Faheem Hashmi Roll No 42 Bs Commerce

2012
INTERNSHIP REPORT NATIONAL BANK OF PAKISTAN
Muhammad Faheem Hashmi contact (0301-7656169)

Department of Commerce Islamia University Bahawalpur 11/21/2012
Internship Report on,
National Bank of Pakistan
Submitted to: Mr. FarrukhNaveed Submitted by: Mr. Muhammad Faheem Roll # 42 From Session BS (Hons) (6th Semester) 2009-2013
Submitted on: November 21st 2012
Department of Commerce
EXECTIVE SUMMARY
I have completed my six weeks internship at National Bank of Pakistan. I tried my best
to gain something practically from this opportunity. This report starts from the introduction of word Banking, and then History of National Bank of Pakistan. History of NBP shows that how it helps its Nation and Country in both war & peace. Bank Mission statement & Vision shows its focus on overall performance of the bank and quality of services and products. After restructuring of the bank the objectives of the bank are changed. Now it has objectives to overcome past mistakes, realize the real importance of customer so now it has main objective to achieve customization. A commercial bank has basic functions that are must be performed by them as a bank i.e. Accept money as deposits. Investing deposits to earn profit. Miscellaneous functions. Each branch of the bank is divided on the basis of these functions into different sections. Deposit section opens different accounts of clients and maintains record of deposited money from the customer & credited it into his account. It also maintains record of payment to the customer when he presents cheque. Advances section deals the customers who demand loans against required security.
Remittance & collection section deals customers who want to transfer or collect their money from/to other city. Foreign Exchange section deals customers who have foreign account in the bank & deals exchange of foreign currencies. Bank also provides facility of L.C to support export and import in the region. SWOT analysis of National Bank of Pakistan shows that it has small number of strengths and lot of weaknesses. The bank should give attention to this drawback. But bank has lot of opportunities to improve its quality of services, and do efficient banking. Bank should give proper attention to overcome its threats.
ACKNOWLEDGEMENT
With the name of Allah who is the most beneficial & merciful. I am very thankful to Allah for his unlimited blessings for me. I have completed this task with the help of my Allah, my parents & my Teachers especially Mr. Farrukh Naveed (Incharge Internship). I am very thankful to the staff members of NBP Branch for their cooperation & kindness, especially I am thankful to Mr. Zia ulhaq (Branch Manager) MrDilshadHussainAbbasi (Operatin Manager) MrTahir Sahib &Ghazali Sahib (Remittance&Clearience Dept) Mian Saeed Sahib (pension Dept)) Tariq Mehmood Sahib(Credit Dept). Mr A.D Semab Sahib (Public Relation, Maintaince)AsifZawar Sahib(Deposit Incharge) Waseem Sahib(Cashier) Saeed Sb(Head Cashier) Akhtar Sahib(Deposit) Rizwan Sahib(Deposit) I cannot forget their cooperation & kindness, many regards to them. I have gain practical knowledge of Banking functions & their processes during my internship. I have tries to get more & more information & knowledge about banking from senior & experienced employers of NBP during my internship period.
Who always prayed for my success and their love and affection have always been a source of inspiration for me
Who always provide us knowledge and guidance that become a successful way in our life.
I am very thankful to all my sweet friendswho always help me and cooperate with me in all difficulties.
PREFACE Internship, a practical training, is an integral part of BS (Commerce) study. For internship I was sent to National Bank of Pakistan Farid Gate Branch Bahawalpur. It is a Six weeks training period in which I tried my best to get complete knowledge and training in different sections of the branch. This report contains the necessary information about the sections and functions of NBP. This report is prepared in simple and understandable format so that ordinary person can also take benefit from this report.
S.No
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
TABLE OF CONTENTS INTRODUCTION

HISTORY OF NBP VISION MISSION CORE VALUES GOAL CORPORATE INFORMATION OBJECTIVE OF NBP FUNCTION OF NBP F.GATE BRANCH STRUCTURE DEPARTMENTS DEPOSIT DEPARTMENT ACCOUNT OPENING PROCEDURE REMITTANCE DEPARTMENT Govt.RECEIPT& PAYMENT DEPARTMENT ESTABLISHMENT DEPARTMENT CASH DEPARTMENT DISPATCHES DEPARTMENT ADVANCE DEPARTMENT MAIN REQUIREMENTS FOR SANCTIONING LOAN PRODUCT LINES & IMPORTANT BRANDS ACCOUNT DEPARTMENT FOREIGN EXCHANGE DEPARTMENT INCOME STATEMENT BALANCE SHEET RATIO ANALYSIS PROFITABILITY RATIOS LIQUIDITY RATIOS DEBT RATIOS HORIZONTAL ANALYSIS OF BALANCE SHEET HORIZONTAL ANALYSIS OF INCOME STATEMENT VERTICAL ANALYSIS OF BALANCE SHEET PEST ANALYSIS
Page No.
10 11 12 13 14 15 16 17 18 19 20 22 26 31 33 38 41 42 45 47 52 53 56 57 58 58 66 73 77 88 98 108
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SWOT ANALYSIS SUGGESTION & RECOMMENDATIONS CONCLUSION REFERENCE
109 113 114 115
HISTORY OF NBP
National Bank of Pakistan was established as a semi-public commercial bank on November 8, 1949 The primary objective of the bank was to purchase jute from the growers in the East Pakistan and to perform the commercial banking functions in the country. The bank is also authorized to act as an agent of State Bank of Pakistan and operate treasury where State Bank does not have its own branches.The paid up capital of National Bank is 4924.106 million rupees. This is 14 percent of the combined paid up capital of the 18 listed commercial banks amounting to Rs.3.528 billion. Such a large paid up capital places National Bank at the number one slot in the entire financial sector.The bank maintained its position as the largest bank deposit holder in Pakistan. The integration of corporate and investment banking efforts in enabling the bank to offer wider products range besides making it a major player in debt and equity market. The Bank has one joint venture in U.K. and one wholly owned subsidiary in Kazakhstan. The U.K. Operations of the Bank were merged with that of United Bank Limited to form a Joint Venture Bank namely Pakistan Investment Bank (PIB) incorporated in U.K. NBP has 45% of share holding while the balance 55% is with UBL.Today the bank has 1428 branches and 84 regional offices in Pakistan and 24 overseas branches with 4 representative offices are working out side the country.The general superintendent and direction of the affairs and business of the bank shall be entrusted to the Central Board which may exercise all powers and things as may be exercised or done by the ordinance expressly directed or required to be done by the bank in general meeting.
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Vision To be recognized as a leader and a brand synonymous With trust, highest standards of service quality, international Best practices and social responsibility.
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Mission
NBP will aspire to the values that make NBP truly the Nations Bank, by: Institutionalizing a merit and performance culture Creating a distinctive brand identity by providing the highest standards of services Adopting the best international management practices Maximizing stakeholders value Discharging our responsibility as a good corporate citizen of Pakistan and in countries where
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Core Values
Highest standards of Integrity Institutionalizing team work and performance culture Excellence in service Advancement of skills for tomorrows challenges Awareness of social and community responsibility Value creation for all stakeholders
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Goal
To enhance profitability and maximization of NBP share through increasing leverage of existing customers base and diversified range of products
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Corporate Information
Board of Directors
QamarHussain Nazrat Bashir Tariq Kirmani HaniyaShahidNaseem President/ Chairman Director Director Director Tariq Kirmani Nazrat Bashir HaniyaShahidNaseem
Audit Committee
Chairman Member Member
Auditors
Legal Advisor
AnjumAsimShahidRahmanChartered Accountants KPMG TaseerHadi& CoChartered Accountants
Mandviwala&Zafar Advocates & Legal Consultants
Registered & Head Office
Registrar & Share Registration Office
NBP Building, I.I. Chundrigar Road, Karachi, Pakistan
Central Depository Co. of Pakistan (CDC), CDC House, 99-B, Block-B, S.M.C.H.S., Main Shara-e-Faisal, Karachi, Pakistan. 111-111-500
Website www.nbp.com.pk
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OBJECTIVES OF NBP
The main objective of NBP
Maximize the deposits. Give attractive return to its shareholders. Maximize the market share. Modernize the bank. Export/import promotion. Development of human resource. Improvement in the quality of customer service. Provide customers reliability and convenience.
The major objective of NBP is to handle the crises because when it came into being there were jute crises in East Pakistan and it was assigned to handle those crises. At present the main objective of NBP is to support the economy with the help of its financial policies rather to maximize profit. It is objective of NBP to capture the deposits of the Govt. as well as public. The National bank provides different types of loans to the industrial sector to increase their business activity. It provides the different types of loans to assist the formers on short-term basis.Other objectives of the bank are to promote agriculture & business activities in the country, to dominate the financial market by excellence of services & product, to emerge one of the top ranking bank of Pakistan, to promote trade related activities in the global scenario, to strengthen relations with the financial market, to position NBP as a bank of Choice in the customers mind & to get satisfaction of the customers by meeting their expectations through market based solutions and products.
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FUNCTIONS OF NBP
The following are the services which are used by the Pakistani customers Transfer of money The bank accepts deposits from public and payback on demand Issuing the letter of credit Acquiring loans Use it as media of exchange ATM services in large cities People receive pension, dividend, rent and interest through the banking services. Buy and sell the securities through the services. The payment of insurance and other expenses are also made through the banking system. Bankers services can also be rendered to work as executor and trustee. The bank is also collecting Zakat. Dealing in foreign currency is another service that consumer are enjoying. The security of the costly goods like Gold, other people enjoying the facility of lockers. Evening banking system of billing Foreign currency account Lockers facilities
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FARID GATE BRANCH STRUCTURE

Branch Manager Zia-ul-Rahman
Operation Manager DilshadHussainAbbasi Credit Officer Tariq MehmoodSb
Deposit Incharge AsifZawar
Subincharge MrRizwan
Remitance GhazaliSb
Public Relation A.D Semab
Head Cashier MrSaeed
Cashier MrWaseem
Pension MianSaeed
Clearing Officer TahirMehmood
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DEPARTMENTS
Deposit department Bills and Remittance department Govt. receipt & payment department Establishment department Cash department Dispatch department Advance department Accounts department Foreign exchange department
All types of cash transactions are deled under this section. Now we see the types of accounts, which are opened in this section
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DEPOSIT DEPARTMENT
Types of the Accounts
Depositors can open the following types of accounts with the National Bank of Pakistan:iiiiiiivCurrent account P.L.S. saving account. P.L.S. Term Deposit Account. M.I.S.(Monthly Income Scheme)
A brief introduction of these accounts is given below.
1. Current Account
Depositor can draw or demand amount at any time by presenting the cheque in the bank. There is no restriction of withdraw. The bank neither pays any kind of interest nor deducts the Zakat from the deposits of this account. The minimum balance required to an account to be opened is Rs. 500/-If balances in account reduce from Rs. 5000/- then the bank charges Rs. 50/- as incident charges in every month.
2. Profit & Loss Sharing Saving Account

