Samina Ameer Din Mc090404110 MBA Finance National Bank of Pakistan.

Samina Ameer Din Samina Ameer Din Mc090404110Mc090404110

MBAMBAFinanceFinance

National Bank of Pakistan National Bank of Pakistan

Brief Introduction of the Brief Introduction of the Organization Organization

History of National Bank of History of National Bank of PakistanPakistan

NBP is the largest commercial bank.NBP is the largest commercial bank. Acts as an agent of central bank.Acts as an agent of central bank. Moved from public sector organization to commercial Moved from public sector organization to commercial

bank.bank. Provide both public sector and commercial banking Provide both public sector and commercial banking

services. services. Handle treasury transactions.Handle treasury transactions. A major lead player.A major lead player.

Business Volume of NBPBusiness Volume of NBP

2010 (Particulars) (Rs. in Million)2010 (Particulars) (Rs. in Million)

Total Assets Total Assets 1,035,0251,035,025

Deposits Deposits 832,152832,152

Advances Advances 477,507477,507

Investments Investments 301,324301,324

Shareholder’s Equity Shareholder’s Equity 103,762103,762

Pre-tax Profit Pre-tax Profit 24,41524,415

After-tax Profit After-tax Profit 17,56317,563

Earning Per Share (Rs.) Earning Per Share (Rs.) 13.0513.05

Number of Branches Number of Branches 1,289 1,289

Number of Employees Number of Employees 16,45716,457

Competitors of NBPCompetitors of NBP

Competitors at Public SectorCompetitors at Public Sector

First Women Bank Limited (FWB) First Women Bank Limited (FWB) The Bank of Khyber (KB)The Bank of Khyber (KB)The Bank of Punjab (BOP)The Bank of Punjab (BOP)

Competitors at Private SectorCompetitors at Private Sector

My Bank Limited Allied Bank Limited My Bank Limited Allied Bank Limited Bank Al-Falah Limited Atlas BankBank Al-Falah Limited Atlas BankBank Al Habib Limited Habib Bank LimitedBank Al Habib Limited Habib Bank LimitedAskari Bank Saudi Pak Bank LimitedAskari Bank Saudi Pak Bank LimitedFaysal Bank Limited Metropolitan Bank limited Faysal Bank Limited Metropolitan Bank limited Muslim Commercial Bank LimitedMuslim Commercial Bank Limited

Organizational Hierarchy ChartOrganizational Hierarchy Chart

4. SVP 5. VP3. EVP2. SEVP

OG-I

Executives

Officers

OG-II OG-III

Clerical Staff

Head Cashier

CashierNon

Clerical Staff

Peon, Guards etc

Assistant

1. President

6. AVP

CashDept.

Hierarchy of BranchHierarchy of Branch

Branch Manager

Credit Officer

Operations Manager HR Officer

All other staff

Training ProgramTraining Program

1)1) Account Opening Department Account Opening Department

2)2) Clearing Department Clearing Department

3)3) Remittance Department Remittance Department

Description of the Tasks Assigned to Description of the Tasks Assigned to me During my Internshipme During my Internship

PLS Saving A/C PLS Saving A/C Current A/CCurrent A/C Inward / Out ward ClearingInward / Out ward Clearing Local Clearing Local Clearing Intercity Clearing Intercity Clearing Pay Order (PO)Pay Order (PO) Demand Draft (DD)Demand Draft (DD) Call Deposit at Receipts (CDR)Call Deposit at Receipts (CDR)

