxation using the liability method on all significant

timing differences arising form differences between the carrying amount of assets

and liabilities in the financial statements and the corresponding tax basis used in the

computation of taxable income.

5.7 Foreign Currencies

Foreign currency transactions are accented for at exchange rated prevailing on the date of the transactions.


mailto:computed@20%25

5.8 Employees Benefits

Defined Contribution Plan

The bank operates an approved contributory provident fund scheme through a

trust for all its permanent employees. Equal contributions are made to the fund on a

monthly basis by the bank and the employees are at the rate of8.33% per month of

the basic salaries.

5.9 Revenue Recognition

Profit on advances and investments are recognized on an accrual basis, except

income, if any, which warrants suspension in compliance with the Prudential

Regulations of the State Bank of Pakistan. Commissions earned in letters of creditor

and a guarantee is also recognized in an accrual basis. Dividend income is

recognized when right to receive payment is established.

5.10 Cash and Cash Equivalents

Cash Equivalents are held for meeting short-term cash commitments and comprised

cash and balances with State Bank of Pakistan and other banks.

5.11 Derivative Financial Instruments

Derivative financial instruments including forward foreign exchange contracts and

other financial instruments are recognized at cost (including transaction costs) and

subsequently measured at fair value.

5.12 Acceptances

Acceptances comprise undertakings by the bank to pay bills of exchange drawn of

customers. The bank expects to settle these acceptances simultaneously with the

reimbursement form the customers. Acceptances are accounted for as off balance

sheet transitions and are disclosed as contingent liabilities and commitment.


WORK DONE BY ME

As every body knows that "Knowledge without practice is sterile "In order to

give vent to this idea an Internship program of two months has been

arranged in different esteemed organizations during M. Com. In this regard

on 15,July 2003, I was asked by my Principal to go to Prime Bank Ltd to have

an internship of two months thereof. In the Prime Bank Ltd I really enjoyed

working with the staff of G.T Road Branch Gujranwala and having a wish to

be employee of PCBL. It was almost impossible to work in all the

departments within that limited time. But on my request, the staff of the

branch provided me the opportunity to work in the different departments for

the sake of practical knowledge. I feel highly indebted to work in the

Gujranwala Branch on the request of the manager of that branch Kamran

Mehmood, because I learnt a lot in that branch.

On my first day of Internship, Manager handed me over the charge of

Assistant to Accountant.

As three departments namely the Manager in this particular branch was managing

Accounts, Cash and Billing, and Clearing. I started my practical training by

checking the cheques for withdrawals and entering them into token book. This was

the routine work that I had done it daily. At the time of closing exact position of

cash in hand, Receipts and Payments were evaluated. The Manager and the

Accountants duly signed this evaluation.


Secondly I was advised by my Manager to be remained vigilant about the

fake cheques giving some instructions for the scrupulous examination of

cheques like signature verification from specimen card. Unfortunately the

branch where I got my Internship was not computerized, all the things were

to be done manually. Right after two weeks, the date of balancing came. Here

balancing means balancing of ledgers of Current Deposit and Saving

Deposits. The balancing of Current Deposit Ledgers was done on weekly basis

while Saving Deposits Ledgers were balanced on semi monthly basis.

Prime Bank Ltd collects utility bills on behalf of WAPDA, Sui Gas

Companies, and Pakistan Telecommunication Corporation Limited by

putting the stamp on the utility bills “Paid”, Date of payment, Signature of

the officer receiving the utility bills. I collected bills of LESCO, PTCL and

SNGPL during period of my internship. After receiving utility bills a list is

made on the form that is called Bills scroll form. One copy of the scroll is with

the bank for evidence whereas the original copy with the receipt of the bills is

sent to the billing department of the respective corporation. The bank charges

commission on the bills.

After one month I came under the supervision of the Cashier who got me to

know, how the books of cash are balanced at the closing of each day. I too

learnt to prepare General Ledger, which is called as the mother of all books

used in the branch. It was really a tough and daunting task.

After Six Weeks My Manager tells me about the transfer book, which keeps

the record of the transfer of funds between clients of bank.

During my internship training in the PCBL as I mentioned that I have worked

in different departments & seats and learnt the followings experience.


OPENING NEW ACCOUNT BASICS

During the span of mine internship in PCBL I learned and observed a lot of

about the opening of an account. Basically I think that the opening of an

account is the establishment of a contractual relationship between the banker

and the customer. By opening an account at a bank a person becomes a

‘customer’ of a bank. Further I am going to express the basic requirements

and steps involved in the opening of an account.