In P.L.S. accounts the bank gives no fixed rate of profit. These types of deposits are designed to encourage the saving habits of the people. The minimum deposit to open this account is Rs. 500/-. After every six months a rate of profit is announced by the bank and after calculating the amount, it is credit to the depositor account. Customer can withdraw their amount at no limit.
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3. P.L.S. Term Deposit

In this the amount is deposited for a specified period of time. This period varies from 7 days minimum to maximum 5 years. The profit rate is also changes with the short period to long period. There is higher rate of profit on long term P.L.S.
4. Monthly Income Scheme

This account could be open with minimum balance Rs.5000/-. Profit is announced after every six months but it is credit to the customers accounts on every month. Mostly retired persons are like to open this type of account.
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ACCOUNT OPENING PROCEDURE

The customer can open an account with the National Bank of Pakistan in the following categories: Individually Jointly Sole proprietorship Partnership
1. Individual Account
In National Bank of Pakistan a person can open an account in Pakistani-rupee. First of all they have to fill the account opening form provided by the bank. Then his introduction is done before the branch manager. An existing account holder of the bank or an officer of the bank who know him very well can do this introduction. A copy of his identity card is must attached with his account opening form. If the account holder is illiterate then he/she provides his/her three recent photographs to the branch.
2. Joint Account
In open an account an account opening form given that branch, where he wants to open his account. In that opening form he provides complete information about the account holders. If any one or both of them are illiterate then they ask to provide the photographs to the bank. Then the introduction of the person is done. A copy of their identity card is must attached with his account opening form. He or she also states the made of operation which is clearly written in their account opening form. In jointly mode both the persons must sign the cheque. And for any kind of transaction they must dually
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signed the documents while the either any one of them can sign the cheque and withdraw his money.
3. Sole Proprietorship
The person who is the owner of a business can open an account in National Bank of Pakistan after providing the following documents to the bank officer. Current municipal license, commercial registration certificate and copy of identity card. In some special cases when the officer of branch is doubtful about the authenticity of the documents he can get additional documents for proper verification. The branch manager studies all documents of the business. If he is satisfied then the account of the party is opened with the bank. Normally these types of accounts maintained under Current account system.
4. Partnership Firms
The partnership firms can also open an account with the bank. But for this purpose they have to provide the certain type of information to the bank. For this purpose a form is provided to the account holder in which they provide the following information to the concerned branch, name of the firm, name of parties, identity card of partners, registration certificate of the firm.
Issuance of Cheque Book

National Bank of Pakistan issue cheque books. Size of cheque book is varies. It contains 25 leaves to 100 leaves. The assistant writes the following information on the title page of the cheque book and cheque book issuance register.
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Issuance date Name of account holder Account number Type of account After authentication by the authorized officer on the cheque book register, the cheque book is handed over to the account holder.
Depositing of the Amount

Account holder can deposit the amount in cash or draft etc. in his account through credit voucher. In N.B.P. two types of vouchers are used for this purpose. Green and blue voucher which is used for Cash Receipts Pink voucher, which is used for all Non Cash Receipts like drafts, cheques, payment orders etc.
Encashment of Cheques
Issuance of Token: After apparent tenure of cheque a token is issued to the account holder. Verification of Signature After affixing the two stamps i.e. Pay Cash and Signature Verified, a cheque is sent to the accountant for the verification of signature from signature specimen card. After authentication of signature and posting in his account the cheque is sent to the cash department for the payment. Payment of Cash Cashier pays the amount to the token holder after getting back the token from customer.
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Deduction of Zakat
From the PLS Saving account Zakat is deducted at the rate of 2.5% annually on the outstanding balance of account on the first day of every valuation date i.e. first day of Ramadan. Minimum balance of the deduction of Zakat is fixed by the Central Zakat Authority (CZA) before the valuation date.
Exemption from Zakat

The accounts of foreigners (including Muslims of other nations) and Pakistani non-Muslims are exempted from the compulsory deduction of Zakat. The accounts of followers of Fiqah-I-Jafria are also exempted from the deduction of Zakat after the submission of affidavit on a legal stamp paper.
Closing of Account
There are many reasons for closing of an account. It is not a good indication for the business of the bank. Some of the more common reasons are as follows: Account holders own request Death of the account holder Closing of account due to bad conduct of account holder etc. At the request of account holder the account is closed or as a result of improper conduct of the accept holder or because of nil balance of the account. But bank before closing the account first sends a letter to the account holder that his account will be closed. So after fulfilling the legal requirements, it is marked of the accounts holders number that the account has been closed.
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REMITTANCE DEPARTMENT
Remittance is a major function of the bank. It is the transfer of money from one place to another place. The need for remittance is commonly felt in commercial life particularly and in everyday life generally. By proving this service to the customers the National Bank earns a lot of income in the form of service charges. There are two types of bills remittance. 1) Remittance inward 2) Remittance outward
Remittance Inward
Cheques and drafts received for payments or draw on us from customer or other bank on behalf of other customers is called remittance inward.
Remittance Outward
All instruments issued by us , which are drawn on other branch of the same bank or instrument deposited for collection for other bank locally or out of the city are called remittance outward. Bills remittance & collections are mainly two heads. Local short credit Short credit
Local Short Credit (LSC)

All the bills for remittance & collection from customer and bank within the city are recorded under this LSC book. These bills are passed along with the covering schedule & advice to maintain the branch of the bank, from an agent of SBP received that all bills for clearance.
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Short Credit (SC)

All the bills for remittance & collection from customer and bank outside the city/country are recorded under this SC book. If bill is drawn on the book itself then it passed along with covering schedule & advice directly by courier service to the concerned branch on which is drawn for realization. National Bank of Pakistan deals with the following type of remittances: Demand Draft (DD) Mail Transfer (MT) Telegraphic Transfer (TT) Pay Order Now we discuss all these in detail:-
Demand Draft (DD)

Demand draft is a written order given by the one branch of a bank on behalf of customer to another branch of the same bank to a certain amount to the certain person.
PROCEDURE
1. A draft voucher is filled which contains the following information Name of the parties involved Date Amount to be sent Account number (if DD is crossed) Branch name and code number Name of the city 2. A credit voucher is filled in order to get the excise duty, exchange commission.
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3. The sender deposits the total amount of the two vouchers i.e. the debit and credit vouchers. 4. Then the cashier sends the cash receipt voucher to the accounts department and the account records the amount paid in his cash scroll. 5. Accountant gives the DD leaf along with the DD voucher to his assistant who records the senders name, amount and receivers name. After writing all the information in the DD register he gives it to the officer along with the DD for authentication. 6. After authentication the DD is handed over to the sender and bank sends the advice to the concerned branch. So when the party presents the DD in the concerned branch its payment could be made.
Mail Transfer (MT)

It is the transfer of money from one branch to another branch of the same bank through mail service. In mail transfer there is no need of advice as the amount is directly credited to the receivers account.
PROCEDURE
1. First a voucher is filled in which the sender writes the amount to be sent, name, account number of the receiving person with the branch name and date. 2. A credit voucher is filled in order to deduct exchange, postage charges and withholding tax according to the amount of the mail transfer. 3. The sender deposits the total amount of the two vouchers in the cash department.
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4. The cashier gives the vouchers to the accountant after affixing received stamp and writing the amount in red ink. 5. Then the accountant writes the amount paid in the cash scroll and gives the MT to his assistant. 6. MT leaf is filled according to the information provided in credit voucher. He also writes the same information in the MT register. Then he gives the MT leaf and MT register to the officer for authentication. 7. He takes two signature of the sender on the counterfoil of the MT and counter foil is handed over to the sender, at the end the MT along with the fan fold is sent to the concerned branch through mail.
Telegraphic Transfer (TT)

This is the most urgent method of remitting the money from one place to another place. This method is used when the sender desires to send urgently, in this case the sender request the manager of the branch to issue TT.
PROCEDURE
For sending the TT the manager applies a test. In the test the manager uses a coding technique. He writes his own code number, which is allotted, to him as the bank branch code. After making all the conformation the concerned branch makes the payment to the receiver. If the sender wants to convey the same message through telephone then he has to pay the charges of telephone along with the TT charges. First the person deposit the TT amount along with the charges through the credit voucher then his TT sent to the relevant branch.
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Pay Order (PO)

Pay order is a written order issued by the bank on its own branch, drawn upon and payable by itself to pay a specified sum of money to the person. The purpose of a pay order is to transfer the fund from one place to another. It is usually not issued in favor of the parties of other cities. Usually the pay order is issued for the local transfer of money from one person to another or from the person to any other It is used for different purposes. The purpose may be the repairs of the branch or renovation of the branch.
PROCEDURE
The procedure of a pay order varies with the nature of the purpose. If the work is of huge amount then first the manager writes a letter to the Zonal Chief in order to get sanction of the work. Then the advertisement of the work is given in the newspaper in order to invite the contractors. But if the work is small then the branch manager has discretionary power to select the party whose rate is lowest. After finishing the work the contractor submits the bill of work on his stamp pad. Then the bank issues a pay order, against the pay order the contactor gets the amount from the issuing branch.
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GOVT. RECEIPT & PAYMENT DEPARTMENT

Govt. Receipt & payment includes different types of work. Now we see one by one:
Utility Bills
National Bank accepts the following types of utility bills: Electricity Bills Telephone Bills Sui Gas Bills
PROCEDURE
The cashier in cash section receives utility bills. The cashier posts the amount of bill in respective scroll and at the end all the amount of collected bills is transferred to the respective account. Then representative of the concerned department collects the amount in the shape of M.T. (Mail Transfer). The bank takes the collection commission of Rs. 2.0 per bill from each type of bill.
Taxes
National Bank also accepts the following types of taxes: Income Tax Central excise Tax Sales Tax Provincial Excise Duty Provincial Motor Duty Professional Tax Provincial property Tax
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Disbursement of Pension
National bank is fully authorized to disburse the pension to the Govt. and army retired personnel.
PROCEDURE
For the distribution of pension the branch maintains the pension register. In order to get the pension, first the pensioner submits his pension voucher with his pension book that voucher sent to the cash department for the payment to the pensioner after posting into his account.
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ESTABLISHMENT DEPARTMENT
In National Bank establishment department works for the maintenance of different type of the expenses and for the provision of funds for different activities in the branch. The manager of this department has two types of register. 1. Charges account register 2. Suspense accounts register
Charges Account Register

