COMMERCIAL BANKING ASSIGNMENT

ANALYSIS OF ASSETS AND LIABILITIES OF A BANK

SUBMITTED BY: AYAZ QAISER, UNSA HAIDER ZAIDIMEHRAN USMANI, SARDAR MOHSIN BBA-7B

ANALYSIS OF

ASSETS AND LIABILITIES

NIB started as NDLC-IFIC Bank which was incorporated in March 2003, as a public

limited company. It started its operations in October 2003 with paid up capital of Rs.

1.2bn with amalgamation of NDLC and of IFIC’s Pakistan operations and their assets

& Liabilities, and subsequently those of Credit Agricole Indosuez Pakistan in April

2004. Temasek Holdings acquired 25% shareholding in NIB in March 2005 through

Bugis Investments which was enhanced to over 70% in June 2005. NIB has branches

all over Pakistan.

NIB vision is to rank amongst top 5 banks in Pakistan. Therefore it acquired majority

shares of PICIC on June 28 2007, which gave control of its subsidiaries (commercial

bank –PCBL, an asset management company - PICIC AMC and PICIC Insurance).

Legal merger of PICIC & PCBL into NIB took place on 31st December ’07, once all

regulatory approvals were obtained. Post merger NIB total assets increased to Rs.

176.6 bn as of 31st December 2007, further increasing to Rs 180 bn as of 31st

September ’08. Present paid up capital of Rs. 40.4 bn is highest amongst banks in

Pakistan. Temasek Holding remains the largest single shareholder with approximately

74%shareholding.

 

NIB has almost 4500 employees, working in the different business units of the bank

which include:

Retail Banking and Transaction Banking

Small Medium Enterprises and Commercial Banking Group

Corporate and Investment Banking Group / Financial Institutions

Treasury of Capital Market Group

NIB BANK LTD PRODUCTS

NIB is offering several kinds of products, details of which are as under:

1. Khazana Daily Product Account

2. Azadi Saving Account

3. Term Deposit Scheme

4. Basic Banking Account (Current Account)

5. Foreign Currency Accounts (FCY Account)

6. Auto Finance

7. Small Business Loan

8. Personal Installment Loan

9. ATM

1- Khazana Daily Product Account

The fascination for an individual in Khazana Daily product Account is as under:

Interested In More Profit? Want Cash Every Month?

NIB offers his customers that; with “NIB Khazana Daily Product Account” they

can see their money grow – every day, every month.

Attractive Returns Every Month

NIB Khazana enables his customers to earn profit daily, on the basis of their day –

end balance, which is credited to their account every month. NIB offers the

opportunity to earn as high as 4.5% profit. The higher the balance, the higher the

return. The deposits and Rate per annum of NIB Khazana Product Account is given

as under:

Deposits Rate (Per Annum)

Up to Rs. 99,999/- 0.10%

Rs. 100,000 – 499,999/- 1.50%

Rs. 500,000 – 999,999/- 3.50%

Rs. 1,000,000 – 2,999,999/- 4.50%

The minimum balance requirement to avail this product is Rs. 100,000/-

2- Azadi Saving Account

NIB offers yet another attractive opportunity to earn an even higher rate of return

on investment. Now the customers can get as much as 6% on a deposit of Rs.

1,000,000/- and above. Whether salaried or Self-employed, Trader or a

Businessman, Housewife or a Pensioner, Proprietor or a Partnership concern, the

Azadi Account is designed to offer each one a host of special benefits.

The deposits and Rate per annum of NIB Azadi Saving Account is given as under:

DepositsRate (Per Annum)

For Individuals & Corporate

Up to Rs. 99,999/- 0.10%

Rs. 100,000 – 499,999/- 1.50%

Rs. 500,000 – 999,999/- 3.50%

Rs. 1,000,000 – 2,999,999/- 4.50%

Rs. 3,000,000 & above Treasury

3- Term Deposit Scheme

Term Deposit scheme comprises of PLS Notice Deposit, NIB Promise Term

Deposit, NIB Term Deposit Certificates and NIB Amanat Deposit. Term Deposit

Scheme is available from 1-5 year period. So an individual has the advantage of

choosing the tenor that best suits to him. NIB is also offering the loan facility of the

account holder. In case of need an account holder can borrow up to 95% o of his

Term Deposit amount.

Additional Benefits

*Free Cheque Book.

*No Minimum Balance Requirement.