INVESTIGATION

Before opening an account PCBL as like the other banks in Pakistan

ascertain whether or not the person who is going to open the account is a

desirable customer or not. Then PCBL determine the prospective customer’s

integrity, respectability, occupation and the nature of business by the

introductory references given at the time of account opening. Negligence in

this informal preliminary investigation may result in serious consequences

not only for the banker concerned directly but also for other bankers and the

general public who may be affected indirectly. In Lad broke & Co. V Todd

(1914), the banker did not obtain introduction at the time of opening the

account, and it was construed a negligence within Section 82 of the Bills of

Exchange Act 1882.

In order to further strengthen and streamline this process, the Federal

Ombudsman of Pakistan, vide his ruling on complaint No. II/31/5186 has

directed the banks to retain with the account opening form a Photostat copy

each of the National Identity Cards of the person desiring to open an account

as well as that of the introducer. As per these directions, the concerned

Branch Managers are required to obtain the original National Identity Cards

along with their Photostat copies and then return the original after attesting

the authenticity of the retained copy.


How to open an account (in general)

Before opening an account in PCBL I observed that the following points must

be considered in this regard.

1. Another account holder of the bank should properly introduce the new

customer.

2. The account holder should sign the account opening form in the presence

of bank officer and the signature is duly verified.

3. A copy of identity Card is required by Bank.

4. Against submission of the Bank’s prescribed application form, duly

introduced in the manner provided and on supplying such document, as

may be required and account may be opened. The Bank reserves to itself

the right to refuse to open and account without assigning any reason.

5. Each account shall be allotted a distinct number that is to be quoted in all

correspondence with the bank relation to the account.

6. Minimum amount to open an account is required regarding the nature of

account.

Procedure to open an account

According to my practice in PCBL, when a customer wants to open an

account, the bank officer gives him an application form. All information,

which is necessary to be known by the bank, are requirements of the

application form. Form also requires the essential documents to be

attached by the customer.

Basically following information is required to open an account with PCBL

1. Title of Account


2. Full Name of Applicant

3. Occupation

4. Address

5. Telephone No.

6. Currency of account

7. Nature of Business

8. Introducer’s Name, Address & Signatures

9. Special instruction regarding the account

10. Initial Amount of the Deposit

11. Signature of the applicant

Procedure to Honour a cheque

During my internship training in the Muslim Commercial Bank Limited, I observed and found Cheques are received for the following purposes.

i) For Cash paymentsii) For transfer (from one account to another account)iii) For Clearing

i) For cash Payments

Cheques, which are presented on Bank counter, must be checked in the following way:

Date. Signature of Drawer. Signature of Payee. Whether Bearer has cancelled. Whether Payee account duly is there. If condition 4&5 exist then check the signatures of Drawer. Match the figure and wordily amount of cheque.

When all above matters are satisfied then come to the Token register and check:1) Token number.2) Cheque number.3) Amount of cheque.4) Particulars.


Two stamps are put on cheque.a) Cash Payment (on the face of cheque).b) Stamp for Token (on the back of cheque).

On stamp that is put for token their details are as follows: Token number. Time of giving token to client. Signature of token giver.

Note:

Payment is also made when cheques of same branch account is presented for transfer to other account in same ranch along with cheque for payment.

ii) Cheque for Transfer:

When cheques are presented to be sent for collection and drawn on bank situated within the city then there are three stamps to be put on face as well as on back of cheque.

a) Crossing Stamp (face).b) Transfer Stamp (face).c) Bank Manager Stamp (back).

Only in PCBL branches.

Cheques for clearing:

There are two stamps put on each cheque, sent for clearing:a) Crossing Stamp.b) Manager Stamp.

Cheques in Collection:

When cheques received in clearing are intra city then these are controlled

under CC.

First of all, these cheques are recorded in daybook then allotted number and

then serial number. Then a Performa is prepared in which Bank on whom

was drawn, cheque number, amount, beneficiary name are recorded. After

completing that Performa cheque is posted along with Performa.


Clearing

Following information is entered in clearing register.

a) Name of favoring party.b) Name of bank on whom drawn.c) Branch.d) Cheque number.e) Amount.

Clearing is sent after entering in register. In clearing register future date and

day is putted. Cheques and vouchers are then separated and Cheques are sent

for clearing.

