Escolar Documentos
Profissional Documentos
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EXECUTIVE SUMMARY
COMSATS is giving the best education and are offering for specialization, in finance,
marketing and human resource. I am doing my specialization of BS(BA) Honors in finance.
An important programmed is six to eight weeks internship with any recognized institution.
This report is about my internship that I have undergone at RBS (F/7-1Jinnah Super Market
Islamabad) from 1st July 2008 to 10th August, 2008. During my internship I am able to learn
practical aspect of the things that I learn from my books, and get good working experience.
On the very first day of my internship I reported to Area Vice President of Corporate services
department, Mr. Zafar Ahmed Niazi, who assigns Mr. Imran Naveed Ahmed as my
supervisor. He gave me small introduction of the bank and introduced me to the staff of the
department. During my internship I have learned more about the workings of the bank
especially of my own department and a few about others department of bank like operations,
IT, etc. there during my internship of 6 weeks I have learnt a lot of things which are discussed
in detail in the report but below I will tell you about my observations in short.
During my internship I found that RBS is one of the best foreign banks, which are currently
operating in Pakistan. The major emphasis of this bank has always been the quality of
customers’ services. This is the culture and tradition of RBS that whenever u will enter into
the bank u will always find the smiling and enthusiastic faces to welcome you.
Customer retention is the biggest challenge for RBS in Pakistan because there are many
competitors offering similar products and services. So it’s become difficult for the bank to
survive in such a competitive environment. In the year ended December 2008 the bank wasn’t
being able to get profit but the good thing is that they are being able to reduce the loss that
they concur in the pervious year. Low profit rates are one of the major reasons for not meeting
the deposit targets.
So, overall the bank has a good environment but still it has to improve some more things like
ATMs network, promotion system, etc
INTRODUCTION
Background
Royal bank of Scotland (RBS) is one of the world's leading financial services providers and
one of the oldest banks in the United Kingdom (UK). Following the takeover of national
Westminster bank in 2000, the group has continued to grow its business around the globe and,
in addition to its strong UK presence, it has offices in Europe, the united states of America
and Asia. By the end of 2002, it was the second largest bank in Europe and the fifth largest in
the world by market capitalization.
RBS itself was founded in Edinburgh, by royal charter, in 1727. It opened its first branch in
Glasgow in 1783 and developed a large network of offices throughout Scotland during the
nineteenth century. In 1874 it opened a branch office in London and from the 1920s
developed, by acquisition, a major presence in England. By 1970, following the royal bank's
merger with the Edinburgh-based national commercial bank of Scotland, comprising the
former national bank of Scotland (established 1825) and commercial bank of Scotland
(established 1810), it enjoyed over forty per cent of Scotland’s banking business. Under the
Williams & Glyn’s bank banner, it also boasted a large and growing presence in England and
Wales. In 1985 Williams & Glyn’s merged fully with the group's Scottish clearing bank
which thereafter traded throughout Britain as a single entity, the royal bank of Scotland.
During the 1980s the group diversified, setting up an innovative car insurance company.
During the early 1990s the royal bank refocused on its core business of retail banking. In 2000
the royal bank acquired national Westminster bank which was the biggest takeover in the
history of British banking. Now in 2008 RBS took over Aljameen bank of Netherland,
Amstardamsche Rotterdamsche (ABN AMRO), which is considered the number one bank in
Asia.
RBS Pakistan
Effective august, 2008, ABN AMRO bank has been renamed as the royal bank of Scotland
limited as part of global rebranding strategy of royal bank of Scotland post acquisition ABN
AMRO bank in October 2007. The rebranding process proceeded seamlessly and efficiently
from the point of view of customers as well as global RBS standards.
Vision
To be leaders in our chosen markets whilst demonstrating commitment to deliver for our
customers.
Mission
To rebuild the royal bank of Scotland group’s standalone strength and value.
Corporate Values
1. CUSTOMER FOCUSED
We are unrelenting in our focus on customer relationships and our customers’ success.
2. TEAM ORIENTED
We respect and depend on each other for success by working as collaborative teams.
3. PERFORMANCE DRIVEN
Results matter. We have a burning desire to succeed. To make it happen.
4. ENTREPRENEURIAL
We thrive on being innovative in our approach to business.
The royal bank of Scotland group currently operates in more than 50 countries around the
world.
Credit Rating
Pakistan credit rating agency (PACRA), has measured rating of your bank with long term
rating of ‘AA’ and short term rating at ‘a +’. These ratings represent very high credit quality,
a low expectation of credit risk and highest capacity for timely payment of financial
commitments. These ratings are pertinent to the senior unsecured creditors (depositors) of the
bank.
Risk Management
RBS has a well defined risk management framework which complies with all the local and
global standards and the same is fine-tuned from time to time to account for the challenges the
bank faces in its working environment. The year 2008 witnessed unprecedented changes in all
spheres of the economy with significant impact on financial institutions, both globally and
locally. The bank is constantly monitoring its overall risk portfolio to adapt to the changing
dynamics of the market. While there are great challenges, there will continue to be select
opportunities for growth which the bank is confident to pursue and capitalize on.
