Download - Report and Hypothesis of Faysal Bank
Subject: Econometrics- I (405)Submitted to :Mr. Abdul Aziz
Submitted by :
Rabia’a Naushad
Acknowledgement: By the grace of ALLAH almighty, who has enabled
us to do this entailing hard work. It is a matter of pleasure and privilege for us to complete this report on Faysal Bank.
I would like to thank Sir. Abdul Aziz for giving us an opportunity . This work helped us to apply the theoretical concepts and learn the practical aspects of a bank. I would also like to thank my Group members SUNITA & SAHAR for their valuable guidance and help throughout the period of making this report.
Introduction of Banking Industry
Definition:“ A bank is an institution which receives deposits and advances loan.”
History:After independence, Muhammad Ali Jinnah took actions to establish a central bank in Pakistan which resulted in the new founding of the State bank of Pakistan, with its headquarters to be based in Karachi.
Classification of Banks on the Basis of Functions:Central Bank
Commercial Bank
Agricultural Bank
Mortgage Bank
Investment Bank
Saving Bank
Micro Finance
Bank
SLOGAN:EXCELLENCE IN SERVICE IS THE KEY
TO SUCCESS”
Faysal Bank’s philosophy is to provide consumer-driven banking products and services that meet customer demands and exceed customer expectations. They believe ‘Service’ is the only key to success.
INTRODUCTION TO FAYSAL BANKFaysal Bank is subsidiary of Ithmaar Bank of BahrainFaysal Bank is listed with Karachi, Lahore & Islamabad Stock Exchange..Faysal Bank Limited was incorporated in Pakistan on October 3, 1994, as a public limited company.It is a full service banking institution offering consumer, corporate and investment banking facilities to its customers. Faysal Bank later on acquire RBS (Royal Bank of Scotland).Faysal Bank Limited has grown its countrywide branch network to 245 in 56 cities across Pakistan.
Vision & MissionExcellence in all that we doTo excel in providing innovative, value based banking solutions to meet changing needs of customers and to strengthen the image of trust and reliability.
Values
Faysal Bank culture is built on a set of core values: Respect, IntegrityProfessionalism Teamwork
MEMBERSHIP OF VISA INTERNATIONAL:Faysal bank became the principal member of Visa International. The bank is in the process of linking its ATM and Debit cards to visa for use by its customers even out of Pakistan.
Products:Saving
accountsRozana Munafa Plus
AccountFaysal Moavin Account
Faysal Premium Account
Faysal Izafa Account
Mahfooz Sarmaya
FCY Saving Plus Account
Consumer Loans:Car Loans
Housing Loans
Corporate & Investment Banking:
Corporate Financing
Trade Finance
Treasury & Capital Markets
Agricultural Financing
Cash Management Services
Credit Cards
Services:PocketMate Visa
Debit Card
Traveler's Cheques
Transfer of Funds
Safe Deposit Lockers
Non-Stop Banking
SMS Alerts
E-Statement
Consumer lendings:Faysal Bank also offers
Credit cards to its customers in collaboration with Master Card and Visa Company. Credit cards offers are as follows:
mc2 Master CardUfone Credit CardAirblue Credit Card
Strengths:
The bank this year has been awarded a certificate of Excellence by Management Association of Pakistan for its good corporate governance and best business.Heavy investment in Information Technology Symbols, implementation of Financial Oracle, HRMS.Very attractive salary packages to employees.Attracted big corporations like SNGPL, Attock Group of Companies, Zaver Petroleum, etc. Most progressive and well networked bank in Pakistan.
Weaknesses:
High employee turnover.
Low number of ATMs.
Attracting only upper and middle class customers.
Market share is declining from new competition.
Employees’ frustration due to excessive work burden
Opportunities:It can capture agriculture market by offering innovative agri finance products.
Impressive print and electronic media campaign highlighting FBL’s role in the development of rural economy of Pakistan can give it competitive edge over its competitors.
Through re-branching, FBL can capture lot of new customers.
Threats:Declining trend in banking sector, due to Economy of Pakistan.
Arrival of Barclays Bank in Pakistan, which can increase the competition in banking sector.
Moving of key employees, e.g. Corporate Relationship Managers, which means moving of corporate clients to other banks
Identifying Problems Of Company
Less number of branches across the country.
