INTERNSHIP REPORT On NBP 2013

Report Presented by: Roll No: Session: Submission Date:
Muhammad Zeshan BE-10-34 2010- 2014 September 17, 2013
Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.
I dedicate all of my work to my teacher and all of the members of NBP who helped me to do my internship and to prepare this report.
First of all I am thankful to ALLAH who always helped me in all of the ways in my life and always gave me courage and patience to do all of my internship in a good manner and secondly I am thankful to my teacher and all of the staff of the bank that also helped me to do my internship.
This report is about National Bank of Pakistan. In November 8, 1949, National Bank of Pakistan was established under National Bank of Pakistan Ordinance 1949. National bank is owned by the government and act as an agent of the State bank of Pakistan. Its headquarter is situated in Karachi. It has its national and international level branches i.e. 1250 national and 22 international branches. National Bank of Pakistan maintains its positions as a pakistans premier bank for higher achievements. Its subsidiaries include NBP Capital, NBP Modaraba Management Company, NBP Exchange Company, Taurus Securities, NBP Almaty and others. It offers its unique products that are affordable for all classes. During my internship, I learn a lot about working in different departments that are account opening, clearing and remittance. The main department of any bank is finance department and the main function of any bank is to deal with finance. Any bank secures the resources of general public and offers them a good profit. NBP also provides services for government employees. One portion of bank is reserve for government employees dealings only.
Sections 0 1 2 3 4 5 6
SubSection Title Page
Description
Page No. 0 2 2 2 3 4 6 7 9 10 10 14 14 15 16 17 18 18 19 19 22 38-40 41-43 44 44 45 46 47 47-54 54 54
6.a 6.b 6.c 6.d 6.e 6.f 6.g 7 7.a 7.b 7.c 8 9 10 11 12 13 14 15 16 17 18 19
Dedication Acknowledgement Executive Summery Table of Contents Brief intoduction of the organizations business sector Overview of the Organization Brief History Organizational Hierarchy Chart Business Volume Product Lines Competitors of NBP Brief Introduction of all the departments Comments on organizational structure Plan of Internship Program Brief Introduction of the branch Starting & Ending dates of Internship Training Departments & Duration Training Program Detailed description of the Tasks during Internship Ratio Analysis Horizontal Analysis of Financial Statements Vertical Analysis of Financial Statements Banking Analysis (Competitiors of NBP). SWOT Analysis PEST Analysis Future Prospects of the Organization Conclusion Recommendations for Improvement References & Sources used Annexes
Definition of Bank:
A bank is a financial institution that deals with de posits and advances and acts as a financial intermediary. It receives money in the form of deposits and lends that money to those who need it. A Bank derives a profit from the difference in the interest rates paid and charged, respectively. Banks are usually charted by state bank or federal government.
Banking in Pakistan:
At the time of independence, commercial banking facilities were provided fairly well here. There were 487 offices of scheduled banks in the territories now constituting Pakistan. An Expert committee was appointed. The committee recommended that the reserve bank of India should continue to function in Pakistan until 30th September 1948, and Pakistan would take over the management of public debt and exchange control from Reserve Bank of India on 1st April 1948 and that India Notes would continue to be legal tender in Pakistan till 30th September 1948. Moreover the banks including those having their registered offices in Pakistan transferred them to India in order to bring a collapse of a new state. By 30th June1948 the number offices of scheduled banks in Pakistan declined from 487 to only 195. The Governor General of Pakistan QUAID-E-AZAM MUHAMMAD ALI JINNAH inaugurated the State Bank of Pakistan on July 1, 1948, after the state Bank of Pakistan Order was promulgated on May 12, 1948. The first Pakistan notes were issued in October 1948. As the Centered Bank of the country, the State Bank addressed itself with the equally urgent task of creating a national banking system. In order to attain this goal it provided every help and encouragement to Habib Bank to expand its network of branches and also recommend to Government the establishment of a new bank which could serve as an agent to the State Bank. As the result the National Bank of Pakistan came into over the agency function from the Imperial Bank of India. More Pakistan scheduled banks continued to be established which included the Commerce Bank Limited and the Standard Bank Limited. By June 1965, the number of scheduled banks stood at 36.
Banking structure in Pakistan:

Banking structure in Pakistan consists of the following: 1. (SBP) State Bank of Pakistan (Central Bank) 2. Commercial Banks 3. Exchange Banks 4. Saving Banks
6. a. Brief History:
NBP is the largest commercial bank operation in Pakistan. In 1949, NBP was established under National Bank of Pakistan Ordinance 1949. NBP head office is located in Karachi. NBP has moved from a public sector organization into modern commercial bank and acts as an agent of central bank. It provides both public sector and commercial banking services. The bank also handles treasury transactions for the government of Pakistan (GOP) as an agent of State Bank of Pakistan (SBP). The National Bank of Pakistan was established on November 29, 1949 as a semi public commercial bank. NBP has diversified its business portfolio and is today a major lead player in the debt equity market, corporate investment banking, retail and consumer banking, agricultural financing, treasury services and is showing growing interest in promoting
and developing the country's small and medium enterprises and at the same time fulfilling its social responsibilities.
Vision:
To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility
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 we operate
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
Goal:
To enhance profitability and maximization of NBP share through increasing leverage of existing customer base and diversified range of products.
6. b. Organizational Hierarchy Chart:
1. President
Executives
2. SEVP
3. EVP
4. SVP
5. VP
6. AVP
Officers
OG-I
OG-II
OG-III
Cash Dept.
Clerical Staff
Assistant Head Cashier