Future Outlook
In year 2008, it was decided by the new management of RBS plc to revisit its global
footprints in various countries to decide about the future world wide strategic presence to
ensure optimum capital rationing. Based on the results of a strategic review conducted for all
the locations, RBS plc has announced its intention to explore new ownership for its businesses
in fifteen countries including Pakistan. The announcement assures about the full legal and
regulatory obligations compliance and business continuity in an orderly way, through the
transition phase. Local management of the bank is fully committed to RBS Pakistan with an
increased focus on business growth during the year 2009. The main challenge remains
managing the assets quality which has negatively affected our profitability. We are working
on tightening risk parameters to ensure a reduction in this charge in the years to come.
Further, high costs remain a challenge for the upcoming period. We are committed to
rationalize expenses in order to improve our operating efficiency ratios.
Corporate Information
CHAIRMAN
Mr. Muhammad Aurangzeb
DIRECTORS
Mr. Shamim Ahmad Khan
Mr. Robert Ralph Davis
Mr. James Alexander brown
Mr. Shahid Hafiz Carder
Lt. Gen (retired) Muhammad Maqbool
COMPANY SECRETARY
Mian Ejaz Ahmad
AUDIT COMMITTEE
Mr. Shamim Ahmad khan chairman
Mr. Shahid hafiz Kardar member
Mr. James Alexander brown member
Lt. Gen. (r) Muhammad Maqbool member
AUDITORS
Messrs M. Yousuf Adil Saleem & co.
CHARTERED ACCOUNTANTS
Cavish court, a-35, block 7& 8, K.C.H.S.U.
Sharah-e-Faisal, Karachi.
LEGAL ADVISOR
Messrs Hassan & Hassan (advocates)
7-d, Kashmir Edgerton road, Lahore.
REGISTRAR
Messrs Hameed Majeed associates (pvt) limited
H.M. house, 7-bank square, the mall, Lahore.
Principal Office
6, Abdullah Haroon road, Karachi.
Registered / Head Office
77-y, phase-iii, commercial area, D.H.A., Lahore.
2. DEPOSIT FACILITY
The followings are the main type of deposit accounts being offered by RBS for various
categories of people:
• Current account --------------------Sahulat account
• Savings account--------------------Anchor account
• Checking account------------------Access account
• Term deposit account-------------Value term
3. LOCKER FACILITY
“If your jewelry has been given you sleepless nights, and the prize bonds tucked in the bottom
drawer make you feel tense, it is time to discover peace of mind.”
The lockers at RBS are safe, convenient and private. As a customer, you can enjoy
personalized service and operate your locker in a friendly and pleasant environment.
4. CREDIT CARDS
Credit card is the safest mode of using money. It is used repeatedly to borrow money or buy
products and services on credit. Credit cards are issued by banks, savings and loans, retail
stores, and other businesses.
RBS is offering three kinds of credit cards
• Future perfect master card
• RBS air blue master card
• RBS Ufone credit card
5. ATM FACILITY
Through RBS ATM network you can have access to money 24 hours a day, 7 days a week.
This facility gives you the flexibility of withdrawing money from your account any time. The
RBS ATMs are located inside the premises of the bank.
Any customer can make one to five transactions in a single day, by withdrawing 20,000 of
amount in a single transaction, so the customer having the credit card can withdraw 100,000
in a day. If some one wants more than 100,000 then he can use his cheque book.
6. ONLINE BANKING
RBS is offering the facility of online banking to its customers through the country wide
network of branches. If the customer is interested in sending the money in any other branch of
RBS then he / she can use this facility. Customers can use ATMs or banking counters of any
branch for day to day banking needs, irrespective of branch where they maintain their
accounts. It is fast and secure access to any of your private accounts via internet.
8. TREASURE PLUS:
Treasure plus is a kind of insured loan for children’s education. It is very simple. You select
the premium amount (in multiples of 12,000) and term of the plan. Minimum annual premium
amount for customers is Rs. 120,000 to Rs. 24 million
You have the flexibility of paying the amount on a monthly, quarterly, half yearly or annual
basis. When your child reaches the college going age, you will receive a lump sum amount to
meet his / her education needs. In addition to the above, treasure plus also offers a unique
school fee continuation benefit. This option would ensure continuity of your dream to give
your child the best education in case of your untimely death.
1. DEPOSIT
Our Islamic banking deposit products illuminate your choices by providing you Shariah
compliant solutions for a simple reason: we value what you believe in. At RBS Islamic
banking, we bring together products and services that comply with not just your needs but
also your beliefs.
• Current
• Savings
• Term deposit
Savings and term deposit accounts at RBS Islamic banking have been developed under the
Islamic banking principles: Mudarabah and Musharakah. In this arrangement, the depositors
are “Raab-ul-Maal” (investors) and the bank is the “Mudarib” (the fund manager) and in some
instances the investor as well.
