Internship Repot
Transcript of Internship Repot
NATIONAL BANK OF PAKISTAN
“INTERNSHIP REPORT ON NBP MALAKAND UNIVERSITY CAMPUS”
SUBMITTED BY:
M.BURHAN ID # 3289
MBA (FINANCE)
IQRA UNIVERSITY PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR
SESSION: 2007 – 2009
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
APPROVAL SHEET
Head of Department: ______________________Mr. ABID USMANIqra University, Peshawar
Internal Supervisor: ______________________________Mr. ASIF MEHMOODIqra University, Peshawar
IQRA UNIVERSITY PESHAWAR CAMPUS 11 B, OLD JAMRUD ROAD, UNIVERSITY TOWN, PESHAWAR
SESSION: 2007 – 2009
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
ACKNOLEGEMENT
First of all, I am thankful to the most merciful and Almighty Allah who gives me the
strength that I fulfill my task
This report is a thorough essence of my internship which I carried out for a period of two
months in The National Bank Of Pakistan at Malakand University Campus, I exclusively
studied and observed the organizational structure, customer service and personnel
administration of the bank. The purpose of this report is to evaluate the performance of
NBP in these areas and give concrete recommendations for further improvement.
Although the bank is functioning satisfactorily, but still there are some shortcomings,
which have been pointed out along with recommendations to overcome them.
Two months period is too less to understand the operation of a bank, but still it was a
great experience for me to have a feel of the practical world and keeping in view the
limitations. I tried to make this study useful and meaningful.
I acknowledge the help of my adviser Sir.Asif Mehmood whose guidance helped me a lot
to complete my task in a way I desired.
I am thankful to the bank staff of the NBP University Branch Malakand for their valuable
guidance in preparing this report.
I am also thankful to my parents and friends for cooperation.
M.BURHAN
ID # 3289
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
PREFACE
Research report is an opportunity for the students to apply theoretical knowledge and to
gain practical experience about public and private organizations and their practices and
procedures.
I chose to do my internship report on NBP because of the fact that it is a part of the most
successful organizational setup in the country and have had in recent years NBP has
shown the will that it wants to stay the best bank in Pakistan with constant innovations in
its services, and by making use of the emerging technologies.
Research report is not sufficient to understand the operations of organizations. But still it
was a great experience to have a feel of the practical world and keeping in view the
limitations of the study, this seems a reasonable attempt. Working on NBP was a true
learning experience for me. I have exclusively studied and observed the organizational
structure, its departments and customer services.
M.BURHAN
ID#3289
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
TABLE OF CONTENTS
S. No TOPIC PAGE. #CHAPTER # 1 INTRODUCTION1.1 Introduction1.2 Purpose Of The Study1.3 Scope Of The Work1.4 Limitation Of The Study1.5 Methodology Of The StudyCHAPTER # 2 BACKGROUND 2.1 Background Of The Banks2.2 Types Of Banks2.2.1 Commercial Banks2.2.2 Saving Banks2.2.3 Trust Companies2.2.4 Credit Union2.3 International Banking Group's2.4 International BankingCHAPTER # 3 BACKGROUND OF THE ORGANIZATION 3.1 Intorduction3.1.1 Early Inception3.1.2 Modernization3.1.3 Mission Statement and Vision Of NBP3.2 Short List Of NBP Services3.2.1 Demand Draft3.2.2 Swift System3.2.3 Letters Of Credit3.2.4 Mail Transfer3.2.5 Foreign Remittance 3.2.6 Short Term Investment 3.2.7 NBP ATM Network3.2.8 Equity Investment3.2.9 Commercial Finance3.2.10 Agricultural Finance3.2.11 Agricultural Finance Services3.2.12 Agricultural Credit3.2.13 Agricultural Credit Medium Term
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3.2.14 Production Loan3.2.15 Corporate Finance3.3 The Change Program CHAPTER # 4 ORGANIZATIONAL OVERVIEW 4.1 Organizational Structure 4.1.1 Head Office 4.1.2 Board Of Directors 4.1.3 Regional Headquarters 4.2 Regional Audit Office4.3 Staff Collages 4.4 Overseas Operations CHAPTER # 5 FINANCIAL ANALYSIS 5.1 Financial Analysis 5.2 Common Size and Trend Analysis CHAPTER # 6 SWOT ANALYSIS 6.1 Strengths Of NBP6.2 Weaknesses OF NBP6.3 Opportunities 6.4 Financing 6.5 Threats CHAPTER # 7 FINDINGS AND RECOMMENDATIONS 7.1 Findings and Recommendations7.2 Output Monitoring 7.3 Easy Producer Of Advancing Loans7.4 Establish a Customer Complain Centers 7.5 Effective Appraisal System Of Employees 7.6 Recruitment 7.7 Friendly Environment 7.8 Technological Advancement CHAPTER # 8 IMPLEMENTATION 8.1 Implementation / Action Plan 8.2 Business Development Plan 8.3 Market Research and Analysis Plan8.4 Plan For Monitoring and Evaluation Systems 8.5 Performance Evaluation Plan8.6 Hiring Process and Job Description Plan8.7 Internship Program Plan8.8 Customer Retention PlanCHAPTER # 9 MY WEEKLY INTERNSHIP REPORT BIBLIOGRAPHY
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EXECUTIVE SUMMARY
Banking industry of Pakistan is well established where growth rate is increasing
every year. Its market is also becoming very competitive. There are a number of
foreign and local banks including National Bank Of Pakistan.
NBP’s leading bank established on November 1949 ahead of schedule. Being in
the field of Banking Industry for a long time the management of the NBP has
developed a philosophy of harmony, service, and creativity and is providing
quality products to its consumers.
The purpose of this report is to study the overall activities, processes, and
performance of the Bank with special focus on organizational structure, customer
satisfaction, Advances and Foreign Exchange Department of the Bank.
The NBP was founded as a public sector entity with 25 per cent of the paid up
capital sponsored by the government of Pakistan. Both SBP and NBP performed
well because the managements of these two banks was in the hands of the young
professionals having rich experience of working in Reserve Bank of India and
The Bank of India.
Advances and Foreign Exchange Department is headed by the Advance and
Foreign Exchange Managers followed by other Officers, they have their own
duties and responsibilities. The bank has also a proper procedure for customer
complaints, customer feedback and customer satisfaction. Finance and
Accounting Department is headed by the finance executive of the bank followed
by Chief Accountant and other officers and assistants all of them have their own
duties and responsibilities. The bank maintains accounting books for initial
accounting entries. Then the initial record is stored permanently in the computers.
There is a Human Resource department, which has the responsibility to recruit
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and promote the officers and manager the salaries and other remuneration to the
staff members.
Report Findings are:
Some of the major problems of NBP are:
There is no program for extensive training and development programs, and
employees are selected on previous experience and expertise
The bank is relying mostly on short-term loans and funds, which is risky, because
of not being able to provide adequate short term financing in tight money periods.
The bank is following an extremely conservative set-up both in finance and
general administration. The bank does not conduct any formal planning sessions.
Too much reliance is made on ad hoc decision making.
There is no concept of market promotional activities like advertising, although the
bank is using some sales promotion tools, but it still needs some improvement.
Report recommendations are:
The bank should provide better training facilities to the employees within the
limited resources available. The bank should provide better working environment
and incentives to its employees. The bank needs to follow Management by
Objectives (MBO) principle. NBP also needs to pay special attention to the
promotion activities with special emphasis on advertising. The bank must
improve the relations with its new and existing customers.
To protect against risk of short term financing only in tight money period, the
bank should also rely on long-term funding to cover short-term needs.
The Bank needs to follow some aggressive policies of growth in its all
departments. The Bank also needs to develop effective standards for monitoring
and evaluation.
As mentioned, the bank has no concept for promotion activities like advertising
for which an action plan is given in which the kind of advertising, the timing and
the channel for advertising is given.
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After the recommendation at the end an action plan has been outlined along with
its NBP implements these Plans into its corporate and consumer banking, it can
achieve the highest levels of its targets in every division and department.
CHAPTER # 01
INTRODUCTION
1.1 INTRODUCTION
We are doing the internship in the partial fulfillment of the requirements for the degree of
the MBA-Finance in the NBP to equip ourselves with first hand knowledge about the
NBP main Branch Malakand University Campus and improve our skills. NBP is the
abbreviation of National Bank Pakistan. It was established in Nov 1949 for the purpose to
do the international trade.