Clearing credit vouchers are entered on clearing sheet. Such credits are

balanced by giving debits to cheques received in clearing from other

branches. At the beginning of the day clearing return sheet is received.

Vouchers are made if:

Clearing received is more than clearing delivered then Credit voucher.

Clearing delivered is more than clearing received then Credit voucher.

On the same day, credit vouchers sent for clearing are entered on the sheet's

credit side.

Cheques are sent to NIFT after taking them on calculator, their total amount

along with total number of instruments. A summary is prepared and sealed

after noting the number of seal in summary.

Telephonic Transfer

DD- Demand Draft

PO- Payment Order


For TT, the account of beneficiary must be there in branch. DD is also

prepared and beneficiary can get payment.

First of all, purchasing party along with cheque or cash payment fills

Performa. When cheque is received it is first posted in computer section in

order to check the balance of account. After posting the bank officer calculate

tax if National Tax number is not there. i.e.

Rs.100000 @0, 1%

More than Rs.40000 @0.4%

Commission and postage charges are also calculated. These are paid in cash

or otherwise by cheque.

ISSUANCE OF CHEQUE BOOK

During my period of internship in PCBL I observed that when a account

is opened then a cheque is issued to the customer for drawing his money at

per rules. Following procedure is adopting for the issuance of cheque.

When a customer opens an account with the bank, he is provided with

cheque book for withdrawals from account. However, the first

chequebook is given to the customer only when all the required documents

are checked. A chequebook contains ten, twenty five, fifty or hundred

leaves. The cheque book also carries a requisition slip for the issuance of

the new cheque book. This slip is duly filled and singed by the customer.

The bank verifies the signature of the customer and new chequebook is

issued to the customer and serial numbers of the cheque are duly entered

in the book of the bank. Along with the signature, person should also write

his full name & address.

Usually only one cheque book is issued at a time, however big concerns

who need a number of cheque books at a time, may ask the bank to stock


as number of cheque books in their name and to point their name on these

cheque books.

Bank debits the client’s account for excise duty of Rs.2.50/- per cheque

and keeps the cheque book ready for the customer, as on his advice.

The officer keeps and maintains the cheque book register Cheque book

inventory and cheque books issued are recorded in this register. The

account number for which the cheque book is issued and the number of

leaves are also recorded in this register when the cheque book issued an

entry is passed in the cheque book issue register.

Rupee Traveller Cheques: (RTCs)

When RTCs are to be issued payment is received in cash or by cheque, tax

@0.03% is charged id National Tax number is nor available. RTCs are issued

in consecutive number of face value of

Rs.1000

Rs.5000

Rs.10000

Rs.50000

Rs.100000

Specimen signatures of buyer are taken and clearing slip is in four pages. One

is sent to head office, one to RTC division, one for bank record and one for

client.

If client wants immediate payment of RTCs then he will bring RTCs with two

signatures, one copy of deal and ID card copy. Payment is made. RTCs can be

endorsed to other party. Once receiving party will pay the RTCs along with


credit vouchers in their relevant account with Bank. Payment will be credited

to account of paying party.

Financial Analysis

The strength of any organization in real terms can be appraised by analyzing its balance sheets as well as its statement of accounts. The financial statement of any organization shows the results of its operations and its position in business. The financial statement of any organization includes:

1. The Balance Sheet

2. The Statement of Accounts

3. The Funds Flow Statement

With the help of these three items, financial analysis of an organization can be conducted. Analysis of data helps to conclude the financial strength of the organization.

Comparative Analysis

There is a big difference between data and information when data is arranged in

such a way that it clearly indicates some fact. The data becomes information.

Although the balance sheet and income statement gives a great idea about the

financial position of an organization but unless the data of these statements are

not compared over the years they do represent the actual position. The

comparison shows the increases, decreased and growth of an organization, which

help to predict the future potential of an organization.


The following pages show the-comparative analysis of Balance Sheet and profit

and loss accounts of Prime Bank.