2. HOME FINANCE
With our Islamic banking home finance, your dream of owning a house becomes a reality.
Islamic banking home finance uses the Islamic mode of diminishing Musharakah to offer you
a bouquet of benefits and services. We guarantee you the fastest turnaround time in the
market. Your dream of a new house comes true with us, with maximum ease that is the
hallmark. Choose the home finance option that best meets your needs and let our Islamic
banking make your dream come turn.
3. COMMERCIAL PRODUCTS
Our commercial products are based on the Islamic principles of Murabaha, also known as
“cost plus” financing. This is a sale where the seller discloses his cost and charges a profit on
top. At RBS Islamic banking, Murabaha is a ‘buy and sell’ transaction between the bank and
the client, where the bank purchases certain goods (as required by the client) and sells them to
the client by adding profit to the cost. Thus Murabaha is not a loan given on interest; rather it
is a sale of a commodity on spot or deferred payment.
5. ATM NETWORK
You can operate your accounts from any RBS branch in the world, or through our 24-hour
ATMs. Our ATM networks are multi purpose enabling you to transfer funds, withdraw cash
or simply check your balance.
8. E-STATEMENTS
Convenience is just a click away. Now, with RBS, you can receive your statements on your e-
mail. Just access your personal e-mail account, whenever it’s convenient.
9. LOCKERS
If your jewellery has been giving you sleepless nights, and the prize bonds tucked in the
bottom drawer make you feel tensed; it's time to discover peace of mind.
1. DEPOSIT PRODUCTS
A full menu of current, savings accounts and terms deposits in all major currencies with
extensive cash withdrawal limits, attractive returns with high liquidity and a host of associated
privileges.
2. LOAN PRODUCTS
A range of convenient and easily available loan products to cater to all unexpected moments
and any give you the cash to spend when you need it. Whether it is a personal loan, financing
for your home or a loan to pay off your credit card bills, we can provide you with all the
financial assistance you need.
3. CREDIT CARDS
Credit cards come with a myriad of privileges, rewards and a wealth of ideas that elevates
your every experience. Make your choice today to experience unprecedented dependability
designed to compliment your lifestyle.
4. INSURANCE PRODUCTS
RBS provides a wide selection of insurance plans that helps you save and at the same time
offers protection on your assets, income and loved ones. Choose from any of our customized
plan that fit your budget and your life stage needs.
STRUCTURE OF RBS
Organizational Structure Of RBS
DEPARTMENTS
The main departments of RBS (Islamabad branch, Pakistan) include:
and fax facility etc. As the bank has installed cameras at various places so this department
views all the persons going in and out of the bank from a television set.
3. LOCKERS
This is just a separate unit rather than department. It has a very important function to perform.
It provides safety to the customers’ valuables like bonds and jewelry. Mostly three to four
employees work there with proper knowledge about lockers.
The doors of the department are not free to enter but are locked by automatic and well secured
switches.
5. CORPORATE DEPARTMENT
This department deals with corporate accounts. The people of this department have formal
meetings with the corporate clients. If any transaction that has a balance of either above rs.20
million or $ 333,000 worth then there is a requirement of compliance (signatures) to be done
on the cheque by concerned person in the corporate department. If the account has no balance
then a notice is send to the clients.
6. OPERATIONS DEPARTMENT
The operations department is divided into two parts. One part deals with clearing of cheques,
payorders and demand drafts, account opening and closing, incoming remittances, telegraphic
transfers, letter of credit, internal transfers, inter branch and daily reporting. In this
department, processing of the above transactions takes place. They are also maintaining the
files of all these transactions. This part does not have a direct interaction with the consumers
and is located upstairs. Second part deals with cash and transfer. This part has a direct
interaction with the customers. Here the customers receive cash. If a customer wants to open
an account then he/she can contact the people on the desk. This section is located on the
ground floor.
7. LEGAL RECOVERY
This department has a head, team manager and various customers’ handling staff. Basically
this department recovers various loans (auto loan, Islamic loans, and credit cards) from those
clients / customers who do not pay off. In the list of customers who do not pay their money
back to the bank can be of two types those who are unwilling to pay and secondly defaulters.
The department contacts these customers through telephone and firstly informs them that their
case is in recovery so please contact bank and return the loan. Secondly if they do not turn up
then the employees themselves visit the customers.
This process consists of settlement letter, sending a waiver to the customers and then
contacting lawyers.
This is a top secretive department where entry is not so easy for every one. This department
has a boss, two supervisors and other employees. Basically it checks and verifies all the
documents of the customers who have applied for loan or credit card whether they are
common customers or royal ones. It is being sub divided in two portions the secure and the
insecure one. In secure portion those loans are verified against which some collateral is
granted by the customer like mortgage and auto loans. In case of non collateral loans like
(credit cards and balance transfer facility) the secured portion is considered. The external and
internal verification of documents is done in this department.
12. I.T.DEPARTMENT
Information technology played a critical role during the year 2008 for business of the bank.