1.2 PURPOSE OF THE STUDY
First purpose of the report is to observe, analyze and interpret the relevant data and 2nd is
to give insight to the readers about the organization and finally to represent the sketch of
the organization and its operations and the services etc.
1.3 SCOPE OF THE WORK
The scope of my work is based on complete observation of national bank during my
internship. I worked in following departments of the branch.
Deposit Department.
Advance Department.
Remittance Department.
Account Department.
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Foreign Exchange Department
1.4 LIMITATION OF THE STUDY
The vast scope of operation of a bank is difficult to be analyzed in a limited time of two
months. The lack of information is another limitation of study.
1.5 METHODOLOGY OF THE STUDY
I used different methodologies depending upon both primary as well as secondary data.
The sources of primary data.
Interviews with bank employees.
Personal observation.
The sources of secondary data.
Annual reports.
Concerned books.
Bank’s manuals and brochures.
Internship reports on NBP available in IMS library.
Internet.
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CHAPTER # 02
BACKGROUND OF THE STUDY
2.1 BACKGROUNG OF THE BANKS
In the beginning there was no exchange of goods and everybody was self sufficient, in
that he provided all the basic needs, foods, clothing and shelter, for himself and his
family through hunting and fishing. There was no need for money. Then came the barter
system, in this system there is exchange of goods for goods. But there were some
problems in the barter system due to which new system indirect exchange was
established. Gradually this turns to exchange the goods for the precious metal like gold,
silver, bronze etc… the people use the precious metal because of their intrinsic value.
About at the end of 13th century these precious metals were used and the first gold pound
was introduced in the 14th century. But the person starts clipping and debasing the
coinage. In the eighteenth century the value of gold was fixed for next two years. At the
advent of civilization priests were the bankers and their temples were the banks. But in
the London it was the goldsmiths, who initially kept peoples’ valuables for safe custody,
then started giving loans out of these deposits and finally their “receipts” for deposits,
started changing hands like currency note. The first such receipt was perhaps the first
Bank note. Gradually some goldsmiths started concentrating on Banking instead of their
own businesses. Others also joined them and thus many large private banks came into
being, with them their own notes that circulates in the market. Series of legislation in the
19th century brought an end to the private note issue. Monopoly of note issue got vested
in the Central Bank with the exception of some banks in Europe, who have still limited
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authority. In Banking companies ordinance 1962 section 5(b) of which say, “Banking
means the accepting the deposits for the purpose of lending or investment, repayable on
demand or otherwise, draw able by cheques.This is the little history of Banks that how
they originates from the revolution.
2.2 TYPES OF BANKS
Banks have traditionally been distinguished according to their primary functions.
Commercial banks, which include national- and state-chartered banks, trust companies,
stock savings banks, credit unions, and industrial banks.
2.2.1 COMMERCIAL BANKS
A bank that offers a broad range of deposit accounts, including checking, savings, and
time deposits, and extends loans to individuals and businesses -- in contrast to investment
banking firms such as brokerage firms, which generally are involved in arranging for the
sale of corporate or municipal securities. Specializes in helping business and making
investments. These were, until deregulation, the only banks that could make investments
in commercial real estate were not interested in small depositors until mid 1800’s. Were
the only types of banks, until deregulation that could issue checking accounts? These are
the big banks. They are for profit institutions.
2.2.2 SAVINGS BANKS
Savings banks were originally founded in order to provide a place for lower-income
workers to save their money. While of National importance, savings banks are chartered
by the respective states in which they exist, and as such are distinctly local institutions.
Unlike the National, the savings bank is not established as a money-making corporation.
Unlike the National, the savings bank is not established as a money-making corporation.
The savings bank provides a safe place for the care of such deposits, and it pays such
rates of interest on such deposits as are warranted by the earnings of its investments after
paying the expenses incident to the proper conduct of its officers.
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2.2.3 TRUST COMPANIES
A trust company has been referred to as a near-bank; while technically it differs from a
bank in mandate and services offered, it also provides banking services such as chequing
accounts, savings and loans, investments and credit cards. A trust company may be
owned by or be part of a chartered bank or building society. The "trust" name refers to
the ability of the institution's trust department to act as a trustee - someone who
administers financial assets on behalf of another. Trustee will manage investments, keep
records, manage assets and prepare court accountings, paying bills and (depending on the
nature of the trust) medical expenses, charitable gifts, inheritances or other distributions
of income and principal.
2.2.4 CREDIT UNIONS
Credit Unions are financial cooperative organizations of individuals with a common
affiliation (such as employment, labor union membership, or place of residence). Credit
unions accept deposits of members, pay interest (dividends) on them out of earnings, and
primarily provide consumer installment credit to members. In the past costs were kept
low because they borrowed office space, managerial help, etc. from the employer or
union. This has changed as they have become more like full service banks but are not
faced with some of the regulations other banks face. This gives Credit Unions an
advantage that many other banks are fighting on the state and national level.
Financial cooperative organization of individuals who have a common bond, such as a
place of employment, residence, or membership in a labor union. Credit unions accept
deposits from members, pay interest (in the form of dividends) on the deposits out of
earnings, and use their funds mainly to provide consumer installment loans to members.
2.3 INTERNATIONAL BANKING GROUP’S (IBG)
Different forums are conducted in the field of banking but there is no specific
organization or group to act as head but in every geographical area there is banking act
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according to the requirement of that place. Here is IBG, which say that International
Banking Group’s (IBG) principal line of business is trade finance. In our international
units we are also active in financing local third country trade in niche segments,
particularly by leveraging our network. IBG units have a well-established customer
franchise in the South Asian origin communities. Activity with other customer segments
has also been growing particularly in emerging markets and now forms an important part
of our business. An additional strength of IBG is that all international units are entirely
self funded through stable well diversified local customer deposits or capital which
enables us to develop local commercial and, in specific markets, consumer businesses
while minimizing the inherent cross border exposures.HBL has a sizable market share in
the region like Africa, Nigeria that has resulted from focused marketing efforts. Gulf
region generated improved earnings, due to participation in large syndications, enabling
utilization of liquidity in viable business transactions. The turnaround efforts in the past
few years have now been completed with balance sheet clean up and cost structure
rationalization. In summary, IBG will continue to grow by focusing on its core strengths
and further developing synergies with our domestic businesses and within the
international network. Identifying opportunities, while keeping a balance in
acknowledging and acceptance of diverse foreign cultures is a task that will continue to
guide and control IBG in the future.
2.4 INTERNATIONAL BANKING (NBP)
National Bank of Pakistan is at the forefront of international banking in Pakistan, which
is proven by the fact that NBP has its branches in all of the major financial capitals of the
world. Additionally, we have recently set up the Financial Institution Wing, which is
placed under the Risk Management Group. The role of the Financial Institution Wing is
To effectively manage NBP’s exposure to foreign and domestic correspondence
Manage the monetary aspect of NBP’s relationship with the correspondents to
support trade, treasury and other key business areas, thereby contributing to the bank’s
profitability
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Generation of incremental trade-finance business and revenues
NBP offers
The lowest rates on exports and other international banking products
Access to different local commercial banks in international banking
CHAPTER # 03
BACKGROUND OF THE ORGANIZATION
3.1 INTRODUCTION
Before we begin with a detailed explanation of the services offered by NBP let us give a
brief introduction of the history of NBP. The organizational culture of any organization
largely depends on its history. NBP is the beaurocratic organization and the history of
NBP was very much affected by National Political changes that occurred as the
Government implemented different policies. In order to meet the challenge of financing
Pakistani exports, the government established the National Bank of Pakistan in
November 1949 ahead of schedule. Originally the NBP was to be established in 1950.
Since Dhaka was occupying an important position those days because of jute which was
on top of the exports list in the early days of Pakistan hence the first branch of NBP was
established in Dhaka, the capital of the then East Pakistan.
The NBP was founded as a public sector entity with 25 per cent of the paid up capital
sponsored by the government of Pakistan. Both SBP and NBP performed well because
the managements of these two banks was in the hands of the young professionals having
rich experience of working in Reserve Bank of India and The Bank of India.