Ratio Analysis Ratio Analysis

Financial StatementsFinancial Statements

All the financial statements for the preparation of these PPT All the financial statements for the preparation of these PPT slides are downloaded from the slides are downloaded from the Website of NBP: Website of NBP:

www.nbp.com.pkwww.nbp.com.pk

Ratio Ratio AnalysisAnalysis


(Net profit/ Revenue) *100(Net profit/ Revenue) *100

Year 2010Year 2010 Year 2009Year 2009 Year 2008Year 2008

1. Net 1. Net Profit Profit Margin Margin

17,563,214/17,563,214/

88,472,134*10088,472,134*100

=19.85%=19.85%

17,561,846/17,561,846/

77,947,697*10077,947,697*100

= 22.53%= 22.53%

15,458,590/15,458,590/

60,942,798*10060,942,798*100

= 25.36%= 25.36%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

Year 2008 Year 2009 Year 2010

Net Profit Margin



((Mark-up / return / interest earned - Mark-up / Mark-up / return / interest earned - Mark-up / return / interest expensed) / Mark-up / return / return / interest expensed) / Mark-up / return /

interest earned*100 interest earned*100


2. Gross 2. Gross Spread Spread Ratio Ratio

43,221,658/43,221,658/

88,472,134*100 88,472,134*100

= 48.85%= 48.85%

37,458,048/37,458,048/

77,947,697*10077,947,697*100

= 48.05%= 48.05%

37,058,030/37,058,030/

60,942,798*10060,942,798*100

= 60.80%= 60.80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%


Gross Spread Ratio

Working of Net Interest Margin Working of Net Interest Margin

Net Interest Margin = Net Interest Margin = Mark-up / return / interest earned - Mark-up / return / interest earned - Mark-up / return / interest expensedMark-up / return / interest expensed

2010)2010) Net interest margin = ( Net interest margin = (88,472,134-45,250,476)88,472,134-45,250,476) = = 43,221,65843,221,6582009)2009) Net interest margin = ( Net interest margin = (77,947,697-40,489,649)77,947,697-40,489,649) = = 37,458,04837,458,0482008)2008) Net interest margin = (60,942,798-23,884,768) Net interest margin = (60,942,798-23,884,768) = = 37,058,03037,058,030



non mark-up/interest income/ (non mark-up/interest non mark-up/interest income/ (non mark-up/interest income +Mark-up/return/interest earned)*100income +Mark-up/return/interest earned)*100


3. Non 3. Non Interest Interest Income Income to Total to Total Income Income

17,632,640/17,632,640/

106,104,774*100 106,104,774*100

= 16.61% = 16.61%

19,025,357/19,025,357/

96,973,054*10096,973,054*100

= 19.61%= 19.61%

16,415,862/16,415,862/

77,358,660*10077,358,660*100

= 21.22%= 21.22%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%


Non Interest Income to Total Income Ratio

Working of Total Income Working of Total Income

Total Income = Total Income = (non mark-up / interest income +Mark-(non mark-up / interest income +Mark-up / return / interest earned)up / return / interest earned)

2010)2010) Total Income = (17,632,640+88,472,134) Total Income = (17,632,640+88,472,134) = = 106,104,774106,104,7742009)2009) Total Income = (19,025,357+77,947,697) Total Income = (19,025,357+77,947,697) = = 96,973,05496,973,0542008)2008) Total Income = (16,415,862+60,942,798) Total Income = (16,415,862+60,942,798) = = 77,358,66077,358,660



Interest Earned / Interest ExpensedInterest Earned / Interest Expensed


4.Spread 4.Spread Ratio Ratio

88,472,134 /88,472,134 /

45,250,476 45,250,476

=1.95 times =1.95 times

77,947,697 /77,947,697 /

40,489,64940,489,649

= 1.92 times = 1.92 times

60,942,798 /60,942,798 /

23,884,76823,884,768


0

0.5

1

1.5

2

2.5

3


Spread Ratio



(Net profit/ Total assets) *100(Net profit/ Total assets) *100


5.Return 5.Return on on AssetsAssets

17,563,214/17,563,214/

1,035,024,680*1001,035,024,680*100

= 1.69%= 1.69%

17,561,84617,561,846//

944,582,762*100944,582,762*100

= 1.85%= 1.85%

15,458,590/15,458,590/

817,758,326*100817,758,326*100

= 1.89% = 1.89%

1.55%

1.60%

1.65%

1.70%

1.75%

1.80%

1.85%

1.90%


Return on Assets

Working of Total AssetsWorking of Total AssetsTotal AssetsTotal Assets Year 2010Year 2010

