Subject: Econometrics- I (405)Submitted to :Mr. Abdul Aziz

Submitted by :

Rabia’a Naushad

Acknowledgement: By the grace of ALLAH almighty, who has enabled

us to do this entailing hard work. It is a matter of pleasure and privilege for us to complete this report on Faysal Bank.

I would like to thank Sir. Abdul Aziz for giving us an opportunity . This work helped us to apply the theoretical concepts and learn the practical aspects of a bank. I would also like to thank my Group members SUNITA & SAHAR for their valuable guidance and help throughout the period of making this report.

Introduction of Banking Industry

Definition:“ A bank is an institution which receives deposits and advances loan.”

History:After independence, Muhammad Ali Jinnah took actions to establish a central bank in Pakistan which resulted in the new founding of the State bank of Pakistan, with its headquarters to be based in Karachi.

Classification of Banks on the Basis of Functions:Central Bank

Commercial Bank

Agricultural Bank

Mortgage Bank

Investment Bank

Saving Bank

Micro Finance

Bank

SLOGAN:EXCELLENCE IN  SERVICE IS THE KEY

TO SUCCESS”

Faysal Bank’s philosophy is to provide consumer-driven banking products and services that meet customer demands and exceed customer expectations. They believe ‘Service’ is the only key to success.

INTRODUCTION TO FAYSAL BANKFaysal Bank is subsidiary of Ithmaar Bank of BahrainFaysal Bank is listed with Karachi, Lahore & Islamabad Stock Exchange..Faysal Bank Limited was incorporated in Pakistan on October 3, 1994, as a public limited company.It is a full service banking institution offering consumer, corporate and investment banking facilities to its customers. Faysal Bank later on acquire RBS (Royal Bank of Scotland).Faysal Bank Limited has grown its countrywide branch network to 245 in 56 cities across Pakistan.

Vision & MissionExcellence in all that we doTo excel in providing innovative, value based banking solutions to meet changing needs of customers and to strengthen the image of trust and reliability.

Values  

Faysal Bank culture is built on a set of core values: Respect, IntegrityProfessionalism Teamwork

MEMBERSHIP OF VISA INTERNATIONAL:Faysal bank became the principal member of Visa International. The bank is in the process of linking its ATM and Debit cards to visa for use by its customers even out of Pakistan.

Products:Saving

accountsRozana Munafa Plus

AccountFaysal Moavin Account

Faysal Premium Account

Faysal Izafa Account

Mahfooz Sarmaya

FCY Saving Plus Account

Consumer Loans:Car Loans

Housing Loans

Corporate & Investment Banking:

Corporate Financing

Trade Finance

Treasury & Capital Markets

Agricultural Financing

Cash Management Services

Credit Cards

Services:PocketMate Visa

Debit Card

Traveler's Cheques

Transfer of Funds

Safe Deposit Lockers

Non-Stop Banking

SMS Alerts

E-Statement

Consumer lendings:Faysal Bank also offers

Credit cards to its customers in collaboration with Master Card and Visa Company. Credit cards offers are as follows:

mc2 Master CardUfone Credit CardAirblue Credit Card

Strengths:

The bank this year has been awarded a certificate of Excellence by Management Association of Pakistan for its good corporate governance and best business.Heavy investment in Information Technology Symbols, implementation of Financial Oracle, HRMS.Very attractive salary packages to employees.Attracted big corporations like SNGPL, Attock Group of Companies, Zaver Petroleum, etc. Most progressive and well networked bank in Pakistan.

Weaknesses:

High employee turnover.

Low number of ATMs.

Attracting only upper and middle class customers.

Market share is declining from new competition.

Employees’ frustration due to excessive work burden

Opportunities:It can capture agriculture market by offering innovative agri finance  products.

Impressive print and electronic media campaign highlighting FBL’s role in the development of rural economy of Pakistan can give it competitive edge over its competitors.

Through re-branching, FBL can capture lot of new customers.

Threats:Declining trend in banking sector, due to Economy of Pakistan.

Arrival of Barclays Bank in Pakistan, which can increase the competition in banking sector.