During the course of the year a number of major activities were carried out, this included
completion of data migration project from prime commercial bank application platform onto
the RBS banking application. Also deployments of new modules were made within the
applications, to cater for additional products and processes for both internal and external
requirements. In order to streamline the products offered to the customers, all the ATMs were
re branded and a consistent and standard menu was implemented on all the ATMs and the call
center was upgraded to handle additional call volumes and products.
In order to cater to the increased transparency and control of the expense system various
improvements and additional controls have been introduced into the transaction processing
systems. Furthermore, to improve the efficiency of the payroll system, a new third party
application was launched; this improved the response time within the hr department and also
ensured that greater transparency in the allocation of cost was made available. As part of the
re branding from ABN to RBS, all applications were reviewed and a comprehensive project
was undertaken that included all customer touch points. This not only included changes on the
touch points such as the ATMs but also included other areas such sms alerts, statement of
account, e statement, advices, reports and other customer correspondences.
A project to further improve the network bandwidth across the country and with the regional
offices was initiated. This included the bandwidth up gradation at various locations of the
existing links as well as migration of the links onto the fiber based technology at key
branches. We have deployed satellite connectivity in all cities and have also engaged a
separate vendor for redundant links to improve our ability to maintain a high level of business
continuity and reduce the level of reliance onto a single vendor
13. KITCHEN
The function of kitchen is to serve tea, coffee and water. It also serves lunch to the bank
employees during lunch hours.
Beside all these departments RBS is also dealing in Islamic banking but it is not treating it as
department but as a totally independent unit and with having its own system and branch
network.
The emergence of Islamic banking has made banking easy for customers interested in
financial products and services which are in harmony with their religious beliefs. RBS
understands the needs of their local communities, and the RBS Islamic banking brand is able
to meet customers’ desire for Shariah complaint solutions.
RBS Islamic banking unit is a client driven institution which provides innovative solutions to
cater to genuine customer needs. Central to their customers is their commitment towards
adherence to Shariah which is evident through all their practices. RBS Islamic banking
commits to deliver only the best service standards through its presence across the country.
ANALYSIS
SWOT Analysis
STRENGTH
• The decor of branch gives a new and modern look
• Availability of required office equipment.
• RBS has assigned separate parking for its regular customers.
• ATMs are located inside the premises of bank, enabling the customers for having
access to the comfortable environment.
• Customers can get the bank statements or the check books in a single day as compared
to the other banks.
• Customers do not have to wait too long or stand in long queues to wait for their turn.
• All the customers are greeted properly. This skill is given foremost importance in this
department, so it must be learnt by the employees and interns.
• It enjoys better position than the other banks of Pakistan because RBS maintains big
accounts of highly profiled businessmen as compared to other banks.
• RBS has the accounts of big organizations like ogdcl, ptcl, efu, ptc, ppl and shv
energies Pakistan etc.
• RBS has one special department by name of fraud risk management (FRM). The staff
of frm verifies the customers at various stages in order to reduce the occurrence of
fraud in bank.
• RBS gives too much importance to its customers. On the main entrance of bank there
is special greeter desk which is responsible to properly guide the customer. Not only
has this bank always keeps two to four staff members who are ready to help the new
customer any time.
• The concept of NSBC introduced by the bank is very positive by providing 24 hours
service to the customers. Also the sms banking is better than other banks of Pakistan.
• All the departments of the bank follow the policy of kyc that is “know your customer.”
According to this policy the bank staff knows its customers fully from his / her
business to daily activities so that they do not fall a pray to illegal activities.
• A very positive point of this bank is that it gives separate status to high profile
customers. For example the customers who have account worth of more than 1 million
are treated specially. Bank has a separate department and dealing section for such
customers which is known as RPB and customers are called royal preferred customers.
These customers have access to luxurious and well decorated waiting areas where they
can enjoy reading newspapers, magazines, watching television and using internet.
• RBS has a very strong management who is always ready to take strict actions and wise
decisions during the bad conditions.
• As RBS is focusing sports allover the world as a mean of marketing, in Pakistan
targeting cricket, so that also makes it familiar with the peoples of that country. So
there marketing strategy is also there big strength.
WEAKNESSES
• One of the weaknesses of this bank is that some of its branches have not even started
its operations like its Peshawar branch is not functioning because of lack of employees
in that area.
• It is very much true that RBS considers it’s customer a great asset but some times it is
not able to satisfy them. The main problem is with ATMs mostly the customers get
annoyed but the bank employees do not take this problem seriously.
• Many of the times employees on the floor who have direct dealing with the customers
feel frustrated without any break during the work schedule.
• There is lack of proper rotation among the departments, which leads to limited
knowledge among employees.
• Sometime the customers feel dissatisfied and complaints that bank does not clearly
mentions the terms and conditions on various products like deduction of service
charges. Mostly credit card holders come up with such complaints.
• Many of the banks employees are not loyal with it. They just leave the job in search of
better job opportunities to other banks.
• Some times the customers are not informed before time about the certain changes
being going in the bank; regarding banking products or changing the name or structure
of the bank, which creates confusion in minds of the customers.
