Internship Report on

Bank of Azad
Jammu and
Kashmir

Submitted By:
Hassan Abbasi

(Reg. No )

Department of Management Sciences

University of Azad Jammu and Kashmir, Muzaffarabad

January 2022
 Internship Report on

Bank of Azad
Jammu and
Kashmir

Submitted by:
Hassan Abbasi
Roll No: 57
(Reg. No )

This internship report is submitted in partial fulfillment of the requirements for the degree
of Bachelor of business administration awarded by the University of Azad Jammu &
Kashmir, Muzaffarabad.

Department of Management Sciences

University of Azad Jammu and Kashmir Muzaffarabad

 Department of Management Sciences

University of Azad Jammu and Kashmir Muzaffarabad

Approval Sheet

1.Evaluator

Mr./Ms. Signature

2.Chairman

Mr./Ms. Signature
 DECLARATION

I declare that this material, which I now submit for assessment, is entirely my own work and has
not been taken from the work of others, save and to the extent that such work has been cited and
acknowledged within the text of my work. I understand that plagiarism, collusion, and copying
are grave and serious offences in the university and accept the penalties that would be imposed
should plagiarism, collusion or copying. I have identified and included the source of all facts,
ideas, opinions, and viewpoints of others in the assignment references. Direct quotations from
books, journal articles, internet sources, module text, or another source what’s over are
acknowledged and the source identified in the assignment references. This assignment, or any
part of it, has not been previously submitted by me or any other person for assessment on this or
another course of study.

I have read and understood the referencing guidelines as recommended

in the report guidelines. I have correctly acknowledged it with accordance to the university
standard.

Name Hassan Abbasi

Roll No 57

Session 2018-2022

Signature
 DEDICATION

I dedicated this report to my beloved parents, and my friends who have

Constantly given memorial support and encouraged me throughout my studies. They gave
me mental strength to fight and deal with the hurdles of daily routine which

I faced during my studies. At this stage I can say that today what I am and where I stand is
just because of them.

Secondly I would like to dedicate this report to my teachers

Who guided me to overcome my flaws and enhanced my abilities to bring up the best in me.

Internship
letter will be
added in final
report due to
absence of
manager
today
TABLE OF CONTENTS
Chapter No 1......................................................................................................................13

1 INTRODUCTION OF THE REPORT:.........................................................................13

1.1 INTRODUCTION:......................................................................................................13

1.2 OBJECTIVE OF THE REPORT:................................................................................14

1.3 SCOPE OF THE REPORT:.........................................................................................14

1.4 METHODOLOGY:......................................................................................................14

1.4.1 PRIMARY DATA;...................................................................................................15

1.4.2 SECONDARY DATA;.............................................................................................15

1.5 SIGNIFICANCE OF THE REPORT;..........................................................................16

Chapter 02..............................................................................................................................17

2 INTRODUCTION TO THE ORGANIZATION...............................................................17

2.1 INTRODUCTION OF BAJK , BACKGROUND AND HISTORY...........................18

2.2 VISSION......................................................................................................................18

2.3 MISSION.....................................................................................................................18

2.4 BOARD OF DIRECTORS..........................................................................................19

2.5CORE VALUE..............................................................................................................19

2.6 PRODUCT AND SERVICES .....................................................................................19

2.7 BRANCH HIERARCHY ............................................................................................21

2.9 BRANCH NETWORK MUZAFFARABAD ZONE.................................................22

2.10 POSITION IN THE MARKET ...............................................................................23

2.11 CPM(competitive profile matrix).............................................................................24
Chapter No. 3.........................................................................................................................25
3. Analysis ...........................................................................................................................25
3.1. INTERNSHIP SCHEDULE .....................................................................................................25

7
 3.2. LOCATION IN THE DEPARTMENT......................................................................................26
3.3. ACCOUNT OPENING DOCUMENT:.....................................................................................26
3.4. ACCOUNT OPENING .............................................................................................................26
3.5. REQUIRED DOCUMENTS (Copies).......................................................................................26
3.6. ISSUANCE OF CHEAQUE BOOK..........................................................................................26
3.7. ACCOUNTS DEPARTMENT..................................................................................................27
3.8. Internship work relation with BBA studies:...............................................................................28
CHAPTER 04........................................................................................................................29

FINANICAL STATEMENT AND ANALYSIS...................................................................29

4.1 STATEMENT OF FINANCIAL POSITION.................................................................30

4.2 BAJK BALANCE SHEET.............................................................................................31

4.3 BAJK PROFIT AND LOSS A/C....................................................................................32

4.4 RATIO ANALYSIS........................................................................................................34

4.5 SWOT ALAYSIS............................................................................................................36

CHAPTER 05........................................................................................................................39

5.1 OBSERVATION AND RECOMMENDATION............................................................39

5.2 CONCLUSION............................................................................................................40

BIBILIOGRAPHY

ONLINE REFERENCES

8
 ACKNOWLEDGEMENT

In the name of Allah, The Most Beneficial, The Most Merciful.

First of all, I would like to thank Allah Almighty, who’s marvelous Blessings are always with me
and granted me the patience, determination and courage to complete this task.
I also say thanks to my supervisor, Lecturers for his help throughout the internship report. His
guidance, remarkable suggestions, constant encouragement and constructive criticism enable me
to complete this work… I extend my deepest thanks to my parents and my friends who also
supported me during this work.
I am especially thankful to my respected teachers, Banks Employees who help me in Bank and
friends who prayed for me.