National Bank of Pakistan maintains its position as Pakistan's premier bank determined to
set higher standards of achievements. It is the major business partner for the Government
of Pakistan with special emphasis on fostering Pakistan's economic growth through
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aggressive and balanced lending policies, technologically oriented products and services
offered through its large network of branches locally, internationally and representative
offices.
3.1.1 EARLY INCEPTION
National Bank of Pakistan was established under the National Bank of Pakistan ordinance
1949 in Pakistan and Government of Pakistan having 76% share holding owns it.
According to the order of Government of Pakistan the bank started functioning on
November 20, 1949. The bank has 1183 branches in Pakistan and 16 in Overseas. In
domestic banking industry of Pakistan National Bank of Pakistan possesses a unique
position. It is also undertakes Government Treasury operations and it is the largest
contributory agent of Government and semi Government requirements. It also acts as a
trustee to the National Investment Trust, a premier financial institution charged with the
responsibility of mobilizing small saving in the country
3.1.2 MODERNIZATION
National Bank of Pakistan is the first bank, which has started a Foreign Exchange
Company in order to regularize the inflows of foreign money and control the undesirable
blackmailing of private foreign exchange companies in the country. It is the only
domestic bank of the country, which has been awarded “The Best Domestic Bank”
consecutively in 2001 and 2002.
National Bank of Pakistan (NBP) provides a wide range of services, including opening of
account and acceptance of deposits, Remittances outward/inward, acceptance/issuance of
Travelers cheques, issuance of Guarantees, collection of taxes, and deliveries of salaries.
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3.1.3 MISSION STATEMENT AND VISION OF NBP
Mission Statement
To be recognized in the market place by Institutionalizing a merit & performance culture,
Creating a powerful & distinctive brand identity, Achieving top-tier financial
performance, and Adopting & living out our core values.
Vision of NBP
To be the pre-eminent financial institution in Pakistan and achieve market recognition
both in the quality and delivery of service as well as the range of product Offering
The Objectives
All the objectives of the National Bank of Pakistan were compatible to the mission
statement of the bank. As a business organization its main objective is profit
maximization. National Bank of Pakistan (NBP) tries to maximize its profits by its two
basic functions, deposits and finances. The tool used by the bank in order to increase its
deposits was to provide the best of facilities to their customers. By the increase in profits
of bank mean that bank becomes capable of lending more loans to the clients and hence
earning profit from them.
3.2 SHORT LIST OF NBP SERVICES
3.2.1 DEMAND DRAFT
If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account
holder of the bank or not, can purchase a Demand Draft from a bank branch.
3.2.2 SWIFT SYSTEM
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system has
built-in features of computerized test keys, which eliminates the manual application of
tests that often cause delay in the payment of home remittances. The Swift Center is
operational at National Bank of Pakistan with a universal access numbers. All NBP
overseas branches and overseas correspondents (over 450) are drawing remittances
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through SWIFT. Using the NBP network of branches, you can safely and speedily
transfer money for our business and personal needs.
3.2.3 LETTERS OF CREDIT
NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.
3.2.4 MAIL TRANSFER
Move your money safely and quickly using NBP Mail Transfer service. And we also
offer the most competitive rates in the market.
3.2.5 FOREIGN REMITTANCES
To facilitate its customers in the area of Home remittance, National Bank of Pakistan has
taken a number of measures to:
Increase home remittances through the banking system
Meet the SBP directives/instructions for timely and prompt delivery of remittances to the
beneficiaries
New Features
The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides
Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.
Zero Tariffs: NBP is providing home remittance services without any charges.
Strict monitoring of the system is done to ensure the highest possible security.
Special courier services are hired for expeditious delivery of home remittances to
the beneficiaries.
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3.2.6 SHORT TERM INVESTMENT
NBP now offers excellent rates of profit on all its short-term investment accounts.
Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are
extremely attractive, along with the security and service only NBP can provide.
3.2.7 NBP ATM Network
NBP ATM Network
Burewala
Faisalabad
Gujar Khan
Gujranwala
Gujrat
Hyderabad
Islamabad
Multan
Muzaffarabad
Peshawar
Quanta
Rawalpindi
Sheikhupura
Sialkot
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Karachi
Lahore
Mirpur
Taxila
Wah Cantt.
1 Link ATM Network
*The link one (1) means network in Pakistan
3.2.8 EQUITY INVESTMENT
NBP has accelerated its activities in the stock market to improve its economic base and
restore investor confidence. The bank is now regarded as the most active and dominant
player in the development of the stock market.
NBP is involved in the following
Investment into the capital market
Introduction of capital market accounts (under process)
NBP’s involvement in capital markets is expected to increase its earnings, which
would result in better returns offered to account holders.
3.2.9 COMMERCIAL FINANCE
Let us help make your dreams become a reality. Our dedicated team of professionals
truly understands the needs of professionals, agriculturists, large and small business and
other segments of the economy. They are the customer’s best resource in making NBP’s
products and services work for them.
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3.2.10 AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.
3.2.11 AGRICULTURAL FINANCE SERVICES
“I Feed the World” program, a new product, is introduced by NBP with the aim to help
farmers maximize the per acre production with minimum of required input. Select farms
will be made role models for other farms and farmers to follow, thus helping farmers
across Pakistan to increase production.
3.2.12 AGRICULTURAL CREDIT
The agricultural financing strategy of NBP is aimed at three main objectives:-
Providing reliable infrastructure for agricultural customers
Help farmers utilize funds efficiently to further develop and achieve better production
Provide farmers an integrated package of credit with supplies of essential inputs,
technical knowledge, and supervision of farming.
3.2.13 AGRICULTURAL CREDIT (MEDIUM TERM)
Production and development
Watercourse improvement
Wells
Farm power
Development loans for tea plantation
Fencing
Solar energy
Equipment for sprinklers
Farm Credit
NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis
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Operating loans
Land improvement loans
Equipment loans for purchase of tractors, farm implements or any other
equipment
Livestock loans for the purchase, care, and feeding of livestock
3.2.14 PRODUCTION LOANS
Production loans are meant for basic inputs of the farm and are short term in
nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme If you require
any further information, please do not hesitate to e-mail us.
3.2.15 CORPORATE FINANCE
Working Capital and Short Term Loans
NBP specializes in providing Project Finance – Export Refinance to exporters – Pre-
shipment and Post-shipment financing to exporters – Running finance – Cash Finance –
Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-
shipment / Post Shipment Agricultural Production Loans
Medium term loans and Capital Expenditure Financing
NBP provides financing for its clients’ capital expenditure and other long-term
investment needs. By sharing the risk associated with such long-term investments, NBP
expedites clients’ attempt to upgrade and expand their operation thereby making possible
the fulfillment of our clients’ vision. This type of long term financing proves the bank’s
belief in its client's capabilities, and its commitment to the country.
Loan Structuring and Syndication
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National Bank’s leadership in loan syndicating stems from ability to forge strong
relationships not only with borrowers but also with bank investors. Because we
understand our syndicate partners’ asset criteria, we help borrowers meet substantial
financing needs by enabling them to reach the banks most interested in lending to their
particular industry, geographic location and structure through syndicated debt offerings.
Our syndication capabilities are complemented by our own capital strength and by
industry teams, who bring specialized knowledge to the structure of a transaction.
Cash Management Services
With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s total
financial position right from your desktop computer. They will also be able to take
advantage of our outstanding range of payment, ejection, liquidity and investment
services. In fact, with NBP, you’ll be provided everything, which takes to manage your
cash flow more accurately.
3.3 THE CHANGE PROGRAM
The Symbol of Change
The Logo of National Bank of Pakistan is “the symbol of change”. The logo represents
the tradition of intellect and security, the basis for the future of the bank. The Eagle
represents Dynamisms, symbolizing the new customer focus and the new products, new
way of working carrying the bank to be the best.
Major Improvements
In the change program the bank is giving great importance to its employees. The bank
thinks that the changing environment will bring three major improvements. First, there
will be far greater recognition of an individual’s contribution to the bank. There will be
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an official reward and respect for the efforts and achievements. Second, the strengthening
of the staff means that they can directly contribute to the shape of their future at the bank.
Third, a steady improvement in working conditions both in terms of physical
surroundings and relationships with the colleagues and customers.