Non Clerical Staff
Cashier
Peon, Guards etc
6. c. Business Volume:
2012 (Particulars) Total Assets Deposits Advances Investments Shareholders Equity Pre-tax Profit After-tax Profit Earning Per Share (Rs.) Number of Branches
(Rs.) 1309339305 1037784947 657381154 343537529 151277750 23257706 16162635 8.75 1289 9
Number of Employees
16457
6. d. Product lines:
1. NBP Premium Aamdani (Monthly Income 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%
2. NBP Premium Saver (PLS Saving Account)
Earn up to 8.50% p.a. +. Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 1 million*. Free NBP Cash Card (ATM + Debit). Convenience of NBP Online Aasan Banking (for online banking customers). Two debit withdrawals allowed in a month & no limit on number of deposit transaction. Profit calculated on monthly and paid on half yearly basis. 3. NBP Saibaan (Home Financing):
NBP Saibaan (Open the Door to Your Dream Home)
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Home Purchase Home Construction Home Renovation Purchase of Land + Construction Balance Transfer Facility (BTF) 4. Advance Salary (Personal Loan):
Easy installments of 1 to 60 months at your choice. No minimum income, collateral & insurance charges required. Quick processing and fastest disbursement. For permanent employees of Government, Semi Government and Autonomous bodies receiving salaries through NBP. 5. Cash Card (ATM + Debit Card):
Use it as an ATM in any of the ATMs in Pakistan Use it as Debit Card in any of the outlets with ORIX POS machine Cash withdrawal up to Rs. 20,000/- per day Account Balance Enquiry Mini Statement (Only at NBP ATM) PIN Change facility (Only at NBP ATM)
6. Investor Advantage (Financing Facility for Stock Investors):
Comfortable environment for trading No security requirement, except for the customers equity Customers equity freely available for investment Equity acceptable in cash or approved shares 7. Cash n Gold (Ready Cash against Gold):
Facility of Rs. 20, 000/-against each 10 gms of net weight of Gold Ornaments 11
No maximum limit of cash Repayment after one year Roll over facility No penalty for each repayment
8. NBP Karobar (Mera Apna Karobar):
Minimum down payment, 10% of asset price (5% for PCO & Telecaster) Tenure 1 to 5 years (for PCO 2 years) Grace period 3 months Maximum loan amount Rs. 200,000/Age 18-45 years Mark-up (variable) 1 year KIBOR + 2.00% p.a. The customer will pay markup @ 6% p.a.
9. Kisan Dost:
Competitive mark-up rate Quick & easy processing Delivery at the farmers doorstep Technical guidance to farmers Wide range of financing schemes for farmers Finance facility up to Rs. 500,000/- for landless farmers against personal guarantee. Financing available against pass book, residential/commercial property, gold ornaments and paper security. Loan facility on revolving basis for three years (renewable on yearly basis without obtention of fresh documentation and approval).
10. NBP PAK Remit:
Pak remit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel. 12
Remitters in USA can log on to NBP user friendly website, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes. The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.
11. Protection Shield (Personal Accident Insurance):
(Life is precious) No documentation No medical required Premium Auto Debit facility & choice of deactivation Coverage includes death due to: Natural Calamities e.g. Earthquake, Flood, Cyclone etc. Accident, Riots, Civil Commotion, Strikes and Acts of Terrorism.
6. e. Competitors of NBP:
The competitors of NBP at public sector: Competitors at Public Sector First Women Bank Limited The Bank of Khyber The Bank of Punjab The competitors of NBP at private sector: Competitors at Private Sector My Bank Limited (FWB) (KB) (BOP)
Allied Bank Limited 13
Bank Al-Falah Limited Bank Al Habib Limited Askari Bank Faysal Bank Limited Metropolitan Bank limited Muslim Commercial Bank Limited
Atlas Bank Habib Bank Limited Saudi Pak Bank Limited
6. f. Brief Introduction of all the departments:

1. Finance department 2. Deposit department 3. Credit department 4. Operation department 5. Human Resource (HR) department 1. Finance department: Finance department of any organization controls and manage all routine financial matters. This department helps to maintain the books of account of any organization. It performs the investing and lending functions. This department not only prepares the income statements and balance sheet of any bank but also it estimates the profit and loss of any bank. It keeps record of total deposits of the bank. It keeps eye on total worth of the bank. 2. Deposit department: Deposits are the lifeblood of any bank. This department promotes all of the departments in a bank. Without deposits, a bank can not perform its banking function. This department keeps it eye on potential customers for deposits. This department motivates the branches to get a fixed target through different schemes like cash prizes and special increments. This department helps to run a banking function. 3. Credit department: Credit department includes all the credit policies of the NBP. It controls all the credit policies in this bank like loans and keeps eye on securities, mortgages, pledges and so on. This department fixes the markup rate for credit. 4. Operation department: Operation department concerned with the operation in a bank. This department helps in handling the routine work in a bank. Without this department, bank cannot maintain its operations. If there is any problem in working area in any branch, this
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department helps to correct the error and make sure that all operations are working correctly. Account opening is also handled by this department. 5. Human Resource (HR) department: Human resource department is basically concerned with the employees. This department works for the benefits of the employees. This department also helps how to assign the task and jobs of the employees. It helps to the employees to do their work easily and to get more and more benefits and incentives for the employees. This department works in hiring and firing to the employees. Its work is all about the human resources/ work forces.
6. g. Comments on organizational structure:

NBP is one of the oldest banks in Pakistan. It has the biggest structure in Asia. National Bank has not been changed its structure from many years so it is not so good. NBP has its great contribution towards building structure and is serving for all classes of the society. In any branch of NBP, branch manager perform all the activities in a branch. NBP has not a rigid structure. It has decentralized structure that can be adopted easily by all the employees. NBP has large its network because it is the major business partner for the Government of Pakistan because of its special emphasis to fostering pakistans economic growth through various services like aggressive and balanced lending policies, technologically oreinted products and services offered through its large networks of brances like nationally and internationaly. So NBP has its good structure as compared to other banks.
7. a. Brief Introduction of the Branch:

National Bank of Pakistan Main Branch, Jalal Pur Pir Wala Branch Code: 0544 Branch Manager: Sabir Ali Khan (AVP/Manager). Operations Manager: Mian Fiyyaz.
Hierarchy of Branch:
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Branch Manager
Credit Officer
Operations Manager
HR Officer
All other staff
Departments in Branch:
1. Cash Department: Cash department is such department that purely deals with cash. It is the most critical part of departments. Three main cashiers in cash department are cash receipts, cash payments and bill payments. One deals with cash receipts, second deals with the cash payments and the last one deal with the bill payments. It is supervised by CD in charge and head. 2. Govt. Department: This department deals with all the govt. things like govt. receipts, govt. payments pension, taxes, bills, salaries etc. 3. Credit / Advances Department: Credit department includes all the credit policies and control these policies. This department gives different types of loan and chare a fix markup rate for credit. Three main types of loans are:
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1. Personal loans 2. Agricultural loans 3. Commercial loans 4. Operation Department: This department deals with all general banking operations. Dealing with customers, HR maintenance and account opening etc all these dealings relate to this department and is controlled by it. 5. Account Opening Department: Account opening department deals with opening the account of the customers on the bank. In this department different types of account are opened like PLS saving account, Current account etc. 6. Clearing Department: Clearing department deals with clearance of the payments within the branches of the same bank and with the branches of the other banks. 7. Remittance/ Bills Department: Remittance department deals with the transfer of money. It transfers money from one place to another place or from one branch to another branch. 8. Establishment Department / HRM: This department basically works for staff benefits like medical, traveling etc 9. Electronic Banking System (EBS): This controlls the over all banking system in a bank. 10. Compliance Group / Auditor: The work of compliance group / auditor is to audit all the banking work.
7. b. Starting & Ending Dates of Internship:
Starting Date: Ending Date:
10-06-2013 26-07-2013
7. c. Training Departments & Duration:

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Departments
Account Opening Clearing Remittance 10-06-2013 01-07-2013 15-07-2013
Duration
28-06-2013 12-07-2013 26-07-2013
Detailed description of the tasks assigned to me during my Internship:
1. Account Opening Department 2. Clearing Department 3. Remittance Department
1. Account Opening Department:

The first task assigned to me was the account opening. Fisrt of all I asked the customer to give me his/her ID card. In ID card, I checked the Expiry Date of the ID card. If the expiry date of the card is corect and it has not been expired then I took interview of the customer so that I can know what type of account he wanna open PLS saving or current account and what is his/her source of income for which he/she want to open this account. After the interview, he asked me that he wanna open
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saving account. I said ok then I tell him that the minimum amount for opening the saving account is Rs. 100 and maximum amount you want to deposit and I also told him that in this account zakat will be deducted and profit will be added. He said ok I will deposit Rs. 500. After this, I asked the customer you will have to take some necessary things to open this account that are as follows: Photocopy of your C.N.I.C Photocopy of Next of Kin C.N.I.C Photocopy of your mother C.N.I.C Photocopy of the your home electricity bill 3 Photos if he/she cant sign means illiterate or sign in urdu and can be copied by other.
After taking these documents I filled the Customer Information Folio (CIF) and in CIF I asked the customer of whom person you want to make your Next of Kin. He told me the name of next of kin, whats his relation with him/her, photocopy of his/her C.N.I.C and his mobile number. After filling these information I took a verisys of his/her C.N.I.C from Nadra from the operations manager so I can know is this correct C.N.I.C. After all these things I opened the account of customer . After this I took print of all the forms and then I took the signature card and took the signature of that person whose account I opened and I used the Brach Stapm on signature card. After this I took the sign of the designation authority means my supervisor and I also used the stamp of attested on the photocopy of C.N.I.C.After this, I filled his/ her deposit slip with that amount from which he wanna open this account that is Rs. 500 and asked him to pay the money to the cash counter and then your account will be opened. When he came back to pay the amount then I gave his all the forms and asked him that a letter of thanks will be reached your home address by post. I told him you will have to sign on letter of thanks and post it. Then I told him when the bank will receive this letter of thanks then the bank will issue you the check book. At the last, I asked the customer now you are free and you can go now. In this way , I opened the account of a person completely and I accomplished my task. The same procedure I used for opening the current account. But the minimum amount for opening the current acount is Rs. 5000 and this account is not profit oriented and no zakat deduction is made in this account and this account is for businessman and companies etc.
2. Clearing Department:
The second task assigned to me was the clearing which means the clearance of payments and cheques within city or with different cities. In clearing, I learnt about the inward clearing, outward clearing, intercity clearing and local clearing. My supervisor told me that the clearing we receive is inward clearing and that we sent to other is outward clearing. After that my supervisor gave me some intercity and local cheques and asked me to clear them. First of all I went to the clearance counter and applied the CROSSING STAMP at the front of all the cheques. After that I separated all the cheques of Lahore. And all the cheques of other cities like Islamabad,
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Gujranwala, and Faisalabad etc. After this I applied the CLEARING STAMP with the same date of all the cheques of Lahore and the CLEARING STAMP with the next day date of other cities cheques. After that I used the INTER CITY CLEARING stamp of all the inter city cheques. After that I used Govt. Account Credited stamp for all the govt. cheques and Payees Account Credited stamp for account holders. After that I used the Collecting Bank Endorsement Confirmed stamp for other banks cheques which are made collection from our branch and Our Branch Endorsement Confirmed stamp for those cheques if any branch from outside said to our bank to collect money. After completing these stamps I took the registers of local clearing and intercity clearing. In the register of local clearing, I entered all the local cheques and in intercity register, I entered all the intercity cheques. After that entering the cheques in register I total all the amount of entered cheques and confirm that total with total amount of cheques. After completing this work, I made one list for local cheques and the other list for intercity cheques and entered the amount of all the cheques and made total of it. After this, I put them in an envelope and then I put stamp of the bank on it. In this way, I completed my whole work
3. Remittance Department:
The third task assigned to me was the remittance. In remittance department, I learnt about how the pay orders (PO), demand draft (DD) and call deposit at receipts (CDR) are made. My supervisor asked me to make a pay order of the customer. First of all I asked the customer, are you account holder of NBP or not? He asked me I am account holder of NBP. I said ok the charges for making pay order for account holders of NBP are Rs. 100 and for non account holders are Rs. 150. He asked me to make the pay order. Then I asked the customer gave me the photocopy of your C.N.I.C. He gave me the photocopy of his C.N.I.C and told me his account number. After this I took the pay order (PO) book and filled it with his name, account number, amount in figures and words and the name of the bank. After writing these things, I applied two stamps at the front of the pay order that are branch stamp and stamp of the date. After this my supervisor signed the pay order (PO). After signed I gave the pay order (PO) to the customer. In this way, I made the complete pay order of the customer. The same procedure I used for making demand draft (DD) and call deposit at receipts (CDR). But the charges rates for making demand draft (DD) and call deposit at receipts (CDR) are also different for account holders & non account holders. During making the demand draft (DD), I used the same stamps like branch stamp and stamp of the date but the charges rates that I used for making the demand draft (DD) for account holders are Rs. 80 and for non account holders are Rs. 100 that I used during my work and I used the demand draft (DD) book for making DD. Similarly, the charges rates that I used for making call deposit at receipts (CDR) for account holders are Rs. 100 and for non account holders are Rs. 200 and I used the call deposits at receipts (CDR) book for making CDR. In this way, I made all these things that are pay order (PO), (DD) demand draft and call deposit at receipts (CDR). Hence, I completed my whole in a good manner.
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We can use Ratio analysis to check out how profitable a business is, we can use it to check out how much enough money a business has to pay its bill and we can even tell whether its shareholders should be happy. Ratio analysis can also help us to check whether a business is doing better this year that it was last year, and it can tell us if our business is doing better or worse than other businesses doing and selling the same things. 1. Net Profit Margin Formula: Net profit margin= (Net profit/ Revenue) *100 Calculation: 2012 Net profit= 16162635 Revenue/sales= 100092132 = (net profit/ revenues)*100 = (16162635/ 100092132)*100 = 19.85% 16.15% Graphical Representation: 2011 Net profit= 17,709165 Revenue/sales= 95689741 = (net profit/ revenues)*100 = (17,709165/ 95689741)*100 = 18.50% 18.50% 2010 Net profit= 17738405 Revenue/sales= 88681381 = (net profit/ revenues)*100 = (17738405/ 88681381)*100 = 20.% 20.0%
20.00% 15.00% 10.00% Net Profit Margin 5.00% 0.00%
Year 2010
Year 2011
Year 2012
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Interpretation: This graph is showing that the net profit margin of NBP for the year 2010, 2011 & 2012 is 20%, 18.5% & 16.15% respectively. This ratio is not constant in all over the years. Its showing that the net profit margin of NBP is decreasing day by day due to increase in non mark-up interest expenses and taxes. As the net profit margin of NBP is decreasing in all over the years it is showing that the NBP is not efficient to converting its revenue into actual profits. As we know, the higher the net profit margin the better it is. So this decreasing trend is not a good sign for NBP. . 2. Gross Spread Ratio Formula: Gross Spread Ratio = (Mark-up / return / interest earned - Mark-up / return / interest expensed) / Mark-up / return / interest earned*100 Calculation: 2012 Spread = 43674305 Revenue/ sales= = (Spread / Revenue)*100 = 43674305/ 100092132*100 = 43.63% 43.63% 2011 Spread = 47173224 Revenue/ sales= 95689741 = (Spread / Revenue)*100 = 47173224/ 95689741*100 = 49.29% 49.29% 2010 Spread = 43511637 Revenue/ sales= 88681381 = (Spread / Revenue)*100 = 43511637/ 88681381*100 = 49% 49.0%
Graphical Representation:
50.00% 49.00% 48.00% 47.00% 46.00% 45.00% 44.00% 43.00% 42.00% 41.00% 40.00%
Gross Spread Ratio
Interpretation:
Year 2010
Year 2011
Year 2012
This graph is showing that the Gross Spread Ratio of NBP for the year 2010, 2011& 2012 is 49%, 49.29% and 43.63%. It is showing that the Gross Spread Ratio of NBP is not constant and is going to decrease day by day due to increase in interest
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expenses. This ratio was high in 2010 but due to increase in interest expenses this ratio is decreasing in 2011 and 2012 that is not a good sign for the national bank. 3. Non Interest Income to Total Income Ratio Formula: (Non Mark-up / interest income to total income ratio= non mark-up / interest income) / (non mark-up / interest income +Mark-up / return / interest earned)*100 Calculation: 2012 non mark-up / interest income= 23849322 Total income = 123941454 = (non mark-up / interest income / Total income)*100 = (23849322 / 123941454)*100 = 19.24% 19.24% 2011 non mark-up / interest income= 19,754420 Total income= 115444161 = (non mark-up / interest income / Total Income)*100 = (19,754420 / 115444161)*100 = 17.11 17.11% 2010 non mark-up / interest income= 18150883 Total income = 106832264 = (non mark-up / interest income / TotalIncome)*100 = (18150883 / 106832264)*100 = 16.99% 16.99%
Working of Total Income: Total Income = (non mark-up / interest income +Mark-up / return / interest earned) 2012) Total Income = 23849322+100092132= 123941454 2011) Total Income = 19754420+95689741= 115444161 2010) Total Income = 18150883+88681381= 106832264
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19.50% 19.00% 18.50% 18.00% 17.50% 17.00% 16.50% 16.00% 15.50%
Non Interest Income to Total Income Ratio
Year 2010
Year 2011
Year 2012
Interpretation: This graph is indicating that the Non Interest Income to Total Income Ratio of NBP for the year of 2010, 2011 & 2012 is 16.99%, 17.11% and 19.24% respectively. It is showing that this ratio of NBP is not constant in all over the years. It is increasing day by day. It indicates that non markup income is how much percent of the total income of the NBP. In 2010, this ratio is low but in 2011 and 2012 this ratio is increasing it means in 2010 & 2011 NBP is not gaining more non interest income like commission, brokerage income & income from dealing in foreign currencies etc due to which this ratio is decreasing in 2010 & 2011 than 2012 4. Spread Ratio Formula: Spread Ratio = Interest Earned / Interest Expensed Calculation: 2012 Interest Earned= 100092132 Interest Expensed= 56417827 = (Interest Earned / Interest Expensed) = (100092132 /56417827) =1.77 times 1.77 Graphical Representation:
2011 Interest Earned = 95689741 Interest Expensed= 48516517 = (Interest Earned / Interest Expensed) = (95689741 / 48516517) = 1.97 times 1.97
2010 Interest Earned = 88681381 Interest Expensed = 45169744 = (Interest Earned / Interest Expensed) = (88681381 / 45169744) = 1.96 times 1.96
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2 1.95 1.9 1.85 1.8 1.75 1.7 1.65 Year 2010 Year 2011 Year 2012 Spread Ratio
Interpretation: This graph is showing that the Spread ratio of NBP for the year 2010, 2011,& 2012 is 1.96, 1.97 & 1.77 Times respectively. Its showing that the Spread Ratio of NBP is not constant. This ratio is much lower in 2012 as compared to 2010 and 2011. It is showing that the interest expenses in 2012 are more than 2010 and 2011 that is becoming cause to decrease the ratio.
5. Return on Asstes Formula: Return on Assets = (Net profit/ Total assets) *100 Calculation: 2012 Net profit= 16162635 Total Assets= 1309339305 = (Net profit/ Total assets) *100 = (16162635/1309339305)*100 = 1.23% 1.23% 2011 Net profit=17709165 Total Assets= 1153480100 = (Net profit/ Total assets) *100 = (17,709165/ 1153480100)*100 = 1.53% 1.53% 2010 Net profit= 17738405 Total Assets=1038018467 = (Net profit/ Total assets) *100 = (17738405/ 1038018467)*100 = 1.70% 1.70%
Total Assets
Year 2010 1309339305
Year 2011 1153480100
Year 2012 1038018467
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1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00%
Return on Assets
Year 2010
Year 2011
Year 2012
Interpretation: This graph is indicating that the Return on Asset ratio of NBP for the year 2010, 2011 & 2012 is 1.70%, 1.53% and 1.23% respectively. It is showing that the Return on Assets Ratio of NBP is not constant and is decreasing with the passage of time. This ratio is high in 2010and 2011 but is decreasing in 2012. Its indicating that the management of NBP is not utilizing its assets in an efficient manner in generating earnings and revenues for the NBP. 6. Return on Total Equity Formula: Return on total Equity=Net Income/ Total equity*100 Calculation: 2012 Net income= 16162635 Total Equity= 116034637 =Net Income/ Total equity*100 = 16162635/ 116034637*100 = 13.92% 13.92% 2011 Net income= 17709165 Total Equity= 112736906 =Net Income/ Total equity*100 = 17,709165/ 112736906*100 = 15.70% 15.70% 2010 Net income= 17738405 Total Equity= 105687665 =Net Income/ Total equity*100 = 17738405/ 105687665*100 = 16.78% 16.78%
Working of Total Equity: Total Equity

