The Bankss fiscal nonsubjective, like any other private sector house, is to optimise the degree of stockholder wealth, defined as the discounted watercourse of net hard currency benefits earned by the bank and available for ultimate distribution to the bank ‘s common stockholders. This translates into pattern by bank fiscal directors endeavoring to:
Stabilise and selectively increase their bank ‘s net income after revenue enhancements.
Achieve both a competitory rate of return on the assets they manage ( a competitory ROA ) and a competitory rate of return on the equity part of the securities they issue ( a competitory ROE ) .
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In order to accomplish their profitableness marks ( frequently stated in footings of ROA and ROE ) Bankss and other fiscal services industry houses have to vie efficaciously by developing and marketing an attractive portfolio of fiscal merchandises and services.
Introduction to Dissertation
I have chosen Bank Muscat because once it was a market leader in the banking industry in Oman, but now due to lifting competition, the bank is confronting menace from its rivals.
Banks face two wide fiscal inquiries: How should it pay for investments/deposits? And what investings should the bank do? The first inquiry involves raising money and the 2nd inquiry involves raising it. The secret of success in fiscal direction is to increase the overall value.
The transmutation of the universe economic system has dramatic deductions for concern. American direction, for illustration, is larning that the United States can no longer be viewed as a immense economic system that does a spot of concern with secondary economic systems around the universe. Rather, the United States is simply one economic system, albeit a really big one, that is portion of an highly competitory, incorporate universe economic system.
Fiscal statements gives the place of assets and liabilities of a company and a bank. Income statement is besides a major component of the fiscal statement of a bank.
Beginning: hypertext transfer protocol: //www.bankmuscat.com/en-us/Pages/default.aspx
With assets deserving over USD 15 billion, Bank Muscat ( SAOG ) is the taking fiscal services supplier in Oman with a strong presence in Corporate Banking, Retail Banking, Investment Banking, Treasury, Private Banking and Asset Management. Firmly positioned to pull one million satisfied clients by 2010, the Bank has the largest web of 121 subdivisions, 341 ATMs, 100 CDMs and 3500 PoS terminuss in Oman, a subdivision in Riyadh, Saudi Arabia, and a representative office in Dubai ( UAE ) .
Bank Muscat owns 49 % of BMI Bank B.S.C © , an independent bank in the Kingdom of Bahrain that is focused on going a truly GCC bank. The Bank besides has a 43 % interest in the Mangal Keshav Group, one of the oldest and most well-thought-of securities houses in the aggressive Indian equities market, besides a 35 % interest in Silkbank Ltd. ( once Saudi Pak Commercial Bank ) in Pakistan.
Bank Muscat holds the rare differentiation of being voted the ‘Best Bank in Oman ‘ for seven old ages by The Banker, FT London ; nine and eight old ages in a row by Global Finance and Euromoney severally. Bank Muscat late won the esteemed Hewitt acknowledgment as the Middle East ‘s Best Employer 2009. The outstanding awards won by the Bank include the ‘Quality Recognition Award ‘ from JPMorgan Chase Bank and the ‘Best Topographic point to Work in Oman ‘ awards in studies conducted by taking international and regional concern magazines. The Bank was declared an Investor in People ( IiP ) administration in January 2007, going the first banking administration in the MENA part to be awarded the esteemed planetary acknowledgment. In 2004, Bank Muscat became the first bank in the Middle East to be wholly ISO 9000:2000 certified.
Corporate Banking Division
Bank Muscat is the taking supplier of corporate banking services in Oman, providing to domestic and abroad demands of little concern, medium and big corporates, offering a broad scope of merchandises runing from traditional working capital finance to project finance. The Bank ‘s clients include domestic and transnational companies engaged in activities across all sectors of the economic system such as catching, telecommunication, oil and gas.
Consumer Banking Division
Bank Muscat believes in puting in state-of-the-art engineering to supply a complete scope of value-added personal banking merchandises and services to clients. The Bank presently offers a comprehensive suite of universe category e-banking channels, including Online Banking, 24 ten 7 Call Centre, and the largest web of ATMs and CDMs in the Sultanate.
Investing Banking Division
Bank Muscat plays a cardinal function in the development of Investment Banking and Treasury in Oman. The Investing Banking division provides a comprehensive suite of fiscal services – corporate finance, merchandise structuring, securities firm and research and a host of exchequer merchandises. The Bank has an odd record of being the first to establish a debt merchandise, an index tracker, a guaranteed merchandise, a private equity fund, subordinated loan, exchangeable bond and an international merchandise listed on the local market.
Asset Management Division
The Asset Management division is a taking participant across the part and manages investing portfolios for several prime institutional clients in Oman. In the common fund industry in Oman, Bank Muscat occupies a dominant place. The division offers portfolio direction, custodial and accounting services and is besides involved in structuring, selling and pull offing new financess in assorted plus categories.
Private Banking Division
The Private Banking division has a distinguished path record in banking and wealth direction. Whether it is maximizing investing portfolio or helping in structuring fundss, the Private Banking division continues to run into and transcend the outlooks of clients.