CHAPTER # 04
ORGANIZATIONAL OVERVIEW
4.1 ORGANIZATIONAL STRUCTURE
Organizational structure is the framework that defines the boundaries of the formal
organization and with which the organization operates. A suitable organizational
structure for the nature of the organization leads to better performance.The new
organizational structure of the bank constitutes a board of directors and an executive
committee as the governing bodies. The National Bank of Pakistan (NBP) has 1183
branches all over the country and 16 overseas branches. The head office is operationally
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in charge of central affairs including the delegation of power and authority to the regional
headquarters all over the country.
4.1.1 HEAD OFFICE
The National Bank of Pakistan consists of a Head Office situated at I.I. Chundrigarh
Road Karachi. All branches and regional offices work according to the rules and
regulations issued by the Head Office from time to time. The Head Office of National
Bank of Pakistan, which is primarily responsible for making policies and execution of
policy decision include,
1. Board of Directors
2. Group or Divisional Chiefs
The Head Office operationally in charge of central affairs including the delegation of
powers and authority to the 29 Regional Headquarters all over the country.
4.1.2 BOARD OF DIRECTORS
The Board of Directors nominates the executive committee, which consists of one
President or Chairman and seven Directors and among these seven members, one
member perform functions of both member and Secretary.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
4.1.3 REGIONAL HEADQUARTERS
On May 13, 2002 a circular was issued in which zones were abolished and the whole
country and Azad Kashmir was divided into 29 regions. The changeover process started
from 1st August 2002 and was completed by 31st August 2002. The new setup was made
fully functional by 15th September.
Regional Management Committee
A regional management committee controls all regions. Regional management consists of
Regional Business Chief, Regional Operations Chief, Risk management Chief,
Compliance Chief.
Provincial Level Region
Regional Headquarters No of Regions
Balochistan 2
Sindh 6
NWFP 5
Punjab 14
Azad Kashmir 2
Total 29
Name of Regions
No Region No Region
1 Karachi (South) 16 Bahawalpur
2 Karachi (West) 17 Dera Ghazi Khan
3 Hyderabad 18 Sahiwaal
4 Larkana 19 Federal Capital-Islamabad
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
5 Sukkhar 20 Rawalpindi
6 Quetta 21 Jehlum
7 Gawadar 22 Gujrat
8 Lahore Central 23 Gilgit
9 Lahore East 24 Peshawar
10 Gujranwala 25 Mardan
11 Sialkot 26 Dera Ismail Khan
12 Faisalabad 27 Abbotabad
13 Jhang 28 Muzaffarabad (A.K)
14 Sargodha 29 Mirpur (A.K)
15 Multan **** ****
The Regional Head Quarters consist of the following Group
1. Management Support Group
2. Marketing Development Group
3. Inspection Group
4. Credit Policy & Management Group
5. Special Assets Management Group
A Regional Chief Executive of the rank of Senior Executive, Vice President, or
Executive Vice President heads each RHQ. The General Manager heads each Division.
4.2 REGIONAL AUDIT OFFICE
To keep check on the working of the Branches, and to ensure that their day to day
operations conform to the laid down rules and procedures, there is a very effective system
of audit and inspection in NBP. This system is implemented mainly through the 29
Regional Audit Offices. These Regional Audit Offices work directly under the
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Administrative Control of Head Office and are located with each RHQ. A Regional Audit
Chief heads this Regional Audit Office.
4.3 STAFF COLLEGES
As earlier stated, the NBP is maintaining four staff colleges for optimum training of its
employees. These staff colleges are located at all the provincial headquarters. The
purpose of these staff colleges is very clear. They conduct different sort of courses. These
include basic training course to newly appointed officers as well as those who have been
newly elevated to the officer level.
4.4 OVERSEAS OPERATIONS
National Bank of Pakistan has a strong international presence through 16 overseas
branches and 5 representative offices situated in USA (Chicago), Canada, China,
Azerbaijan, and Uzbekistan.
Country Number of Branches Country Number of Branches
USA 2 Bahrain 1
Germany 1 Egypt 1
France 1 Bangladesh 1
Hong Kong 2 Kyrgyzstan 1
Japan 2 Turkmenistan 1
South Korea 1 Pakistan EPZ 1
Afghanistan 1 ******** ***********
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
FIGURE-4.1ORGANIZATIONAL STRUCTURE OF HEAD OFFICE
IQRA UNIVERSITY PESHAWAR
BOARD OF DIRECTORS
PRESIDENT
EXECUTIVE COMMITTEE
SEVPs/CHIEF BALUCHISTAN
SEVPs/CHIEF
PUNJAB
SEVPs/CHIEF NWFP
SEVPs/CHIEF
SIND
SEVPs
WINGS
NATIONAL BANK OF PAKISTAN
FIGURE:4.2 BOARD OF DIRECTORS
IQRA UNIVERSITY PESHAWAR
Syed Ali Raza
(President)
Dr. Waqar Masood Khan (Director)
Mohammad Arshad Chaudhry (Director)
Iftikhar Ali Malik
(Director)
Syed Shafqat Ali Shah Jamote (Director)
Sikandar Hayat Jamali
(Director)
M. Zubair Motiwala
(Director)
Muhammad Khalid Malik (Director)
NATIONAL BANK OF PAKISTAN
CHAPTER #05
FINANCIAL ANALYSIS
5.1 FINANCIAL ANALYSIS
Financial analysis is an evaluation of a firm’s past financial performance and its
prospects for the future. It consists of applying analytical tools and other relevant data to
obtain useful information. The financial statement with the attached schedules and
Directors report on past performance and future prospects give compact information. The
interested parties need to interpret this information about performance of the company
through the use of financial tools. The main purpose of financial analysis is to give a
clear picture of the financial position by studying the relationship and comparisons
between the items in the statement. Keeping in view its importance I have addressed
financial analysis by using the Balance Sheet and Income Statement, their common,
index, trend and ratio analysisIn addition, the banking sectors indicators like Deposits and
Advances positions, the investments and Advances to Total Assets have been calculated
and analyzed.
5.2 COMMON SIZE AND TREND ANALYSIS
Common Size analysis can be extremely helpful to highlight the changes overtime in the
financial performance and financial conditions of the bank. Analyses of percentage
financial statements, where all balance sheet items are divided by total assets and on the
other hand, all income statement items are divided by net sales or revenues.An analysis of
percentage financial statements where all balance sheet or income statement figures for a
base year equal 100 % and subsequent financial statement items are expressed as
percentage of their values in their base year.
Cash & Balances with treasury banks
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
In 2005 its cash & balances with treasury banks are Rs.79, 155, 081 million, in 2006
amounting to Rs.55, 531, 453 million and in 2007 amounting to Rs. 59, 420, 502
million. Based upon common size analysis there has been a fall of almost 6%, 6% in the
year of 2006and 2007 respectively as compared to 2005. Based upon Change with year
2006 Cash & Balances with treasury banks are 55,531,453 and in 2007 are 59,420,502
and it is increased by 3,889,049 million. Based upon trend analysis in 2006 there is
29.8% decrease and in 2007 there is 7% increase in cash & balances.
Investments
In year 2005 it’s Total Investments are Rs.71, 759, 449 million, in 2006amounting to
Rs.143, 524, 971 million and in 2007 amounting to Rs. 166, 195, 619 million.
Based upon common size analysis there has been a rise of 17.29%, 33.16% and 35.22%
in the years of 2005, 2006 and 2007 respectively. Based upon Change with year 2006
Investments are 143,524,971 and in 2007 are 166,195,619 and it is increased by
20,442,891 million.
Based upon trend analysis in 2006 there is 100% increase and in 2007 there is 15.8%
increase in Total Investments due to efficient management.
Advances
In year 2005 it’s Total Advances are Rs.170, 319, 096 million, in 2006 amounting to
Rs.140, 547, 374 million and in 2007 amounting to Rs. 160, 990, 265 million. Based
upon common size analysis there has been a rise of 41% in 2005but in 2006 there is a fall
to 33% and again rise to 34 % in 2007.Based upon Change with year 2006 Advances are
140,547,374 and in 2007 are 160,990,265 and it is increased by 20,442,891 million.
Based upon trend analysis in 2006 there is 17.5% decrease and in 2007 there is 14.5%
increase in Advances.
Liabilities Side
Total Liabilities
In year 2005 it’s Total Liabilities are 397,578,553 million, in 2006 amounting to Rs.