9
 APPENDEX

Abbreviations Meanings
ATM Automatic Teller Machine
BAJK Bank of Azad Jammu and Kashmir
CD Current Deposit
DD Demand Draft
FC Foreign currency
HO Head Office
IBC Inwards bills for collections
IC Inward Clearing
LBC Local Bills for Collections
LCY Local Currency
MT Mail Transfers
OBC Outwards bills for collections
PLS Profit & Loss Saving Account
RF Running Finance
SBP State Bank of Pakistan
SDA Special Deposit Accounts
SNTD Short Notice Term Deposit
SVP Senior Vice President
TDR Term Deposit Receipts
TT Telegraphic Transfers

10
 EXECUTIVE SUMMARY

As we all know very well that time and tide wait for none. So, because of this rapid change in
time and era we have to cope with it. After a lot of search in many fields which are on their
peak in this era, I found Banking sector as a best practice in which I was interested most & I
also searched out different private & Govt. banks that which will be most suitable. During
this era, I got an opportunity of getting practical knowledge about the Banking system in
Pakistan. So to quench the thirst of practical exposure and for getting the basic knowledge
about Bank I joined BANK OF AZAD JAMMU AND KASHMIR MUZAFFARABAD. In
start it was quiet difficult to join this bank due to their complex formalities but finally I got
approval & started practice. During six weeks in BAJK I gather all necessary information
about BAJK.

Efforts have been made to compile this report in such a way that activates its salient features
not only for students but also for the layman. I am writing this report in such a manner that
what I have learnt in this six months’ experience that should reflects through this report. This
includes about all of my activities which I performed in six months but some of additional
assignments were also done by me which helps me a lot to understand banking system in
Pakistan & all over global world. I have divided this report into different Chapters.

o First Chapter is about summary of the report, why you carried out this internship,
what is the purpose and objectives of this report.
o Second Chapter is about Introduction to the Organization. The purpose of this chapter
is to offer an introduction of the company/organization in which I did my internship.
o Third and fourth Chapter is about job description & its analysis This chapter is about
offer the detail account of the all activities (categorized by functions i.e. HR, Sales &
Marketing, Finance, General Management, Operations etc.) carried out by the me,
during the six-week period.
o Fifth Chapter include the findings & recommendations Based on my six-week work
experience, observations and my interactions with the employees & management.

11
Chapter No.01

INTRODUCTION TO THE REPORT

1.1 INTRODUCTION

This is an essential academic requirement to complete an internship program of six weeks in

reputed organizations. Report writing that is an integral part in fulfilment of requirements
follows the internship for degree of BBA hons. A report encompasses the experience of the
internee, his learning and analysis in light of which recommendations are made. This Internship
report has been written on “BAJK”.
Background of Study
It is a practical requirement of Bachelor’s degree by the Department of Management Sciences of
University of Azad Jammu and Kashmir for every student to go on six weeks’ internship
program. The internship program of six weeks is to serve the purpose of acquiring students with
the practice of business administration as belongs to the finance, banking was the most suitable
field to study, so I decided to do internship at Bank of AJ&K.

1.2 Objective of the study:

The main objectives of my study in BAJK are to enhance my management skills. I got
many skills regarding to my field (Finance).
To complete my internship program and prepare the internship report
. To improve my personal skills in the professional environment
. To identify my own strengths and weaknesses which I ever faced in the practical
environment.
 Discover that how to treat and satisfied the customer.

 Analyze the banking operation i.e. operational analysis, financial analysis by doing
practical work and applying the theoretical study.
 Able to move and set in the real organization.
 To learn how to survive in the large organizations.

12
  To learn how to manage the time and also the importance of the time in the practical
life.
 To identify and describe the toughness of the job.

1.2 Purpose of study

Internship training program during Bachelor in Business Administration Program is necessary.

The Internship will enable internees to integrate and use knowledge and skills from the
classroom. This study will facilitate regarding the working of marketing sector of Pakistan. For
achieving my purposes, objectives and for the preparation of the internship report, I required
some kind of data. I used both methods of data collection that are primary sources and secondary
sources for that purpose.

1.3 Scope of Study

. For achieving improvement, research projects are made an integral part of the course work. The
scheme requires the student to study and complete research in specific area at an organization, in
order to get firsthand knowledge of real life situation, apply knowledge in practice, improve
personal skills and help to develop concrete research and development plans.

The time duration of 6 weeks was quite insufficient for conducting complete study and
observation of large bank being specialized in finance, the main focus of study was its financial
aspects including the financial health of the bank and its comparison of this year with previous
year’s performance.

These operations include remittance, customer dealings, deposits, advances and foreign
exchange

1.4 Methodology of Report

In this report writing, a mixed blend of primary and secondary data has been used. In
addition to this primary data was also used wherever the unavailability and shortage for
secondary data was felt.

13
The Instruments used in data collection are following:

1.4.1 Primary Data

The information, which is collected for the first time and exists in raw form, is known as primary
data. It contains the following:

 Formal and informal discussions, group discussions with staff of the Bank.
 Observations
 Feedback from customer.

1.4.2 Secondary Data

 The information, which has undergone through statistical techniques and exists in a
refined form, is known as secondary data. It contains the following:
 Annual Report: Annual report of the BOAJK, issued by the management at the end of the
year’s e.g. Annual report 2018,2019, etc.
 Information memorandums: Various information memorandums issued by the
management.
 Internet: Internet is used to get updated information from the official website of the Bank
as well as other web based information available.
 Documents published by banks: Various documents and broachers printed by the
commercial banks for their clients.
 Banking manuals: different kind of manuals issued by banking operation division for
various departments.