In the charges account register following accounts are maintained:
Basic Salary
This account deals with the salaries of the employees within that branch when bank have to pay the salary of any employee the amount of salary is debited to the charges account.
Allowances
Under this head different allowances are paid to employees. But these are attached with salary and paid with the salary.
Provident Fund
It is deduction from the employees salaries, which is paid out at his retirement.
Medical Attendance
When some employee suffers from any disease the bank allocate fund for him and this amount is debited to charges account of the patient.
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Honorarium to Staff
This is that types of funds, which are not part of salary, like bonus profit.
Staff Welfare
To improve the efficiency, the bank provides some special facilities and the fund is provided from the welfare account. These funds are similar to honorarium fund.
Bonus
When the efficiency of employees increases and bank earn profit more then expectation then bank gives extra bonus to the employees. The provision of bonus is done through bonus account by debiting to the charges account.
Suspense Account Register

Some employee needs some advance amount for them. He can withdraw that amount from suspense account, which is then adjusted, from his salary account. But the bank provides funds in advance within some limits under this account.
Other Expenses of the Establishment Department Traveling Expenses

In this account the transportation expenses of employees are maintain for example, when a manager goes to attend the meeting in any other city or country his expenses on transportation are paid from this account. Similarly when some one goes for any official work to other branch or head office the traveling expenses are paid from this account.
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Auditor Fee
When any team comes for the auditing of some branch then all of their expenses are beard by active branch. Also bank paid them fix amount as fee. The funds for this purpose provided from this account.
Rent
For paying the rent of building under the branch is running is paid from rent account.
Residence
To pay the rent of employees residence, because they are given this facility some rank. To allocate funds for this purpose rent account is used.
General Insurance
The property in the branch like cash, gold, prize bonds are insured the maximum limit of insured property that is 5.00 millions. In case of any incident insurance company will pay the damages.
Taxes
Tax on bank property like building and vehicles this account is debited.
Lighting and Power

To furnish the branch with lights and provides the branch air conditional environment. The funds paid from this account.
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Telephone
Bank provides the facility to his officer to pay their telephone bills.
Pay of Security Guards

In national bank security are provided by some private companies. So to pay their salaries the bank used this account. Withdebiting this account and crediting the security companys account.
Depreciation of Bank Property

Under this account the depreciation of branch building, vehicles and other machinery are treated. Annually 10% of any property is considered depreciated.
Repairs and Renovation Expenses

The expenses on repairing the building, furniture, power generator and automobiles are paid from this account.
Postage, Telegrams and Stamps

The charges of dispatch section like expenses of dispatching all the mail and expenses of telegram are paid through this account. The charges of postage and stamp collected from customers are credited to current account and at the end of month this amount is transferred to the postage telegram and stamp account to pay the expenses for the next month.
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Law Charges
The branch hired a legal authority. When bank have to defend any law suit against him or bank have to place any law suit against any one. Then this legal authority is hired. To pay the fee of this person law charges account is used.
Stationery, Printing and Advertisement

The expenses on the vehicles used for branch and branch manager are paid through this account. It includes the expense of stationary used in branch.
Entertainment
The bank provides a facility to manager to entertain some special clients in his chamber or outside the chamber.
Miscellaneous Expenses
Those expenses, which dont have their own account, are paid through this account for example; Laundry Local conveyance Sundries
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CASH DEPARTMENT
The cash department is that through which all the receipts and payments of bank are made. Also the banks cash record remains with this department. There are two types of books used in this department. Cash Receipts Book Cash Payment Book
Cash Receipt Book

In this cashier records the entry when some one comes to deposit some amount. The clients come with pay in slips and the cashier the amount according to the pay in slip, sort out the notes, put a signature, stamps it and record in his book. After stamping the slip the cashier returns the pay in slip to the customer. Then customer goes to the another bank officer, he again record this voucher into his cash scroll and returns one part of the pay in slip to the customer and keeps the other part for the record.
Cash Payment Book

When some client comes to the branch to withdraw some amount from the account, after getting the token from deposit section he goes to the cashier, cashier checks his token and cheque which is referred to him from deposit section. The cashier makes to him required payment and receives the token from the customer. After recording all the cheques in his book he returned the cheques in to the deposit section.
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Books Maintained
These are the common books, which are maintained in any branch of NBP.
Cash Book
The sole purpose of the cashbook is to record the total transactions done in each type of account daily. The closing balance of cash is also included in the cashbook. It is maintained with the help of various types of vouchers and daybooks. These vouchers and day books of different heads are as follows: Cash finance day books. Running finance day books. Demand finance day books. Charges vouchers. Call deposit vouchers. Foreign exchange day books. Suspense vouchers. Payment order vouchers. Term deposit vouchers. With the help of these vouchers various types of registers are maintained to record daily transactions done in various accounts. These registers are: Daily transaction report of PLS/ Current account. Suspense register Charges register
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General Ledger
In this ledger the posting is done from the cashbook. With the help of this ledger any discrepancy in balance of accounts can be easily found out.
General Ledger Abstract

It is like trial balance. In this ledger debit or credit balance of each balance of each type of account is posted from the cash book. If total debit and credit is equal then it means the clean cash book and general ledger is maintained correctly.
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DISPATCHES DEPARTMENT
In this department posting of every mail into the dispatches register. For this purpose bank hire the services of different courier services to send the documents from one place to another. Before the handing over the mail to the courier service clerk, the dispatch section assistant notes the document in a register and issues a number, which is used to maintain the proper records. After handing over to the courier service, now it is the responsibility of the courier service company. In case of misplacement they have to pay for the damages. Assistant of this department sort out the receiving mail and then sent to the different sections.
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ADVANCE DEPARTMENT
Advances are investments of bank to earn more profit. After restructuring of National Bank of Pakistan, head office gives loans targets to each branch that must be achieved for its survival. The manager is responsible to achieve these targets in the given period.
Types of Loans/Finance
There three major types of loans that are offered by NBP mostly are rates of 11%, they are follows; 1. Short term finance 2. Medium term finance 3. Long term finance
Short Term Finance

Short term finance is finance is sanctioned for increasing working capital & production. These are given for the period of one year to three year maximum. Short term finance includes the following types
1. Cash Finance
The bank gives this loan to the customer and businessman against certain specified immovable. It issued for establishment and extension of industry.
2. Demand Finance
This loan is given against movable property (called secure finance) or may be given against personal graduate (called clean finance). Demand finance is further divided into three types.
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i.
Staff finance
This finance is given to the employees of National Bank for improving their
living standard e.g. for purchasing a motorcycle, car, house building, computer etc. there is no markup on this loan except on car and computer buying @ 4%.
ii.
Gold Finance
It is the sanctioned for the period of 11 month by pledging gold ornaments.
iii.
Agricultural (Seasonal Finance)

It is given for supporting seasonal crops like Rabi and Kharif. It is sanctioned for
six month only at high markup rate.
3. Running Finance
This finance is only a secured finance which is sanctioned against movable security that is easily convertible onto cash e.g. security bonds Govt.certificates& bonds etc. e.g. advance salary.
Medium & Long Term Finance

These finance are issued for production & development of industry & agriculture e.g. for buying input or building for industry. These are issued for the period of 5 years or more. The main types of this finance are: 1. 2. 3. Project Finance Agriculture (Development) House building Finance
All the loans may be fund base or non-fund base. Fund Base loans are those which given in cash form to the borrower.
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Non-Fund Base loans are those which given other than cash e.g. Guarantee, L.C, Promissory Note etc.Banks run their business with the money of depositor, which is repayable to them on demand. Banker is very conscious while using these funds. They think thousands times before lending to the borrower. They must keep in mind the following factors before advancing the loan.
1) Character
The first and most important factor considered in the credit analysis is character. The credit character is base on the borrowers willingness to pay his obligation. The willingness can be judged by the banker to see his family background, stability of employment, personal habits, nature of business, previous record moral reputation, importance of values to him etc.
2) Capital
The asset of the consumer may be in form of horse motorcar, furniture etc. The businessman may own assets in the form of new material, plant, machinery, building etc. The bank should extend the loan in the proportion to the asset head by them. If the assets of borrower are liquid, he may be giver large amount of credit. If assets are not liquid, then less amount of credit may be given against the value of assets. Before landing the loan the banker should examine the value of his business and its prospectus in future. The banker should keep in his maid the owners participation in his business. The banker should not provide loan more than capital.
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3) Capacity to Pay
The bank should judge the financial condition of the borrower. Whether he is able to repay that amount of loan which he wants to get. Before advancing the loan bank must be satisfied with the repayment of fund by checking following resources of borrower; (a) (b) (c) Sale of Assets Income Location of Plant etc.
4) Collateral
Collateral means an additional security given against the loan. Before advancing the loan the banker should preferred get the security of liquid assets because they can be converted into cash easily. The collateral security may be consisting of stock, bill of exchange, bill of lading warehouse receipt, bonds etc. Bank must be carefully examining this collateral security before advancing the loan for security purpose. Banker should not extend loan on up to the full value of collateral security.
Main Requirements for Sanctioning Loan

ID card copy. Legal contract between bank & borrower on a security bond. A written application. Promissory Note. Valuable security.
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References (at least two) Latest Financial statements. Financing Agreement on a prescribed form. Authority letter. Trust Receipt. Insurance of securities.
Securities
Before giving a loan to borrower a bank required a valuable security in three ways: Hypothecation Pledge Mortgage
Hypothecation
In This type of security, immovable property is pledged by the bank & bank is required a real value of that property for sanctioning a loan. Margin for this security is 50%. In hypothecation bank does not interfere in the business of borrower.
Pledge
In Pledge the bank have 90% shares in business of the borrower. The bank has a right to sold the production & interfere in business transactions. In this type of security bank pledge the stock & raw material. The stock must be insured. Stock is controlled & managed by the bank;borrower cannot use raw material & cannot sell its production without the presence & permission of the agent of bank.
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Mortgage
All documents of ownership & registration of movable property is submitted to the bank with an authority letter which has an agreement to give authority of selling property in case when borrower will not repay the loan after a fixed period
Product lines and Important Brands
Product Items
Home Purchase Home Construction Home Renovation Purchase of Land + Construction Balance Transfer Facility (BTF)
Home Purchase (House or Apartment) *

Financing Amount Upto 35 Million Financing Period Debt to Equity 3 to 20 Years 85:15 (Maximum)
Home Construction*
Financing Amount Upto 35 Million Financing Period Debt to Equity 3 to 20 Years 85:15 (Maximum)
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Home Renovation *
Financing Amount Financing Period Upto 15 Million 3 to 15 Years
Debt to Equity 80:20 (Maximum)
Purchase of Land and for Construction thereon*

Financing Amount Financing Period Upto 35 Million 3 to 20 Years
Debt to Equity 80:20 (Maximum)
Re-Financing (Balance Transfer Facility (BTF)*

If you have a Home Finance Facility outstanding with another bank you can have it transferred to NBP through a hassle-free process.
NBP Advance Salary Scheme

NBP Advance Salary , the leading personal loan product of the country, is maintaining its inimitability ever since it was launched. This was only possible due to its swift growth and remarkable loan disbursement of over 138 billion. You can avail up to 20 net take home salaries with easy repayment installments. Its hassle free acquisition with no prior formalities and easy availability in a short turn around timeare attributed as the most distinguishing features of the product. The product is offered countrywide
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National Bank Cash Gold Scheme