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Description Share capital Reserves Un appropriated profit Total Equity
2012 18500114 28818528 68715995 116034637
2011 16818286 26206507 69712113 112736906
2010 13454629 25129425 67103611 105687665
18.00% 16.00% 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%
Return on Total Equity
Year 2010
Year 2011
Year 2012
Interpretation: The graph is showing that the Return on Total Equity Ratio of NBP for the year 2010, 2011 & 2012 is 16.78%, 15.70% and 13.92% respectively. Its indicating that this ratio is not constant in all over the years and is decreasing with the passage of time. The Return on Total Equity Ratio of NBP in 2012 is lower as compared to 2010 & 2011. This ratio measures the profitability of NBP and is showing that the NBP can generate much profit by the money invested by shareholders. In 2012, NBP is less effective in using contributions from stockholders to generate earnings due to which this ratio is low in 2012.
7. Debt Ratio
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Formula: Debt ratio= (Total debt/ Total assets)*100 Calculation: 2012 Total Debt= 1158061555 Total Assets= 1309339305 =(115806155/1309339305)*100 =87% 88.44% Working of Total Debt: Total Debt Description Total Debt Working of Total Assets: Total Assets Description Total Assets Graphical Representation:
88.60% 88.40% 88.20% 88.00% 87.80% 87.60% 87.40% 87.20% 87.00% 86.80%
2011 Total Debt= 1017685691 Total Assets= 1153480100 =(1017685691/1153480100)*100 =87% 88.22%
2010 Total Debt= 906719635 Total Assets= 1038018467 =(906719635/1038018467)*100 =87.35% 87.35%
2012 1158061555
2011 1017685691
2010 906719635
2012 1309339305
2011 1153480100
2010 1038018467
Debt Ratio
Year 2010 Year 2011 Year 2012
Interpretation: The graph is showing that the Debt Ratio of NBP for the year 2010, 2011 & 2012 is approximately in between 87% and 88%. Its showing that the NBP is using much debts to finance its assets. This ratio is very high and is not a good sign for NBP. NBP
28
need to decrease to its debts because high debt shows the NBP has high risk of default due to which investors will not like the NBP. 8. Debt / Equity Ratio Formula: Debt / Equity Ratio = (total debt/ total equity) Calculation: 2012 Total Debt= 115806155 Total Equity= 116034637 = (115806155/116034637) = 9.98 2011 Total Debts= 1017685691 Total Equity= 112736906 = (1017685691/ 112736906) = 9.02 9.02 2010 Total Debt= 906719635 Total Equity= 105687665 = (9067196935/105687665) = 8.58 8.58
9.98 Working of Total Equity: Description Total Equity Graphical Representation:

1 0.95 0.9 0.85 0.8 0.75 Year 2010
Total Equity 2012 116034637
2011 112736906
2010 105687665
Debt / Equity Ratio
Year 2011
Year 2012
Interpretation: This graph is indicating that the Debt to Equity Ratio of NBP for the year 2010, 2011 & 2012 is 8.79, 8.77 and 8.73 Times respectively. This ratio is not constant in all over the years and is increasing with the passage of time. NBP has this ratio low in the year 2010 as compared to 2011 & 2012. But this ratio is approximately 9 which indicating that the NBP has 9 times more debt than its equity that is not a good sign for NBP because investors like this ratio to be low.
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09. Time Interest Earned Ratio Formula: Time Interest Earned Ratio = (EBIT/ total interest) Calculation: 2012 EBIT= 79675533 Total Interest= 56417827 = (EBIT/ total interest) = 79675533/56417827 = 1.41 times 1.41 Working of EBIT: EBIT= Profit before Taxation+ Mark-up / return / interest expensed 2010) EBIT = 24,622287+45,169744= 69,792031 2011) EBIT = 26116002+48516517= 74632519 2012) EBIT = 23257706+56417827= 79675533 Graphical Representation:
1.55 1.5 1.45 1.4 1.35 1.3 Year 2010 Year 2011 Year 2012 Time Interest Earned Ratio
2011 EBIT= 74632519 Total Interest= 48516517 = (EBIT/ total interest) = 74632519/ 48516517 = 1.54 times 1.54
2010 EBIT= 69792031 Total Interest= 45169744 = (EBIT/ total interest) = 69792031/ 45169744 = 1.55 times 1.55
Interpretation: This graph is indicating that the Time Interest Earned Ratio of NBP for the years 2010, 2011 & 2012 is 1.55, 1.54 and 1.41 times respectively. Its showing that the Time Interest Earned Ratio of NBP is not constant. NBP has the ability to cover its interest expenses with its EBIT in all over the years. This ratio is high in 2010 but it is decreasing in 2011 and 2012 due to increase in interest expenses
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10. Advances / Deposits Ratio Formula: Advances / Deposits Ratio= Total Advances/ Total Deposits Calculation: 2012 Advances= 657381154 Deposits= 1037784947 (Advances/ Deposits) = 657381154/ 1037784947 = 0.633 times 2011 Advances= 527109209 Deposits= 927415132 = (Advances/ Deposits) = 527109209/ 927415132 = 0.5684 times 0.5684 2010 Advances= 478886755 Deposits= 832134054 = (Advances/ Deposits) = 478886755/ 832134054 = 0.5754 times 0.5754
0.633 Graphical Representation:
0.64 0.63 0.62 0.61 0.6 0.59 0.58 0.57 0.56 0.55 0.54 0.53
Advances / Deposits Ratio
Year 2010
Year 2011
Year 2012
Interpretation: This graph is indicating that the Adavnces to Deposits Ratio of NBP for the year 2010, 2011 & 2012 is 0.5754, 0.5684 and 0.633 respectively. This ratio is not constant in all over the years . NBP has this ratio very low in all over the years but the standard for this ratio is 1:1. This low ratio is showing that the NBP is not using its deposits efficiently in advancing to the borrowers. It means NBP has excess liquidity and potentially low profits. 11. Dividend Per Share Formula: DPS = Dividends paid to Shareholders/ Average common shares outstanding Calculation: 2012 Dividend paid= 12596042 Average common shares 2011 Dividend paid= 10077219 Average common shares 2010 Dividend paid= 8060510 Average common shares 31
outstanding= 1850011.4 = Dividends paid to Shareholders / Average common shares outstanding = 12596042/ 1850011.4 = Rs.6.8 per share 6.8
outstanding= 1681828.6 = Dividends paid to Shareholders / Average common shares outstanding = 10077219/ 1681828.6 = Rs.6 per share 6
outstanding= 1,345,462.8 = Dividends paid to Shareholders / Average common shares outstanding = 8,060510/ 1,345,462.8 = Rs.6 per share 6
6.8 6.6 6.4 6.2 6 5.8 5.6 Year 2010 Year 2011 Year 2012 Dividend Per Share
Interpretation: This graph is indicating that the Dividend per Share Ratio of NBP for the year 2010 and 2011 is Rs. 6 and Rs. 6.8for year 2012. Its showing that NBP has positive ratio in all over the years. NBP is generating more earnings to pay its shareholders for their common shares outstanding that is a good sign for NBP. It will attract more and more investors to invest in NBP. 12. Earning Per Share
(Given in Annual reports)
2012 8.74
2011 10.53
2010 13.24
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14 12 10 8 6 4 2 0 Year 2010 Year 2011 Year 2012 Earning Per Share
Interpretation: This graph is indicating that the Earning per Share Ratio of NBP for the year 2010, 2011 & 2012 Rs. 13.24, 10.36 and 8.74 respectively. It is showing that the Earning per Share Ratio of NBP is decreasing in 2011 and 2012. The EPS ratio of NBP in 2010 is more due to the increasing net income than other years that is showing the shareholders were earning more per share in 2010 as compared to 2011 and 2012.
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BALANCE SHEET
Rupees in Millions ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets
2010 2011 2012
115,657,025 30,743,368 23,051,171 301,078.498 478,886,775 54,026,725 27,620,697 6,954,228 1,038,018,46 7

2010
131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 66,469,884 28,126,754 7,973,084 1,153,480,10 0

2011
158,332,708 30,222,338 8,272,645 343,537,529 657,381,154 80,162,206 27,949,833 3,480,892 1,309,339,30 5

2012
LIABILITIES Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities net Total NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated Profit Non Controling Surplus
8,006631 19,657,207 832,134,054

_
123,413 46,798,330 _ 906,719,635 131,298,832
9,104,710 14,367,639 26,371,675 50,250,684 927,415,132 1,037,784,947 _ _ 92,739 29,619 54,701,435 55,628,666 _ _ 1,017,685,69 1,158,061,55 1 5 135,794,409 151,277,750
13,454,629 25,129,425 67,103,611 498076 25,113,091 131,298,832
16,818,286 26,206,507 69,712,113 495488 22,462,015 135,794,409
18,500,114 28,818,528 68,715,995 _ 35,243,113 151,277,750
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Income Statement
2010
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 Profits from associates Gain on revaluation of previously held equity interest Gain on sale & redemption of securities-net Investments classified as held for trading Loss from Joint Venture Other income Total non-markup/ Interest income Total income ( Interest + nonInterest) 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 88,681,381 45,169,744 43,511,637 7,007,975 2,904,949 3,965 92,593 10,009,482 33,502,155 9,871,667 1,067,273 2,278,898 66,906 180,131 2,512,363 6,730 (16,976) 2,183,891 18,150,883 51,653,038 26,732,045 179,819 118,887 27,030,751 24,662,287 9,871,640 (938,158) (2,049,600 ) 6,883,882 17,738,405
2011
95,689,74 1 48,516,51 7 47,173,22 4 6,219,671 3,138,494 Nil Nil 9,358,165 37,815,05 9 9,948,547 1,595,192 3,196,630 83,559 _ 2,390,211 (35039) 32,181 2,543,139 19754420 57569479 30760815 554,810 137852 31453477 26116002 9229882 2,60,000 (1083045) 8406837 17709165
2012
100,092,13 2 56,417,827 43,674,305 7,155,149 842,111 Nil Nil 7,997,260 35,677,045 10,706,506 3,626,356 3,703,319 _ _ 3,220,442 (2,472) _ 2,595,171 23,849,322 59,526,367 35,736,823 371,514 160,324 36,268,661 23,257,706 7,526,333 _ (431,262) 7,095,071 16,162,635 35
TAXATION
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 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.
10.a.Horizontal analysis Balance Sheet.