FINANCIAL STATEMENTS

MCB SHARAQPUR BRANCH

BALANCE SHEET

AS ON DECEMBER 31, 2002

ASSETS 2003

Demand Deposit 14861634.17Saving & Other Deposit 57826155.51

PLS Term Deposit 5966500Other Accounts 182757Sundry Creditors 110Profit on Deposit 1244065Bank liability as per Contra 4960000Other liabilitiesTotal Income

593493494986.16

88595526.94LIABILITIESDeposits 10,366,688Borrowings 2,231,892Bills Payable 402,051Other Liabilities 97,466

Deferred tax liabilities -----16,098,097

Net Assets 1,427,578PRESENTED BY:Share capital 876,818Reserve fund and Other Reserves 409,931


Unappropriated profit 93

1,286,842Surplus on revaluation of Fixed Assets. 140,736

1,427,578

PRIME COMMERCIAL BANK OF PAKISTANPROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED DECEMBER 31, 2002

(Rs. in 000)

PARTICULARS 2001 2002Mark up/ return/ interest earnedMark up/ return/ interest expensedNet Mark up interest income

1,136,900(693,849)

443,849

1,394,770(948,113)

446,657Provisions for non performing loans and advances (89,281) (49,185)

Provision for diminution in value of investment written ofNet mark up/ or interest income after provisions

600354,370

(8,212)390,260

Non mark up/interest incomeFees and commission 148,370 142,777Dividend Income 327 646Gain from Govt. securities 15353 19,7026Gain from dealing in foreign currency 78,158 81,852Other incomeTotal non mark up income

6,550248,758

603,128

10,679432,980

822,240Non mark up/interest expensesAdministrative expenses (361,271) (512,415)Other provisions ---------- (1,120)Other charges

Total non mark up/interest expenses

Profit before tax

(760)

(362,031)

241,097

(2,811)

(516,346)

305,894Taxation

Profit after taxation

(88,500)

152,597

(130,000)

175,987Unappropriated profit b/d

Profit available for appropriation

19

152,612

93

175,894

Appropriations


Transfer to reserve (152,523) (175,961)Dividend paid

Unappropriated Profit c/dEarning per share

___

93 1.51

___

261.74

PRIME COMMERCIAL BANK LIMITEDBALANCE SHEET

AS ON DECEMBER 31, 2002

HORIZONTAL ANALYSIS

Particulars 2001 2002 Change %Age (Rs.000) (Rs.000) (Rs.000)

ASSETSCash 1,389,359 1,316,933 (72,426) -5%Balance with other banks 766,587 138,557 (628,030) -82%Investments 790,000 2,754,792 1,964,792 249%Lending to other financial ins. 4,165,457 7,534,278 3,368,821 80%Advances 6,239,148 9,016,138 2,776,990 45%Fixed assets 211,520 371,951 160,431 76%Other Assets 700,986 504,504 (196,482) -28%Deferred Tax Assets 262,698 --- (262,698) -1%Total 14,525,675 21,637,153 7,111,478 51%LIABILITIESDeposits 10,366,688 14,640,410 4,273,722 41%Borrowing from other banks 2231892 4722117 2,490,225 112%

Bills payable 402,051 444,461 42,410 11%Other liabilities 97,466 255,452 157,986 162%Deferred tax liabilities --- 23,447 23447 1%Total 13,098,097 20,055,887 6,957,790 51%


INTERPRETATION OF BALANCE SHEETHORIZONTAL ANALYSIS

ASSETS

If we observe the assets side of the balance sheet of Prime bank we will find that there is an increasing trend in the properties and assets of the bank from 2001 to 2002.The first term on the assets side of balance sheet is cash. Normally all the banks keep enough cash to meet day-to-day requirements of the client. This position of cash in Prime bank is not satisfactory. The figures show as liabilities substantial decrease in cash of the bank. The cash decreased 5% from 2001 to 2002.The next item on the assets side is the balance with other banks. This item has decreased to 82% during 2002.The bank play a very important role in lending to financial institutions which will grew up to 249% in 2002 as compared to previous year results.The investments of Prime Bank also showed an overall increase of 80% from 2001 to 2002. This is also a very healthy sgn as it is increased.The advances of Prime Bank show an overall increase of 45% from 2001 to 2002. In 2001 the growth was not quite strong but in 2002 the growth was quite strong as it was in 2001.The fixed assets of Prime bank also increased to 76% in 2002 while banks other assets and deferred tax assets are still shows a decreasing trend of 28% and 1% as compared to its previous year.

LIABILITIESThe capital always showed with the liabilities. The capital always showed with the liabilities. The left-hand side of the balance sheet must equal the right hand side. The first item on liabilities side is the deposits and other accounts of the customer. The deposits have shown increasing trend. The deposits increased by 41% from 2001 to 2002. Hence this is a good sing.Another item is borrowing from other banking companies. The over all increase in this item from 2001 to 2002 us 122%. This increase in liability is hooting beneficial for the bank and now it should be reduced and minimized.