Rate of mark-up 15.50% p.a. Facility of Rs. 20,000 against each 10 gms of net contents of gold No maximum limits of cash Repayment after one year Roll over facility Only gold ornaments acceptable Weight and quality of gold to be determined by NBPs appointed schroffs No penalty for early repayment.
National Bank Kisan Dost Scheme Agriculture Farming Program Competitive mark-up rate. Quick & easy processing. Provision of technical guidance to farmers at their doorstep. Wide range of financing schemes for farmers. Finance facility up to Rs. 100,000/- for landless farmers on personal guarantee. Financing available against Pass Book, Residential / Commercial property, Gold ornaments and paper security.
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Loan facility on revolving basis for three years (renewable on yearly basis without obtention of fresh documentation and approval).
National Bank Premium Aamdani Certificate Scheme

Earn up to 12.25% p.a. + Minimum deposit of Rs. 20,000/- with maximum balance of Rs. 10 million for 5 years Free Demand Draft, Pay Order and Cheque Book* Convenience of NBP online Aasan Banking (for online banking customers) Free NBP Cash Card (ATM+Debit) Running finance facility up to 90% Profit paid every month as follows
Year** 1st 2nd 3rd 4th 5th Profit Rates (%) *** 11.25 11.50 11.75 12.00 12.25
+ Profit rates are expected * Conditions Apply *** Expected rates are for the given year
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NBP Karobar Scheme

vernment provides the balance markup to NBP on monthly basis. NBPS loan available for: Utility Store, Mobile General Store, Transport, PCO/Tele-centers. National Bank of Pakistan providing financing under President Karobar Scheme. The purpose of this scheme to reduce unemployment from the country. Main features are as under. Age limit is 18-45 years. Finance limit to Rs. 200,000/-. Tenure of this loan 1-5 years. Markup rates are variable. i.e. KIBOR +2% per annum. The customers will pay 6% as long as go
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ACCOUNT DEPARTMENT
Accounts Section
This is the last section of the branch; whole days work is officially ended in this section. Incharge of this section send information of whole days business in branch to Main branch Multan via computer networking. Computer operator retained a copy of that information in floppy for branch record daily. He also reconciled all transactions with Head Office transactions received daily. This section maintains its record in three books that are;
1. Cash Scroll
Daily transactions of cash are recorded in cash scroll at the end of each day. Total cash received in the date is added up in opening balance (closing balance of previous day) then cash payments are subtracted from it. End balance is recorded in computer & mails it directly through networking to Multan IT section of NBP.
2. Transfer Scroll
All transfers inward & outward of the branch are recorded with all details of accounts in transfer scroll. It is also mailed to Multan (IT) section of NBP daily at the end of day.
3.NBP General Account

General account is an account of each branch of the bank in its Head Office for transactions among branches. All transactions among branches are through Head Office by sending F-16 Frankfort that is reconciled at Head Office.
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FOREIGN EXCHANGE DEPARTMENT

It is the function to deal with customer in foreign currency. Only few branches of NBP are allowed to deal in the currency other Pak rupee.
Procedure to Open an Account in Foreign Currency

There are two types of foreign currency accounts, FOR RESIDENTS
In order to open the account of a Pakistani resident in foreign currency the following documents are required. a) b) Photo copy of ID card Foreign exchange
The remaining process is same as in the case of local currency account. FOR NON RESIDENTS
For non-residents following documents are required. a) b) Photo copy of Passport Photo copy of Visa
The remaining process is same to open an account in local currency.
Closing of a Foreign Currency Account

For closing the foreign currency account the same methods are used as were used in local currency.
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Advantages of Foreign Currency Account

No wealth tax is charged. Credit card and loan facilities are available. The depositors can get 75% of their deposits as a loan at lower rate. The foreign currency accounts save the amount from devaluation. No withholding tax. No compulsory deduction of Zakat.
Foreign Remittances
To transfer money abroad and to bring the funds from the other countries foreign remittances are used. There are normally three major types of foreign remittances.
Foreign Currency Demand Draft

The debtor can make the foreign payment by purchasing a bank draft from the branch. The draft is dispatched by the debtor to creditor. He can claim the amount of the draft from the responding branch.
Requirements
I. II. III. IV. V. The debtor must be foreign account holder of NBP. They must mention the name of the foreign bank. The purpose of the remittance should be permitted by the GOVT. The account number of the ultimate client should be told to the bank.
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Foreign Mail Transfer

The debtor can make the payment to the creditor in foreign currency by Foreign Mail Transfer. The branches of NBP issue the order for the payment to the responding branch by mail. After receiving the letter responding branch will make the payment to the creditor.
Foreign Telegraphic Transfer

The debtor make the payment in his branch and his branch manager sends a telegraphic message to the responding branch to make the payment to the ultimate client. This is the quickest method to transfer the funds from one place to another place.
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Income Statement
In Rupees
Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly Net markup/interest income after provisions NON MARKUP/ INTEREST INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ INTERSET EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT BEFORE TAXATION Taxation Current Prior years Deferred PROFIT AFTER TAXATION Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation 2007 50,569,481 16,940,011 33,629,470 47,23,084 2008 61,151,818 23,877,804 37,274,014 10,634,367 2009 78,124,796 39,448,291 38,676,505 11,148,773 651,282 20,237 Nill 11,820,292 26856213 8996973 1896817 3103673 4593041 2355 552950 19145809 46002022 2010 88,472,134 45,250,476 43,221,658 7,011,046 2,954,678 3,965 Nill 9,969,689 33251969 9631579 1099493 2211139 2512363 6730 2171336 17632640 50884609 2011 95,689,741 48,516,517 47,173,224 6,219,671 3,138,494 Nill Nil 9,358,165 37815059 9948547 1595192 3,196630 2390211 (35039) 2543139 19638680 57453739
(40,248) 371,729 Nill 4,000 39899 Nill 4,722,735 11,010,096 28906735 26263918 6781683 3263246 1042827 2341690 (31964) 147363 13544845 42451580 7985547 2887314 4021064 397118 1707 1255903 16548653 42812571
14205911 168027 17141 14391079 28060501 8311500 391497 323731 9026728 19033773 32074677 39007 51147457
18363344 751403 583361 19698108 231144263 11797821 (1813) 4230776 7565232 15549231 46232813 130456 61912500
22816665 628391 321647 23766703 22235319 9261621 (4137307) (1024513) 4099801 18135518 52456204 123934 70715656
26202577 148026 118887 26469490 24415119 9835048 (939256) (2043878) 6851905 17563214 60696510 117738 38377462
30760815 554810 137852 31453477 26116002 9229882 260000 (1083045) 8406837 17709165 Nill Nill 17709165
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Balance Sheet
ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Operating fixed assets Deferred tax assets Other Assets 30,994,965 762,193,593 2007 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 25,922,979 2008 106,778,346 39,490,729 17,139,081 171,204,890 413,076,390 24,271,964 3,203,565 44912236 820,077,201 2009 116,668,514 28,786,397 19,683,526 217,596,037 475,338,439 25,200,870 3,064,459 59565027 945,903,269 2010 115,657,025 30,743,368 23,051,171 301,078,498 478,886,755 27,620,697 6,954,228 54026725 1,038,018,467 2011 131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 28,126,754 7,973,084 66,469,884 1,153,480,100
LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities net Other Liabilities 7,061,902 10,886,063 591,907,435 _ 33,554 5,097,831 30,869,154 645,855,939 NET ASSETS 116,337,654 39,988,101 715,625,996 104,451,205 42,455,768 824,460,717 121,442,552 46,798,330 906,719,635 131,298,832 54701435 1,017,685,691 135,794,409 10,219,061 40,044,291 625,349,269 _ 25,274 10,621,169 44,828,138 726,513,013 _ 42,629 8,006,631 19,657,207 832,134,054 _ 123,413 9,104,710 26,371,675 927,415,132 _ 92,739
REPRESENTED BY Share capital Reserves Unappropriated Profit 8,154,319 15,772,124 45,344,188 69,270,631 _ 69,270,631 Surplus 47,067,023 8,969,751 20,476,863 53,567,323 83,013,937 112,699 83,126,636 21,324,569 10,763,702 23,395,059 62,346,594 96,505,355 110,930 96,616,285 24,826,267 13,454,629 25,129,425 67,103,611 105,687,665 498,076 106,185,741 25,113,091 16,818,286 26,206,507 69,712,113 112,736,906 495,488 113,232,394 22,562,015
Non Controlling Interest
Contigencies And Commitments
116,337,654 104,451,205 121,442,552
131,298,832
135,794,409
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Ratio Analysis
Ratio analysis enables the analyst to compare items on a single financial statement or to examine the relationships between items on two financial statements. After calculating ratios for each year's financial data, the analyst can then examine trends for the company across years. Since ratios adjust for size, using this analytical tool facilitates intercompany as well as intercompany comparisons. Ratios are often classified using the following terms: profitability ratios (also known as operating ratios), liquidity ratios, and solvency ratios. Profitability ratios are gauges of the company's operating success for a given period of time. Liquidity ratios are measures of the short-term ability of the company to pay its debts when they come due and to meet unexpected needs for cash. Solvency ratios indicate the ability of the company to meet its long-term obligations on a continuing basis and thus to survive over a long period of time. Financial ratios allow for comparison: Between companies Between industries Between different time periods for one company Between a single company and its industry average
a) Profitability Ratios
The continued viability of any bank depends on its ability to earn an appropriate return on its assets and capital. Good earning performance enables a bank to fund its operations, remain competitive in the market and increase or decrease in market funds. Profitability ratios relate profit to sales and investments. These ratios indicate the firms overall Department of Commerce 58
Effectiveness of operations and give us idea how well firm utilized its resources in generating profit and shareholder value.
Gross Profit Margin Ratio

Gross profit margin ratio is used to assess the profitability of a Bank's core activities. Gross profit margin indicates the relationship between gross profit and interest earned. A high gross profit margin indicates that a Bank can make a reasonable profit. Formula = Gross Profit / Interest earned (Revenue)
Year 2007 2008 2009 2010 2011 Ratio % 66.5 60.95 49.5 48.85 49.29
80 60 40 20 0 2007 2008 2009 2010 2011

Ratio %
Analysis
The Year 2007 has been an outstanding year with the bank recording the highest profit in its history i.e.(66.05%).The National Bank of Pakistans wide range of product offering, large branch network and committed workforce are some of fundamental Strengths that enabled NBP to achieve exceptional in a very competitive market. The gross profit is (48.85%) in 2010.The lowest percentage among all years.
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Net Profit Margin Ratio Net profit margin measures the percentage of revenue remaining after all cost and expenses, including interest and taxes have been deducted. Formula = Net Profit after Taxes / Interest earned
Year 2007 2008 2009 2010 2011 Ratio % 37.63 25.42 23.21 19.85 18.50
40 35 30 25 20 15 10 5 0 2007 2008 2009 2010 2011