Moving of key employees, e.g. Corporate Relationship Managers, which means moving of corporate clients to other banks

Identifying Problems Of Company

Less number of branches across the country.

Difficulties in accessing the ATMs of bank because lower in numbers.

Not focusing on lower middle class customers.

Decreasing the deposit ratio because of new competition.

High turnover rate.

Suggest StrategiesFaisal Bank can increase its deposits by capturing the lower middle class customers and by offering innovative financial products to its customers.It can increase the number of branches and the ATM’s across the country.It can focus on Islamic banking window and can increase its deposits by capturing the customers whom are interested in Islamic banking.By providing attractive incentives, it can retain its potentials employees.

Share Price Analysis

FBL’s footprint now spreads over more than 260 branches in over 70 cities, with combined business assets of over PKR 300 billion, further strengthening its balance sheet and placing it amongst the top ten banks in Pakistan. With assets exceeding 250 billion USD rupees, it is one of the largest banks in the country and has shares listed on the Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange.

Regression Analysis:

Calculation of Slope:

b= nΣXY – (ΣX)(ΣY) nΣX2 – (ΣX)2

b= 30(14062691.15) – (882560.62) (477.92) 30 30(25966424048.70) – (882560.62)2

b= 421880734.5 – 421793371.5_____ (7.789927212)11 – (7.78913248)11

b= 87363______ 79473225.22

b= 0.001099

Calculation of intercept:

a= Ymean – b (Xmean)

a= ΣY – b (ΣX)

n n

a= 477.92 - (0.001099)(882560.62)

30 30

a= 15.93066 – (0.001099)(29418.6873)

a= 15.93066 – 32.331137

a= -16.4004

Model equation:

Y= -16.4004 + 0.001099 (X) Calculation of Co-efficient of Correlation:r = nΣXY – (ΣX)(ΣY)______________ √[nΣX2 – (ΣX)2] [nΣY2 – (ΣY)2]

r = 30(14062691.15) – (882560.62) (477.92)_____________________ √ [30(25966424048.70) – (882560.62)2][30(7618.1684)-(477.92)2]

r = 421880734.5 – 421793371.5_____________________________ √ [(7.789927212)11 – (7.78913248)11][2288545.052 – 228407.5264]

r = 87363______ √ (79473225.22)(137.5256)

r = 87363

√(1.092960298)10

r =87363________

104544.7415r= 0.835

Y=a+bx

Coefficient Of Determination:R2 = ESS TSS

R2 = 3.199605383

4.584186668

Standard Deviation: S.E = √RSS

n-2

S.E = √1.383007313

30-2

S.E = √0.049393

R2= 0.6979

S.E = 0.2222

Step 1:HO = Null Hypothesis = β =0 (There is no effect of 100 Index on Shareprice)

Ha = Alternate Hypothesis = β ≠ 0 (There is an effect of 100 Index on Shareprice)

Step 2:Level Of Significance:α = 0.05Confidence level = 95%

Step 3:Find Value from t-table:Here table-value is +-2

Step 4: Test Statisticst = _____b______

S.E/ √ nΣX2 – (ΣX)2

t = 0.00109__________

0.2222/√30(25966424048.70) – (882560.62)2

t = 0.00109______________________________

0.2222/√ (7.789927212)11 – (7.78913248)11

t = 0.00109_________________

0.2222/√ 79473225.22

t = 0.00109______________

0.2222/ 8914.775

t = 0.00109_____

0.000024924

t = 43.731

Step5: Reject & Do not reject Ho:If Calculated value is less than 2 then Do not Reject HoIf Calculated value is greater than 2 then Reject Ho

Here, calculated value is 43.73 which is greater than 2 hence Ho is rejected.

Step6: Result In Words

This shows that Ha is considered and there is an effect of 100 Index on Share Price of Faysal Bank Ltd.

CONCLUSION:Role of Bank is became important as the

economy is booming.There are a number of mergers happening

in the economy with foreign investments coming into the banking sector.

FBL is committed to its clients by meeting good relationship with them.

The  services FBL provides have a great market penetration not only because of their features but also the profit and markup rates that they charge.

The top management of the bank is always developing strategies that cope with unexpected challenges to deliver products and services more efficiently.