14
1.5 Significance of the Report

The Internship Report serves multiple purposes. Help the student develop written
communication skills. Serve as an archive record of the internship experience. Give the
student an opportunity to reflect on the professional aspects of the internship experience and
the skills were learned. It also allows the students to describe the science content of the
internship.

15
 Chapter No.02

INTRODUCTION OF THE BANK

2.1 History:

The Bank of Azad Jammu and Kashmir” is also known as “The Bank of AJK.

“BAJK is a fast growing commercial bank operating across the state of Azad Jammu & Kashmir
with a network of 73 branches. The Bank is a wholly owned corporate entity of the Govt. of
Azad Jammu & Kashmir mandated to mobilize private savings and public funds for diverting
them to productive channels; promote industrial, agriculture, rural micro financing and other
socio economic activities through active participation of private and public sectors and help
under-developed areas, create employment opportunities and to assist overseas Kashmiris to
effectively and profitably invest their savings in the State. The bank has a number of liability and
assets products customized to fulfill the banking needs of people. The Bank believes that equal
access to resources in the economy is smart economics and a powerful means of poverty
reduction and a path to faster socio economic development. That is why the Bank has launched
an innovative scheme of microfinance for those who have limited or no access to financial
resources.

The bank is actively engaged in promoting home remittances by active participation in Pakistan
Remittance Initiative (PRI) scheme of GOP, through which, customers can receive their home
remittances routed through leading Exchange Companies including MoneyGram and RIA
Money. Under these arrangements a fast and convenient payment system is in place for payment
of inward home remittances in minutes through dedicated desks in all the branches.

The Bank also offers conventional banking services such as safe custody and safe deposit
facilities on minimal rates. The bank also offers cash management services to its corporate
customers on need basis.

A lot has changed since the BAJK started its operations in 2006 through its 1st Branch in
Muzaffarabad. The Bank has expanded its outreach to 69 locations in all districts of state, some

16
in far off places where other banks are not present. From customized product offering to the
technology being acquired to support our service delivery channels, one thing has never changed
which is its focus to change the socio economic conditions of the people of the State. Ever since
its inception, we have remained committed to serve the people with enthusiasm, dedication and
highest sense of responsibility. During this period, we have been able to earn the trust of our
valued customers, who have by choice established their relationship with us. Today we have a
franchise of enormous customers being served by a dedicated team of professionals.

The bank has a dedicated team of professionals fully capable to provide services with energy,
zeal and commitment. The bank attaches top priority to service delivery, therefore investing
considerably in IT and Human Capital to evolve a powerful brand, which is competitive,
sustainable and trusted by its customers

2.2 Vision statement of “The Bank of AJK”:

The vision statement of bank is

“To act as a premier financial institution, fostering socio- economic development of the people
of AJK.”

2.3 Mission Statement of “The Bank of AJK”:

Mission statement of BAJK is:

“To acquire market leadership through quality banking services customized products, best
business practice, merit and performance culture and participation in development process of the
State for the well-being of its people”.

2.4 BOARD OF DIRECTORS

 Board of Directors Dr. Ijaz Munir,

 Chief Secretary, AJ&K Imran Samad,

17
  CEO, BAJK Farid Ahmad Tarar,
 Secretary Finance, AJ&K Fayaz Ali Abbasi,
 SMBR, AJ&K Zahoor-ul-Hassan Gilani,

2.5 Core values of “The Bank of AJK”:

i. Integrity
ii. Commitment
iii. Team work
iv. Excellent in Service
v. Innovation and Growth
vi. Responsibility
vii. Honesty
viii. Trust

2.6 PRODUCT AND SERVICES

2.6.1 DEPOSITS SCHEMES:

 Current account
 Pls savings accounts
 Special deposit accounts (SDA)
 Bemisal mahana bachat account (BMBA)

2.6.2 COMMERCIAL ADVANCES:

 Running finance
 Demand finance
 Bank of AJK car loan scheme

18
 2.6.3 SERVICES:

 Demand draft
 Mail transfer
 Payment order
 Utility bills
 Lockers
 Public service commission services.

19
2.7 Branch Hierarchy:

20
 2.8 BRANCH NETWORK MUZAFFARABAD ZONE

i. Main Branch Muzaffarabad (0001) Bank Square, Chattar, Muzaffarabad

ii. Athmuqam Branch (0008) Main Bazar Athmuqam, District Neelum, AJK
iii. Garhi Dupatta Branch (0017) Main Bazar Garhi Dupatta, Muzaffarabad,
iv. Lower Plate Branch (0018) Near City Hospital Lower Plate, Muzaffarabad, AJK
v. Chatter Klass Branch (0019) Main Bazar Chatter Klass, Muzaffarabad, AJK
vi. Chakar Branch (0022) Main Bazar Chakar, District Hattian,
vii. Pathika Branch (0024) Main Bazar Pathika, District Muzaffarabad, AJK
viii. Madina Market Branch (0028) Madina Market, Muzaffarabad, AJK
ix. Hattian Branch (0034) Main Bazar Hattian, District Hattian, AJK
x. Chakothi Branch (0037) Main Bazar Chakhoti, District Hattian, AJK
xi. District Complex Muzaffarabad Branch (0040) Old Secretariat,
xii. District Complex, Muzaffarabd
xiii. Sharda Branch (0043) Main Bazar Sharda, District Neelum, AJK TEL: Joora Branch
(0052) Joora, District Neelum, AJK
xiv. Ladies Branch, Muzaffarabad (0053) Hashim Plaza, Poultry Farm Road, Muzaffarabad,
AJK
xv. Upper Adda Branch (0061) Near AJK University, Campus/Muzafarabad,
xvi. Chathian Branch (0062) Srinagar Road, Chathian Bazar
xvii. Kuttan Branch (0063) Kuttan, Tehsil Athmuqam, District Neelam
xviii. Gojra Bypass Branch (0067) Gojra Bypass Road,Muzaffarabad