Difficulties in accessing the ATMs of bank because lower in numbers.
Not focusing on lower middle class customers.
Decreasing the deposit ratio because of new competition.
High turnover rate.
Suggest StrategiesFaisal Bank can increase its deposits by capturing the lower middle class customers and by offering innovative financial products to its customers.It can increase the number of branches and the ATM’s across the country.It can focus on Islamic banking window and can increase its deposits by capturing the customers whom are interested in Islamic banking.By providing attractive incentives, it can retain its potentials employees.
Share Price Analysis
FBL’s footprint now spreads over more than 260 branches in over 70 cities, with combined business assets of over PKR 300 billion, further strengthening its balance sheet and placing it amongst the top ten banks in Pakistan. With assets exceeding 250 billion USD rupees, it is one of the largest banks in the country and has shares listed on the Karachi Stock Exchange, Lahore Stock Exchange and Islamabad Stock Exchange.
Regression Analysis:
Calculation of Slope:
b= nΣXY – (ΣX)(ΣY) nΣX2 – (ΣX)2
b= 30(14062691.15) – (882560.62) (477.92) 30 30(25966424048.70) – (882560.62)2
b= 421880734.5 – 421793371.5_____ (7.789927212)11 – (7.78913248)11
b= 87363______ 79473225.22
b= 0.001099
Calculation of intercept:
a= Ymean – b (Xmean)
a= ΣY – b (ΣX)
n n
a= 477.92 - (0.001099)(882560.62)
30 30
a= 15.93066 – (0.001099)(29418.6873)
a= 15.93066 – 32.331137
a= -16.4004
Model equation:
Y= -16.4004 + 0.001099 (X) Calculation of Co-efficient of Correlation:r = nΣXY – (ΣX)(ΣY)______________ √[nΣX2 – (ΣX)2] [nΣY2 – (ΣY)2]
r = 30(14062691.15) – (882560.62) (477.92)_____________________ √ [30(25966424048.70) – (882560.62)2][30(7618.1684)-(477.92)2]
r = 421880734.5 – 421793371.5_____________________________ √ [(7.789927212)11 – (7.78913248)11][2288545.052 – 228407.5264]
r = 87363______ √ (79473225.22)(137.5256)
r = 87363
√(1.092960298)10
r =87363________
104544.7415r= 0.835
Y=a+bx
Coefficient Of Determination:R2 = ESS TSS
R2 = 3.199605383
4.584186668
Standard Deviation: S.E = √RSS
n-2
S.E = √1.383007313
30-2
S.E = √0.049393
R2= 0.6979
S.E = 0.2222
Step 1:HO = Null Hypothesis = β =0 (There is no effect of 100 Index on Shareprice)
Ha = Alternate Hypothesis = β ≠ 0 (There is an effect of 100 Index on Shareprice)
Step 2:Level Of Significance:α = 0.05Confidence level = 95%
Step 3:Find Value from t-table:Here table-value is +-2
Step 4: Test Statisticst = _____b______
S.E/ √ nΣX2 – (ΣX)2
t = 0.00109__________
0.2222/√30(25966424048.70) – (882560.62)2
t = 0.00109______________________________
0.2222/√ (7.789927212)11 – (7.78913248)11
t = 0.00109_________________
0.2222/√ 79473225.22
t = 0.00109______________
0.2222/ 8914.775
t = 0.00109_____
0.000024924
t = 43.731
Step5: Reject & Do not reject Ho:If Calculated value is less than 2 then Do not Reject HoIf Calculated value is greater than 2 then Reject Ho
Here, calculated value is 43.73 which is greater than 2 hence Ho is rejected.
Step6: Result In Words
This shows that Ha is considered and there is an effect of 100 Index on Share Price of Faysal Bank Ltd.
CONCLUSION:Role of Bank is became important as the
economy is booming.There are a number of mergers happening
in the economy with foreign investments coming into the banking sector.
FBL is committed to its clients by meeting good relationship with them.
The services FBL provides have a great market penetration not only because of their features but also the profit and markup rates that they charge.
The top management of the bank is always developing strategies that cope with unexpected challenges to deliver products and services more efficiently.