The next item on the liability side of the balance sheet is bills payable, from 2001 to 2002 the bills payable increased by 11% which shows not health, sign for the bank. The over all liabilities also increased by 116% 2001-02.

PRIME COMMERECIAL BANK LIMITEDPROFIT AND LOSS ACCOUNT

AS AT DECEMBER 31st 2002

HORIZONTAL ANALYSIS

(Amount in 000’s)INCOME 2001 2002 Change %

Mark-Up Earned (Net) 443051 446657 3606 0.81%Fees & commission 148370 122777 -5593 -5.15%Dividend Income 327 646 319 98%Total 591748 590080 -1668 -0.28%

EXPENSESSalaries, allowances etc. 1548254 217218 58964 37.26%Contribution to defined contr. P 6481 8864 2383 36.77%Non- Executed Directors Fees 2379 2442 63 2.65%Rent, tax insurance & etc. 73511 106822 33311 45.3%Legal and professional charges 5665 15487 9822 174.0%Communications 9860 10510 650 6.60%Repairs & maintenance 11592 13916 2324 20.04%Finance charges on leased assets 240 - -240 -1%Stationary & printing 14123 20303 6180 43.76%Advertisement & publicity 20050 10042 -2008 -16.66%Auditors remunerations 447 1770 1323 296%Depreciation 29300 42177 12877 44%Amortization 4761 13230 8469 178%Travel & motor vehicle expense 24985 32909 7924 31.72%Other Expenditures 7611 16725 9114 120%Total 361271 512415 151144 41.84%


INTERPRTATION OF PROFIT AND LOSS A/C.HORIZONTAL ANALYSIS

INCOME

On the income side of the profit and loss account the first item is the markup

earned. This means the income that the bank receives as interest on various

advances. There was 0.81% increase in this item during 2001-2002. There is

a increasing trend in the interest income. This is a very important source of

income for the bank and its growth gives a positive sigh fit.

The second item on the income side is the commission and brokerage, which

the bank received by offering various services to its clients. The income is

also known the non-fund-based revenue. It is also a very important source of

income for a bank. The figures reveal that the commission decreased by

5015% from 2001 to 2002.

Expenditure

The expense item shows salaries, allowances etc that shows the change in

37.26% as far as the bank expand its business, obviously these expenses also

increases. Next item on this side is overall increase in administrative

expenditures. The rent. Taxes and insurance increased by 45.3%in 2001-

2002, which is not a good sigh for the bank. Expenditure on repair &

maintenance, stationary and printing also increased. The auditor’s fee has

increased. However the overall position is not improving as the expenditures

are increasing at an increasing rate.


PRIME COMMERCIAL BANK OF PAKISTANBALANCE SHEET

AS AT DECEMBER 31, 2002

Vertical analysis

2001 % 2002 %

ASSETS (Rs.000) (Rs.000)

Cash 1,389,359 9.56 1,316,933 6.08Bank Balance 766,587 5.27 138,557 0.64Lending to financial ins. 790,000 5.44 2,754,792 12.73Investments 4,165,457 28.68 7,534,278 34.82Advances 6,239,148 43 9,016,138 41.67Fixed assets 211,520 1.46 371,951 1.72Other assets 700,986 4.86 504,504 2.33Deferred Tax Assets 262,698 1.81Total Assets 14,525,675 100 21,637,153 100

LIABILITIESDeposits 10,366,688 79.12 14,640,410 73Bank Borrowings 2,231,892 17.04 4,722,117 24

Bills payable 402,051 3.07 444,461 2.22Other liabilities 97,466 .744 255,452 1.27Deferred Tax Liabilities 23,447 0.12Total Liabilities 13,098,097 100 20,055,887 100


Interpretation of Balance Sheet

VERTICAL ANALYSIS

ASSETS

Cash in hand comprises 9.26% of total assets in 2001 and this composition is to be 6.08% in 2002. This shows that the liquidity has increased. Balance with other banks was 5.28% of the total assets in 2001 and goes to 0.64% in 2002. This trend was due to increasing liquidity approach of the bank. Investments were 24% of the total assets in 2001 and increases to 34.82% of total assets in 2002.Lending to financial institutions was 5.44% in 2001 then rose up to 12.73% of total assets 2002. Total liquid assets were 40.95% of the total assets in 2001, and 42% in 2001.The proportion of advances to total assets in 2001 is 43%, and in 2001 it is 41.68%. Financing constitutes a major portion of total assets. Other securities (net) were 0.36% of total assets in 1998, 1% in 1999, 3% in 2000 and 8% in 2001. The %age of other securities to total assets has increased tremendously in2001. Operating fixed assets are 2.15% of total assts in 1998, 1.8%in 1999, 1.46% in 2001. The proportion of operating fixed assets has remained more or less constant throughout the years and it was 1.72% in 2002.Other assets also follow the same trend in their proportion to total assets in these four years. It remained approximately 7% of the total assets.