21
2.9 Position in the market

I t e m s B A J K M C B N B P H B L
Deposit (2018) 8 0 m i l l i o n 3 0 m i l l i o n 1000 million 1841 million
Lending (2018) 40 million N i l 4000 million 1000 million

22
2.10 CPM (competitive profile matrix)

S r.No B A J K M C B N B P H B L
Weig Rati Weig Rati Weig Rati W e i g R a t i Weig
H t s n g h t s n g h t s N g h t s N g h t s
Score Score Score Score
1 Central Govt. 0 . 8 3 0.24 3 0.24 3 0 . 2 4 4 0 . 3 2
S c h e m e s

2 E-governaces 0 . 1 2 1 0.12 3 0.36 2 0 . 2 4 4 0 . 4 2

3 Ed uc at i o n a n d 0 . 1 4 3 0.42 2 0.28 3 0 . 4 2 3 0 . 4 2
Job operations in other status

4 Democratic Govt.setup 0 . 1 1 2 0.22 2 0.22 3 0 . 3 3 3 0 . 3 3

5 Natural and Locals rescues 0 . 1 1 2 0.22 2 0.22 3 0 . 1 4 4 0 . 4 4

6 Handicraft industry truism 0 . 5 3 0.15 2 0 . 1 2 0 . 3 3 3 0 . 2 5

7 Poor governances 0 . 1 2 1 0.12 1 0.12 3 0 . 1 0 2 0 . 2 4

8 Lack of private investment 0 . 7 2 0.14 1 0 . 7 2 0 . 3 6 4 0 . 2 8

9 Lack of industrial infrastructure 0 . 1 3 2 0.26 3 0.39 2 0 . 1 4 4 0 . 4 2

1 0 Politely varying ideology 0 . 7 4 0.28 2 0.14 2 0 . 2 6 1 0 . 0 7

Totals 1 . 0 0 2.062 2.77 2 . 5 3 . 1 9

HBL rating is 3.19

NBP rating is 2.5
MCB rating is 2.77

BAJK rating is 2.062

23
Chapter No 03

ANALYSIS

3.1 Internship Schedule

WEEKS JOB FUNCTIONS

1ST– Deposit Section The function of a commercial bank is to mobilize deposits of

2ndWeek money from sever and lend into for more profitable purpose. I
 Time Deposit performed the following job during the 2 week.
 Demand Deposit
 Deposits
 Checking Account
 Saving Account

 Current Deposit Account

3rd- Account Opening I perform the following functions during the 3 rd and 4th week
4THWeek Section about Opening of accounts
 Issuance of cheque books
 Closing of accounts

5th- 6TH Cash Dealing During the period of 5th to 6th week I performed the following
Week Section functions about the CASH RECEIPT for receiving deposit
 Cash payment for encashment of cheques.

3.2 Location in the Department:

I worked in the Bank of AJ&K, Garhi Duppata Branch Muzaffarabad (A.K) for six weeks in
following departments:

 Account Opening Department

 Account Department

24
3.3 Account Opening Department:

It’s a customer services section. Here a employees of bank are always ready to serve the
customer. Here people come to open different type of account according to their need. Here the
employees also new checkbooks and Atm’s cards

3.4 Account Opening:

Account opening is a very sensitive procedure. It contains the basic information regarding. An
account opening from is given to the customer if he wants to open an account. It also services as
the purpose of giving complete record of account holder. After completing all the requirements
mentioned in account opening from an account number is given to the customer. Then the
customer becomes the holder of account and can deposit or with draw money when and where
required. Account opening register is maintenance so that every customer has a unique account
number. While in ledger, the entry is posted along with the address and personal information of
the account holder and the mode of transaction he wants to make with the bank.

3.5 Required documents: (Copies)

 Individual/joint account:
o Certified copy of C.N.I.C.
o Proof of profession (source of income)
 Proprietorship Account:
o Certified copy of C.N.I.C.
o Declaration of proprietorship concern on firm’s letter head.
o Specimen signature cards duly signed.

3.6 Issuance of Cheque Book:

25
Amount from the account could only be withdrawn through cheque. There is a slip called CBR
(Cheque book Regulation) given to the customer on his request for issuance of cheque book,
after the account has been opened. The basic information on CBR is title of account holder,
account number, leaves the cheque book contains, signature of applicant, signature of officer and
the signature of operational manager. After verification of all the information mentioned above
cheque book is issued.

