Internship Report on Commercial Bank of Kuwait Prepared for, Virtual University of Pakistan

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2 Internship Report on Commercial Bank of Kuwait Prepared for, Virtual University of Pakistan

3 Executive Summary I considered Commercial bank of Kuwait for my internship program after careful consideration as it is one of the prominent local bank of Kuwait. This internship provided me the opportunity to learn more about the banking sector in Kuwait. This report is about my internship at Commercial Bank of Kuwait, Mubarik Al Kabir Branch from 15th May to 23rd June for six weeks. During my internship I was able to learn practical features of banking and obtain a good working experience from professionals. The first day, I reported to Human Resource Department and met the training supervisor, XXXX. She gave me brief introduction of the bank and its policies. Later on, I went to the Branch, and met the Branch Manager, XXXX, who was very courteous and cooperative. She introduced me to the Supervisor Customer Services. According to bank policy, every internee is rotated among various departments, in order to get the general awareness about the Bank operations. This departmental rotation is usually for a week. During the internship I learned about various bank operations. In retail banking I have gone through operational aspects of customer service, loans, fixed deposit, safe custody, credit cards, foreign exchange and remittances. I have learnt how they function and deal with different type of customers every day. I have tried to grasps all the detail and working. Each department has its own supervisor who reports to Deputy Branch Manager and who in turn reports to the Branch Manager. The staff at CBK is predominantly Kuwaiti nationals. The attendance at CBK was very important, so I was suppose to sign daily attendance sheet with the branch manager s secretary. The bank staff was very friendly and cooperative, so I had a very relaxed time and above all I got a chance to learn from them. At the completion of my internship program, I reported back to HR, which issued me an Internship Completion Letter & Internee Evaluation Form. I am sure that this report will provide you a complete momentary look of the bank, where I have completed my internship. Moreover this report depicts my practical experience that I have gained and learned during this internship program.

4 Introduction of The Banking Sector Banks are the backbone of an economy. Economic development of any country strongly depends on banking sector of that country. Central Bank of Kuwait is the Central Bank, which was established in Objectives of Central Bank of Kuwait are, to look after the monetary policy & credit policy of the country, issue Kuwaiti Dinar (KD), act as a financial advisor to commercial banks and control the banking system. E-banking plays a vital role in promoting economic advancement of a country. Banks in Kuwait have changed completely towards modern Internet or e-banking which provides new and traditional banking system. Hence all the financial transactions, funds transfer, payments and investments are done on line. The Banking sector in Kuwait consists of Local Banks, commercial Banks, non commercial Banks, Islamic Banks, Foreign Banks, Domestic Private Banks and specialized banks. All these banks are regulated by the Central Bank of Kuwait. Local Banks include the following in Kuwait: COMMERCIAL BANKS: 1. National Bank of Kuwait (NBK) 2. Commercial Bank of Kuwait (CBK) 3. Gulf Bank (GB) 4. Al-Ahli Bank of Kuwait (ABK) 5. The Bank of Kuwait & the Middle East (BKME) 6. Burgan Bank (BB) 7. The Branch of the Bank of Bahrain & Kuwait 8. The Branch of the BNP Paribas Bank 9. The Branch of HSBC Middle East Bank 10. The Branch of the National Bank of Abu Dhabi 11. The Branch of Citibank

5 SPECIALIZED BANKS 1. Kuwait Real Estate Bank (KREB) 2. Industrial Bank of Kuwait BANKS ACCORDING TO THE PROVISIONS OF ISLAMIC SHARIA 1. Kuwait Finance House (KFH) 2. Boubyan Bank

6 Banks' asset composition (Central Bank of Kuwait and IMF estimates) Consolidated assets of local banks grew by 24.9% y-o-y to reach KD27.0bn at the end of 2006 which was on account of the credit facilities to residents growing by 26.3% to KD14.9bn. During the period , the consolidated assets of local banks grew at a Compounded Annual Growth Rate of 12.8% from KD18.8bn in 2003 to KD27.0bn in The composition of the advances in percentages:

7 Some additional metrics:

8 Consolidated Balance Sheet of Local Banks in Kuwait: (Amounts in KD Millions) Source: Bank Kuwait website.

9 Overview of Bank (Commercial Bank of Kuwait) History Commercial Bank of Kuwait was established on 19th June In June 2010 the Bank celebrated its 50th Anniversary. Commercial Bank of Kuwait is second largest financial institutions in Kuwait with a strong and growing corporate and retail banking franchise. CBK provides innovative financial and investment solutions to its ever growing customer base. It deals from retail banking to mega project finance. CBK is mobilizing its substantial capital base and decades of expertise to assume a cutting edge role in Kuwait economy. The Bank has emerged as a lead financier, arranging a flow of loans to diverse power, construction and notable infrastructure projects in Kuwait. The bank is majority owned by members of Kuwaiti ruling family. According to International Credit Agency, CBK has been awarded by Moody s with A2 whereas the bank s financial rating by Standard & Poor s remains at bbb. The Bank s Board of Directors, elected in 2010, have in cooperation with one of the professional advisory firms, identified a five-year strategic plan that aims at addressing and overcoming the woes brought by global financial crisis, with particular focus on restoring the Bank back to high profitability levels generated from core banking activities. To this end, the Board of Directors is closely working with the executive management team to maximize shareholders returns, returns on average assets, cater to customers banking needs and ensure the Bank s corporate social responsibility as a socially responsible Bank. Mission Statement OF CBK: For the sake of greater customer convenience, Commercial Bank of Kuwait endeavors to develop and enhance its product offerings to become the premier provider of banking services to its large customer base along with maximizing shareholders' funds. Vision Statement OF CBK: Commercial Bank of Kuwait seeks to maximize shareholder value by demonstrating excellence in Leadership, Innovation, Commitment and Corporate Citizenship to build the future together.

10 Commercial Bank of Kuwait Hierarchy Chart

11 2.3 BUSINESS VOLUME Commercial Bank of Kuwait has a highly skilled team with years of banking services experience. CBK has demonstrated strong capital and good profitability. However asset quality has weakened since This caused a sharp fall in loss reserve coverage while provisioning together with lower operating profitability, this has impacted the Bank s net return. Net Profit of Commercial Bank of Kuwait was KD 40.5 million for SHARE CAPITAL: CBK share capital comprises of 1,272,022,346 shares of fils 100 each, totaling to KD 127,202,235. The current price of each share is fils 850. The bank is also holding 70,000 shares of the above as Treasury shares. BONDS: There are no bonds outstanding as on 31/12/2010. FUTURE CONTRACTS: The total number of foreign exchange forward contracts entered into by the bank and remaining outstanding as on 31st Dec, 2010 is 62,166,000KD. Most of the contracts are maturing in 30 days time. 2.4 PRODUCT LINES CBK offers wide range of products to its customers, which as below: Loans: 1. Construction projects 2. Infrastructure projects 3. Oil & Power projects Online Banking 1. Checking Accounts: 2. KD Current Account (Individual) 3. KD Current Account (Business) 4. Foreign Currency Current Account

12 Lead Package 1. MFA Discount Partners 2. Salary Transfer 3. Tijari Discount Partners 4. Saving Accounts: 5. KD Saving Account 6. Foreign Currency Saving Account 7. KD Daily Saving Account 8. Foreign Currency Daily Saving Account 9. KD Commercial Star Account 10. KD Privilege Account 11. KD Salary Account 12. KD Al Najma Account CBK Cards: 1. Visa Card 2. Visa Infinite 3. MasterCard 4. Gold MasterCard 5. Platinum MasterCard 6. Visa Gold 7. Point of Sale Merchants 8. StarLink Plus 9. Free AIG Insurance Card 10. Pre-paid Card Term Deposits: 1. KD Fixed Deposit 2. Foreign Currency Fixed Deposit 3. KD Smart Deposit 4. KD Advanced Interest Deposit Remittances: 1. Swift Transfers 2. Demand Draft 3. Citibank Draft

13 On Demand Accounts: 1. KD Call Account 2. Foreign Currency Call Account Asset Management: 1. Funds Management 2. Portfolio Management 3. Private Equity

14 Investments & Assets Management CBK Capital was established in February 2007, it was licensed by the Central Bank of Kuwait. CBK Capital has a paid up capital of KD 15 million. This Company is a fully owned subsidiary of Commercial Bank of Kuwait and has its full backing and support. CBK Capital has taken responsibility of all investment activities for Commercial Bank of Kuwait. It is under supervision of highly reputed Board of Directors and skilled Management Team. CBK Capital provides the following wide range of services to its customers: Assets management. Advisory Investment Banking Financing activities.

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