LIABLITIES

On the liability side the total deposits comprise 78% of the total assets in 1998, 73%in 1999, 76%ub 2000 and 71% in 2001. This shows that more than 70% of the assets have been financed by the demand and time deposits of the bank. Borrowings were 10%, 14%, 11% and 15% in the years 1998, 1999, 2000 and 2001.Bills payable comprise a very small proportion of total assets. Approximately the proportion remained 2.5% in all the years. This shows that the liability of the bank towards people other than it depositors is less. Other liabilities also comprise a very minor portion of the total assets. The proportion of total liabilities to total assets is round about 90% in all the four years. It decreases a little in 2000 because of uncertain conditions as a result of which the owner’s money proportion had to be increased. Shareholder equity shows a constant proportion to total assets in all the four years. It increased a little in 2002.


PRIME COMMERCIAL BANK OF PAKISTAN LIMITED

PROFIT AND LOSS ACCOUNTAS AT DECEMBER 31,2002

VERTICAL ANALYSIS

INCOME 2001 % 2002 %

Mark-Up Earned (Net) 443051 74.87 446657 75.69

Fees And Commission 148370 25.07 142777 24.20Dividend Income 327 0.05 646 0.11Total 591748 100 590080 100

OPERATINGEXPENSESSalaries, allowances, etc. 158254 43.80 217218 42.39Contribution to defined contr. P 6481 1.79 8864 1.72Non-Expected Directors Fees 2379 0.66 2442 0.48Rent, tax, insurance, & etc. 73511 20.35 106822 20.85Legal and professional charges 5665 1.57 15487 3.02Communications 9860 2.73 10510 2.05Repaires & Maintenance 11592 3.21 13916 2.72Finance charges on leased assets 240 0.07 -- --Stationary and Printing 14123 3.91 20303 3.96Advertising and Publicity 12050 3.34 10042 1.96Auditors remunerations 447 0.12 1770 0.35Depreciation 29300 8.11 42177 8.23Amortization 4761 1.32 13230 2.58Travel and motor vehicle expense 24985 6.92 32909 6.42Other Expenditures 7611 2.11 16725 3.26Total 361271 100 512415 100


Interpretation of Profit & Loss account Vertical analysis

In the vertical analysis of profit and loss account each time on income side is shown

as a percentage of total income and each item of expenditure as a percentage of total

expenditure.

The interest income as a percentage of total income is slightly increased by 74.87%

to 75.69% during 2001-02, however the commission and brokerage income shown

decreasing trend. The other items on the come side are slightly fluctuating as a

percentage of totals.

As we see in the vertical analysis of profit and loss statement of PCBL we come to

know that the bank currently operation are going to be expanded and for that

purpose their expenses also increased. But these all shows every slightly difference

in all those expenses such as salaries, contribution to provident fund, non executed

fees of directors, legal and professional charges, stationary and printing etc. as

compared to previous year.


Ratio Analysis

Ratio analysis helps us in determining a logical relationship between different heads

of income statement and balance sheet. This logical relationship is helpful in making

various useful interpretations about the financial position of the bank, liquidity of

the bank and most of all the profitability of its operations. Following ratios have

been calculated:

1. Working capital

Working capital = Current Assets- Current Liabilities

(Amount in 000’s)2001 2002

Current Assets 2155946 1455490Current Liabilities 402051 444461Working Capital 1752895 1011029

Comments The working capital of the bank has decreased in 2002. Actually working capital is the liquidity of capital available to the organization from which it conducts its business. In2002 working capital decreased because of many anticipated reasons.

2. Loan to Deposits

Loan to Deposit Ratio= Total Loans/Total Deposit

(Amounts in ooo’s)2001 2002

Total Loans 4347890 4722117Total Deposits 10366688 14640410Ratio 42% 32.25%


CommentAccording to the prudential regulations of the state bank of Pakistan every bank has to maintain the liquidity of 45% with the state bank. If it is subtracted from the total deposits then only 55% of the total deposits are left with the bank to advance to the borrowers. The bank has favorable loans to deposit ratio.