408,866,590 million and in 2007 amounting to Rs. 444,276,123 million. Based upon
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
common size analysis Total Liabilities was the 95.8% of the Total Assets in the year
2005 and there has been a fall of 94.5% and 94.15% in the years of 2005 and 2007
respectively due to little amount of rise in Total Liabilities as compare to Total Assets.
Based upon Change with year 2006Total Liabilities are 408,866,590 and in 2007 are
444,276,123 and it is increased by 35,409,533 million.
Based upon index analysis in 2006 there is 2.8% increase and in 2007 there is 8.6%
increase in Total Liabilities.
Deposits
In year 2005 its Total deposits are Rs. 349,617,068 million, in 2006amounting to Rs.
362,865,637 million and in 2007 amounting to Rs. 395,568,490 million. Based upon
common size analysis when we see the percentage of Deposits in Total Assets there has
been a fall of 84.22%, 83.84% and 83.83% in the years of 2005, 2006 and 2007
respectively.
Based upon Change with year 2006 Total Deposits are 362,865,637 and in 2007 are
395,568,490 and it is increased by 32,702,853 million. Based upon trend analysis in
2006there is 3.8% increase and in 2007 there is 9% increase in Deposits.
Common size and Trend Analysis of Income Statement
The following table shows an Income Statement of NBP their common size and trend
analysis for the year ending December, 20062007.and 2008.
Markup/Interest Expense
In 2005 its markup/interest expense are Rs. 18,877,247 million, in 2006 amounting to Rs.
14,698,507 million and in 2007 amounting to Rs. 6,735,579 million.
Based upon common size analysis there has been a fall of 60%, 54% and 39% in the
years of 2005, 2006and 2007respectively.
Based upon trend analysis in 2006 there is 22% decrease and in 2007there is 54%
decrease in markup/interest expense.
Total Non-Markup/Interest Income
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
In year 2005 its Total Non markup/interest income are Rs. 4,501,568 million, in year
2006 amounting to Rs. 5,209,092 million and in year 2007 amounting to Rs. 7,248,239
million.
Based upon common size analysis there has been a rise of 14.38%, 19% and 37.26% in
the years of 2005, 2006 and 2007respectively.
Based upon trend analysis in year 2006 there is 5% increase and in 2007 there is 11.7%
increase in Non markup/interest income due to the increase of fee, commission and
brokerage income.
Profit before Tax
In year 2005 its profit before tax is Rs. 3,015,629 million, in 2006amounting to Rs.
6,044,811 million and in 2007 amounting to Rs. 9,008,708 million.Based upon common
size analysis there has been a rise of 9.6%, 22.3% and 46.3% in the years of 2005,
2006and 2007 respectively. Based upon trend analysis in 2006 there is 100% increase and
in 2007 there is 49% increase in profit before tax.
Profit after Tax
In year 2005 its profit after tax is Rs. 1,148,529 million, in 2006 amounting to Rs.
2,253,385 million and 2007 amounting to Rs. 4,198,103 million.
Based upon common size analysis there has been a rise of 3.6%, 8.3% and 21.6% in the
years of 2005, 2006 and 2007 respectively.
Based upon tend analysis in 2006there is 96% increase and in 2007 there is 86% increase
in profit after tax.
Fig 10.1.1 Assets and Liabilities Distribution in 2007
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Fig 10.1.2: Income Statement Distribution 2007
Adjustment made (Long term investment and advances were removed
Current Ratio
Current Ratio = Current Assets/Current Liabilities
Current Ratio (2005)= 276,289,721/ 351,862,417 = 0.79 times
Current Ratio (2006) = 289,103,079/366,231,381 = 0.79 times
Current Ratio (2007) = 306,360,400/401,065,228 = 0.76 times
Interpretation
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Current ratio of the Bank is decreased to 0.76 in 2007 as compared to 2006and
2005which are 0.79 and 0.79 respectively and indicates that the bank has not kept so
much current assets to pay current liabilities. It should be known that too much liquidity
decreases profitability. The reason is that cash on hand is the most unproductive asset and
the surplus cash should be invested in short-term ventures.
Cash Ratio
Cash Ratio = Cash/ Current Liabilities
Ratio for the year 2005 = 79,155,081/351,862,417 = 0.22 times
Ratio for the year 2006 = 55,531,453/366,231,381 = 0.15 times
Ratio for the year 2007 = 59,420,502/401,065,228 = 0.15 times
Interpretation
Cash Ratio has been the same for 2007and it is equal to 0.15% while it was 0.22% in
2005 because the bank has increased the lending to the people. This trend shows the
efficient utilization of cash by NBP in meeting its current obligations as they arise. The
reason is that cash on hand is most unproductive assets and too much liquidity decreases
profitability.
Advances-Deposit Ratio
Advances Deposit Ratio = Advances/ Deposits X 100
Advances Deposit Ratio (2005) = 170,319,096/349,617,068 X 100 = 48.72%
Advances Deposit Ratio (2006) =140,547,374/362,865,637 X 100 = 38.73%
Advances Deposit Ratio (2007) =160,990,265/395,568,490 X 100 = 40.70%
Interpretation
The Advances deposit ratio of the Bank has declined to 40.70% in 2007 as compared to
48.72% in the 2005 but as compared to 38.73% in 2006 there is little increase in the
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
advances deposit ratio. This shows that the Bank has small concentrate on providing the
loans to the customers due to lack of information about the background and assets of
customers.
Investment-Deposit Ratio
Investment Deposit Ratio = Investments/ Deposit X 100
Investment Deposit Ratio (2005) = 71,759,449/349,617,068 X 100 = 20.5%
Investment Deposit Ratio (2006) = 143,524,971/362,865,637 X 100 = 39.55%
Investment Deposit Ratio (2007) = 166,195,619/395,568,490 X 100 = 42.0%
Interpretation
The investment-deposit ratio of the Bank was 42% in 2007 and 39.55% in 2006 and
20.5% in 2005 which is increasing with the passage of time and it shows that the bank
using efficiently the deposits of the customers.
Capital to Deposit Ratio
Capital to Deposit Ratio = Capital/ Deposit X 100
Capital to Deposit Ratio (2005) = 17,510,437/349,617,068 X 100 = 5%
Capital to Deposit Ratio (2006) = 23,936,263/362,865,637 X 100 = 6.60%
Capital to Deposit Ratio (2007) = 27,584,014/395,568,490 X 100 = 6.97%
Interpretation
According to this ratio we interpret that the bank has own equity is not so much as
compared to deposit because there is large difference between capital and deposit. The
capital is increasing but with the little percentage as compared to deposit.SBP Prudential
Regulations that Capital should be 8% of Total Deposits and NBP is not fulfilling the
Prudential Regulation of SBP.
Capital to Deposit Ratio (Excluding Surplus on Revaluation of Assets)
Capital to deposit ratio = Capital/Deposit X 100
Capital to deposit ratio (2005) = 11,958,673/349,617,068 X 100 = 3.42%
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Capital to deposit ratio (2006) = 14,279,303/362,865,637 X 100 = 3.93%
Capital to deposit ratio (2007) = 18,133,897/395,568,490 X 100 = 4.58%
Interpretation
After excluding surplus on revaluation of assets the amount of capital is very low because
the capital should be 8% of the Total Deposits by Prudential Regulation of SBP.
Capital to Advances Ratio
Capital to Advances ratio = Capital/ Advances X 100
Capital to Advances ratio (2005) = 17,510,437/170,319,096 X 100 =
10.28%
Capital to Advances ratio (2006) = 23,936,263/140,547,374 X 100 =
17.03%
Capital to Advances ratio (2007) = 27,584,014/160,990,265 X 100 =
17.13%
Interpretation
According to this ratio we analyze from the previous data that capital is not increasing
proportionately to advances. In 2005 the ratio is 10.28% which increased in 2006 to
17.03% but in 2007 the ratio is increased with very little percentage which is 17.13% and
indicates that stockholders contributing lesser amount of capital.
Advances to Total Assets Ratio
Advances to Total Assets Ratio = Advances/ Total Assets X 100
Advances to Total Assets Ratio (2005) = 170,319,096 X 100 = 41% Advances to
Total Assets Ratio (2006) = 140,547,374/432,802,853 X 100 = 33%
Advances to Total Assets Ratio (2007) = 160,990,265/471,860,137 X 100 = 34%
Interpretation
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Advances was the 41% of the Total Assets in 2005 and fall to 33% in 2006 and again rise
to 34% in 2007 because of fluctuation in advances.