3.7 Accounts Department:

Here all the vouchers of the previous day are verified with the computer generated transaction’s
sheet. This is called the activity. Their main job is to maintain general ledger, and compare the
reporting which is the computer generated transaction’s sheet with the source document i.e.
vouchers and cheques. When I was doing the activity the following things we should consider:

 On cheque Requisition slip we mainly saw these things:

o Account No
o Cheque book issued from No This to This leave
o Signature Verified Stamp is there or not
o Authorized Officer at 2 places
o One is at authorized place and other is at recipient place
 General ledger includes
o Main ledger
o Sub ledger
o Document Number
o Amount

Here I have also make the filing. If any kind of error is made then they rectify that error. They
also make payment to parties like Phoenix, NIFT, Sweepers, etc.

They are responsible for the maintenance of accounting books and safe custody of records

26
3.8 Internship work relation with BBA studies:

During my internship period I learnt so many things, especially the exposure to professional
world was great. First of all I came to know that how banks work and where our banking
industry is moving. B. So there I experienced business and how to deal with customers.

This actually polished my skills regarding implementation of business studies in the practical
world and I experienced the implementation of Financial Management etc. and especially major
(Finance) activities.

I had experienced how theoretical studies of BBA are related to practical work &
INSHAALLAH this will help me in future and also for getting BBA Degree from the university
and when I will go in the field this practical experience and studies will provide a great help to
me.

27
CHAPTER # 04
FINANCIAL STATEMENTS & ANALYSIS

INTRODUCTION
“A Company’s financial statements tell an important story about its operations an a
financial manager or a financial analyst should be able to interpret these statements and
understand thoroughly”

4.1 STATEMENT OF FINANCIAL POSITION

A balance sheet shows the financial position of an accounting entity as of particular date.
The balance sheet consist of three major sections assets: the resources of the firm. Liabilities:
The debts of the firm And the owner equity interest of the owners in firms This analysis is based
on the figures available in the annual reports.And will clear the position of the bank where it
stands at that date.

ASSETS= LIABILITIES + OWNER EQUITY

4.1.1 HORIZONTAL ANALYSIS

Percentages are calculated by selecting a base year and assign a weight of 100 to the amount of
each item in the base year statement. Thereafter, the amounts of similar items or groups of items
in prior or subsequent financial statements are expressed as a percentage of the base year
amount. The resulting figures are called index numbers or trend ratios.

Formula = Current Year amount / Base Year amount * 100.

28
4.1.2 VERTICAL ANALYSIS
Vertical analysis is a technique for identifying relationship between items in the same financial
statement by expressing all amounts as the percentage of the total amount taken as 100 In a
balance sheet, for example, cash and other assets are shown as a percentage of the total assets
and, in an income statement, each expense is shown as a percentage of the sales revenue.

4.2 BANK OF AJK COMPARISION OF BALANCESHEET

BANK OF AJK
COMPARISION OF BALANCESHEET
AS AT DECEMBER 31……

Assets (PKR. In Million) 2017 2018 2019 2020 2021

Advance.net 170,496 199,931 235,164 258,693 343,107
Investment.net 217,214 268,021 295,846 314,957 260,234
Cash, short term funds and 29,926 38,794 55,250 49,683 53,281
statutory deposits with SBP
Fixed/intangible a 8299 9230 11,020 10,729 13,533
Assets held for sale 54 - 262 81 81
Other assets 21,392 19,891 21,597 22,566 36,296
Total assets 447,083 535,867 619,139 656,708 706,532
Non-performing loans 31,376 31,484 28,535 26,753 26152
Provision for non-performing loans 28,169 28482 26,959 25,647 26,152
Liabilities
Deposits and others accounts 387,587 433,172 472,811 525,808 573,636
Refinance and borrowing from SBP 7,954 10,327 12,891 16,839 18,967
Subordinate debts 7,993 4,997 4,995 4,993 9,994

Borrowing/other liabilities 19,841 60,518 95,866 76,632 70,426

Total liability 4322,375 509,014 586,562 624,273 673,030
Share capital 12,603 12,603 12,603 12,603 12,603

29
Reserve 6686 9209 12,755 14,798 19,257
Surplus on revaluation of assets- 4,418 50,41 7,219 5,053 1,649
net of tax
Total shareholders’ funds 23,707 26,853 32,577 32,435 33,509
Horizontal Analysis:
Balance sheet 2017% 2018% 2019% 2020% 2021%
Assets
Advance-net 38 37 38 39 48
Investments-net 48 50 48 49 39
Cash, short term funds and 7 7 9 8 9
statutory deposits with SBP
Fixed/intangible 2 2 2 2 2
Assets held for sale 0.01 - 0.04 0.01 0.01
Other assets 5 4 3 3 5
Total assets 100 100 100 100 100
Non-performing 7 6 5 4 4
Provision for nonperforming loan 6 5 4 4
Liabilities
Deposits and other 87 81 76 80 81
Refinance borrowings with 2 2 2 3 3
Subordinate debts 0.83 0.93 0.80 0.76 1
Borrowing/other 4 11 15 12 10
Total liabilities 94 94 94 95 95
Shareholder funds
Share capital 2.64 2.35 2.03 1.78
Reserves 1.40 1.71 2.06 2.25 2.72
Surplus on revaluation of assets 0.92 0.94 1.15 0.76 0.23
Total shareholders 4.96 5.01 5.26 4.93 4.74

Comments

The horizontal analysis, cash increases drastically in 2021, as compared to previous year and
investments is decreasing in 2021 to. Net assets result in total shows normal condition of
business. The percentage of deposited is increasing in 2021 as compared to previous years. Other
assets are increasing in 2021.