Ratio %
Analysis
Net profit margin shows Negative trend till 2007to 2011 and was the highest in the same year as it was (37.63%), the percentage is decreased in 2008 as it was (25.42%). The net profit margin is on its lowest level at the end of 2011 as it indicates a percentage of (18.50%). The primary reason of this decline is current global economic conditions and current political crisis in Pakistan.
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Assets Turnover
This ratio is useful to determine the amount of revenue that is generated from each Rupee of assets. The Banks with low profit margins tend to have high asset turnover, those with high profit margins have low asset turnover. Formula = Revenue/ Total Assets
Year 2007 2008 2009 2010 2011 Ratio 0.066 0.074 0.082 0.085 0.082
0.1
0.05
Ratio
0 2007 2008 2009 2010 2011
Analysis
The year 2007 represents a ratio of (0.066%), lowest among all years. The years 2009, 2011 indicates almost same percentage of (0.082%) on account of banks assets turnover. The National Bank of Pakistans assets turnover in 2010 is (0.085%), peak ratio among all years
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Return on Capital Fund

This ratio relates the net profits to the amount of capital funds that have been employed in making that profit. Formula = Net markup received / Capital Funds Year Ratio
5 4 3 2 1 0 2007 2008 2009 2010 2011
Ratio
2007 2008 2009 2010 4.12 4.15 3.59 3.21
2011 2.80
Analysis
The above given ratios suggest that the profitability of the bank has a Positive trend during two years. The Last three years 2009 (3.59), 2010 (3.21), 2011 (2.80) shows Decreasing trend.
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Return on Investment
This ratio indicates the profit earned by the bank on the resources employed. Formula = Net income after taxes / Total Assets
Year 2007 2008 2009 2010 Ratio 0.024 0.019 0.019 0.016
2011 0.015
0.025 0.02 0.015 0.01 0.005 0 2007 2008 2009 2010 2011 Series 1 Column1 Column2
Analysis
There was an increase in the utilization of the resources in 2007. The year 2008 and 2009 have Almost same percentage ie.(0.019) 2008, (0.019) (2009). The ratio was decreased to (0.016) 2009 and (0.015) 2011.
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Return on Deposits
This ratio indicates to what extent deposits which represent funds mobilization on the part of the bank contribute towards income generation. Formula = Net income before taxes / Total Deposits Year 2007 2008 2009 2010 2011 Ratio 0.047 0.36 0.030 0.029 0.028
0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2007 2008 2009 2010 2011
Ratio
Analysis
During all first two years the return on deposits ratio of National Bank of Pakistan shows a Positive trend. The year 2008 (0.36) was the best year for bank in terms of its funds mobilization. Although the ratio was decreasing in 2009 (0.030), indicating Bank is more keen to kept deposits and a change in policy of the Bank regarding its funds mobilization.
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Effective Tax Rate

This ratio is a measurement of a company's tax rate, which is calculated by comparing its income tax expense to its pretax income. This amount will often differ from the company's stated jurisdictional rate due to many accounting factors, including foreign exchange provisions. This effective tax rate gives a good understanding of the tax rate the company faces. Formula = Income Tax expense/ Pretax Income
Year 2007 2008 2009 2010 2011 Ratio % 0.321 0.032 0.184 0.280 0.321
0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 2007 2008 2009 2010 2011
Ratio %
Analysis
The effective tax rate of National Bank of Pakistan was highest in the year 2007 (0.321%). 2008 tax rate has reduce to (0.032%) and from 2008 to 2011 is increasing trend in tax ie 2008 (0.032%), 2009 (0.184%), 2010 (0.280%), 2011 (0.321%).
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b) Liquidity Ratios
Theliquidity position of a bank is like a reservoir. It may be adequate, although nearly depleted, just before the start of the rainy season. Or it may be inadequate, although three quarters full just before the summer drought. Liquidity can be defined as: The banks ability not only to meet possible deposit withdrawals but also to provide for the legitimate needs of the economy as well
Current Ratio
Current ratio is a measure of the current adequacy of company's current assets to meet its current obligations. It must be greater than 1. If it is less than 1, liabilities exceed current assets. For every Rs.1 of liabilities, the company has a ratio amount of current assets available. The concept behind this ratio is to ascertain whether a company's short-term assets (cash, cash equivalents, marketable securities, receivables and inventory) are readily available to pay off its short-term liabilities (notes payable, current portion of term debt, payables, accrued expenses and taxes). In theory, the higher the current ratio, the better.
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Formula = Current Assets / Current Liabilities
Year Ratio
2007 2008 2009 2010 0.21 0.21 0.18 0.17
2011 0.16
25 20 15 10 5 0 2007 2008 2009 2010 2011

Ratio
Analysis
The year 2011 (0.16) and 2010 (0.17) were not satisfied for bank as current assets are less than current liabilities. However, in 2008 (0.21) the management of National Bank of Pakistan is able to overcome this problem. The year 2007 (0.21) is also good for bank as per standards of this ratio
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Cash Ratio
This ratio shows that the cash is enough for payment of current liabilities or not. This ratio is obtained by dividing cash by current liabilities. For a bank this is the cash held by the bank as a proportion of deposits in the bank. Formula = Cash / Current Liabilities
Year Ratio
16 15.5 15 14.5 14 13.5 13 12.5 12 2007 2008
2007 2008 2009 2010 2011 15.55 15.80 14.91 13.45 13.69
Ratio
2009
2010
2011
Analysis
The cash ratio of National Bank of Pakistan shows a mixed trend during five years of operations. During all years, the ratio is satisfactory as per standards of this ratio. The year 2008 (15.80), representing highest and 2010 (13.45) & 2011 (13.69), representing lowest ratio in all five years.
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Advances to Deposit Ratio

It demonstrate the degree to which bank has already used up its available resources to accommodate the credit needs of its customers. Formula = Advances / Total Deposits
Year Ratio%
68 66 64 62 60 58 56 54 52 2007 2008
2007 2008 2009 2010 2011 57.55 66.08 65.42 57.54 56.83
Ratio%
2009
2010
2011
Analysis
This ratio, a comparison of funds generation and its funds mobilization, indicates the total loans sanctioned by the bank in relation to total amount of money deposited with the bank, stands highest in 2008 ( 66.08%) as compared with all year. This shows that the bank has greater potential to advance additional loans. During all other years the ratio is quiet satisfactory representing National Bank of Pakistans credit management decisions.
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Due from Banks to Total Assets

It is an indication of Banks funds management policies. Formula = Due from banks / Total Assets
Year Ratio
0.04 0.035 0.03 0.025 0.02 0.015 0.01 0.005 0 2007 2008
2007 2008 2009 2010 0.028 0.020 0.020 0.022
2011 0.038
Ratio
2009
2010
2011
Analysis
The National Bank of Pakistans due from banks to total assets ratio is fluctuating and indicates a mixed trend during all years. The ratio is 0.028 in 2007 and 0.020 in the year 2008. The year 2011 represents highest ratio of 0.038 among all years.
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Due from Banks to Due to Banks

It shows the relationship between what the bank owes from other banks and what is due to it. Formula = Due from banks / Due to banks
Year 2007 2008 2009 2010 Ratio% 197.17 42.33 43.90 117.26
2011 168.21
200 150 100 50 0 2007 2008 2009 2010 2011

Ratio%
Analysis
The ratio indicates decreasing trend till 2008 that is (42.33%).And increasing trend till 2011,ie 2009(43.90%), 2010 (117.26%), 2011(168.21%). The year 2008 represents the lowest percentage of 42.33 on account of due from banks to due to banks.
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Due to Banks to Total Deposits

This ratio is an indicative of the proportion of the lending from the financial institutions in relation to the total funds raised by the bank in the form of deposits. Formula = Due to banks / Total Deposits
Year
2007
2008
2009
2010
2011 0.028
Ratio 0.018 0.064 0.061 0.023
0.07 0.06 0.05 0.04

Ratio
0.03 0.02 0.01 0 2007 2008 2009 2010 2011
Analysis
The due to banks to total deposits ratio of National Bank of Pakistan is increased in 2008 and decreasing trend till2010. In 2011 due to bank to total deposits ratio of NBP is Increased (0.028%).
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c) Debt Ratios
These ratios give users a general idea of the company's overall debt load as well as its mix of equity and debt. Debt ratios can be used to determine the overall level of financial risk a company and its shareholders face. In general, the greater the amount of debt held by a company the greater the financial risk of bankruptcy
The Debt to Equity Ratio

The debt-equity ratio compares a company's total liabilities to its total shareholders' equity. This is a measurement of how much suppliers, lenders, creditors and obligors have committed to the company versus what the shareholders have committed. To a large degree, the debt-equity ratio provides another vantage point on a company's leverage position, in this case, comparing total liabilities to shareholders' equity, as opposed to total assets in the debt ratio. Similar to the debt ratio, a lower the percentage means that a company is using less leverage and has a stronger equity position. Formula = Total Liabilities/ Total Shareholders equity
Year 2007 2008 2009 2010 2011 Ratio 79.20 79.78 76.59 67.39 60.51
80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011

Ratio
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Analysis
The debt to equity ratio of National Bank of Pakistan shows a ratio of 79.20 in 2007. The ratio is decreased to 79.78% in the year 2008. The ratio is further decreased in 2009 as it shows a percentage of 76.59. There was an increase in the ratio as it shows a percentage of 67.39. The year 2011 represents the ratio of 60.51
Interest Coverage Ratio

It shows whether the bank is earning enough profit before mark up charges to be paid to the financiers and the taxation obligations due to the government in order to remain solvent. The interest coverage ratio is used to determine how easily a company can pay interest expenses on outstanding debt. The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses for the same period. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable
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Formula = Earnings before interest & Taxes / Interest expense Year Ratio
3 2.5 2 1.5 1 0.5 0 2007 2008 2009 2010 2011
Ratio
2007 2.94
2008 2.17
2009 1.93
2010 1.92
2011 1.82
Analysis
The amount of interest a Bank pays in relation to its revenue and earnings is tremendously important. The National Bank of Pakistans interest coverage ratio is 1.82 times in the year 2011.
Horizontal Analysis
This technique is also known as comparative analysis. It is conducted by setting consecutive balance sheet, income statement or statement of cash flow side-by-side and reviewing changes in individual categories on a year-to-year or multiyear basis. The most important item revealed by comparative financial statement analysis is trend. A comparison of statements over several years reveals direction, speed and extent of a trend(s). The horizontal financial statements analysis is done by restating amount of each item or group of items as a percentage. Such percentages are calculated by selecting a base year and assign a weight of 100 to the amount of each item in the base year statement. Thereafter, the amounts of similar items or groups of items in prior or Department of Commerce 75
subsequent financial statements are expressed as a percentage of the base year amount. The resulting figures are called index numbers or trend ratios. Formula = Current Year amount / Base Year amount * 100 Horizontal analysis, whilst simple to execute and useful to a certain extent, has its limitations. These limitations include: Being highly dependent on the selection of base year and the period under examination in the financial model. Horizontal analysis provides little insight into why the trend occurred in a financial model.
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Horizontal Analysis of Balance Sheet