ASSETS Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments net Advances net Operating fixed assets Deferred tax assets net Other assets net TOTAL LIABILITIES Bills payable Borrowings Deposits and other accounts Subordinate loan Liabilities against assets Deferred tax liabilities net Other liabilities TOTAL PRSEENTED BY Share capital Reserves unappropriate profit
2010% age
100% 100% 100% 100% 100% 100% 100% 100% 100% %age 100% 100% 100% 100% 100% 100% 2010 %age 100% 100% 100%
2011% age
114% 91% 192% 106% 110% 102% 115% 123% 111% %age 114% 134% 111% _ 75% 116% 112% 2011 %age 125% 104% 104%
2012% age
137% 98% 36% 114% 137% 101% 50% 148% 126% %age 179% 257% 125% 24% 119% 128% 2012 %age 137% 115% 102% 36
Surplus on revaluation of assets Non controlling TOTAL
100% 100% 100%
89% 99.5% 103%
140% 115%
10.b. Horizontal analysis Profit & Loss A/C: Particulars Markup / return / interest earned Markup / return / interest expensed Net markup / interest income Provision against non performing advances-net Provision for diminution in the value of investments net Provision against off balance sheet obligations Net markup / interest income
2010% 100% 100% 100% 100% 100% 100%
2011% 108% 107% 108% 89% 108% -
2012% 113% 125% 100.04% 102% 29% -
100%
113%
106%
Nonmarkup / interest income

Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized gain on revaluation of investments Share of loss from joint ventures Share of profits 100% 100% 100% 100% 100% 100% 100% 101% 149% 140% 95% 190% 125% 108% 339% 163% 128% 37
Gain on revaluation of previously held equity interest Other income
100% 100% 100%
116% 109%
119% 131%
Total nonmarkup / interest income Total income ( Interest + nonInterest)
100%
111%
115%
Nonmarkup / interest expenses

Administrative expenses Other provision net Other charges Total nonmarkup / interest expenses Profit before taxation Taxation Current year Prior years Deferred Profit after taxation 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 115% 309% 116% 116% 106% 93% (28)% (53)% 122% 99% 134% 206% 135% 134% 94% 76% (21)% 103% 91%
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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: 1. Components of the balance sheet expressed as a percentage of total assets 2. Components of the income statement expressed as a percentage of sales or Interest earned Formula: The formula for Vertical Analysis is: Individual item of financial statement/total of items head *100 Vertical analysis of Statement of Financial Position ASSETS 2010%age 2011%age 2012%age Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments net Advances net Operating fixed assets Deferred tax assets net Other assets net TOTAL LIABILITIES Bills payable Borrowings Deposits and other accounts Subordinate loan 11% 3% 2% 28% 46% 3% 5% 4% 100% 12% 2% 2.7% 26.5% 44.3% 2% 6% 5% 100% 12.09% 2.3% 0.63% 26.24% 50% 2.13% 0.265 6.12 100%
.008% 1% 81%
.008% 2% 83%
1.1% 3.83% 79%
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Liabilities against assets Deferred tax liabilities Other liabilities TOTAL LIABILITIES NET ASSETS
0.0012% 3% 86% 14%
0.011% 4% 89% 11%
0.00226 0.0424 88.4% 11.6%
Vertical analysis of Profit & loss account

Particulars Markup / return / interest earned Markup / return / interest expensed Net markup / interest income Provision against non performing advances-net Provision for diminution in the value of investments net Impairment of goodwill 2010% 100% 52% 49% 8% 3% .1% 2011% 100% 51% 49% 6% 4% 10% 39% 2012% 100%
43.6% 7% 1% 8% 35.8%
Provision against off balance sheet -.002 obligations 11% Net markup / interest income after provisions Non -markup / interest income Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities net Unrealized gain on revaluation of investments Share of loss from joint ventures Share of profits from associates Gain on revaluation of 40%
13% 1% 2% 3% 0.009% 0.1% .2%
11% 2% 3% 2% 0.1% 0.1% .1% -0.0035
10.6% 4% 3.6% 3.21% -0.0047

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previously equity interest Other income Total nonmarkup / interest income Total income ( Interest + nonInterest) Administrative expenses Other provision net Other charges Total nonmarkup / interest expenses Profit before taxation Taxation Current year Prior years Deferred Profit after taxation
2% 20% 58% 31% .2% .1% 30%
3% 21% 60% 32% .6% .2% 33%
2.6% 24% 59.4% 35.70% .37% .16% 36.23
11% 11.13% -3% 7% 20%
10% 9% .27% 9% 19%
23.23% 7.5 16.14%
12.BANK ANALYSIS WITH REFERNCE TO COMMERCIAL BANKS LISTED ON STOCK EXCHANGE

Financial Position of Commercial Banks
41
Registered in Pakistan
Name of Commercial Bank Paid up Reserves Assets (Rs. Capital (Rs. Bn) Bn) (Rs. Bn)
7.59 8.97 6.46 6.28 10.12 0.28 5.29 4.11 4.06 4.79 4 8 5 5.3 4.02 4.54 28.44 4.24 5.01 38.72 5.11 6.02 23.6 18.54 5.48 35.88 12.82 0.22 7.43 1.88 7.59 2.8 1.34 2.95 0.22 3.57 0.17 0.81 8.46 0.41 0.52 1.95 0.01 6.7 735.71 788.12 344.7 450.34 576.02 8.04 217.85 81.61 194.21 167.36 34.43 333.02 50.83 137.31 53.66 71.74 177.98 45.47 30.7 276.38 24.16 192.45
As of June 2012 Deposits Advances Profit After (Rs. Bn) (Rs. Bn) Tax (Rs. Bn)
584.85 621.53 293.97 350.72 465.54 6.4 180.82 64.73 153.32 136.75 24.4 287.77 42.35 99.61 44.33 57.84 112.12 31.96 22.18 173.81 14.08 128.97 411.36 173.42 168.45 228.98 328.55 3.09 142.85 45.83 114.04 93.25 11.14 180.02 27.62 87.61 32.65 38.3 85.43 23.03 17.5 126.27 9.57 101.22 7.5 8.1 2.51 7.68 5.59 0.05 -2.63 0.47 0.05 1.25 0.11 1.69 -0.81 0.75 0.08 0.44 -0.73 0.43 -0.2 1.31 0.16 1.57
Earnings Branch Credit Per share Network Rating (Rs)