Vertical Analysis:
2017% 2018% 2019% 2020% 2021%
Balance sheet
Assets
Advance-net 4 17 18 10 33

30
Investments-net 31 23 10 6 17
Cash, short term funds and (21) 31 42 (10) 7
statutory deposits with SBP
Fixed/intangible (3) 11 19 (3) 26
Assets held for sale 0 1 0 (69) 0
Other assets 12 (7) 9 4 69
Total assets 13 20 16 6 8
Non-performing (5) 34 (9) (6) 0
Provision for nonperforming loan (2) 1 (5) (5) 2

Liabilities 16 12 9 11 9
Deposits and other (11) 30 35 31 13
Refinance borrowings with 100 (37) 0 0 100.4
Subordinate debts (29) 20.5 58 (20) (8)
Borrowing/other 13 20 15 6 9
Total liabilities 13 10 15 6 9
Shareholder funds
Share capital 0 0 0 0 0
Reserves 66 38 39 16 30
Surplus on revaluation of assets 11 14 41 (30) (67)
Total shareholders 27 13 21 0 3

Comments
In index, analysis, deposits decreased in 2021. As compared to previous years. Balance with
other banks and investments in this year is increase as compared with arouse year. In such year,
fixed assets is increasing as compare with previous year. Net result in total show an unfavourable
condition of business. The percentage of deposited is decreasing compare with previous years, as
for as concerned to share capital and reserve. There is a normal indication of business not so
favourable.The strong results of financial statements and analysis also attract the stakeholders.

31
4.3 BANK OF AJK COMPARISON OF PROFIT AND LOSS A/C

BANK OF AJK
COMPARISON OF PROFIT AND LOSS A/C

2017 2018 2019 2020 2021

Increase income 34,604 36,592 35,512 36,267 43,670
Interest expense 22,711 21,690 20,497 20,072 25,060
Net interest income 11,893 14,902 15,016 16,195 18,610
Provision and impairment against 322 879 (659) (1,205) 1,461
non-performing assets
Fee and commission income 1,435 1,732 2,156 2,707 3,116
Other income 3,882 4,958 4,951 3,549 2,506
Non markup expenses 11,107 12,281 14,304 15,164 15,892
Profit/(loss)after taxation 5,781 8,432 8,477 8,492 6,879
Taxation 1,766 3,388 3,256 3,224 2,448
Profit/(loss)after taxation 4,015 50,043 5,221 5,268 4,431
Operating profit 6,103 9,311 7,818 7,287 8,340
Total income 39,920 43,283 42,619 42,523 49,292
Total expenditure 34,140 34,850 34,142 34,031 42,412

32
Vertical analysis:
2017% 2018% 2019% 2020% 2021%
Increase income 100 100 100 100 100
Interest expense 65 59 57 55 57
Net interest income 34 40 42 44 43
Provision and impairment against 1 2 (2) (3) 3
non-performing assets
Fee and commission income 4 5 6 7 7
Other income 11 13 14 9 6
Non markup expenses 32 33 40 42 36
Profit/(loss)after taxation 16 23 24 23 16
Taxation 5 9 9 9 6
Profit/(loss)after taxation 11 13 14 16 10
Operating profit 17 25 22 20 19
Total income 113 118 120 117 113
Total expenditure 98 95 96 94 97

Comments
The income statement of the bank by vertical analysis shows that interest expenses are increasing
in 2021 by 2% as compared to 2020. Net interest income earned of 2021 also remained greater
than the other years. Profit after taxation decreased by 5% as compared to previous year, which
shows an unfavourable condition of a bank.

Horizontal analysis:
2017% 2018% 2019% 2020% 2021%
Increase income 23 6 (3) 2 20
Interest expense 17 (4) (6) (2) 25
Net interest income 38 25 1 (8) 15
Provision and impairment against (97) 173 (175) 83 (221)
non-performing assets
Fee and commission income 23 21 24 26 15
Other income 60 27 0 (28) (29)
Non mark-up expenses 16 11 16 6 5
Profit/(loss)after taxation (168) 46 1 0 (19)
Taxation (41) 91 (4) (1) (24)
Profit/(loss)after taxation 27 25 4 (7) 14
Operating profit 129 53 (16) (7) 14
Total income 26 8 (2) 0 16
Total expenditure (15) 2 (2) 0 25

Comments
The horizontal analysis show that operation profit is increasing in 2021 as compared to 2020.net
income earned of 2021 also remained greater than the net income earned of other years. Profit

33
before taxation in 2020 decreased as compared to previous years. Profit after taxation to
decreased as compared to previous years. Which shows an unfavourable condition of a bank.

4.4 Ratio Analysis:

Ratio analysis is helpful to the management of the organization as well as for the investors and
creditors. Investor keep an eye on the company financial statement and make decisions whether
to invest funds in that company or not, similarly creditors also analysis the financial statements
and makes decisions whether to grant loan or not.

Particulars 2017 2018 2019 2020 2021

A-ASSETS QUALITY
Total assets growth rate 18.90 19.14 23.54 21.74 32.53
Investment to deposit ratio 15.75 17.87 23.27 31.24 30.12
Advance to deposit ratio 65.3 63.0 55.7 44.3 46.3
C-INVESTMENT/MARKET RATIO
Earning per share 7.67 5.56 5.45 5.01 4.56
Price earnings ratio 12.05 12.07 12.34 9.13 10.31
Market value per share 92.39 67.10 67.24 45.75 47.00
D-PROFITABILITY
Return on assets 1.03 0.87 0.92 1.03 1.03
Return on equity 1.84 1.59 1.45 1.84 1.18
E-LIQUIDITY RATIO
Cash and cash equivalent 6.93 8.18 8.46 8.15 6.75
to total assets
Investment to total assets 13.19 15.12 19.66 27.30 25.92

Investment to deposit ratio:

=investment/deposits *100

It is comparison of investment and deposit. This ratio is useful for banks.