Horizontal Analysis (%) 2009 2010 122.9 121.9 76.8 82.0 91.7 107.3 103.2 142.8 139.5 140.5 97.2 106.5 192.1 174.3 124.1 2009 132 148.3 137.4 52.7 150.4 411.7 122.7 127 136.1 2010 165 159.3 147.9 53.3 113.3 180.5 140.5 367.8
ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Other assets Total Assets LIABILITIES Share Capital Reserves Inappropriate profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total Liabilities
2007 100 100 100 100 100 100 100 100 2007 100 100 100 100 100 100 100 100 100 100 100
2008 112.5 105.3 79.8 81.2 121.2 93.6 144.9 107.5 2008 110 129.8 118.1 45.3 144.7 367.8 105.6 75.3
2011 138.9 74.9 206.6 151.5 154.7 108.5 214.4 151.3 2011 206.2 166.1 153.7 47.9 128.9 242.2 156.6 276.3 Nil 177.2 157.5
129.5 110.8
137.5 127.6
151.6 140.3
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150 100 50 0
100
112.5
122.9
121.9
138.9
2007
2008
2009
2010
2011
Cash
Analysis
The National Bank of Pakistans Cash & balance with treasury banks shows aincreasing trend till 2009. It was decreased by 1% in 2010 and again increased 17% in 2011. There was a marginal increase in the year 2011. In 2011 the percentage is increased by 38.9% as compare to base year.
120 100 80 60 40 20 0
100
105.3 76.8 82 74.9
2007 Base Year
2008
2009
2010
2011
Balances with other banks
Analysis
The Balances of National Bank of Pakistan with other banks shows aincreasing trend in 2008 (5.3%) as compare to base year. The percentage decreased in 2009 by (-24.2%), 2010 (-18%), 2011 (-26.1%) Department of Commerce 78
250 200 150 100 50 0
206.6 100 79.8 91.7 107.3
2007 Base Year
2008
2009
2010
2011
Lending's to financial insitutions
Analysis
The lendings to financial institutions by National Bank of Pakistan. The lendings decreased(21.2 %) in 2008. The year 2011 represents highest percentage of (106%) among all years on account of lendings to financial institutions. The year 2010 and 2011 also shows an increase of (7.3 %) and (106.6%) as compare to base year.
200 150 100 50 0
100
81.2
103.2
142.8
151.5
2007 Base Year
2008
2009
2010
2011
Investments
Analysis
The investments made by National Bank of Pakistan fluctuate during all years. There was decreased of (19 %) in 2008. The year 2009 indicates aincrease of (3.2%) in investments. The year 2010 represents an increase of (42.8 %). The investments are increased (51.5 %) in 2011 as compare to base year. Department of Commerce 79
200 150 100 50 0 2007 Base Year 2008 2009 2010 100 121.2 139.5 140.5
154.7
2011
Advances
Analysis
The advances made by National Bank of Pakistan shows an increasing trend in all years as compare to base year. This implies that National Bank of Pakistan is keener to advance money to lenders. The advances were increased (21.2 %) in the year 2008 and (39.5 %) in 2009 and (40.5%) in 2010 and (54.7%) in 2011.
108.5
110 105 100 95 90 85
106.5 100 93.6 97.2
2007 Base Year
2008
2009
2010
2011
Operating Fixed Assets
Analysis
The operating fixed assets of National Bank of Pakistan shows a mixed trend during all years. There was decrease of (6.4%) in 2008&(3.2%) in 2009. There was a very sharp increase in operating fixed assets in the year 2011 of (8.5%) as compare to base year.
80
250 200 150 100 50 0
100
144.9
192.1
174.3
214.4
2007 Base Year
2008
2009
2010
2011
Other Assets
Analysis
The other assets of National Bank of Pakistan are increasing till 2009. Ie 2008 (44.9%), 2009 (92.1%) The other assets are increased (74.3%) in 2010 and (114.4%) in 2011.
250 200 150 100 50 0
100
110
132
165
206.2
2007Base Year
2008
2009
2010
2011
Share Capital
Analysis
The Share capital refers to the portion of a Bank's equity that has been obtained by trading stock to a shareholder for cash or an equivalent item of capital value. The share capital of National Bank of Pakistan shows an increasing trend in all years as compare to base year. The increase in share capital during all years indicates share holders concern toward National Bank of Pakistan and efficient banks Management policies.
81
200 150 100 50 0
100
129.8
148.3
159.3
166.1
2007Base Year
2008
2009
2010
2011
Reserves
Analysis
The Banks reserves are banks' holdings of deposits in accounts with their central bank plus currency that is physically held in bank vaults (vault cash). The reserves of National Bank of Pakistan fluctuate during all years as they show an increasing trend. The reserves are increased 29.8%, 48.3% &59.3% in the years 2008, 2009& 2010 respectively. The year 2011 represents highest increasing percentage of 66.1% as compare to base and previous years.
82
200 150 100 50 0
100
118.1
137.4
147.9
153.7
2007 Base Year
2008
2009
2010
2011
Unappropriated Profit
Analysis
The Inappropriate profit are Earnings of National Bank of Pakistan not paid out as dividends but instead reinvested in the core business or used to pay off debt.
Inappropriate profit is part of shareholder equity. The banks Inappropriate profit is increasing very sharply during all years as compare to base year, indicated banks strict dividend payout policy and concern towards reinvestment options.
83
120 100 80 60 40 20 0
100 45.3 52.7 53.3 47.9
2007 Base Year
2008
2009
2010
2011
Surplus on revaluation of assets
Analysis
The National Bank of Pakistans surplus on revaluation of assets fluctuates and shows a mixed trend during all years. It was decreased 54.7% in 2008 and 47.3% in 2009. The year 2010 has 46.7% decreased form base year. The percentage is decreased by 52.1% in 2011 as compare to base year.
200 150 100 50 0
144.7 100
150.4
113.3
128.9
2007 Base Year
2008
2009
2010
2011
Bills Payable
Analysis
The National Bank of Pakistans bills payable is showing a mix trend during all years. The year 2010 is best for bank in terms of reduction in bills payable. The year 2009 represents a higher percentage of banks liability as it increase 50.4% as compare to base year. The year 2011 also shows an increase in banks bills payable as it increases to 28.9% as compare to base year. Department of Commerce 84
500 400 300 200 100 0
367.8
411.7 180.5 242.2
100
2007 Base Year
2008
2009
2010
2011
Borrowings
Analysis
The National Bank of Pakistans borrowings fluctuates during all years and shows a mixed trend. The borrowings were increased 267.8% in 2008; however same are increased 311.7 % in 2009 as compare to base year. There was a marginal decrease of 80.5% in banks borrowings in the year 2010. The year 2009 represents highest percentage of borrowings as these were increased to 311.7% comparing with base year and are increased 142.2 % as compare to 2011.
85
200 150 100 50 0
100
105.6
122.7
140.5
156.6
2007 Base Year
2008
2009
2010
2011
Deposits & other accounts
Analysis
The deposits and other accounts of National Bank of Pakistan show aincreasing during all years. In the year 2011, the deposits were increased very marginally, with the year 2008 represents an increase of 5.6%. The deposits are increased 22.7% & 40.5% in the years 2009 and 2010 respectively
86
400 300 200 100 0
367.8 100 2007 Base Year 75.3 2008 127 2009 2010
276.3
2011
Liabilities against assets subject to finance lease
Analysis
The National Bank of Pakistans Liabilities against assets subject to finance lease were fluctuate during all years, with the year 2008 (24.7% decrease) and 2009 (27% increase) and the year 2010 (267.8% increase) & 2011 (176.3 % increase) shows an increasing trend as compare to base year.
177.2
200 150 100 50 0
100
129.5
137.5
151.6
2007 Base Year
2008
2009
2010
2011
Other Liabilities
Analysis
The other liabilities of National Bank of Pakistan are increasing during all years and show an increasing trend. The year 2008 indicates an increase of 29.5 % and 2009 indicates an increase of 37.5%. The other liabilities in the year 2010 represent an increase of 51.6%. There was a sharp increase in 2011 as it indicates a percentage of 77.2%, highest among all years Department of Commerce 87
Horizontal Analysis of Income Statement