Deposit to Total Assets Ratio
Deposit to Total Assets Ratio: = Deposit/ Total Assets X 100
Deposit to Total Assets Ratio (2005) = 349,617,068/415, 088, 9901 X 100 =
84.22%
Deposit to Total Assets Ratio (2006) = 362,865,637/ 432,802,853 X 100 =
83.84%
Deposit to Total Assets Ratio (2007) = 395,568,490/471,860,137 X 100 =
83.83%
Interpretation
In year 2005 its total deposits are Rs.349, 617 million, in 2006amounting to Rs.362, 865
million and in 2007 amounting to Rs.395, 568 million but when we see the percentage of
deposits in Total Assets there has been a fall of 84.22%, 83.84% and 83.83% in the years
of 2005, 2006and 2007 respectively due to small increase in deposit as compare to Total
Assets.
Investment to Total Assets Ratio
Investment to Total Assets Ratio = Investment/ Total Assets X 100
Investment to Total Assets Ratio (2005) = 71,759,449/415,088,990 X 100= 17.28%
Investment to Total Assets Ratio (2006) = 143,524,971/432,802,853 X 100 =
33.16%
Investment to Total Assets Ratio (2007) = 166,195,619/471,860,137 X 100 =
35.22%
Interpretation
In year 2005 its total investments are Rs.71, 759 million, in 2006 amounting to Rs.143,
524 million and in 2007 amounting to Rs.166, 195 million.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
There has been a rise of 17.29%, 33.16% and 35.22% in the years of 2005, 2006 and
2007 respectively due to the efficient management.
Debt to Equity Ratio
Debt-Equity Ratio = Total Debt/ Stock Holders’ Equity
Debt-Equity Ratio (2005) = 397,578,553/17,510,437 = 22.76
Debt-Equity Ratio (2006) = 408,866,590/23,936,263 = 17.9
Debt-Equity Ratio (2007) = 444,276,123/27,584,014 = 16.10
Interpretation
The debt-equity ratio has been slightly declined in 2007. In the year 2003, the decrease in
ratio was less than as compared to year 2006 because the decrease in ratio from 2005 to
2006 was greater. In the year 2007 creditors provided Rs. 16.10 rupees for Rs. 1 rupee
provided by the shareholders.
Debt to Assets Ratio
Debt to assets ratio = Total Debt/ Total Assets
Debt to Assets Ratio (2005) = 397,578,553/415,088,990 = 0.96
Debt to Assets Ratio (2006) = 408,866,590/432,802,853 = 0.94
Debt to Assets Ratio (2007) = 444,276,123/471,860,137 = 0.94
Interpretation
The Debt to Assets ratio in 2007 was the same as compared to 2006 but as compared to
2005 there was very small decrease in ratio. Both Debt and Assets are increasing at the
same rate.
Gross Profit Margin
Net mark up/interest income = Gross Profit/ Total Revenue X 100, Gross Profit
Margin (2005) = 16,192,730/35,069,977 X 100 = 46.17%
Gross Profit Margin (2006) = 16,224,586/30,923,09 X 100 = 52.48%
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Gross Profit Margin (2007) = 16,688,327/23,423,906 X 100 = 71.24%
2007 2006 2005
Rupees in “000”
Mark-Up/Return/Interest Income 19,452,317 27,126,839 31,290,584
Fee, Commission, Brokerage
Income
3,260,863 3,137,007 2,886,762
Income from dealing in foreign
currencies
710,726 659,247 892,631
Total Revenue 23,423,906 30,923,093 35,069,977
Less markup/return/Interest
expense
6,735,579 14,698,507 18,877,247
Net Mark-Up/Interest Income
(Gross Profit)1
16,688,327 16,224,586 16,192,730
Interpretation
According to this ratio we interpret that the gross profit margin has increased in 2007 as
compared to 2006and 2005, but on the other side the total revenue from regular activities
has decreased. The Gross Profit Margin ratio increases due to decrease in Non
markup/return/interest expense. As a result the regular activities of the bank were not
good in 2007 as compared to 2006and 2005.
Net Profit Margin
Net Profit Margin = Profit after Taxation/ Total Revenue X 100
Net Profit Margin (2005) = 1,148,529/35,069,977 X 100 = 11.97%
Net Profit Margin (2006) = 2,253,385/30,923,093 X 100 = 7.29%
Net Profit Margin (2007) = 4,198,129/23,423,906 X 100 = 4.90%
1
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Interpretation
The net profit margin of NBP has also shown as fall to 4.90 percent in 2007 as compared
to 7.29 percent in 2006 and 11.97 percent in 2001.This signal towards lower total
revenues of the Bank during 2007.
Return on Equity
Return on Equity = Profit after Taxation/ Shareholders’ Equity X
100
Return on Equity (2005) = 1,148,529/17,510,437 X 100 = 6.56%
Return on Equity (2005) = 2,253,385/23,936,263 X 100 = 9.41%
Return on Equity (2007) = 4,198,129/27,584,014 X 100 =
15.22%
Interpretation
The return on equity has increased to 15.22 percent in 2007 as compared to 6.56 percent
and 9.41 percent in 2005 and 2006 respectively. The return on equity indicates the net
profit margin trends, with the Bank registering good performance because of better
efficiency with respect to Equity.
Return On Assets
Return on Assets = Profit before Taxation/ Total Assets X 100
Return on Assets (2005) = 1,148,529/415,088,990 X 100 = 0.27%
Return on Assets (2006) = 2,253,385/432,802,853 X 100 = 0.52%
Return on Assets (2007) = 4,198,129/471,860,137 X 100 = 0.89%
Interpretation
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
The return on assets has improved to 0.89 percent in 2007as compared to 2006and 2005.
While the assets of the Bank are not using efficiently because the return is very low as
compared to Total Assets.
Assets Turnover Ratio
Assets Turnover Ratio = Total Revenue/ Total Assets
Assets Turnover Ratio (2005) = 35,069,977/415,088,990 = 0.084 times
Assets Turnover Ratio (2006) = 30,923,093/432,802,853 = 0.071 times
Assets Turnover Ratio (2007) = 23,423,906/471,860,137 = 0.050 times
Interpretation
The assets turnover ratio in 2007 was decreased to 0.050 times as compared to 0.071
times in 2006 and 0.050 times in 2005. It indicates that the bank is not using the assets
efficiently because total revenue of the bank is very low as compare to Total Assets.
Earning Per Share
Earning per Share = Earning after tax/ Total shares outstanding
Earning per share ratio (2005) = 1,148,529,000/373,038,350 = 3.08 rupees per share
Earning per share ratio (2006) = 2,253,385,000/373,038,350 = 6.04 rupees per share.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
CHAPTER # 06
SWOT ANALYSIS
SWOT ANALYSIS BASED ON OBSERVATION
SWOT Analysis is the most important part of the report, because it depends on my
personal observation. Only a good, keen and comprehensive analysis leads to good
recommendations for the improvement of the existing conditions. Therefore in NBP I
have observed many things and I have analyzed them to the best of my efforts &
knowledge.
6.1 STRENGTHS
Following are the main Strengths of NBP:
Serving as an Agent
National Bank of Pakistan main branch Bannu serve as an agent of State Bank of
Pakistan. No other bank is allowed to do the Clearing task but NBP act on the behalf of
SBP the clearing task.
No of Branches
Another strength of NBP is that there are 1183 branches in Pakistan and 16 branches in
overseas of NBP. So NBP staff members are scattered on the land of Pakistan and World
to provide benefits and serve the people.
Experience Employees
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
The staff members of NBP main branch are an experience, though they are not qualified
people but yet they have enough experience to carry on the work of bank. It is said,
“Knowledge is power and experience is wisdom but experience cannot be defeated by
knowledge”.
Modernization
National Bank of Pakistan is the first bank, which has started a Foreign Exchange
Company in order to regularize the inflows of foreign money and control the undesirable
blackmailing of private foreign exchange companies in the country.
It is the only domestic bank of the country, which has been awarded “The Best Domestic
Bank” consecutively in 2005 and 2006.