(Rs)(Rs)Year 2009 Year 2009

(Rs)(Rs)Year 2008Year 2008

(Rs)(Rs)

Cash and balancesCash and balances 115,442,360115,442,360 115,827,868115,827,868 106,503,756106,503,756

Balances with other Balances with other banksbanks

30,389,66430,389,664 28,405,56428,405,564 38,344,608 38,344,608

Lending to financial Lending to financial institution-netinstitution-net

23,025,15623,025,156 19,587,176 19,587,176 17,128,032 17,128,032

Investments-netInvestments-net 301,323,804 301,323,804 217,642,822217,642,822 170,822,491 170,822,491

Advances-netAdvances-net 477,506,564477,506,564 475,243,431475,243,431 412,986,865 412,986,865

Operating fixed assetsOperating fixed assets 26,888,226 26,888,226 25,147,19225,147,192 24,217,65524,217,655

Deffered tax assetsDeffered tax assets 6,952,6666,952,666 3,062,2713,062,271 3,204,5723,204,572

Other assets-net Other assets-net 53,496,240 53,496,240 59,666,438 59,666,438 44,550,34744,550,347

TotalTotal 1,035,024,6801,035,024,680 944,582,762 944,582,762 817,758,326 817,758,326



((net income/revenues)*(revenues/assets))*100 ((net income/revenues)*(revenues/assets))*100


6. 6. Dupont Dupont Return Return on on AssetsAssets

((((17,563,214/17,563,214/

88,472,134)*88,472,134)*

(88,472,134/(88,472,134/

1,035,024,680)*1001,035,024,680)*100

= 1.69%= 1.69%

((17,561,846/((17,561,846/

77,947,697)*77,947,697)*

(77,947,697/(77,947,697/

944,582,762)*100944,582,762)*100

= 1.85% = 1.85%

((15,458,590/((15,458,590/

60,942,798)*60,942,798)*

(60,942,798/(60,942,798/

817,758,326)*100817,758,326)*100

= 1.88% = 1.88%

1.55%

1.60%

1.65%

1.70%

1.75%

1.80%

1.85%

1.90%


Dupont Return on Assets



Net Income/ Total equity*100 Net Income/ Total equity*100


7.Return 7.Return on Total on Total Equity Equity

17,563,214/17,563,214/

103,762,310*100103,762,310*100

= 16.92% = 16.92%

17,561,846/17,561,846/

94,141,919*10094,141,919*100

= 18.65% = 18.65%

15,458,590/15,458,590/

81,367,002*10081,367,002*100

= 18.99%= 18.99%

15.50%

16.00%

16.50%

17.00%

17.50%

18.00%

18.50%

19.00%


Return on Total Equity

Working of Total EquityWorking of Total Equity

Total Equity Total Equity Year 2010Year 2010(Rs)(Rs)

Year 2009 Year 2009 (Rs)(Rs)

Year 2008Year 2008(Rs)(Rs)

Share capitalShare capital 13,454,62813,454,628 10,763,70210,763,702 8,969,7518,969,751

ReservesReserves 24,450,24424,450,244 22,681,70722,681,707 19,941,04719,941,047

Un appropriated profit Un appropriated profit 65,857,438 65,857,438 60,696,51060,696,510 52,456,20452,456,204

Total Total 103,762,310103,762,310 94,141,91994,141,919 170,822,491170,822,491



(Total debt/ Total assets)*100(Total debt/ Total assets)*100


8. Debt 8. Debt Ratio Ratio

906,528,852/906,528,852/

1,035,024,680*1001,035,024,680*100

=87%=87%

825,676,384/825,676,384/

944,582,762*100944,582,762*100

=87%=87%

715,299,108/715,299,108/

817,758,326*100817,758,326*100

=87%=87%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%


Debt Ratio



(total debt/ total equity) (total debt/ total equity)