Rupees in Millions 2007 Markup/return/interest earned Markup/return/interest expensed Net markup/interest income Provisions against non-performing advances provision for/(reversal of) diminution in the value of investments provision against off balance sheet obligations bad debts written off directly Net markup/interest income after provisions NON MARKUP/ INTEREST INCOME Fee, Commission & brokerage income Dividend income Income form dealing in foreign currencies Gain on sale & redemption of securities-net Investments classified as held for trading Other income Total non-markup/ Interest income Total income ( Interest + non-Interest) NON MARKUP/ INTERSET EXPENSES Administration expenses Other provisions written off Other charges Total non markup/ Interest expenses PROFIT BEFORE TAXATION Taxation Current Prior years Deferred PROFIT AFTER TAXATION Unappropriated Profit brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation Profit available for appropriation 100 100 334 121 318 138 302 75 Nil 35 100 100 100 100 100 100 100 100 100 100 100 129 447 3403 137 823 142 -0.46 1307 84 82 144 161 374 1876 165 79 111 -1057 -316 45 95 164 184 88 694 184 87 118 -240 -631 76 92 189 217 330 804 219 93 111 66 -335 93 93 Nil 100 100 100 100 100 100 100 100 117 88 386 17 -5.34 852 122 101 132 58 298 196 -7.36 375 141 108 142 34 212 107 -21.05 1473 130 120 146 49 307 102 110 1726 145 135 100 Nil 100 100 100 Nil Nil 233 91 -923 Nil Nil 250 93 -1618 Nil Nil 211 115 Nil 198 130 -7341 -7797 Nil 100 100 100 100 2008 121 141 111 225 2009 154 233 115 236 2010 175 267 129 148 2011 189 286 140 131
88
200 150 100 50 0 2007 Base Year 2008 100 121
154
175
189
2009
2010
2011
Interest earned
Analysis
The interest earned by National Bank of Pakistan increased during all years as compare to base year. The interest earned is increased 21% in 2008 and 54% in 2009. The year 2010 represents percentage 75%. The year 2011 represents peak percentage of 89 % as compare to all years.
400 300 200 100 0 2007 Base Year 2008 2009 2010 2011 100 141 233 267 286
Interest expensed
Analysis
The interest expense of National Bank of Pakistan shows an increasing trend in all years, as it was increased 41%(2008) and 133% (2009). 167% (2010) and 186% in (2011).The year 2011 shows an increase of 186%, highest among all years. Department of Commerce 89
150 100 50 0
100
111
115
129
140
2007 Base Year
2008
2009
2010
2011
Net markup/ Interest income
Analysis
The net markup/ Interest income of National Bank of Pakistan increased during all years as it shows an increasing trend. It was increased 11 % in 2008 and 15% in 2009 as compare to base year. The year 2010 represents second highest percentage on account of Net markup/ Interest income as it was increased to 29%, comparing with base year. The percentage is increased 40 % in 2010, highest among all years.
90
150 100 50 0
100
91
93
115
130
2007 Base Year
2008
2009
2010
2011
Net merkup/ Interest income after provisions
Analysis The net markup/ interest income after provisions fluctuates and shows a mixed trend during all years. It was decreased 9% (2008), 7% (2009) and 15% increase in 2010. The income is increased 30% as compare to base year.
91
200 150 100 50 0
100
117
132
142
146
2007 Base Year
2008
2009
2010
2011
Fee, Commission & brokerage income
Analysis
The Fee, Commission and brokerage income of National Bank of Pakistan increases during all years. It was increased 17% in the year 2008 and increases 32 % in the year 2009. The year 2010 represents an increase of 42%. The year 2011represents peak percentage of 46%.
120 100 80 60 40 20 0
100
88 58 34 49
2007 Base Year
2008
2009
2010
2011
Dividend income
Analysis
The dividend income of National Bank of Pakistan fluctuates during all years, as it shows a mixed trend during all years. The dividend income is decreases 12 % in the year 2008 and 42 % in 2009. It was decreased 66% in 2010. The year 2011 represents an decrease of 51% as compare to base year. Department of Commerce 92
2000 1500 1000 500 0
1473 852 100 2007 Base Year 2008 375 2009 2010
1726
2011
Other income
Analysis
The other income of National Bank of Pakistan fluctuates during all years as it shows a mixed trend. It was increased 752 % in 2008 and 275% in 2009 as compare to base year. There was a sharp increase in 2011as it was increased to 1626% as compare to base year and 1373%,in 2010increase as compareto base year.
200 150 100 50 0 2007 Base Year 2008 2009 2010 2011 100 122 141 130 145
Total non markup/ Interest income
Analysis
The Total non- markup/ Interest income of National Bank of Pakistan shows an increasing trend till 2009. It was increased 22% in 2008 and 41% in 2009. The income is decreased 30 % in 2010,. There was an increase of 45% in 2011, highest among all years.
93
150 100 100 50 0 2007 Base Year 2008 2009 101 108
120
135
2010
2011
Total income ( Interest + non-Interest)
Analysis
The total income of National Bank of Pakistan shows an increasing trend. It was increased 1% in 2008 and 8% in 2009. The total income is increased 20% in 2010 and also increase very marginally in 2011(35%).
250 200 150 100 50 0 2007 Base Year 2008 2009 2010 100 129 161 184
217
2011
Adminstration expenses
Analysis
The administration expense of National Bank of Pakistan is increased 29 % in 2008 and 61 % in 2009 as compare to base year. The year 2010 represents an increase of 84%. The percentage is increased 117 % in 2011, highest among all years.
94
250 200 150 100 50 0 2007 Base Year 2008 2009 2010 100 137 165 184
219
2011
Total non markup/ Interest expenses
Analysis
The Total non markup/ Interest expenses of National Bank of Pakistan shows an increasing trend as compare to base year. It was increased 27%, 65% and 84% in the years 2008, 2009 and 2010 respectively. The year 2011 represents peak percentage of 119%.
1000 800 600 400 200 0 2007Base Year 2008 2009 2010 2011 100 79 87 93 823
Profit before Taxation
Analysis
The profit before taxation of National Bank of Pakistan fluctuates and shows a mixed trend during all years. It was increased 723% in 2008 and decrease 21% in 2009. The year 2008 represents highest percentage on account of profit before taxation as it was increased by723%. The year 2010 indicates decrease of 13% as compare with base year but it was decreased in 2011 by 7% as compare to base year. Department of Commerce 95
150 100 100 50 0 2007Base Year
142 111
118
111
2008
2009
2010
2011
Current Taxation
Analysis
The current taxation of National Bank of Pakistan fluctuates during all years.. It was increased 42 % in 2008 and 11 % in 2009. The year 2010 and 2011 indicates an increase of 18 % & 11 % respectively.
120 100 80 60 40 20 0
100 82
95
92
93
2007 Base Year
2008
2009
2010
2011
Profit after Taxation
Analysis
The National Bank of Pakistans Profit after taxation fluctuates during all years. The profit after taxation is decreased 18% in 2008 and 5% in 2009 as compare to base year. The year 2010 indicates decrease of 8% as compare to base year and a decrease of 7% in 2011 as compare to 2007.
96
Vertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial statement as a percentage of a total. The term vertical analysis applies because each year's figures are listed vertically on a financial statement. The total used by the analyst on the income statement is net sales revenue, while on the balance sheet it is total assets. This approach to financial statement analysis, also known as component percentages, produces common-size financial statements. Common-size balance sheets and income statements can be more easily compared, whether across the years for a single company or across different companies. Vertical analysis is a technique for identifying relationship between items in the same financial statement by expressing all amounts as the percentage of the total amount taken as 100. In a balance sheet, for example, cash and other assets are shown as a percentage of the total assets and, in an income statement, each expense is shown as a percentage of the sales revenue. In Vertical analysis, various components of the financial statements are standardized by expressing them as a percentage of some bases. Examples of common-sized statements include: Components of the balance sheet expressed as a percentage of total assets Components of the income statement expressed as a percentage of sales or revenue
97
Vertical Analysis of Balance Sheet
ASSETS Cash Balances with other banks Lendings to fin. institutions Investments Advances Operating fixed assets Deferred Tax assets Other assets Total LIABILITIES Share Capital Reserves Inappropriate profit Surplus On Reval. of assets Bills payable Borrowings Deposits and other accounts Liabilities against assets subject to finance lease Deferred tax liabilities net Other liabilities Total
2007 12.45 4.92 2.82 27.67 44.70 3.40 00 4.07 100 2007 1.06 2.06 5.95 6.18 0.92 1.42 77.65 0.00 0.66 4.05 100
2008 13.02 4.81 2.08 20.87 50.37 2.95 0.39 5.47 100 2008 1.09 2.50 6.53 2.60 1.25 4.88 76.25 0.00 0 4.88 100
Vertical Analysis (%) 2009 2010 12.33 11.14 3.04 2.96 2.08 2.22 23.00 29.00 50.25 46.13 2.66 2.66 0.32 0.66 6.29 5.20 100 100 2009 1.14 2.47 6.59 2.62 1.12 4.74 76.81 0.00 0 4.49 100 2010 1.30 2.42 6.46 2.41 0.77 0.89 80.16 0.01 00 4.51 100
2011 11.43 2.43 3.84 27.70 45.69 2.43 0.69 5.76 100 2011 1.46 2.27 6.04 1.96 0.79 2.29 80.40 0.00 00 4.74 100
98
13.5 13 12.5 12 11.5 11 10.5 10
13.02 12.45 12.33 11.14 11.43
2007
2008
2009
2010
2011
Cash
Analysis
The cash balance of National Bank of Pakistan fluctuates during all years. The year 2008 representing highest percentage of cash balance among all years that is 13.02%. The cash balance percentage is decreased in 2009 (12.33%) and 2010 (11.14%). There was a slight increase in the year 2011 as compare to the years 2010, of 11.43%. The year 2007shows 12.45% of Cash.
6 5 4 3 2 1 0 2007 2008 2009 2010 2011 4.92 4.81 3.04 2.96
2.43
Balances with other Banks
Analysis
The National Bank of Pakistans balances with other banks has its peak percentage of 4.92% in the year 2007. The percentage is decreased to 4.81% in 2008 and has decreased 3.04% 2009.The percentage is again decreased in 2010 with a percentage of 2.96 % and a percentage of 2.43% in 2011.
99
5 4 3 2 1 0 2007 2008 2009 2010 2011 2.82 2.08 2.08 2.22 3.84
Lendings to Finanial Insitutions
Analysis
The lendings to financial institutions by National Bank of Pakistan shows a mixed trend. In the year 2007 percentage is 2.82%. The year 2008 along with the year 2009 indicates the same percentage of 2.08%. The year 2010 represents percentage of 2.22%. The year 2011 percentage 3.84% shows for NBPregarding its lendings to financial institutions.
40 30 20 10 0 2007 2008 2009 2010 2011 27.67 20.87 23 29 27.7
Investments
Analysis
The investments made by National Bank of Pakistan are fluctuating and showing a mixed trend. The year 2007 shows a percentage of 27.67% and the year 2008 show 20.87%. The percentage is increased to 23% in 2009; however it was increased in 2010 to 29 %, representing peak percentage among all years. The percentage is again decreased to 27.7% in the year 2011
100
52 50 48 46 44 42 40 2007 44.7
50.37
50.25 46.13 45.69
2008
2009
2010
2011
Advances
Analysis
The advances made by National Bank of Pakistan are fluctuating and indicates mixed trend in all years. The first two years of analysis shows an increasing trend that is 44.7% (2007), 50.37% (2008). There was decrease in banks advances to 50.25% in 2009; however in 2010 the percentage is decreased to 46.13% and in (2011) the percentage decreased to 45.69%.
101
4 3 2 1 0
3.4 2.95 2.66 2.66 2.43
2007
2008
2009
2010
2011
Operating fixed Assets
Analysis
The operating fixed assets of National Bank of Pakistan shows a percentage of 3.44% in the year 2007. There was a decrease to 2.95% in 2008 and 2.66% in 2009along with 2010. The operating fixed assets are decreased to 2.43% in 2011.
102
8 6 4.07 4 2 0 2007 2008 5.47
6.29 5.2
5.76
2009
2010
2011
Other Assets
Analysis
The other assets of National Bank of Pakistan fluctuate during all years. The year 2007 has a percentage of 4.07% and 5.47% (2008) and 6.29% (2009). 5.20% in (2010) 5.76% in (2011)
2 1.5 1 0.5 0 2007 2008 2009 2010 2011 1.06 1.09 1.14 1.3 1.46
Share Capital
Analysis
The share capital of National Bank of Pakistan shows increasing trend in all years. It was 1.06% in 2007 and shows an increasing trend of 1.09% in 2008. The percentage of share capital is further increased in 2009 and shows 1.14%. There was aincrease in 2010
103
3 2.5 2 1.5 1 0.5 0 2007 2.06
2.5
2.47
2.42
2.27
2008
2009
2010
2011
Reserves
Analysis The reserves of National Bank of Pakistan fluctuate and indicate a mixed trend. The above graph shows a percentage of 2.06% in 2007 with an increasing trend of 2.5% in the year 2008. The reserves of the bank are decreasing in 2009& 2010,2011 shows a percentage of 2.47% and 2.42%, 2.27% respectively.
6.8 6.6 6.4 6.2 6 5.8 5.6 2007 2008 2009 2010 2011 5.95 6.04 6.53 6.59
6.46
Unappropriated Profit
Analysis The Inappropriate profit of National Bank of Pakistan is mixed during all years. It shows a percentage of 5.95% in 2007, 6.53% in 2008, 6.59% in 2009, 6.46% in 2010 and 6.04% in 2011
104
8 6.18 6 4 2 0 2007 2008 2009 2010 2011 2.6 2.62 2.41
1.96
Surplus on revaluation of Assets
Analysis The surplus on revaluation of assets is fluctuating and shows a mix trend. It shows a percentage of 6.18% in 2007. The year 2008 represents percentage of 2.6%, and it was slight increase to 2.62% in 2009and in (2010) 2.41% and then decreased to 1.96% in 2011.
1.5 1 0.5 0 2007 2008 2009 2010 2011 0.92 1.25
1.12 0.77 0.79
Bills Payable
Analysis The bills payable by National Bank of Pakistan indicates a percentage of 0.92% in 2007. The percentage is increased in 2008 as it shows aincrease of 1.25%, and there is decreasing trend in 2009, 2010 and 2011 as it shows percentage of 1.12%, 0.77%, 0.79% respectively Department of Commerce 105
6 5 4 3 2 1 0 2007 1.42
4.88
4.74
2.29 0.89
2008
2009
2010
2011
Borrowings
Analysis The Borrowings of National Bank of Pakistan shows a mixed trend in all years. The percentage is 1.42% in 2007 with increase in 2008 shows a percentage of 4.88%. The borrowings are decreased in 2009 shows a percentage of 4.74%. The year 2010 represents lowest percentage of 0.89% of banks borrowing among all years. There was increase in banks borrowing in the year 2011 as it shows a percentage of 2.29%.
82 80.16 80 78 76 74 2007 2008 2009 2010 2011 77.65 76.25 76.81 80.4
Deposits & other accounts
Analysis The deposits and other accounts of National Bank of Pakistan decreased during 2008 and 2009 as (76.25%) and (76.81%) respectively. The year 2010 represents peak percentage of 80.16%. The deposits are about (80.04%) in 2011.
106
6 5 4 3 2 1 0 2007 4.05
4.88
4.49
4.51
4.74
2008
2009
2010
2011
Other liabilities
Analysis The other liabilities of National Bank of Pakistan fluctuate and show a mix trend in all years. The percentage of other liabilities in 2007 is (4.05%). The year 2008 represents percentage (4.88%) of banks other liabilities. The other liabilities were increased in 2009 and 2010 shows a percentage of (4.49%) and (4.51%) respectively.
107
PEST ANALYSES
Political
Privatization policy impact on NBP due to privatization the whole policy changes Impact of subsidized credit affecting of NBP. Employment practices unions association. Political interference and harassment Incidents of high taxation on banking industry.
Economical
Constraints in mobilization of public savings because of inflation. Staff cost changes, Operating cost Bad debts.
Social
Inadequate human resources, Culture poor saving habits, Declining education and work ethics, inadequate accountability.
Technological
Inadequate communication infrastructure, inadequate computer
facilities, Inadequate IT training.
108
SWOT ANALYSIS
STRENGTHS
The most important point of National bank is that it is agent of State bank of Pakistan, where the State bank branches are not working National bank control its function. It is the oldest Bank established in having years of experience. Only the NBP is authorized to advance loan against Gold. This function makes the NBP able to earn profit on the Gold. This function becomes the major source of income of NBP. National bank of Pakistan is a government owned bank. This is the reason that the Pakistani nation has complete trust over the bank that its deposits are fully secured. Government has providing facilities through National Bank of Pakistan to get the knowledge of computer, for this purpose IT Centers have been set up at different places where short courses of computer are taught. It provides courteous services to its customers. There are more than six million clients of National bank. Their customers are served all over the Pakistan and abroad. Its branch network is one of the largest in Pakistan. National bank of Pakistan is enjoying the deposit of different government organization like P.I.A., Pakistan Railway, WAPDA and Sui gas.
109
When Govt. starts some scheme of loan to assist the public normally NBP is authorized to implement it. For this it is provided with the funds from the Govt. But the advances this loan to public he earns profit on its which increase his over all income.
WEAKNESSES
The staff of National Bank of Pakistan is working partially on the bases manual record system and computer record system. It should be computerized, after all we have to adopt electronic media for IT revolution in future.
In National Bank of Pakistan the political involvement in bank affairs resulted in lake of strategic decisions.
There are less customer oriented schemes are started by the Bank, i.e it acts like selling oriented Bank and no promotions and incentives are offered to the general public.
The human resource department of NBP is not performing its duties as well, recruiting, training and development.
There are no bonuses and other cash prizes are given to employees for motivational purposes against extra time on job.
The rate of the loans converted in to bad debts is high. In National Bank of Pakistan, lake of adequate modern computerized techniques that are emerging in Pakistan e.g. concept of online banking.
110
The whole management and staff of the bank have not the relevant knowledge of banking business, education and professional skills.
The attitudes of the employees are not serious with each other and have professional jealousy, which is not healthy for the bank.
OPPORTUNITIES
As the Government is trying to increase industrialization in Pakistan NBP has opportunity to attract business community by offering different product and services.
NBP can attract customers by offering them high profit rates and introduced new product and services.
Golden hand shake may decrease the establishment expenses of the NBP. A gradual reduction in the corporate tax rate for commercial banks will have a positive impact on their earnings.
As the Govt. policy of the industrialization is under way, the Bank has a great chance for growth if it manages to attract the business community.
Most of government accounts are with NBP. This may create the trust and goodwill among the customers.
Bank has its own Networked Regional IT centers which may helpful to establish online banking.
111
THREATS
Being a government bank president of The Bank is appointed by government, so political influence is there.
Foreign banks are increasing in Pakistan which is offering new product and services. This is a threat for NBP.
Political uncertainty is also a threat for NBP. Because of this foreign investors are afraid of investing in Pakistan.
Other commercial banks i.e. MCB, Askari commercial Bank, UBL, Bank AlFalahetc are providing loans and advances at lesser rate of interest.
Downsizing is also a threat for NBP employee as they feel insecure about their job.
There may have some frauds, robbery or other mishaps with the banks so all the time employees have to remain careful.
The number of banks in Pakistan is increasing day by day and they are providing good customer services as compared with the NBP, so it may lose its market share in the future.
The competent employees of NBP may move to other banks, as the pay in NBP is less than the remuneration offered by other banks.
112
SUGGESTIONS & RECOMMENDATIONS