6.2 Weaknesses
Following are the main weaknesses of NBP
Delegation of Authority
National Bank of Pakistan to great extent is a centralized bank. The manager of the main
branch Nowshera as very limited authority, especially in case of advances. Lack of
delegation of authority creates problems and when the manager is not present in his office
and customers have to wait for many hours. There is top to bottom flow of authority and
lower level of employees cannot participate in the decision making process. The top level
of the organization takes all the decision. This completely centralized decision-making
decreases the interest and also reduces efficiency of the bank.
Seniority Based Promotions
Promotion in NBP is purely on seniority basis rather than on performance. This really de-
motivates the employees because they know that it doesn’t matter whether they perform
well or bad.
Job Rotation
Most of the employees work in a particular department and they specialize only in one
department. In case of absence of one employee, any other employee cannot perform this
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
work. In this way bank not only loses the business but also results in dissatisfaction of the
customer.
Lack of Theoretical Knowledge of Employees
There is a lack of theoretical knowledge of the employees of National Bank of Pakistan
main branchNowshera..Although their work is mostly routine and practical but
sometimes low background education can disturb the routine work. They have to consult
the Regional Manager Office or General Manager Office. This factor affects their
efficiency.
Discouragement of Small Depositors
The staff members give proper attention and respect to those customers who have
deposited huge amount of money while the small depositors mostly; the salaried people
are discouraged to open an account within the branch. In this way they discourage saving
habits in the general public.
Lack of Discipline
During my training in National Bank of Pakistan, main branch Nowshera observed lack
of discipline in the way that some of the employees do not care about the office timings.
They usually come late in the morning. Similarly employees take long leaves without any
valid reasons.
Excessive Paper Work
There is excessive paper work in NBP, which takes more time and reduces the effective
banking performance
Lengthy Process of Loan
To meet the immediate requirements of the business, customers require quick financing
but due to centralization of decision-making there are unnecessary delays in sanctioning
of loans, resulting in dissatisfaction of the customers.
Inadequate Fringe Benefits
The main purpose of fringe benefits is to retain the employees in the organization on
long-term basis. It has been analyzed that the package of fringe benefits offered by NBP
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
is not much attractive as compared to other organizations. Recently NBP has furthermore
reduced the fringe benefits of the employees that may result in de-motivation & reduction
the performance of existing employees.
Low Rate of Return
Due to low rate of return, the depositors are drawing their money from the banks and
depositing in the saving centers, which are offering a good rate of return as compared to
the banks.
Limited Application of Electronic Media
NBP is not utilizing the electronic media for its promotional campaign. There is lack of
awareness among the customers and general public about the schemes offered by NBP.
Improper Working Conditions
Most of the branches of NBP are facing the problem of shortage of space like NBP, main
branch Nowshera. The frequent movement of the staff in the manager’s office
discourages the customers and it is also risky from security point of view. The
arrangement of foreign exchange department in main branch Nowshera is even worse.
There is lack of furniture and inappropriate arrangements of the seating for the customers.
Limited Application of Technology in Bank
NBP branches are not fully computerized, which is very important to provide the quick
and quality services.
Political Interference
Banks are not free from political influences. Due to political pressures on the
management for sanctioning the loans in favor of their political persons resulted in huge
amount of bad debts because in this way the bank is unable to recover the loan very
difficult, and these loans are not used for productive purposes.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
6.3 OPPORTUNITIES
Following are the main weaknesses of NBP:
6.4 FINANCING
Now a day’s people have enough savings and they want some luxurious type’s products
such as Car, House and Business etc. So the opportunity for NBP is to start car-financing
scheme to be beneficial for the organization (Bank).
Modernization
Another opportunity for NBP is to modernize itself because all other banks have best
methodologies to compete others and market their products. As I know that NBP have
not enough modernize system to be compatible with other banks.
Strong Competition
As we know that today’s era is the era of competition. In Nowshera all the banks are
involved in struck competition so; it is an opportunity for NBP to develop a strong
marketing policies and campaign to further develop itself.
6.5 THREATS
Followings are the major threats for NBP:
Other Banks
The major threat for NBP is other banks that have started function in Nowshera such as
Bank Alfalah, MCB, UBL, ABL, Khyber Bank etc. These are the banks that NBP face
competition with them. These banks provides a vide variety of services as compared to
NBP.
Political Interference
Banks are not free from political influences. Due to political pressures on the
management for sanctioning the loans in favor of their political persons resulted in huge
amount of bad debts because in this way the bank is unable to recover the loan very
difficult, and these loans are not used for productive purposes.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
CHAPTER # 07
FINDINGS AND RECOMMENDATIONS
7.1 FINDINGS AND RECOMMENDATIONS
After critical and SWOT analysis both the operations and financial data of National Bank
of Pakistan, I addressed the findings and recommendations of the report.The overall
performance of NBP in terms of profitability and growth has been rise over the past few
years. The reason is decrease in expenditure and change in the higher management of the
bank. In order to survive and grow in intense competition, the Bank should pay more and
more attention to carry out a detailed market research/analysis and prepare a new product
plan before launching any venture or expansion plan.
7.2 OUTPUT MONITORING
There are too many rules and regulations within the Organization, which adversely
affects the performance of the employees. For continuous monitoring and evaluation, the
systems and procedures must be dynamic and flexible. This is very important task as the
objective of the systems must be to facilitate the functions and achieve the desired results.
Thus, the changes must be made and improvements should be done.
7.3 EASY PROCEDURE OF ADVANCING LOANS
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Most of the customers face difficulties while getting the loan. The procedure for
advancing loans should be simple and easy. In this regard the bank management can play
an important role by means of simplifying the things to the customers.
7.4 ESTABLISH A CUSTOMER COMPLAINT CENTERS
NBP is the public sector bank and due to heavy rush, customers have always complaints
against the staff of the bank. It is essential to open a customer complaint centers at branch
levels so that the management should better understand the problems of the customers
and then try to overcome these problems. This might create a good reputation of the bank
in the eyes of customers.
7.5 EFFECTIVE APPRAISAL SYSTEM OF EMPLOYEES
Performance of employees within an organization cannot be the same and it is necessary
to evaluate their performance. For this purpose proper employee appraisal system should
be establish for identifying the right persons who are eligible for promotion.
7.6 RECRUITMENT
Merit is not considering in the process of selection and recruitment of employees. The
recruitment process suffers from serious drawbacks. There is no concept of job
description. For recruiting, the hiring process and job description should be modified and
improved. One of the cost-effective methods to select competent employees is to offer
internship programmers to graduates from business and management schools.
7.7 FRIENDLY ENVIRONMENT
A friendly environment should be created and separate section should be established for
each activity because it will help to gain the interest of employees in work.
7.8 TECHNOLOGICAL ADVANCEMENT
NBP main branch Nowshera is not fully computerized which is very important to provide
the quick services. Therefore NBP main branch Nowshera should be fully computerized
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
to expedite the dealing process among bank and customers. It also reduces the burden of
work.
CHAPTER # 08
IMPLEMENTATION
8.1 IMPLEMENTATION / ACTION PLAN
Every organization has its own strengths, weaknesses and opportunities and threats.
Nothing is impossible in this world, as someone has rightly said, “An impossible is often
untried”. Here are the implementation/action plans for the recommendations concluded in
the previous chapter.
8.2 BUSINESS DEVELOPMENT PLAN
In order to develop the implementation procedure to reach business development
objectives, the following steps should be taken:
Campaigns to open More Accounts
In order to increase the number of accounts, there should be a clear market plan. The
staff, branch managers and executives involved in business development should prepare
lists of different groups of prospective account holders and their neighbors, friends and
influential people and make efforts to open their volume of business and deposits by
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
fixing monthly target. This should be done by coordination among the various branches
of the Bank.
Campaigns for Mobilization of Deposits
Deposits are the main source of commercial banks and it is very important for an
individual bank to get funds, because its basic function is to put them to work safely and
profitably. The act of attracting funds is important but there are so many other processes
of obtaining the funds, like the Bank can get funds by advertising, by direct contact or by
contacts through their officers, managers and executives. Thus, they can get the
customers and acquire them ultimately by furnishing banking services.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Campaigns to Increase Business Share
The management of the Bank should prepare a business development plan by taking into
account the overall market position of the bank in the banking industry. In light of market
share, business development targets should be fixed on an annual basis by fixing monthly
targets for imports, exports, issuance of letters of guarantee, bills etc. The achievement of
targets should be reviewed every month by the respective circles at the Head Office and
necessary instructions and guidelines be provided to the respective area control and zones
where the business performance are not according to the set targets.