9. Debt /9. Debt /Equity Equity Ratio Ratio

906,528,852/ 906,528,852/ 103,762,310103,762,310


825,676,384/ 825,676,384/ 94,141,91994,141,919


715,299,108/ 715,299,108/ 81,367,00281,367,002


8.7

8.71

8.72

8.73

8.74

8.75

8.76

8.77

8.78

8.79

2008 2009 2010

Debt / Equity Ratio



(EBIT/ total interest)(EBIT/ total interest)


10. Time 10. Time Interest Interest Earned Earned Ratio Ratio

69,665,595/69,665,595/

45,250,47645,250,476


61,789,822/61,789,822/

40,489,649 40,489,649


46,885,766/46,885,766/

23,884,76823,884,768


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

2008 2009 2010

Time Interest Earned Ratio

Working of EBITWorking of EBIT

EBIT= Profit before Taxation+ Mark-up / return / interest EBIT= Profit before Taxation+ Mark-up / return / interest expensedexpensed

2010)2010) EBIT = 24,415,119+45,250,476 EBIT = 24,415,119+45,250,476= 69,665,595= 69,665,595

2009) 2009) EBIT = 21,300,173+40,489,649EBIT = 21,300,173+40,489,649= 61,789,822= 61,789,822

2008) 2008) EBIT = 23,000,998+23,884,768EBIT = 23,000,998+23,884,768= 46,885,766= 46,885,766



Total Advances/ Total DepositsTotal Advances/ Total Deposits


11.11.AdvancesAdvances/Deposits /Deposits Ratio Ratio

477,506,564/477,506,564/

832,151,888832,151,888

= 0.5738 times = 0.5738 times

475,243,431/475,243,431/

727,464,825 727,464,825

= 0.6532 times = 0.6532 times

412,986,865/412,986,865/

624,939,016 624,939,016

= 0.6608 times= 0.6608 times

0.52

0.54

0.56

0.58

0.6

0.62

0.64

0.66

0.68

2008 2009 2010

Advances / Deposits Ratio



Net cash generated from operating activities/ Net cash generated from operating activities/ Current LiabilitiesCurrent Liabilities


12.12.OCF OCF Ratio Ratio

93,163,784/93,163,784/

867,626,368 867,626,368

= 0.107 times = 0.107 times

41,576,364/41,576,364/

725,293,720725,293,720

= 0.057 times = 0.057 times

2,532,681/2,532,681/

682,905,461682,905,461

= 0.003 times = 0.003 times

0

0.02

0.04

0.06

0.08

0.1

0.12

2008 2009 2010

Operating Cash Flow Ratio

Working of Current LiabilitiesWorking of Current Liabilities

Total Current Total Current Liabilities Liabilities


Year 2009 Year 2009 (Rs)(Rs)


Bills payable (short Bills payable (short term)term)

8,006,6318,006,631 10,621,16910,621,169 10,219,06110,219,061

BorrowingsBorrowings (short term)(short term) 17,154,13117,154,131 37,057,18937,057,189 37,409,28837,409,288

Deposits and other Deposits and other accounts (short term) accounts (short term)

816,172,861816,172,861 655,031,896655,031,896 614,538,859614,538,859

Liabilities against Liabilities against assets subject to finance assets subject to finance leaselease (short term)(short term)

43,96343,963 20,40820,408 16,51716,517

Other liabilities (short Other liabilities (short term) term)

26,248,78226,248,782 22,563,05822,563,058 20,721,73620,721,736

TotalTotal 867,626,368867,626,368 725,293,720725,293,720 682,905,461682,905,461


National Bank of PakistanNational Bank of Pakistan

Dividends paid to Shareholders/ Average common Dividends paid to Shareholders/ Average common shares outstandingshares outstanding