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Brief Literature Review
Mention: Business Necessities: Pull offing Financial Resources and Decisions, BPP Learning Media, London, ISBN 9780751744743
There are different types of Bankss which operate within the banking system, and we will likely hold come across a figure of footings which describe them.
Uncluttering Banks: Clearing Bankss are the Bankss which operate the alleged ‘clearing system ‘ for settling payments ( e.g. payments by check by bank clients ) .
Retail Banks: The term retail Bankss is used to depict the traditional High Street Bankss, Barclays, NatWest, etc. The term ‘wholesale ‘ Bankss refer to Bankss which specialize in loaning in big measures to major clients. The clearing Bankss are involved in both retail and sweeping banking but are normally regarded as the chief ‘retail ‘ Bankss.
Merchant Bankss are Bankss which offer services, frequently of a specialized nature, to corporate clients – companies.
All but the smallest concerns make extended usage of Bankss. The chief maps and activities of Bankss can be summarised as follows.
Supplying a payments mechanism i.e. , a manner in which persons, houses and authorities can do payments to each other. The ‘clearing system ‘ of the glade Bankss is the major payments mechanism in the UK, and it enables persons and houses to do payments by check. The Bankss are besides a beginning from which persons and houses can obtain notes and coins.
Supplying a topographic point for persons, houses and authorities to hive away their wealth, for illustration, in current histories or sedimentation histories. Banks compete with other fiscal establishments to pull the financess of persons and houses.
Lending money in the signifier of loans or overdrafts.
Acting as ‘financial mediators ‘ : they accept sedimentations from people who have surplus wealth and impart it to those that need to borrow.
Supplying clients with a agencies of obtaining foreign currency, or selling foreign currency, whenever they require it.
If you want to borrow money the people imparting it to you will normally merely be prepared to make so if they are certain of the followers:
They will be repaid within a sensible clip.
They will do more for themselves by imparting it to you ( and doing you pay involvement ) than they would from making something else with their money.
Banks do non impart their money to anybody who happens to walk through the door. They apply certain well-tested rules of loaning:
They look at the character of the individual or concern inquiring for the loan. Can they be trusted – for illustration have they borrowed and repaid money in the yesteryear?
Is the borrower able to refund? If it is a concern, is it a profitable one and are at that place plenty trim net incomes to be able to afford the involvement and the periodic refunds of parts of the loan?
Will the bank do money out of the loan? If the bank itself has to pay out 3 % involvement to people who deposit money in their histories so it will hold to bear down more than 3 % involvement to people who borrow money.
The bank will desire to cognize the intent of the loan. They wont lend you money so that you can prosecute in drug-dealing, for illustration. If you intend to chance the money you want to borrow on the 3.30 autopsy at Cheltenham the bank will non take the hazard.
The sum of the loan is partially dependent on whether the borrower can afford to refund capital and involvement and what security there is available. For many concern loans, nevertheless, the bank prefers the clients to hold a important personal interest in whatever the loan is for – the bank will set up a‚¤10,000 to assist purchase a new machine, say, if the concern puts up the staying a‚¤10,000 needed.
The refund footings of the loan are really important. These do non merely include how long the loan will go on ( state, for three or five old ages ) and how much of each regular payment is of capital, and how much of involvement, but besides the fortunes in which the bank can name in the loan early. For case, the footings may province that the full loan should go repayable, with punishment involvement, if more than two back-to-back payments are late.
The bank will necessitate some signifier of security which it can turn to if the loan is non repaid. This is merely like a mortgage: if you ca n’t afford your mortgage refunds your house ( the security ) will be repossessed. Likewise, a bank will take some kind of charge over a concern ‘s assets. This means that the bank has a legal right to prehend the assets if the loan is non repaid.
Fictional character of borrower
Ability to borrow and refund
Margin of net income for the banker
Purpose of the loan
Sum of the loan
Insurance against non-payment ( security )
Broadly speech production, a concern will wish to borrow from the bank for one or more of three intents.
To buy a concern as a whole
To fund the purchase of fixed assets ( capital finance ) like edifices or autos
To fund daily activities ( working capital or trading finance )
Fiscal Statements comprise:
Net income and loss history / income statement history
Cash flow statement
An one-year study and histories will besides incorporate notes to the fiscal statements, manager ‘s and hearer ‘s studies and normally a president ‘s study.
The balance sheet shows the concern ‘s fiscal place as at the balance sheet day of the month whereas the net income and loss history shows its trading consequences, operating expenses, involvement, revenue enhancement and dividends for the twelvemonth. The hard currency flow statement reconciles the trading net income to operational hard currency flows and shows other motions in hard currency for capital minutess and so on. Large companies by and large produce group histories.
Restrictions of Fiscal Statements:
Two really of import drawbacks of fiscal statements are mentioned below:
They are frequently out of day of the month by the clip you receive them.
They are non audited in full, but merely every bit far as required by legislative act.