Training of Personnel
We all know that the profitability, growth and survival of a bank depend upon business
development. Therefore, the Bank should take steps to impart training to the probationary
officers, senior officers, managers and executives in modern business development
techniques and public relations.
Business development training is the process of imparting knowledge creating skills and
shaping attitude, work habits, and consists of telling, showing and teaching the trainee
and then monitoring his/her results and making constructive corrections.
8.3 MARKET RESEARCH & ANALYSIS PLAN
Before launching any venture or expansion plan, a detailed market research/analysis must
be carried out using any and/or of the following methods:
The best method is collecting first hand data from the potential market through surveys.
The questionnaires must be unbiased and should not prompt desired results.
Historical data, if available could be very useful in determining the potential and trends.
In case there is lack of awareness about the service or non-existence of historical data
makes it impossible to conduct research, data of the locations, which have similar or
close characteristics, can be used.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
8.4 PLAN FOR MONITORING & EVALUATION SYSTEMS
The systems and procedures of the Bank must be dynamic, flexible and subject to
continuous monitoring and evaluation. The pre-requisites of an effective monitoring and
evaluation process are as follows:
A good, open and unbiased feedback system should be established to identify the
problems and suggesting improvements.
The feedback system must include the customers and all the staff members from top to
bottom within the Bank.
The feedback system must allow both as needed and fixed interval information.
The problems and errors must be analyzed and removed. The suggestions should be
discussed at all levels and implemented if found useful.
8.5 PERFORMANCE EVALUATION PLAN
Periodic performance evaluation is very important function to be performed. The
objective of evaluation must not be limited for salary review only. It should include and
be performed in the following manner:
Objectives for each employee must be clearly defined in a measurable
quantifiable manner.
A proper system must be adopted, whereby the employees also participate in
the evaluation process.
The system must be such that where the performance against the given
objectives can be measured systematically.
The performance review must be done at short intervals. The periodical
performance reporting and meetings could be effective tools.
The performance review must be aimed at improving employees’ skills and
productivity by identifying training needs.
8.6 HIRING PROCESS & JOB DESCRIPTION PLAN
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
The human resource professionals believe that the failure of sub-ordinate is in fact a
failure of the manager as either he/she has not made the right selection or he/she has not
able to manage people well. The problem could be in the hiring process or an unclear job
description. To enable employees to be most productive at all levels; the Bank should
improve its hiring process and job description.
This can only be attained through the following:
Preparing qualification and experience specification in accordance with the objectives to
be achieved from the position.
Implementing standardized selection criterion.
Offering reasonable compensation package in accordance with job
requirements, experience, and qualification keeping in view the salary packages of the
existing staff at the same level.
Preparing detailed job description.
Arranging detailed orientation programmed.
Setting objectives for the period.
8.7 INTERNSHIP PROGRAM PLAN
One of the best and cost effective method to select the right people and hire graduates
from business and management schools as internees. The internship programmed should
spread over a period of at least six months. During the internship programmed, a close
watch should be kept on the internees. At the end of the internship programmed, the
performance of the internees should be evaluated and competent, diligent and energetic
internees should be hired on permanent basis.
8.8 CUSTOMER RETENTION PLAN
Retaining a customer is more difficult than acquiring a customer. Any disruption in
continuity and quality of the service may result in a quick slump in the presence of a
competitive environment.
The Bank should set up the following for customer retention:
Effective and Efficient Complaint Management System.
Customer Feedback System through independent sources.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
Effective and Efficient Management Information System.
CAHPTER# 09
MY WEEKLY INTERNSHIP REPORT
During my internship at NIB in malakand university campus i worked in remittances,
advances, foreign and customer services office department, and I successfully completed
all tasks and duties that were assigned to me.
This is one of ideal branches of NIB in Malakand, working there for the customers for
almost one year, the duties which I performed and experiences that I gained during each
task of the day explained below.
Basically during the first two weeks I got used to the environments and was introduced to
the bank staff, till that point I was not assigned any task and once I got familiar then I
was given a green signal to work in different departments from week to week basis ,as
explained below in brief from week 3.
WEEK THREE
I reported to the branch manager on the daily basis’s who gave me brief introduction
about the management and the working activities of the branch, he also interviewed me
and look a test on my banking knowledge about the banking experience .
In my first week in NBP they assigned me different tasks in reception department, and
the qualified staff trained me where I gained experience about different activities which
were practiced.
WEEK FOUR
In the second week of my internship I learned that the branch was having about holders
with a few employees to deal with this hectic task of dealing with all these different
clients.
And my experience at this particular department was a very learning one, I learned how
to handle different customers, how to fill account opening forms for the new customers,
what are the requirements of opening account for them, the facilities that an account
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
holders enjoys and the interest rates clients are receiving. And I have also learned the
procedure of maintaining an active account holder.
WEEK FIVE
Learning in Remittance and clearing department
There was many qualified officers in this department, who assigned specific tasks of
inward clearing and outward clearing, while the issuing of pay order, demand draft, pay
slip etc were handled by other officers.
After one week in this department I learned that how the transfer of money from one
branch to the branch takes place, in this department it was my responsibility for
performing the following tasks,
Issuing of the Demand Draft and their computer feeding of data.
Responsibility of DD advice and its payment,
Issuance of telegraphic transfers and their feeding in computer.
Payment of local bills of collections, outward bills of collection and their
realization.
WEEK SIX
Learning from Accounts and finance department
In this department I basically helped in checking and counting of vouchers and how to
calculate the depreciation of all fixed assets, got familiar with formats of different bank
reports, and this is one of those departments where there was no customers interaction is
not involved at all rather the paper based interaction is very important.
WEED SEVEN
Learning in home finance department
In this department the customer integration was also very much limited, and I basically
learned the dept to equity ratio in home financing, calculating its monthly installments,
documentations required to get the product for the customers, clients, eligibility criteria
for agreements and what is the producer.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
WEEK EIGHT
Learning trade finance
I learned that trade finance is the procedure involved in trade financing by NIB. Further,
that in detail I learned about the different aspects like: reshipment credit, post-shipment
credit and letter of credit.
The tasks that I learned about in this department were.
Different types of trade finance.
The types of post-shipment credit facilities.
Parties involved in letters of credit.
Documentation for releasing letters of credit.
Basically that was all of my two months internship activities in different department
performing different tasks, it was only possible with the help of friendly employees of
NIB without it would have been one difficult task, and many to all those who assisted me
any way during this internship period all along.
IQRA UNIVERSITY PESHAWAR
NATIONAL BANK OF PAKISTAN
BIBLIOGRAPHY
Asrar H. Siddiqi, (1998) Practice and Law of Banking in Pakistan, Karachi:
Royal Book Company.
M. Saeed Nasir, Money Banking and Finance.
Bowlin, Oswald D. (1999) Financial Analysis. U.S.A: McGraw Hills
International.
Block, Stanley B and Hirt, Geottrey A. (7 th edition). Foundation of Financial
Management. Sydney: Ed Von Hoffmann Press.
Bodie, Zvi and Mertan, Robert C. (1997). Finance, New Jersey: Prentice Hall.
De Cenzo David A, Robbins Stephen P. Human Resource Management. Fifth
Edition, New York, John Wiley & Sons, Inc. 1996.
Horngren, Sundem. (2000). Introduction to Financial Accounting. New Jersey:
Pentice Hall Press.
Kock, Timothy W. (2001). Bank Management. Orlando: Dryden Press.
Meenai, S.A. (2002). Money and Banking in Pakistan. Karachi: Oxford
University Press.
C.H. James and J.M. Wachowicz.JR. 11th Edition, Foundation of Financial
Management. New Jersey: Prentice-Hall, Inc. p.150
National Bank of Pakistan, (2003). Annual Report, Karachi
National Bank of Pakistan, (2004). Annual Report, Karachi.
National Banking of Pakistan, (2005). Annual Report, Karachi.
National bank of Pakistan of Pakistan, Brochures of Products & Services.
www.nbp.com.pk
IQRA UNIVERSITY PESHAWAR