Return on assets (ROA):

Net profit after tax total assets *100

This ratio expenses the capacity of earning profit by a bank on its total assets employed in the
business.it is calculated as percentage of net profit after tax to total assets, it is useful for whole
financial sector.

34
Return on Equity (ROE):

-net profit after tax total shareholder equity *100

Total shareholder equity (Pakistan banks)-share capital+reserves+un-appropriated profit(loss)

total shareholder equity (foreign banks) = H O capital account + reserves +unremitted profit this
ratio expresses the return on shareholder equity.

ROE is a direct measure of returns to the shareholders. it si calculated as a percentage of the net
profit after tax to total shareholder’s equity. it is also useful for whole financial sector.

Earnings per share:

=net profit after tax/no of ordinary shares

EPS is the ratio between net profit after tax to number of shares outstanding at the end of the
year as shown in balance sheet and its relevant notes to accounts. It is useful for whole financial
sector except for Mod araba companies where certificates are issued for raising capital.

Liquidity ratio:

Cash and cash equivalent to total assets

=cash and cash equitant/total assets *100

This ratio expenses the percentage of total assets available in the form of highly liquidity assets.

Investment and total assets:

Total investment and total assets:

The ratio between investment and total assets shows investment activity with reference to its
total assets. it indicated the portion of total assets used for investment in various venues. This
ratio is useful for banks. DFI and insurance companies.

Gross advances to deposits:

= gross advance deposits *100

35
The ratio expenses the percentage of advantage of advance to deposits and expresses the
utilization of deposits in the core business of the bank i.e. intermediation. This ratio is useful for
banks DFI.

4.5 SWOT analysis:

The SWOT analysis is an extremely useful tool for understanding and decision-making for all
sorts of situations in business and organizations. SWOT is an acronym for Strengths,
weaknesses, Opportunities, and Threats. Information about the origins and inventors of SWOT
analysis is below. The SWOT analysis headings provide a good framework for reviewing
strategy, position and direction of a company or business proposition, or any other idea. SWOT
analysis also works Ill in brainstorming meetings. Use SWOT analysis for business planning,
strategic planning, competitor evaluation, marketing, business and product development and
research reports. Companies can also use SWOT analysis exercises for team building games.

Strengths:

 BANK of AJK is government owned bank that is why nation has a trust on the bank
that their deposits are secured. Due to this reason the deposits of the banks are
increasing with the passage of time. As I see from four year table of income statement
because of this BAJK has advantage that all the government employees have salary
account in BAJK which help to maintain huge portion deposits without any marketing
efforts beside this all the government payments and remittances are made through this
bank which is also a huge and unique advantage to this bank...
 Bank of AJK also having a wide range of branches in rural areas of Pakistan because of
this BAJK is having accessibility to the funds of people living in the rural areas of the
country. In Pakistan BAJK having 70+ branches and are fully commercials .
 Another unique function of Bank of AJK is that it is having chest branches in the
cities. These chest branches also perform most of the functions of Bank of AJK . To
facilitate the distribution of banknotes and rupee coins, the Reserve Bank has
authorized selected branches of scheduled banks to establish Currency Chests.

36
Weaknesses:

 Lack of Implementation of Rules and Regulations due to political interference. Because

is a Bank of AJK govt. owned organization so there is a lack of implementation of rules
and regulations and these deviations from rules and regulations effect on the
performance of the bank.
 Administrative expenses of bank are increasing day by day and with huge amount
which effect on income on Profit after tax and earning per share. If I see in income
statement Bank of AJK should focus on decreasing their administrative expenses.
 As I have already mentioned the benefit of have experience staff in Bank of AJK. But
now, here it becomes weakness of the bank because experience is nothing without
education. Old staff is not so much educated and skilled with the use of new
technology. Bank of AJK needs fresh blood to handle new invented technologies in the
field of banking. So this is one of weaknesses of the bank
 Union has strong impact on performance of Bank of AJK . Most of time employee
union tries to impact on the rules and regulations and recruitment policies of banks.
They try to impose their orders on top management and top management is unable to
punish the violators and shrieks.

Opportunities:

 The basis need of the consumer such as housing, transportation and other durable goods
are not adequately financed by the banks. So by initiating these services, the bank can
enjoy with more funds. Bank of AJK need to uplifts their services of consumer banking
like home building finance, student loans, Kissan Loans and Credit card services so as
to get more potential of funds.
 For Bank of AJK Opportunities also exist to invest in foreign markets BAJK can enjoy
handsome return its funding base by investing in capital markets in the foreign
countries.
 Until recently the bank perceived as purely commercial banking entity so in order to
expand its business the bank may start investment banking by investing in the portfolio
of handsome return.

37
  BAJK by establishing new branches in foreign countries can expand its business and can
enjoy with the profit.
 Bank of AJK can enhance its operation by launching internet banking facilities, online
transaction, Internet money transfers and many others. Online banking (or Internet
banking) allows customers to conduct financial transactions on a secure website
operated by their retail or virtual bank, credit union or building society.