To these we can add several other restrictions:
Histories can merely demo the public presentation and standing of a concern in fiscal footings – they can non put a value on the staff or client base, nor assess the concern ‘s competition.
Histories are a record of the yesteryear, non a forecaster of the hereafter.
Although the Companies Acts and accounting criterions are really elaborate, they sometimes leave room for pick of accounting intervention and they do non cover every type of fiscal dealing encountered in concern.
The audit is non a warrant that the histories are ‘correct ‘ .
Lone companies whose turnover exceeds a certain threshold ( late increased from a‚¤1 million per annum to a‚¤5.6 million per annum ) have to hold an audit. Companies with a degree of turnover under that sum may hold an audit, but it is non mandatory.
Interpretation of Fiscal Statements:
The income statement, the balance sheet and the hard currency flow statement are all beginnings of utile information about the status of a concern. But we need to cognize more about how to analyze and construe them if they are to be genuinely utile.
There are a few regulations to bear in head when utilizing any method of reading.
Always be cognizant of the context in which the concern operates – fabrication, service and finance companies will demo really different consequences.
Compare like with like. Try to eliminate unusual points like major write-downs or alterations in policy which distort the comparing and camouflage implicit in tendencies.
Findingss should ever be double-checked. Make non establish your reading on the consequence of one fact merely ( such as a major diminution in gross revenues ) .
To construe efficaciously, the statements of more than one accounting period should be analysed to give an thought of the tendency.
We can derive an initial overall feeling of a concern merely by looking at the figures: is it a multi-million lb concern, does it hold tonss of fixed assets, does it owe big sums of money, and so on.
Broadly speech production, accounting ratios can be grouped into four classs: profitableness and return ; adoptions ; liquidness and on the job capital ; and stockholder ‘s investing ratios.
Within each heading we will place a figure of standard steps or ratios that are usually calculated and by and large accepted as meaningful indexs. However each person concern must be considered individually: a ratio that is meaningful for a fabrication company may be wholly nonmeaningful for a fiscal establishment.
The key to obtaining meaningful information from ratio analysis is comparison. This may be:
External – comparing with similar concerns and norms for the concern sector within which the company operates ; or
Internal – comparing with old periods and prognosiss or budgeted consequences.
Ratio analysis on its ain is non sufficient for construing company histories. There are other points of information which should be looked at:
Remarks in the president ‘s study and manager ‘s study.
The age and nature of the company ‘s assets.
Current and future developments in the company ‘s markets, at place and overseas, recent acquisitions or disposals of a subordinate by the company.
Beginnings of Information about Fiscal Performance:
All quality newspaper ( such as The Guardian, The Independent, Daily Telegraph, The Times and, above all, the Financial Times ) have detailed information and remark each twenty-four hours in their fiscal pages on the followers:
The economic activities in the City of London every bit good as in the universe ( particularly the Stock Exchange ) .
The fiscal consequences of big companies.
Announcements by big companies and fiscal establishments of of import programs, such as proposed coup d’etats and amalgamations, gross revenues of parts of a concern, enlargement into new activities or geographical markets and so on.
UK and abroad authorities policies on involvement and exchange rates, industrial scheme, denationalization programs and so on.
Longer term developments in the concern universe, such as alterations in direction theories or consumer gustatory sensations.
When we foremost seek to read the fiscal pages, they can look really dull and hard to understand, particularly as they are full of slang. However, if we persevere, we will bit by bit happen that we become familiar with the slang and we will come to gain that the fiscal pages can be really helpful in developing our apprehension of the fiscal market place.
To place the fiscal and banking system used by Bank Muscat.
To pull out trouble in the present system of banking.
To entree whether the present system adopted by Bank Muscat meets its prescribed aims or non.
To happen out the exact ends of Bank Muscat by the reading of fiscal statement analysis.
To cognize exhaustively about fiscal statements and its reading.
To find banking patterns in Bank Muscat.
To cognize frequence and public-service corporation of public presentation reappraisal.
To give some recommendations and suggestions.
For warranting the topic, I have chosen both primary and secondary beginnings of informations for information analysis. Primary information is the information, which is used for the first clip. This sort of informations is non used antecedently and is researched and made available to research workers. Secondary information is the sort of informations, which is used many times. It could be assessed in libraries, newspapers, diaries, magazines, etc.
Company published beginnings
Sample size of Primary Data:
Primary informations will be collected for questionnaire and interview method. For questionnaire method, I will take at least 75 – 100 persons, either clients of Bank Muscat, or belonging to other Bankss. For interview method, I will hold a direct interaction with at least 10 persons, employees belonging to Bank Muscat every bit good as other Bankss.
Method of Data Analysis:
I will utilize some charts and diagrams to picture the fiscal statements of Bank Muscat. For this, I need some utile packages like MS Excel, SPSS, and MS Office Tools. I will show the information in a graphical signifier so that it will be easy to measure and reason the same.
Dissertation Time Table
Questionnaire Design and Testing:
Data Analysis of Research Findingss:
Writing the Dissertation:
Submission of Dissertation:
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