• Weak delivery system and courier facilities.
• Customers are not properly informed about the upcoming changes
• Front line employees are not sometimes well groomed to handle difficult customers
under stress conditions.
• Customers are not properly informed about the upcoming changes.
• No proper rotation and cross departmental promotions of employees which lead to
limited knowledge among staff members related to other departments.
• Link down problem of ATMs.
OPPORTUNITIES
• As the concept of NSBC and online banking is increasing, so the bank has the
opportunity to further enhance and improve there system of NSBC, so that customers
will feel comfort in using in it.
• There are growth trends in Islamic banking sector of Pakistan which will further
enhance the working condition of Islamic banking in near future.
• Now a day’s many banks are going towards mergers and acquisitions, so RBS has the
opportunity to acquire any such banks in order to improve and expand there network
in Pakistan.
• The banking industry of Pakistan is still growing and there are a lot of areas which are
still untouched by commercial banks, so the bank has the opportunity to grab those
areas and gain the advantage out of it.
• More ATMs to attract new customers and to minimize load on cash counters.
• Opportunity for young and fresh blood to get employment and make its career in the
banking sector.
• RBS formerly ABN AMRO had a good name that can be exploited for business
growth with the increased number of branches
THREATS
• Inflation is the biggest threat for the banks to launch new products and to maintain
service delivery system.
• Increasing competition posed by other banks.
• Due to present government and the instability of the policies RBS may face a lot of
problems in future.
• The religious class emerging from the Pakistani society, which hates working with the
foreign banks and prefers local banks, can disturb the working of the bank in future.
• Due to depreciation of Pakistani rupee, bank may earn less profit than its other foreign
branches.
• The employees are not loyal with the bank, when they find better opportunities they
leave their existing posts so it can create the problem of recruiting new staff for human
resource department.
• Many new and emerging banks like Barclays are offering better pay packages to the
employees which in future may increase the turnover of employees.
• The terrorist attacks on foreigners and foreign companies can also make it difficult for
a foreign bank to work in Pakistan.
• Medical schemes
• Tax liability.
• Temporary recruitment.
• Internal communication & staff welfare.
• Delegation of authority & power of attorney
• Foreign posting international assignments
RECRUITMENT PROCESS
Recruitment Sources
External Advertisement
Internal Advertisement
Job Posting, Notice Board
Website Newspaper AD
Candidate to Apply Through
Respective Department
Documents Verification
Job Offer by HR
Marketing Analysis
RBS LAUNCH
Amongst immense excitement and fervor, RBS imprinted its presence in Pakistan in august
2008. Although new to Pakistan, RBS is a global powerhouse brand recognized for its people,
products and processes. With the combined strength of RBS and ABN AMRO’s product
offerings in retail, wealth and corporate banking, RBS seeks to break new grounds in the field
of banking in Pakistan. The launch day was celebrated as “BLUE DAY”- blue being the
identity of RBS worldwide.
reward points for every pkr 50 spent on their RBS credit card during Ramadan. The entire
promotion received a tremendous response and left our customers awaiting the coming year’s
festivities!
EVENING BANKING
Taking into account the busy lifestyle of alot of customers, RBS introduced evening banking
in 3 branches in 5 main cities. Normal banking hours were extended from 9am - 5pm to 9am -
7pm from Monday to Friday to cater to our clients’ growing banking needs. This initiative
was a strong reinforcement of RBS’s customer centric business and service model.
AGRICULTURE LOAN
RBS introduced agriculture loans to facilitate its customers and planted itself firmly on the
map as a trusted preferred supplier of financial solutions to its clients. These loans enable its
customers to reap the maximum from their land with a range of RBS agricultural products and
services, thereby facilitating their business to grow and prosper. RBS also initiated the unique
concept of crop loan insurance, a protective cover for crops against unforeseen calamities.
Financial Analysis
During the year under review the deposits of the bank declined by Rs. 86 billion from the
level in December 07 while advances increased by Rs 3.755 billion, concentrated largely in
the textile, chemical and pharmaceuticals and food and allied sectors. In the year ended
December 3 2008, inter bank borrowings and erf increased by Rs. 2.128 billion over
December 3, 2007. During the year ended December 3, 2008, adequate provisioning against
advances portfolio has been created in accordance with the guidelines of state bank of
Pakistan.
Specific loan losses amounting to Rs 3.602 billion against non-performing loans were made in
current year compared to Rs 3.635 billion provisions made in year ended December 3, 2007.
The loan losses for the current year under review includes the benefit of forced sale value
benefit amounting to Rs. 410 million as allowed by the state bank of Pakistan for commercial
and sme segment. Consumer credit losses registered an increase during the year in line with
the cyclical industry situation.