9.75 9.03 3.88 12.22 5.53 1.67 -4.97 1.13 1.01 2.61 0.27 2.12 -1.54 1.41 0.39 0.98 0.23 1.02 -0.39 0.34 -0.31 2.6
(Nos)
1400 1249 757 1038 1100 38 272 90 155 203 34 231 55 111 41 111 240 69 31 176
Habib Bank NBP Allied Bank MCB United Bank First Women Bank of Punjab Soneri Bank Askari Bank Bank Al- Habib Bank of Khyber Bank Al- Falah Saudi Pak Faysal Bank KASB Bank Meezan Bank NIB Bank Mybank Atlas Bank Standard Chartered JS Bank Habib Metropolitan
AA+ AAA AA AA+ AA+ BBB+ AAAAAA AA BBB+ AA AAA A A+ AAA A-
AA+ 11 A AA+
100
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.If SWOT analysis does not start with defining a desired end state or objective, it runs the risk of being useless. A SWOT analysis may be incorporated into the strategic planning model. An example of a strategic planning technique that Internship Report on NBP, Jalal Pur Pir Wala Branch Multan. 42
incorporates an objective-driven SWOT analysis is SCAN analysis. Strategic Planning, including SWOT and SCAN analysis, has been the subject of much research. Strengths: Attributes of the organization that is helpful to achieving the objective. Weaknesses: Attributes of the organization that is harmful to achieving the objective. Opportunities: External conditions that is helpful to achieving the objective. Threats: External conditions which could do damage to the business's performance.
Strengths: Advance salary product: It exists in the list of top 10 banks in the ASIA. It has the highest profit among the largest banks of the ASIA. Its paid-up capital is very high Very less uncertainty because of a Govt. bank High confidence due to higher capital investment. LC (letter of credit) is acceptable all over the world. Chest branches can supply cash on the behalf of state bank. Chest loans can be used for limited time Stake holder is Govt. of Pakistan. It holds the Govt. treasury. The biggest customer of NBP is Govt. of Pakistan. Work as corresponding of ASKARI bank Provide High packages to employees. Provide high staff benefits. Recruitment occurs after every year. MTOs selection is planned till 2010. Weaknesses: The Major problem with NBP is its image as it is a Govt. bank so the vision of the customer is not positive about it. People think it will not provide them satisfactory services. In many branches management is not up to date. In small areas branches employees have less education. Award and promotion policies are not implemented in all branches. There is no concept of job rotation Employees have low coordination level among each other. Opportunities: Advance salary for employees Employee benefits Pensions Award for employee performance
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Promotions Corporate planning learning. Threats: Turn out of employee Job security and Strugglers At a time do no. of jobs due to competitor. NBP have to do those jobs which have no loss and no profit because of their competition Customer dissatisfaction Slow actions on complains Political environment.
It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning. The organization's marketing environment is made up of: 1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc. 2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc. 3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors. Political: Privatization policy and deregulation. Impact of subsidized credit affecting and NCBs. Employment practices, Unions, Associations. Political Interference and harassment. Incidents of high taxation on banking industry. Economical: Constraints in mobilization of public savings because of inflation. Staff cost. Operating cost. Bad debts
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Social & Cultural: Inadequate human resources. Cultural strain to savings. Defaulters lobby. Declining education and work ethics. Inadequate accountability. Adequate empowerment. Technological: Inadequate communication infrastructure. Inadequate computer facilities. Inadequate IT training
NBP is the biggest bank of Pakistan that has its branches at national and international level. This is only the bank that is owned by the government of Pakistan. NBP acts as an agent of the State Bank of Pakistan. The future prospect of NBP is looking very strong because it has its branches at the national and international level. It has huge amount of profit. No other bank can compete this bank because it works on the behalf of the government. Management of the NBP is also very efficient to meet the requirements. Customers have trust on it. NBP also deals with government employees and provides benefits to them. NBP can touch the heights by the computerized system. Financial position of NBP is very good. Assets and profits of NBP are in a position that no other bank will even think to earn. NBP plans to continue its strong focus on recovery and reduction in non performing loans, deposit mobilization, expense management and consolidation of loans. Financial position of NBP in 2010 is good and is expected to be better in the future. NBP is taking IT initiatives to upgrade and implement new application solutions to meet the challenges of the growing competition. It will improve the operational efficiency and control, customer services. It is expected that the NBP will lead to the other banks of Pakistan in the future.
45
As a financial analyst I concluded that some ratios are good for NBP while some ratios are not good. These ratios are as following: The net profit margin of NBP in all of the years is good. Non Interest Income to Total Income Ratio of NBP is good. Return on assets ratio of NBP is low. Return on total equity ratio is good in all over the years. Debt ratio of NBP is very high in all of the year that is not good. Debt to equity ratio is also too high of NBP that is not god. Time Interest earned ratio of NBP is good. Advances / Deposits ratio is very low and not good for NBP. Operating Cash Flow ratio is also very low in all over the year that is not good. Dividend per share ratio of NBP is good. Earning per share ratio is very good. P / E ratio is also good of NBP. But despite of all these problems NBP is in good position. If it solves these problems it can reach at the highest position and no one can touch its hights.
As a financial analyst I will recommend that some necessary points should be improved that are as following: NBP can also increase the net profit margin ratio by decreasing its non markup interest expenses and taxes. NBP can increase more its gross spread ratio by decreasing the interest expenses. Return on assets ratio can also be increased by utilizing the assets in an efficient manner. NBP need to decrease its debts to manage the debt ratio because a high debt is not a good sign for NBP. Debt to equity ratio is also very high. NBP should decrease its debts because the equity investors will not invest in it due to high debts. NBP can increase its advances / deposits ratio by giving advances to the customers. NBP needs to improve its liquidity by increasing assets for operating cash flow. Moreover, Here I am giving some suggestions, which in my view can add some input for efficiency and better performance of NBP as an organization in general and City branch in particular.
46
The recommendations are as follows: Professional training NBP staff lacks professionalism. They lack the necessary training to do the job efficiently and properly. Although staff colleges in all major cities but they are not performing well. For this purpose these staff colleges should be reorganized and their syllabus should be made in such a way to help the employee understand the everchanging global economic scenario. Delegation of authority Employees of the bank should be given a task and authority and they should be asked for their responsibility. Performance Appraisal The manager should strictly monitor the performance of every staff member. All of them should be awarded according to their performance and result in the shape of bonuses to motivated and incite them to work more efficiently. Transfer Transfer is not properly carried out. Some of the employees are continually serving at the same post. They are simply rotated at the same branch. Therefore it is recommended that evenly rotation of every employee should take place after every three years in different branches of the bank. Changes in Policies There should not be any abrupt policies change by the upper management, as this practice hurts the customer confidences in the bank. Government should make longterm policies Need of Qualified Staff Required, qualified staff should be provided to branch in order to improve the functioning of the branch. Especially a telephone operator should be appointed.
47
Utility Bill Charges Bank gets Rs. 10 to processes a utility bill, and it is very tire, tough and hard job. These charges should be increased to RS 15 per bill to enable the branch to cover their handling costs and make some profit.
Link with the Head Quarter 100 major branches of NBP should established a direct link with the, head quarter In Karachi, through Internet or Intranet. This will make the functions and decision making of the management easier and convenient. Credit Card National bank of Pakistan should start its operation in credit card. These cards are very helpful for the ordinary customer in general and the business people in particular. To make it more secure and to eliminate the misuse of it, the management is required to keep proper security against the card. Installing Validator and ATM Validator machine is used to count the currency notes and its installation will help to eliminate to counting errors and will save time. This branch is situated in the City, which is supported to be the hub of business activates. In this area an auto teller machine (ATM) is the need of the hour businessmen can easily check their balance in the bank and also with draw their money conveniently. Clean Loans Clean loan or clean overdraft is the credit facility extended to the customers to the customers without any security. These types of small term loans should not be
48
extended to anybody, because sometime these loans are provided to blue-eyed people of the management and they become a part of bad debts. Cash Financing In this mode of financing the amount of credit not utilized by the borrower is remained tax-free. It is recommended that a small amount of interest should be charge on this amount as well because the bank gas kept-aside the amount for that borrower and cannot advance it anywhere.. Needs to be Flexible in credit Policy As mentioned earlier, NBP is very conservative in advances and loans policy. It reduces the investment opportunities. Also loans should be given to the small businessmen and the agriculture sector at the low markup rate. It should adopt flexible credit policy while giving credit to the agriculture sector. Technological Advancement I would like to suggest that at least all the main branches of NBP should be fully computerized in order to expedite the dealing process among bankers and their customers. Every department should be provided a computer with adequate training (especially Advances, Deposits and Foreign Exchange departments).Daily records should be entered directly into these computers, (instead entering the overall daily transactions after the banking hours). It will not only reduce transaction time, will increase accuracy but will also be efficient as well. Not only it will be economical but will also reduce the extra burden of work of the bank. It will also help in reducing the use of excessive paper work. Improper Distribution of Work Proper distribution work leads to success in every organization. Proper distribution of work prevents the employee from over and under work situation. So for a smooth running of an organization proper distribution of work is the hint to be followed.
49
During my internship I observed that there was no proper distribution of work in the bank. I saw that some of the employee worked like ants other sat idle starting here and there. So this created a lot of over work situation for while relaxation for other. Favoritism and nepotism In the City branch during my internship I saw that when some of the employees are transfer to other places, due to their relation with influential people and with top management they can cancel their transfer in few weeks, when they are unsatisfied at that place. So I suggest that in the organization there should be no favoritism, nepotism and politics and their transfer and promotion should be made on merit and according to the rules and regulations of the bank and provided favorable environment to the employee to show their performances. Inter Departmental Transfer I watched during my internship that, there is number of employee who have worked on one seat for many a year. It can have negative effects motivation of employee who is hard working and intelligent. Take the example of advances section. In advance section if the employee is transfer after sixth month or seven month, how can he be able to show his performances and how can he be able to know the bank customer in a short period of time. Marketing Policy The branch should adopt various marketing strategy and promotion strategy to promote the bank and its product. The most important in my opinion is personal marketing; it is the most effective of all when you think in term of branch level. But on the whole organization level, they should arrange the seminar within the bank and outside the bank. Complaints of Customer
50
There should be an information desk to provide the information and to receive the complaints of the customer in the bank. There is no complaint box available in the branch and not any person appointed to hear the complaints. Every person cannot go to the manager for the complaint because most of the people are hesitant. So I suggest management to install a compliant box in the branch, and recruit a special person for that guidance of the customer when they are unable to manage some difficulties in banking matters. Analysis of the Business: Proper analysis of the business reports should be conducted before extending any type of loan. For this purpose professional training of the stuff member is required. Organizational Commitment It is suggested that employees working on daily wages basis should be given some benefits, which the other employees are getting. Their salaries must increase according to efficiency, performance and service. Managerial Leadership In the analysis, we have discussed the difficulties of the assistant in taking any initiative; therefore it is recommended that the assistants should he given special training to make them ready for the leadership. Credit Monitoring The credit department of the bank should carries out vigilant credit monitoring. They should ensure the proper payment of installments and the mark-up by the borrower. The staff members who have done all the paper work of the loan extension should perform the monitoring, as he/she will be having more information about the borrower. Extended Banking Hours The banking hours may be extended up to six, as being practiced by HBL opposite to it.
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Some of the business community due to law and order situation are now reluctant to keep the fund in their premises and would want to depart with it. Therefore, City Branch may extend the night banking to cater to demand of this business community. The branch could also be opened to cater the requirements of this business community Limited staff: Staff of NBP in village branches is limited, they face much difficulty to perform their task efficiently. So I recommended that staff should increase in those branches for better development of resources. On other hand I observed that many branches of NBP are overcrowded. Less people can work which extra people perform. Number of employees should decrease or new branches should opens for the adjustment of these extra employees. So there should be effective distribution of human resource achieve goals effectively and efficiently. Housing and House Hold Goods loans Bank should initiate these loans because most of banks customers are middle class and they cannot afford to buy house or household goods at once by their own.
I took help from the following sources: Website of NBP: www.nbp.com.pk www.google.com.pk www.wikipedia.com www.investopedia.com Branch officers like Operations manager Compliance officer Other staff etc
52
All the material used in this report is obtained from website of NBP. All financial statements are downloaded from annual report of www.nbp.com.pk. Financial reports are present in Annual reports. I took all the data from the financial statements of 2012. 2011 and 2010. I took the financial statements of 2012 for the preparation of this report.
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INTERNSHIP REPORT On NBP 2013