The deposits and rates per annum under Term Deposits Scheme are as follows:

1-PLS Notice Deposit

Deposits Rate (Per Annum) For Individual & Corporate

7 Days - 29 Days 5.00%

*Minimum Balance requirement is Rs. 100,000/-

*Rates for amounts over Rs. 3,000,000/- are quoted by treasury.

2-NIB Term Deposit Certificates

Term Rate (Per Annum)

1 Year 7.00%

2 Years 8.00%

3 Years 9.00%

4 Years 10.00%

5 Years 10.50%

3-NIB Amanat Deposit

PLS Term Deposit For Rate (Per Annum) For Individual & Corp.

1 Month 6.00%

3 Months 6.25%

6 Months 6.50%

12 Months 7.25%

4-NIB Promise Term Deposit

Term Expected Annualized Rate of Return on Gross deposit

8 Years 12.50%

4- Basic Banking Account (BBA)

NIB–BBA account is a non remunerative PKR current (checking) account.

From this account, an account holder would be able to make payment as and

when required. The PKR current account is a non interest bearing checking

account that allows an account holder to make as many withdrawals and

deposits as he may please. Ledger fee charges are levied only on balances

below Rs. 5,000/-

The initial minimum deposit to open the account will be Rs. 5,000/-,

however, there will be no minimum balance charges, if the balance falls

below the above threshold.

If the balance in the account remains ‘Nil’ for a continuous six month’s

period, the account will be closed. However, exemption to this effect may be

solicited from business head.

The account should not be overdrawn. The bank is not obliged to honor any

cheques drawn by the account holder if in doing so the account would

become overdrawn and would debit the account with the charge of each

returned cheque, presented through clearing, as per its schedule of charges.

The balance in the account can be offered as collateral for obtaining loan

from the bank, if such a facility is offered to the customer by the bank.

Maximum two deposit transactions and two cheque withdrawals are allowed

free of charge, through cash/clearing per month.

Unlimited, free of charge ATM (Automated Teller Machine) withdrawals

from the banks’ own ATMs will be allowed. In case of withdrawal from

BBA through the ATM machines of other banks, charges as applicable form

time to time will be levied.

5- Foreign Currency Account (FCY Account)

The schedule of NIB Foreign Currency Accounts is given as under:

NIB Foreign Currency Accounts

DepositsRate Per Annum

USD EURO GBP

Savings (US $ Only) 1.75% 0.50% 2.00%

7-29 Days 1.90% 0.75% 2.10%

FDR One Months 2.10% 1.00% 2.25%

FDR Three Months 2.30% 1.10% 2.50%

FDR Six Months 2.50% 1.20% 2.60%

FDR One Year 2.75% 1.30% 2.90%

Annualized Expected Rate of Return

NIB Foreign Currency Khazana Deposits

AmountNIB Rate

USD Euro GBP

Up to US $ 1,000 1.00% 1.00% 1.00%

US $ 1,000 - 9,999 2.00% 1.75% 2.75%

US $ 10,000 - 24,999 3.25% 2.00% 3.50%

US $ 25,000 - 49,999 3.50% 2.20% 4.00%

US $ 50,000 - 99,999 4.25% 2.35% 4.20%

US $ 100,000 & above Treasury

6- NIB Auto Finance

NIB provides its customer the most convenient, affordable and flexible Auto

Loan/Lease scheme to fulfill its customer dream of owing a car.

7- Small Business Loan

NIB Small Business Loan (SBL) is designed to be a multi purpose business

installment loan. The intent is to provide a product designed and tailored

specifically for the needs of the small business segment in Urban Pakistan. SBL is

called secured loan because the bank require collateral against such loan and the list

of approved collateral types are also prescribed by the bank. Moreover, the bank is

financing the maximum 70% of the collateral value. Their target market includes

the small business with annual turnover between Rs. 250K to Rs. 10 Million is

classified as Commercial Mass Market (CMM). These are typically individual or

family owned businesses, mainly involved in retailing products / services or small

scale trading.

8- Personal Installment Loan

NIB Personal Installment Loan (PIL) is designed to fulfill the need of salaried

individual. It is called unsecured loan because the bank does not require any

collateral against such type of loan. The intent is to provide a product designed and

tailored specifically for the needs of salaried class in Urban Pakistan.

9- Automated Teller Machine (ATM)

Automated Teller Machine is designed to

facilitate the customers so that they get their

money through ATM networks countrywide

whenever they required. The intent of ATM

is to access the money even off the bank

timings. So through ATM card any one can

access the rupee account for withdrawal and

balance enquiries on all banks ATMs

countrywide. NIB Bank Ltd Ltd is offering

this facility to its customers / account

holders free of charge provided that they

access NIB Bank Ltd ATMs otherwise they have to pay some amount on each

transaction.