During the year 2008, revenue increased by Rs. 1.315 billion over the last year albeit with a
384 million decrease in net interest margin. The decrease in interest margin is reflective of
pressures on spreads resulting from the higher cost of saving deposits (in line with state bank
instructions on the minimum return to holders of saving deposits) as well as the propensity of
depositors to shift to longer tenor fixed deposits. Also during the year ended December 3,
2008, inter bank borrowing costs rose sharply owing to liquidity tightening. Utilizing the
extensive branch network with additional volumes of non-fund based services handled by the
bank, non-fund based income fetched additional revenues of Rs 574 million. Increase in
derivative income of 926 million contributed largely in revenue growth.
In line with the staff cost increase during the year 2008 and impact of re branding cost,
administration expenses rose by 2.6% to Rs 726.990 million over the last year.
HORIZONTAL ANALYSIS
Profit and loss account for the year ended December 31, 2008
Explanation:
The banks current assets, especially cash assets are in decreasing trend and but total assets are
at stable position. This is only because of the increase in the fixed assets. Considering banks
current liabilities only borrowings are in increasing trend, all remaining current and long term
liabilities are decreasing that leads to decrease in the total liabilities of bank by comparing it
to the liabilities of the previous year.
Now if we see the equity of the bank it almost doubled in the year of 2008 but this effect is
only due to the sale of the assets of the bank that shows that increasing trend. Otherwise bank
didn’t issue any new share, except few right shares.
Now if we see and analyze the income statement of the bank we came to know that the banks
net interest income is in decreasing trend but the only reason that the bank is able to reduce its
loss comparable to previous year is that its non interest income increases, which somehow
offset the effect of decrease in interest income.
VERTICAL ANALYSIS
Represented by
Share capital 20 13,474,364 13,474,364 12.4655 12.5301
Advance against subscription for right
21 3,705,450 - 3.4280 -
shares
Reserves -6,395,647 -6,395,647 -5.9168 -5.9474
Accumulated loss -2,508,205 -1,989,575 -2.3204 -1.8501
8,275,962 5,089,142 7.6563 4.7325
Surplus / (deficit) on revaluation of assets -
22 1,778,742 -23,347 1.6455 -0.0217
net of tax
Total Shareholders Equity 10,054,704 5,065,795 9.3019 4.7108
Total Shareholder’s Equity and
108,092,415 107,535,563 100 100
Liabilities
Profit and loss account for the year ended December 31, 2008
Note 2008 2007 2008 2007
Rupees in ‘000 In percentage (%)
Mark-up/return/interest earned 25 11,489,886 11,520,860 100 100
Mark-up/return/interest expensed 26 -5,648,005 -5,295,616 -49.1563 -45.9654
(5,841,881 (6,225,244 (50.8436
Net mark-up/interest income (54.0345)
) ) )
Provision against non-performing loans and advances-
10.4 1,705,486 3,337,535 14.8433 28.9694
net
Provision for diminution in the value of investments 9.3 60,351 1,887 0.5252 0.0163
Bad debts written off directly 10.6 1,823,868 386,148 15.8736 3.3517
(3,589,705 (3,725,570 (31.2423
(32.3376)
) ) )
Net mark-up/interest income after provisions 2,252,176 2,499,674 19.6013 21.6969
Non mark-up/interest income
Fee, commission and brokerage income 1,936,012 1,519,931 16.8497 13.1928
Dividend income 1,769 9,990 0.01539 0.08671
Income from dealing in foreign currencies 649,344 490,959 5.6514 4.2614
Loss on sale of securities 27 -12,196 -298,666 -0.1061 -2.5923
Unrealized loss on revaluation of investments
9.4 - -34 - -
classified as held for trading
Explanation
If we see the vertical analysis of the balance sheet we came to know that the major portion of
bank’s total assets consists of advances i.e. the money he lends further as a loan. The
remaining assets have a single digit contribution in the total assets.
The financing side was also filled by a single liability i.e. the deposits that contributed more
than 70% of total finances. If we see the contribution of debt in total financing it is round
about 90% of total financing. The remaining financing is one by issuing stock and selling of
assets.
Now in the income statement the banks interest expense is almost 50% of total interest
income, while the net interest income is only 31 % of total interest income. The total non
mark up income is 32 % of total interest income while non mark up expense is again more
then 50% of total; interest income. So there again the interest is more then income. So this
will ultimately represents that the banks total return should be in negative as the bank has
more expenses then its returns. So the bank’s loss after taxation is -4.5% of total interest
income.