Threats:

 The no. of banks in Pakistan is increasing with the passage of time. So due to poor
working condition and poor customer service it may be possible BAJK will lose its
market share in future.
 In our country, the rate of inflation is increasing along with the unemployment. So due
to the increase in price of the products, the savings of the nation is decreasing with the
passage of time. So it is the threat for the banking sector. In the future, the deposits of
the bank will decrease.
 On BAJK Govt. policies have strong impact. A slight change in Govt. policies may
affect the performance of the bank. The bank has to work with in the regulation frame
work.

Chapter No 05
OBSERVATION & RECOMMENDATIONS

5.1 OBSERVATION & RECOMMENDATIONS

Based on the SWOT analysis of Bank of AJK it is observed that the bank like other public
sector industries has not been showing up to mark performance. There is long list of weaknesses
that is given on the previous pages. Most of them are going along since long time and that all

38
efforts made to remove them have not succeeded. On the basis of SWOT analysis of bank the
following suggestions and recommendations are given for future enhancement.

 Bank of AJK should try to get rid of political interferences and influences in
recruitment and policy making so that bank should be able to compete in the industry
with prudent and strong policies. should adopt the policy of equal opportunity
employment as it is observed that announced jobs are quota based.
 When giving the loan to client, the Bank must carefully analyze the past six month’s
transaction history of the borrower. This will help in judging the dealing behavior and
financial status of the client. In most cases, this thing is not properly done and it is the
major reason of default of many clients.
 The Bank should try to give more loans to the small borrower as the past history and
Analysis shows that most of the loans given to the corporate borrower have converted
into bad debts.
 Bank of AJK should cover its administrative expenses as a lot of portion of bank profits
are eaten by these expenses. Policies and guidelines should be made so as to count
down these expenses.
 Better and comprehensive long term and short term planning should be made to
forecast the future needs
 Refresher courses for the staff are most important in any international organization. All
the employees should have these courses according to their requirements. Foreign
experts can also be called for this purpose.
 Every year some of the employees should be sent for training to other countries and
employees from other branches should be brought here. More reading material should
be brought / provided in the reference Room, it should be relevant and its purpose
should be to educate the employees with the advance studies in their field. The
employees should be provided the opportunities to attend and participate in seminars
and lectures on banking.
 This is a routine practice that in order to give personalized services to the customer,
bank staff tries to fill all the columns of AOE with their own handwriting, which is
wrong. AOE must be filled in by the customers. Bankers should avoid filling in the

39
 AOE because it can create problem if the address, title of account or any other
information provided by the customer has not been written properly. Customer may be
affected or he may claim that this information was not provided by him, but if AOE is
filled by the customer then banker cannot be held responsible for any incorrect
information provided by the customer.

5.2 CONCLUSION:

If I have to express my experience of internship in Bank of AJK Garhi Duppata Branch

Muzaffarabad.I would briefly say that Bank of AJK is a good Organization in the way that
anybody can join it for his/ her long-term career. Overall working environment is comfortable.
Management of branch cares a lot of its employees and considers them as the Asset of bank.
Behavior of senior executive of bank is very polite and they are caring about the individual’s
career and their growth.

However management is very demanding about the targets but good reward at the achievement
of assigned targets is awarded. Employees at Bank are quite efficient. As the branch is renovated
and new employees are hired, its employees have to bring their bank among the list of good
banks. Therefore, they work more than their working hours and it is all according to their will. It
also shows their loyalty, commitment to organization.

Employees are given the benefits like bonus, gratuity funds, loans, increments, and medical. All
the customers are entertained individually. Same kind of behavior and attention is given to all the
customers. Getting ideas for improvement from customer side is a new idea and that is working
very well in Bank of AJK. All the customers are asked to fill a suggestion form and the standards
of the bank are improved through them.

Prioritizing its product portfolio in line with its corporate and consumer needs and wants the
bank is committed to develop products that give more value to its customers in both the sectors.
In bank, the work is done on computers as well as manually. All the entries are made in
computer. Balance is fed into the computer. This increases efficiency of the bank. During my

40
internship training I gathered information regarding how a successful bank operational aspect
decorticated with the practical.

I found my internship training at Bank of AJK Gojra branch Muzaffarabad to be a very

rewarding experience. The training was beneficial because it helpful me to aware a real life
working environment.

So far my learning is concerned; all the employees at branch were quite cooperative. They
helped me to understand the activities of a bank to possible extent. Their good attitude gave me
more confidence to learn more and to ask if I have any query in my mind. Besides their ever
going activities they never get irritant by my questioning. I had made an honest efferent to
present the working & operation at Branch in simplest way. I feel pleasure that I have really
gained a lot during 6 weeks & enjoyed working with experienced cooperative & intelligent staff.

41
BIBLIOGRAPHY
BANK REPORTS:

• AJK Bank, annual Report 2016

• AJK Bank, annual Report 2017
• AJK Bank, annual Report 2018
• AJK Bank, annual Report 2019
• AJK Bank, annual Report 2020
• AJK Bank,annual Report 2021

ONLINE REFERENCE:

• http://www.bankajk.com/bod/bod.html
• http://www.bankajk.com/core_values
• http://www.bankajk.com/loans_schemes.html
• http://www.bankajk.com/mission
• http://www.bankajk.com/vision
• http://www.bankajk.com/res.php?=010004

42
43