More Foreign branches should be opened instead on relaying on local branches. NBP has only four foreign branches their number should be increased All the branches should be online so that customer can get quick services. NBP should hire people whose education are related to banking fields instead of hiring graduates by this standard of bank will increase. In NBP branches work load high it should be divided equally The equal employment opportunity especially in case of men and women In NBP an effective recovery system should be adopted in order to low the increasing bad debt. NBP should increase its product line in order to compete with foreign banks. The employees of NBP should have to change behavior so that to attract customers. They should be investing in car financing and other similar business. NBP should provide ATM at extensive level. To improve the productivity the payee of employees should be increased to banking industry. NBP should improve loaning and finance structure The competent persons to enhance performance and quality of work should run all these three segments separately.
113
NBP should spend money development of the human capital the bank should conduct the series of training programs to achieve the mission of ABL.
CONCLUSION
National bank of Pakistan is the largest bank in Pakistan the bank is also authorized to act as an agent of State Bank of Pakistan and operate treasury where State Bank does not have its own branches. National Bank and having a good number of branches in all over in Pakistan Today NBP faces very difficulty in the business specially in the areas like as a financing department and marketing department. NBP has introduce the ATM but today the ATM has face very problem and the management has not pay attention on ATM because with the passage of time its importance has increased adequately. In a future NBP has chances to start the car financing and also try the increase the interest rate on savings of people and give the loan on productive purpose. My experience in NBP as an internee was really helpful to see the working environment of banking industry. I have also observed that the employees of NBP are not satisfied due to lack of promotions and over timing in banking. The working speed is slowly. So, if the management will not pay attention on the employee matters then NBP has to lost the efficient staff and also think about the customers to give them quick response.
114
References
www.nbp.com www.google.com www.Scribd.com
115

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2012

INTERNSHIP REPORT NATIONAL BANK OF PAKISTAN

Muhammad Faheem Hashmi contact (0301-7656169)

Internship Report on,

National Bank of Pakistan

Submitted on: November 21st 2012

TABLE OF CONTENTS INTRODUCTION

SWOT ANALYSIS SUGGESTION & RECOMMENDATIONS CONCLUSION REFERENCE

109 113 114 115

AnjumAsimShahidRahmanChartered Accountants KPMG TaseerHadi& CoChartered Accountants

Mandviwala&Zafar Advocates & Legal Consultants

Registered & Head Office

Registrar & Share Registration Office

NBP Building, I.I. Chundrigar Road, Karachi, Pakistan

FARID GATE BRANCH STRUCTURE

Operation Manager DilshadHussainAbbasi Credit Officer Tariq MehmoodSb

Deposit Incharge AsifZawar

Public Relation A.D Semab

Head Cashier MrSaeed

Clearing Officer TahirMehmood

A brief introduction of these accounts is given below.

2. Profit & Loss Sharing Saving Account

3. P.L.S. Term Deposit

4. Monthly Income Scheme

ACCOUNT OPENING PROCEDURE

Issuance of Cheque Book

Depositing of the Amount

Exemption from Zakat

Local Short Credit (LSC)

Short Credit (SC)

Demand Draft (DD)

Mail Transfer (MT)

Telegraphic Transfer (TT)

Pay Order (PO)

GOVT. RECEIPT & PAYMENT DEPARTMENT

Charges Account Register

Suspense Account Register

Other Expenses of the Establishment Department Traveling Expenses

Lighting and Power

Pay of Security Guards

Depreciation of Bank Property

Repairs and Renovation Expenses

Postage, Telegrams and Stamps

Stationery, Printing and Advertisement

Cash Receipt Book

Cash Payment Book

General Ledger Abstract

Short Term Finance

Agricultural (Seasonal Finance)

six month only at high markup rate.

Medium & Long Term Finance

Main Requirements for Sanctioning Loan

Product lines and Important Brands

Home Purchase (House or Apartment) *

Debt to Equity 80:20 (Maximum)

Purchase of Land and for Construction thereon*

Debt to Equity 80:20 (Maximum)

Re-Financing (Balance Transfer Facility (BTF)*

NBP Advance Salary Scheme

National Bank Cash Gold Scheme

National Bank Premium Aamdani Certificate Scheme

NBP Karobar Scheme

3.NBP General Account