RATIO ANALYSIS
Ratio Formula 2008 2007
Banking Ratios
Earning Asset To Total Asset Ratio Earning Asset / Total Assets 90205270 / 108092415 92946060 / 107535563
Return On Earning Assets Net Income / Earning Assets (517659) / 90205270 (1564764) / 92946060
Interest Margin To Average Earning
Net Interest Income / Earning Asset 5841881 / 90205270 6225244 / 92946060
Asset
(Pre Tax Income + Provisions For Loan Losses) / Net (-558557+5630310) / (-1366806+3963750) /
Loan Loss Coverage Ratio
Charges Off 1862794 1020178
Equity Capital To Total Assets Shareholder Equity / Total Assets 10054704 / 108092415 5065795 / 107535563
Deposit Time Capital Deposits / Stock Holder Equity 79102705 / 10054704 90288654 / 5065795
Loan To Deposit Total Loans / Deposits 72053391 / 79102705 66374394 / 90288654
Miscellaneous Ratios
Return On Total Assets Net Income / Total Assets (517659) / 108092415 (1564764) / 107535563
Return On Equity Net Income / Shareholders Equity (517659) / 10054704 (1564764) / 5065795
Return On Deposits Net Income / Deposits (517659) / 79102705 (1564764) / 90288654
Cash To Deposit Ratio Cash And Cash Equivalents / Deposits 9800197 / 79102705 13423827 / 90288654
(517659) / (1564764) /
Earning Per Share Net Income / Number Of Shares Outstanding
1347436385*1000 1347436385*1000
TREND ANALYSIS
Profitability Ratios
All the three above mentioned ratios are in negative that clearly implies that the bank is in loss
and have negative returns but the positive signal in the ratios is that the ratio is in decreasing
trend toward loss and moving towards profit. And it can be expected that in next year the
bank will get some profits.
MY WORKINGS
I had done my internship in RBS bank f-7 branch, Islamabad. There I worked as an intern in
the department of corporate services, under the kind supervision of Mr. Imran Naveed
Corporate Services
This department deals with a number of jobs. These include:
• Suppliers and payments
• Dealing with human
• Purchasing
• Processing of expenses
• Depreciation
• Payment of taxes of vendors
• Inventory control
• Administration of zone
Product/service dr
Account payable cr
Account payable dr
Pay order cr
PURCHASING
The department has also the authority to purchase any required thing demanded from branch.
It gets the petty cash of rupees 25000 on daily basis to fulfill its daily requirements without
any prior approval. Any single thing to be purchased if cost more then rupees 5000, the
permission is required from the head quarter after which extra cash is drawn in order to
purchase it.
The entry of petty cash is as under
Purchased item dr
Petty cash cr
PROCESSING OF EXPENSES
Mr. Imran is responsible for processing and entries of expenses like purchased items,
payments of gas, electricity, telephone bills, rent, and other expenses.
As the bank is using software registered to them named expense version 2.0for the purpose of
doing entries of expenses. So he is trained to use the software in which he do entries and
automatically reports like monthly statements generates.
DEPRECIATION
It is also included in the expenses but the treatment and nature of these expenses slightly
different so we treat it as a separate function of the department.
The depreciation on fixed asset is done by straight line method in which the total cost of asset
is evenly distributed to the useful life of asset. i.e.
The useful life of most of assets in the bank is considered to be five years. Its entry in the
journal is as follows
Depreciation expense dr
Accumulated depreciation cr
PAYMENT OF TAXES
The department also pay taxes on behalf of there vendors. Tax amount is deducted from the
payorders pf vendors and then paid at state bank by the bank.
The rates charged on different types of vendors are as under:
• 3.5% charged to those suppliers of products, who have already NTN number.
• 6% charged to those service providers, who already have NTN number
• 5.5% charged to those suppliers of products, who don’t have NTN number.
• 8% charged to those service providers, who don’t have NTN number
The suppliers but at any time can collect the copies of paid tax slips from the bank at any
time.
INVENTORY CONTROL
It is also an important function to control inventory and to keep safe amount in the store so
that no problem occurs. They believe in just in time inventory system. Inventory includes
stationary, account opening forms and other forms used in the bank operations.
In order to get inventory the bank has to give orders to suppliers which is then delivered in 3
to 4 days. So the bank keeps this quotient of 3 to 4 days so that shortage didn’t occur.
Then any department that want any item send request to corporate services, which then orders
store keeper to deliver specific items to the specific department and do entry in its register. In
case specific item is not present in the inventory then the department contacts with near
branches in order to reduce the delay time.
ADMINISTRATION
The department is responsible for maintaining the branch. It means that they are heading the
workings of cleaning, doing air reservations for there employees, maintaning record of cars of
bank and to provide the cars to employees, and to deal with all other complaints regarding
overall environment of branch
The department is also responsible for admining the whole north zone too. The north one
includes the branches of Peshawar, Mardan, Nowshera, Rawalpindi, Islamabad, Mirpur,
Jhelum, and Kharian. Any requirement of the whole zone is fulfilled from there.
My Accomplishments
During my internship I am also allotted with a number of tasks and workings that I have to
accomplish. These are as under:
AUDIT OF EXPENSES
The very first day I was assigned with the task to check the bills of fuel i.e. either they are
entered in the summary account or not, for the month of June. For this purpose they give me
the file of printed bills and then from there software print the summary and give it to me. That
day I check all the bills of all the three Islamabad branches. There are few bills not in the file
but in the summary. I told my boss about these bills. He then immediately prints them out
from the software and asked me to clip it in the file.
After wards he also give me files of other expenses like telephone, of suppliers, depreciation,
etc to check them and to make them complete. I not only check the bills of this branch but
also of blue area branch.