3. Cash Deposits

Cash Deposit=Cash/Deposit(Amounts in 000’s)

2001 2002Cash 1389359 1316933Deposits 10366688 14640410Ratio 13% 9%

Comment

This ratio helps to ascertain as to what %age of total deposits are kept as cash. This ratio shows that 13% of the total deposits were kept as cash in 2001 to meet the day-to-day requirements of the bank. In 2002 there is a decrease in this ratio and is not up to the optimum level of the bank.

4. Liquid Assets to Total Assets

Liquid Asset to Total Asset=Liquid Assets/Total Assets

(Amount in 000’s)2001 2002

Liquid Assets 2155946 1455490Total Assets 14525675 21637153Ratio 14.84% 6.72%

1. Return on Assets

Return on Asset= Net Income/Total Assets

(Amounts in 000’s)2001 2002

Net Income 152616 175978Total Assets 14525675 21637153Ratio 1.05% 0.81%

CommentsThis ratio shows that how much an organization is earning on its assets after meeting


all the obligations and expenses. Ratio shows comparatively less return on assets.

Stock Exchange AnalysisOf Prime Commercial Bank share

Prime Commercial Bank is a banking company quoted in the stock exchange;

therefore, it is important to analyze the behavior and trend of its share in the stock

market to get a vast picture.

The stock exchange analysis reveals the strength of the share and the confidence of

the investors in the operations of the company. If the share prices are appreciating

then they show a healthy sign, but this appreciation in price should be accompanied

with increased turnover, increased market capitalization and increased trading

value.

In order to make an analysis the following figures have been obtained from the

bank’s stock exchange trend.

a) Average Share Price

b) Market Capitalization

c) Turnover

d) Price Earning Ratio

Earning Per Share

It shows the amount earned per share by the shareholder. The earning per share

was Rs:0. 63 from January to mid of May, and it increased to Rs: 1.74 in the

following months. It is calculated as;

EPS= Net Profit/No. Of Outstanding Shares


Average Share PricePrime Commercial Bank’s share had an average price of Rs.4.91 in January.

This price followed a gradual increasing trend from January to April. After that

the average price of the share experienced a major downward fluctuation in

August. The reason was the unstable and uncertain conditions due to the coming

elections in the country. People were not investing in the overall stock exchange

market, because they did not want to block their investments before the

emergence of a clear picture.

After August the average share price remained around Rs.5.85 in September but

started to appreciate in October and November. The increase in share price

during the month of October was observed in the second half of the month due

to an overall upward trend in the stock exchange. This upward trend was

basically a result of investment made by institutions.


Price Earning Ratio

Price earning ratio of Prime Bank’s share is declining during the initial 4 months of the

year but after that it started rising and reached a maximum of Rs.0.30 in September and

again declined a little in October and November. Price earning ratio is calculated as

Price Earning Ratio= Market Price Per Share/Earning Per Share

It shows that how much time will be needed to cover the market price. Price earning

ratio of Prime Bank has increased during May to September. An increase in the

price earning ratio indicates that the investor has the confidence in the bank’s

growth and income. The factors determining the price-earning ratio are:

Share price Performance

General Economic Performance

Stock Exchange Trend


Turnover

Total turnover indicates the total business carried out of a specific share. The trend in turnover of Prime Bank’s share is highly fluctuating. It is more or less stable during the first four months but after that it followed a decline from May to September. The turnover was the lowest during September and it was due to the fact that the price of the share was also declining and there was a selling pressure.

The reason for the downward trend was an overall depression in the economy as well as the stock exchange. Since Prime Bank’s share is not a blue chip therefore it follows the trend established by other blue chips.

MARKET CAPITALIZATION

Market Capitalization = Market value * Paid up capital

It is affected by the share’s market value. Greater the marker value more will be market capitalization of the shares and vice versa.


Market capitalization is an indicator of the increase or decrease in the share price and also the total business of the share. The paid-up capital was increased from Rs.878, 818,000 to Rs.1,008,340,000.

Prime Bank’s share usually is affected by stock exchange fluctuations due to a smaller share in the stock exchange therefore the total trading can be increased by floating more shares in the market.

INTERNATIONAL BRANCH NETWORK

No branches of {rime Bank are in any other countries. So the bank has to incur additional cost for correspondent banking.