13. Div 13. Div Per Per ShareShare

8,072,777/8,072,777/

1,345,462.81,345,462.8

= Rs.6 = Rs.6

5,830,338/5,830,338/

1,076,370.21,076,370.2

= Rs.5.41= Rs.5.41

6,115,739/6,115,739/

869,975.1869,975.1

= Rs.6.81= Rs.6.81

0

1

2

3

4

5

6

7

2008 2009 2010

Dividend Per Share



Net income/ outstanding number of sharesNet income/ outstanding number of shares


14. 14. Earning Earning Per Per ShareShare

17,563,214/17,563,214/

1,345,4631,345,463

= Rs. 13.05= Rs. 13.05

17,561,846/17,561,846/

1,345,4631,345,463

= Rs. 13.05= Rs. 13.05

15,458,590/15,458,590/

1,076,3701,076,370

= Rs. 14.36= Rs. 14.36

12.212.4

12.612.8

13

13.213.413.6

13.814

14.2

14.4

2008 2009 2010

Earning Per Share



CurrentCurrent Market Share Price/ EPS Market Share Price/ EPSYear 2010Year 2010 Year 2009Year 2009 Year 2008Year 2008

15. Price 15. Price /Earning/EarningRatio Ratio

76.82/13.76.82/13.0505

= Rs. = Rs. 5.885.88

74.37/13.074.37/13.055

= Rs. 5.69= Rs. 5.69

50.32/14.350.32/14.366

= Rs. 3.50= Rs. 3.50

0

1

2

3

4

5

6

2008 2009 2010

Price / Earning Ratio

ConclusionConclusion

The net profit margin of NBP in all of the years is good. The net profit margin of NBP in all of the years is good. Gross spread ratio is also good in all of over the years.Gross spread ratio is also good in all of over the years. Spread ratio of NBP is also good because it covers its interest Spread ratio of NBP is also good because it covers its interest

expenses.expenses. Non Interest Income to Total Income Ratio of NBP is good. Non Interest Income to Total Income Ratio of NBP is good. Return on assets ratio of NBP is low.Return on assets ratio of NBP is low. Dupont return on assets ratio is also low.Dupont return on assets ratio is also low. Return on total equity ratio is good in all over the years.Return on total equity ratio is good in all over the years. Debt ratio of NBP is very high in all of the year that is not Debt ratio of NBP is very high in all of the year that is not

good.good.

ConclusionConclusion

Debt ratio of NBP is very high in all of the year that is not Debt ratio of NBP is very high in all of the year that is not good.good.

Debt to equity ratio is also too high of NBP that is not god.Debt to equity ratio is also too high of NBP that is not god. Time Interest earned ratio of NBP is good.Time Interest earned ratio of NBP is good. Advances / Deposits ratio is very low and not good for NBP.Advances / Deposits ratio is very low and not good for NBP. Operating Cash Flow ratio is also very low in all over the Operating Cash Flow ratio is also very low in all over the

year that is not good.year that is not good. Dividend per share ratio of NBP is good. Dividend per share ratio of NBP is good. Earning per share ratio is very good. Earning per share ratio is very good. P / E ratio is also good of NBP.P / E ratio is also good of NBP.

RecommendationsRecommendations

NBP can also increase the net profit margin ratio by NBP can also increase the net profit margin ratio by decreasing its non mark-up interest expenses and taxes.decreasing its non mark-up interest expenses and taxes.

NBP can increase more its gross spread ratio by decreasing NBP can increase more its gross spread ratio by decreasing the interest expenses.the interest expenses.

Return on assets ratio & Dupont return on assets ratio can Return on assets ratio & Dupont return on assets ratio can also be increased by utilizing the assets in an efficient also be increased by utilizing the assets in an efficient manner.manner.

NBP need to decrease its debts to manage the debt ratio NBP need to decrease its debts to manage the debt ratio because a high debt is not a good sign for NBP. because a high debt is not a good sign for NBP.

RecommendationsRecommendations

Debt to equity ratio is also very high. NBP should decrease Debt to equity ratio is also very high. NBP should decrease its debts because the equity investors will not invest in it its debts because the equity investors will not invest in it due to high debts.due to high debts.

NBP can increase its advances / deposits ratio by giving NBP can increase its advances / deposits ratio by giving advances to the customers.advances to the customers.

NBP needs to improve its liquidity by increasing assets for NBP needs to improve its liquidity by increasing assets for operating cash flow. operating cash flow.

Thank YouThank You

Samina Ameer Din Mc090404110 MBA Finance National Bank of Pakistan.

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