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    Commercial Banking

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    Hammas
    Banking

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    © All Rights Reserved
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    Commercial Banking

    Uploaded by

    Hammas
    2 views10 pages
    Banking

    Original Title

    COMMERCIAL BANKING

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    © © All Rights Reserved

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    Banking

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2 views10 pages

    Commercial Banking

    Uploaded by

    Hammas
    Banking

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 10

    University of azad jammu and kashmir,

    muzaffarabad

    Name Syed Bilal Haider, Sarim ali ,Hammas Alyas

    ROLL NO 09, 14, 04

    SEMESTER 8TH

    SUBJECT Commercial banking

    Topic commercial banks of Pakistan and its analysis

    Submitted to Mam Nouf Qureshi


    BANK OF AZAD JAMMU AND KASHMIR

    FINANCIAL STATEMENT
    FOR THE
    YEAR ENDED
    DECEMBER 31 2023
    STATEMENT OF FINANCIAL POSITION
    Balance Sheet Analysis

    Total Assets:
    2023:Rs 32,559,896
    2022: Rs 28,461,456
    Growth: The total assets of the bank increased by Rs 4,098,440, which
    represents a growth of approximately 14.4% year-over-year. This growth
    suggests that the bank has expanded its asset base, potentially through
    increased lending, investments, or other asset acquisition strategies.
    Total Liabilities:
    2023: Rs 26,128,766
    2022: Rs 22,592,537
    Growth:The total liabilities grew by Rs 3,536,229, a growth rate of
    approximately 15.6%. This increase could be due to a higher deposit
    base, borrowings, or other liabilities. The liabilities grew at a slightly
    higher rate than assets, which might suggest increased funding costs or
    leverage.

    Net Assets (Equity):


    2023: Rs 6,431,130
    2022:Rs 5,868,919
    Growth: The net assets or equity increased by Rs 562,211, which
    represents a growth of 9.6%. This growth in equity could result from
    retained earnings or other comprehensive income that was not
    distributed as dividends.

    2. income Statement Analysis

    Total Comprehensive Income:


    2023: Rs 562,211
    2022:Rs 448,033
    Growth: The total comprehensive income grew by Rs 114,178, a
    growth rate of approximately 25.5%. This indicates an improvement in
    profitability, possibly due to higher interest income, better cost
    management, or an increase in non-interest income.

    3. Cash Flow Statement Analysis

    Net Cash Generated from Operating Activities:


    2023: Rs 2,366,722
    2022: Rs 328,33206
    Growth: The net cash generated from operating activities decreased by
    approximately 27.9% from 2022 to 2023. This decline suggests that the
    bank faced challenges in its core operations, such as reduced interest
    income, increased interest expenses, or other factors affecting
    operational cash flow.

    Net Cash Used in Investing Activities:


    2023: Rs 568,313 (outflow)
    2022: Rs 8,508,861 (outflow)
    Change: There is a significant decrease in cash outflows for investing
    activities by Rs 7,940,548, indicating a reduction in investments or
    capital expenditures. This could mean that the bank is either holding
    back on investments or has completed a significant investment phase in
    the prior year (2022).

    Cash and Cash Equivalents at End of Year:


    2023:Rs 7,703,554
    2022:Rs 5,934,908
    Increase:Cash and cash equivalents increased by Rs 1,768,646
    (approximately 29.8% increase), reflecting better liquidity and cash
    management.

    4. Key Ratios and Indicators

    Asset Growth Rate: 14.4%


    Liability Growth Rate: 15.6%
    Equity Growth Rate:9.6%
    Comprehensive Income Growth Rate: 25.5%
    Liquidity Position (Cash and Cash Equivalents Growth): 29.8%

    5. Observations and Insight

    1.Positive Asset Growth: The bank's assets have grown significantly,


    reflecting expansion in its operations. However, the liabilities have
    grown at a slightly higher rate than assets, which could suggest
    increased borrowing or a higher deposit base.

    2. improved Profitability: The increase in total comprehensive income


    by 25.5% indicates improved profitability, possibly due to increased
    revenue from core banking activities or better cost control.

    3. Strong Cash Flow from Operations: The substantial increase in cash


    generated from operating activities suggests that the bank has improved
    its core business performance significantly, which is a positive sign of
    operational efficiency.
    4. Reduced Investing Outflows: The sharp reduction in cash outflows
    from investing activities could indicate either a slowdown in new
    investments or a focus on maintaining liquidity. This may be a strategic
    decision to preserve cash in uncertain economic conditions.

    5. Improved Liquidity Position:The increase in cash and cash equivalents


    suggests that the bank has a better liquidity position, which could help it
    meet its short-term obligations and provide a buffer against any
    economic uncertainties.