FINANCIAL STATEMENTS

(ASSETS AND LIABILITIES)

NIB Bank Limited (Formerly NDLC - IFIC Bank Limited)Balance Sheet As At December 31, (2007 – 2009)

 Assets Notes 2009   2008   2007    (Rupees '000') (Rupees '000')             Cash and balances with treasury banks   2,928,404   2,085,141   974,659Balances with other banks   1,362,497   1,966,118   309,218Lending's to financial institutions   2,600,000   2,270,000   1,812,907Investments   6,594,036   5,129,285   766,716Advances   31,052,169   19,622,929   12,158,088Operating fixed assets   622,216   368,551   129,389Deferred tax assets   127,158   -   -Other assets   1,142,363   576,691   406,486    46,428,843   32,018,715   16,557,463             Liabilities                         Bills payable   215,769   274,325   98,620Borrowings   9,164,121   4,547,096   4,159,194Deposits and other accounts   30,566,540   21,123,556   10,648,570Deferred tax liabilities   -   2,465   98,911Other liabilities   2,150,538   1,858,398   188,320    42,096,968   27,805,840   15,193,615

Net Assets   4,331,875   4,212,875   1,363,848

             Represented By:                         Share capital   3,361,522   3,361,522   1,229,041Reserves   719,810   694,623   34,125Inappropriate profit   298,376   197,626   114,609    4,379,708   4,253,771   1,377,775Deficit on revaluate ion of securities - net   (47,833)   (40,896)   (13,927)

    4,331,875   4,212,875   1,363,848

Profit and Loss Account for the year ended December 31, (2007-2009)

   Notes 2009   2008   2007     (Rupees '000')              Mark-up / Return / Interest earned   3,499,278   1,716,917   803,542Mark-up / Return / Interest expensed   2,452,192   1,118,957   412,680Net Mark-up / Interest Income   1,047,086   597,960   390,862Provision against non-performing loans and advances   269,583   120,931   (73,255)Provision / (Reversal) for diminution in the value of investments -   (29,643)   -Bad debts written off directly   -   -   -    (269,583)   (91,288)   (73,255)Net Mark-up / Interest income after provisions   777,503   506,672   317,607             NON MARK0UP / INTEEREST INCOME            Fee, commission and brokerage income   179,994   91,707   40,418Dividend income   14,528   16,668   16,015Income from dealing in foreign currencies   208,627   109,145   25,596Gain on sale of securities   222   4,040   12,806Other income   64,721   14,599   16,732Total Non-Mark-up / Interest income   468,092   236,159   111,567    1,245,595   742,831   429,174NON MARK-UP / INTEREST EXPENSES            Administrative expenses   1,221,423   711,545   393,719 Other (reversals) / Provisions / write offs   (328)   327   3,964 Other charges   2,587   1,182   158Total Non-Mark-up / Interest expense   (1,223,682)   (713,054)   (397,841)Reserves   21,913   29,777   31,333Share of profit / (loss) from associates   8,079   (2,776)   -Extra ordinary / Unusual items   -   -   -Profit before taxation   29,992   27,001   31,333 Taxation - Current   (33,422)   (20,178)   (14,031) - Prior year   -   -   5,687 - Deferred   129,367   96,948   99,620    95,945   76,770   91,276Profit after taxation   125,937   103,771   122,609Unappropriated Profit brought forward   197,626   114,609   16,522Profit available for Appropriation   323,563   218,380   139,131             Basic and Diluted earnings per share   0.37   0.45   0.99

NIB Investment Break down

NIB invest in following :

Pakistan Investment bonds

Overseases investment Securities

Market treasure bills

Government of pakistan guaranted bonds

Government of Pakistan Bonds

Listed companies

Unlisted companies

LIQUIDITY OF NIB BANK

a. Current Ratio

The current ratio of a firm measures its short-term solvency, i.e. its ability to meet

short-term obligations

Current Assets CA

Current Ratio = ---------------------- = ----

Current Liabilities CL

Currents Assets are (Bank + Cash + A/R + Prepaid Expenses + Stock)

b. Quick Ratio / Acid Test Ratio

Quick Assets QA

Quick Ratio = -------------------- = ----

Current Liabilities CL

RATIO ANALYSIS OF NIB BANK LTD.

YEARS 2009 2008 2007

LIQUIDITY

CURRENT RATIO 1.10 1.15 1.09

CASH RATIO 0.23 0.26 0.11