SWOT ANALYSIS

STRENGTHS

Bin Mahfooz Group

The bank is owned by BIN MAHFOOZ group of Saudi Arabia, therefore people

have trust and confidence in banks operating profitability.

Customer Oriented

The bank provides high status services in every field, whether consumer banking,

commercial banking or private banking.

Online transfers

It is a recently achieved strength. Almost 8 branches are on line and more branches

are to be made online very soon.

Location

All the Prime Bank branch locations are in commercial areas.

Highest Rates on Deposit

Prime Bank has the highest rate of returns on different categories of deposits.

Strict Advances Policy

One of the more strengths of Prime Bank is that very less amounts of debts turn

doubtful or bad due to their conservative policy.


Branch Network

Large number of branches have been opened and still more branches are under the

expansion plan.

WEAKNESSES

Branch Layout

Some of the branches do no have an impressive lay out.

No Advertisement

Prime Bank hoes not make any advertisement ore promotion of its products.

International Branch Network

No branches of Prime Bank are in any other countries. So the bank has to incur

additional cost for correspondent banking.


Bin Mahoofz group

Customer oriented

Online transactions

Location Highest rate on

deposits Strict advancing

policy Branch network

SWOT ANALYSIS

STRENGTHS

Weakness

Branch layoutNo AdvertisementInternational branch network

Threats

E- BankingProducts servicesInstability

Opportunities

Branch NetworkMarketingNew products and schemes

THREATS

E-Banking

Many banks are providing e banking to their customers, which is a threat for the

bank.

Products And Services

A wider range of products and services is being provide by the competitors e.g.

ATM, traveler’s cheque, master cards etc.

Instability

The recession experienced by the economy has overall affected the banking

industry.

OPPORTUNITIES

Branch Network

Due to lenient licensing policy by SBP Prime Bank has more opportunities to open

new branches.

Marketing

More market share and customers can be gained by effective marketing strategies.

New Products and Schemes

New customer friendly products can be introduced.

Car Financing

PCBL can also introduce car financing to enhance it business


RECOMMENDATIONS

On the basis of SWOT analysis we see that the Bank’s strengths are more than

its weaknesses but still there is room for a lot of improvement and innovation.

I hope that these humble suggestions for Prime Commercial Bank Ltd. may be

appreciated. These are as follows:

Before sanctioning and issuing and issuing any loans to the borrowers, the

credit worthiness of the client be assured seeing that they’re past dealing

with other banks in the area. This would certainly help in deducing risk of

default.

The customers who have continuous interaction with the bank and have

sound deposits in their accounts should be given value and due importance.

This would greatly help in saving the time of both the bank and the

customer.

The overall services should be improved to a grater extent and the customers

are accommodated in a courteous and friendly manner.

The bank should sanction only small amounts as loans so that it may be easy

for the bank’s officials to collect cash at the end of the year.

A proper current and saving account balance should be kept every time to

increase the deposits with the bank for a longer period of time.

Proper securities should be obtained as guarantees to secure loan in favor of

bank.

All the branches should be equipped with modern facilities like tax

consultancy, interest and computers.

A qualified and skilled staff should be introduced and strategies should be

developed to divert to quality banking rather than quantity. The branches

having continuous insufficient cash balances should be closed.


PCBL should give proper attention on staff training and should provide the

facility not only in Pakistan but also in abroad. Every year some of the

employees should be sent for training to other countries.

In order to improve the image of bank and create public awareness, bank

should establish separate Marketing department.

The employees should be provided the opportunities to attend and

participate in seminars and lectures on banking.

There should be separate counter with well-mannered trained employees for

providing guidance and every kind of information to customers.

Proper remedies for delays or dishonor of cheque is passed at proper time in

order to make good reputation in the eyes of the customers.

Customer should be facilitated at the time of payment of utility bills to avoid

rush and mismanagement.

Online banking system should be started in all the branches.

Automatic Teller Machine should be replaced at various areas in large cities,

especially in commercial areas near big markets.

A car financing scheme should be approved that will be more profitable for

PPCBL. Almost all the competitors of Prime Bank are offering such schemes.

The management should work free from political pressure.

A plan should be developed to employ professionally qualified new blood,

relating to finance and marketing, their recruitment should be strictly on the

basis of merit and induction should be confirmed after proper training.

The employees should also be given due importance. Every year special

prizes and incentives must be given to extraordinary workers to motivate

them.



Annexure

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