PAYORDERS
I also deliver the payorders to there relative owners. Mostly they personally come to the
department and I hand over the payorders to them after doing necessary measures like proof
of receiving by get the signs of them on photocopy of the payorders and bill, etc.
The payorders of taxes are to be submitted in state bank. So after getting there payorders the
payorders is delivered to specific persons who then submitted it in state bank.
FILE KEEPING
Mr. Imran then tells his assistance to tell me something about file keeping. He told me that
how he divide the files according to different priorities.
First he tells me that due to be the zonal headquarter they have to maintain files of all
branches in the zone. But the important is to maintain the files of expenses according to there
accounts.
I will have to clip all the relative documents to there relative accounts and to there relative
branch files.
MISCELLANEOUS
Other then these above mentioned workings I learn a lot about many other things. The major
thing among them I considered to be one of my experiences or observation that I considered
very beneficial for me is the process of switching from ABN AMRO bank to RBS.
31st July was the last day for ABN AMRO in Pakistan rather in the whole world. But
changing start occurring stepwise many days before. Ordering stationary is the biggest
challenge for the administration as well as for suppliers. During acquisition there is very
hustle in the branch and we have to work there late at night. As all administration is the duty
of my department so we all are very busy in the task of managing the stationary, and in
changing the outlook of branches from the green of ABN AMRO to blue of RBS. It is a very
difficult task but at the end of the day we came a successful as when everyone came to ABN-
AMRO thinking of green environment, they were surprised by seeing the new blue culture of
the bank (as we unwrapped all the logos after all the regular working hours).so this is also a
very practical experience to me with respect to the management of the organization.
RECOMMENDATIONS
Some of the problems in the bank can be solved in a very short period of time. But some
problems might take longer time as compared to the short term problems so they must be
solved by proper planning. The following recommendations can improve the condition of
bank.
• Improvement of ATM’s
• Informing the customers before time
• Clear information of any product
• Improving courier services
• Promotion rate
Improvement of ATM’s
The first recommendation is that there is need to improve the existing condition of ATMs
because it disturbs the working environment of the bank, when customers show their
dissatisfaction regarding the problem of link down with ATMs.
RBS should improve the situation by taking the following steps:
• Increase the number of ATM machines.
• Inform the customers about link down problems of ATMs, basically most of the
customers are unaware of their working so they blame the bank for keeping tardy
machines. Customers should be told that link down is not the fault of their bank and
this problem also arises because of using the credit card of other banks.
• ATMs should be serviced regularly each month instead of every four months, for
keeping them in proper order.
• Keeping ATMs in proper working is not the hard task for the bank because by this the
bank will earn appreciation from their regular customers and the rush of customers can
be reduced from the counters. For this the manager of the department should employ a
separate person for keeping the check on these machines.
As we will see in the weaknesses that RBS customers are not properly informed well before
time in case of any change, so they should be kept in contact with the bank in case of the
following situations:
• Launching of new products
• Changing the name of the products
• Changes in bank rules and policies
• Shifting of departments
In this regard the information desk officer should contact the loyal customers either through
phone calls or via email. RBS should use media for marketing of its various products so that
customers get the idea in case of new product launch. If these measures are taken then most of
the customers will give respect to the staff for keeping them updated.
Most of the employees in this department are mentally upset about dispatching customer’s
goods. In this regard RBS should make contacts with the famous courier services of Pakistan,
in order to avoid the problem of dispatching goods to the desired customers.
Promotion Rate
In the bank the rate of promotion is quite slow as compared to any other banks. This
recommendation can be implemented in the long run as RBS has already a lot of problems to
be solved in short and medium term. The bank is lacking cross departmental promotions.
The employees should be promoted with in the department so that they work well. Cross
departmental promotion will be very helpful for employees because:
• It will enhance the knowledge of employees.
• Create the feeling of hard work
• Break the monotony and dissatisfaction among employees.
CONCLUSION
RBS has a very strong position in Asia. In Pakistan it has more than seventy branches. It is
known as one of the best customer service providers with focus on the high profile business
persons.
The banking is offering many versatile products and services for its customers and also has a
separate luxurious department for high profile customers with the name of royal preferred
banking. The bank has a very good repo in the whole world and tries to maintain it in
Pakistan. So for this purpose the most important thing for them are three customers. So they
give very much importance to there customers and treat every customer as the VIP person.
Despite its strong position RBS has some of the weak points which can be removed easily.
There are weaknesses in the bank which can be overcome by efforts of the staff. The big
weakness is that it should have to improve its information sharing with the customers.
The financial position of the bank is also improving and is moving towards good profitability
in future. But at the moment there returns are in negative.
But on the whole we can conclude that the bank is working good and I have got a good
practical experience in the corporate services of the bank but the most dis-satisfaction for me
is that I am not been able to know much about workings of other departments and my
knowledge was just been limited to the workings of my own department.
In the end I must suggest the bank to improve its employees satisfaction level by improving
there promotion strategy and tries to resolve the problems of customers on permanent basis.