    Conclusion :

    Overall Performance: The Bank of Azad Jammu and Kashmir appears to


    have strengthened its financial position in 2023, with increased assets,
    improved profitability, and strong operational cash flow.

    Environmental Analysis of the Bank of Azad Jammu and Kashmir (BAJK)


    The Bank of Azad Jammu and Kashmir operates under the regulatory
    framework set by the State Bank of Pakistan (SBP), which oversees all
    banking activities in the region. The SBP’s regulations encompass areas
    such as , risk management, anti-money laundering (AML) compliance,
    and consumer protection. BAJK must also adhere to local laws and
    regulations specific to Azad Jammu and Kashmir, which may impact its
    operational practices, reporting standards, and customer service
    strategies.

    Comparison of the Bank of Azad Jammu and Kashmir (BAJK) with Other

    Banks in Pakistan and Their Impact on the Economy

    1. Size and Market Presence:


    Bank of Azad Jammu and Kashmir (BAJK):
    Market Presence: BAJK is a regional bank with its operations focused
    mainly in the Azad Jammu and Kashmir (AJK) region. It is relatively small
    compared to other national banks in Pakistan, with a limited branch
    network and asset base.
    Asset Size: The total assets of BAJK are significantly smaller compared to
    major banks in Pakistan, reflecting its focused regional approach. For
    example, BAJK's total assets for 2023 were around Rs 32.6 billion, which
    is much lower than the largest banks in Pakistan.
    Target Market: BAJK primarily serves local customers in AJK, including
    government employees, small businesses, farmers, and individuals. The
    bank's products and services are designed to meet the specific needs of
    the AJK population, with a focus on promoting financial inclusion in the
    region.
    Major Banks in Pakistan (e.g., Habib Bank Limited (HBL), United Bank
    Limited (UBL), National Bank of Pakistan (NBP):

    Market Presence: These banks are among the largest in Pakistan, with
    extensive branch networks across the country and overseas operations.
    They have a diversified customer base that includes corporate clients,
    small and medium-sized enterprises (SMEs), and retail customers.
    Asset Size: For example, HBL has assets exceeding Rs 4 trillion, UBL has
    over Rs 2 trillion, and NBP also has a large asset base. These banks have
    substantial financial strength and capacity to undertake large-scale
    projects and offer a wide range of banking products and services.
    Target Market: The major banks cater to a broad spectrum of
    customers, from large corporations and multinationals to individual
    depositors and small businesses. They offer a comprehensive suite of
    services, including corporate banking, retail banking, investment
    banking, and digital banking solutions

    Impact on the Economy:

    BAJK:

    Regional Impact: BAJK plays a critical role in the economy of Azad


    Jammu and Kashmir by providing financial services to underserved areas
    and promoting economic development at the local level. It contributes
    to financial inclusion by reaching out to rural and unbanked populations
    and supports the local economy by offering loans to small businesses,
    farmers, and individuals.
    Employment and Development: The bank’s presence helps generate
    employment opportunities in the region and contributes to local
    development by funding infrastructure and community projects.
    Major Banks in Pakistan:

    National Impact: Large banks have a substantial impact on the national


    economy. They are key players in mobilizing savings, providing credit to
    various sectors, supporting trade and commerce, and facilitating foreign
    investments. These banks contribute significantly to economic growth,
    development, and financial stability in Pakistan.
    Economic Development: Through their lending and investment
    activities, major banks support the government’s economic policies,
    infrastructure development, and industrial growth. They also play a
    pivotal role in promoting digital financial services, which is crucial for
    financial inclusion and economic empowerment in the country.

    how bajk working toward SBP’s regulations give example?

    The Bank of Azad Jammu and Kashmir (BAJK) complies with the State
    Bank of Pakistan's (SBP) regulations by implementing measures such as:
    Anti-Money Laundering (AML): Adopting strict AML policies to prevent
    money laundering and financial crimes.
    Risk Management: Implementing robust risk management frameworks
    to identify and mitigate potential financial and operational risks.
    Example: BAJK follows SBP’s guidelines by regularly conducting stress
    tests to evaluate its financial stability and implementing stringent KYC
    (Know Your Customer) procedures to enhance its AML compliance.

    Recommendations for the Bank of Azad Jammu and Kashmir (BAJK)

    DIGITAL BANKING: Invest in technology to expand digital banking


    services such as mobile apps and online banking. This will improve
    customer accessibility, reduce operational costs
    Focus on Customer Service: Enhance customer service through training
    programs for staff and implementing feedback mechanisms to improve
    service quality and customer satisfaction

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