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INTERNSHIP REPORT On NBP 2013

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Report Presented by: Roll No: Session: Submission Date:

Muhammad Zeshan BE-10-34 2010- 2014 September 17, 2013

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

SubSection Title Page

Page No. 0 2 2 2 3 4 6 7 9 10 10 14 14 15 16 17 18 18 19 19 22 38-40 41-43 44 44 45 46 47 47-54 54 54

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Banking structure in Pakistan:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

6. b. Organizational Hierarchy Chart:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Assistant Head Cashier

Peon, Guards etc

1. NBP Premium Aamdani (Monthly Income Scheme):

NBP Saibaan (Open the Door to Your Dream Home)

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

6. Investor Advantage (Financing Facility for Stock Investors):

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

8. NBP Karobar (Mera Apna Karobar):

10. NBP PAK Remit:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

11. Protection Shield (Personal Accident Insurance):

Allied Bank Limited 13

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Atlas Bank Habib Bank Limited Saudi Pak Bank Limited

6. f. Brief Introduction of all the departments:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

6. g. Comments on organizational structure:

7. a. Brief Introduction of the Branch:

All other staff

7. b. Starting & Ending Dates of Internship:

Starting Date: Ending Date:

7. c. Training Departments & Duration:

Detailed description of the tasks assigned to me during my Internship:

1. Account Opening Department 2. Clearing Department 3. Remittance Department

1. Account Opening Department:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

20.00% 15.00% 10.00% Net Profit Margin 5.00% 0.00%

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Gross Spread Ratio

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Non Interest Income to Total Income Ratio

Year 2010 1309339305

Year 2011 1153480100

Year 2012 1038018467

Working of Total Equity: Total Equity

Description Share capital Reserves Un appropriated profit Total Equity

2012 18500114 28818528 68715995 116034637

2011 16818286 26206507 69712113 112736906

2010 13454629 25129425 67103611 105687665

Return on Total Equity

Year 2010 Year 2011 Year 2012

9.98 Working of Total Equity: Description Total Equity Graphical Representation:

Total Equity 2012 116034637

Debt / Equity Ratio

0.633 Graphical Representation:

Advances / Deposits Ratio

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan.

115,657,025 30,743,368 23,051,171 301,078.498 478,886,775 54,026,725 27,620,697 6,954,228 1,038,018,46 7

131,843,291 28,069,897 44,360,727 319,527,254 527,109,209 66,469,884 28,126,754 7,973,084 1,153,480,10 0