CHAPTER - 1

INTRODUCTION OF STUDY
Background of study As part of the academic requirement for completing BBA (Hons) (Finance)

Bachelor of Business Administration. The students are required to under go two months of internship with an organization. The internship is to serve the purpose of acquainting the students with the practice of knowledge of the discipline of banking administration. This report is about National Bank of Pakistan. NBP was established in 1949 and since then, it has expanded its network, becoming the largest commercial Bank of the country. It offers different products of services to its customers. Purpose of the study The main purpose of the study in hand is together relevant information to compile internship report on National Bank of Pakistan. To observe, analyze and interpret data completely and in a useful manner. 1. To work practically in an organization. 2. To develop interpersonal communication. Scope of Study As an internee in National Bank of Pakistan the main focus of my study research was on general banking procedure in one of the branches of NBP. These operations include remittances, deposits, advances, foreign exchange, account opening, ATM, dispatch and clearing departments. Similarly different aspects of the overall of NBP are also covered in this report.

Methodology of Study The report is based on my two months internship program in National Bank of Pakistan. The methodology reported for collection of data is primary as well as secondary data. The biggest source of information is my personal observation while working with staff and having discussion with them. Formally arrange interviews and discussion also helped me in this regards. 1. Primary Data: Personal observation Interviews of staff 2. Secondary Data: Manuals Annual reports Internet

CHAPTER - 2 INTRODUCTION OF NATIONAL BANK OF PAKISTAN

Golden History of National Bank Pakistan In 1949 (September) U.K (United Kingdom). Devalued its currency, India followed suit but Pakistan did not. India said we had contravened the agreement of keeping both currencies at par. We said we had not done that, India had done it arbitrarily without consulting us. On October 3, 1949 the two central banks were to announce the new par value of both currencies but India denied a day earlier. India also froze our trade - balance surplus that is still an unsettled dispute. India also withdraws the Marwari merchants who were employed annually for movement of jute crop by financing it. There being no jute industry, prices fell sharply, foreign banks and foreign merchants stood aside and an agrarian unrest was threatening. Two Ordinances were, therefore, issued 1. Jute Board Establishment Ordinance & 2. NBP Ordinance dated 08.11.1949 National Bank of Pakistan was established on November 9, 1949 under the National Bank of Pakistan Ordinance 1949 in order to cope with the crisis conditions which were developed after trade deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank was established with the objective to extend credit to the agriculture sector. The normal procedure of establishing a banking company under the Companies

Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of JUTE TRADE. The Bank commenced its operations from November 20, 1949 at six important jute centers in the East Pakistan and directed its resources in financing of jute crop. The Banks Karachi and Lahore offices were subsequently opened in December 1949. The nature of responsibilities of the Bank is different and unique from other banks/financial institutions. The Bank act as an agent of the State Bank of Pakistan for handling Provincial / Federal and Government Receipts and Payments on its behalf. Mr. Ghulam Farooq was chairman Jute Board and Mr. Mumtaz Hassan was chairman NBP. Until June 1950, NBP remained exclusively in jute operations, thereafter-other commodities were also taken-up. After that Mr. Zahid Hussain, Governor SBP assumed additional charge also as chairman NBP's Board of Directors, and Mr. M.A. Muhajir became its first M.D. In 1952 NBP replaced Imperial Bank of India. Mr. Mumtaz Hassan as Acting Governor of SBP negotiated this arrangement. In 1962 when Mr. Mumtaz Hassan became MD (He had already served NBP for 10 years as its Chairman of government Director), the number of branches had increased from 6 to 239 and deposits from Rs.5 crore (50 million) to 106 crore (one bn & 60 mln), profit from 3 million (3 Lac) to 21 million (2.1. crore) and the staff increased from 380 to 7091, as compared to 1949-50. In Dec. 1966 its 600th branch was opened raising the deposits to 2.31 bn. and staff to 14, 963. Up to 1965, the shareholders had received 225% of their original investment. The Bank has also played an important role in financing the countrys growing trade, which has expended through the years as diversification took place. Today the Bank finances import/export business to the tune of more than Rs.70 Billion, whereas in 1960 financing under this head was only Rs. 2 Billion.

The field is being de-layered to improve customer services and enable faster decision-making. As a result of this de-layering zones have been eliminated and the numbers of Regions have been increased. Organizational hierarchy at the regional level has been restructured and operational and business activities have been completely separated. This separation will improve communication, decision-making and promote teamwork. For the fourth consecutive year, the Bank is recognized as the best Bank in Pakistan for the year 2004 by the prestigious periodical. The Banker UK (a subsidiary of Financial Times Group). Were expanding horizons, reaching out, being there and bringing something for everyone. After all, we are The Nations Bank PRESIDENT MESSAGE It gives me great pleasure to announce that National Bank of Pakistan is gearing up to the challenges faced by the domestic banking industry due to innovations and advances in the international banking world, which is the consequence of globalization. The bank wishes to effectively utilize the financial assistance being extended by the Government of Pakistan for banking sector reforms aimed at reducing operating costs and improving profitability. National Bank of Pakistan is distinct from other banks in that it has a non profit and service oriented motive, which has manifested itself in the area of salary deposits of government employees and payment of utility bills. The bank renders both of these services across the country reaching as far as the remotest regions; from our northern borders to the Arabian Sea. These services do not contribute towards the earnings of the bank; rather they put pressure on our resources. Nevertheless, we are committed to serving small savers and the general public of
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the country. National Bank is everyones and does not only serve corporate customers. By extending and targeting our research to improve bank earnings, through customer focus of our commercial and corporate branches, and by enhanced efforts towards the development of human capital, we shall very soon transform the bank from a bureaucratic organization to a fast paced, modern, and competitive bank. In conclusion, I firmly believe that we have the vision, which will enable us to achieve even better results, safeguard the interest of our customers and to assist us in our march towards progress and prosperity in future. QAMAR HUSSAIN Chairman & President. VISION STATEMENT: To be recognized as a leader and a brand synonymous with trust, highest standards of service quality, international best practices and social responsibility. MISSION STATEMENT: NBP will aspire to the values that make NBP truly the Nations Bank, by: Institutionalizing a merit & performance culture. Creating a distinctive brand identity by providing Adopting the best International Management Making Shareholders values. Discharging our responsibility as a good

the highest standard of services. practices. CORE VALUES: culture. Highest standard of integrity. Institutionalizing teamwork & performance

corporate citizen of Pakistan & in countries where we operate.

Excellence in service. Advancement of skills for tomorrow challenges. Awareness of social & community response. Value creation for all shareholders.

GOALS: To enhance profitability & maximization of NBP share through increasing leverage of existing customer base & diversified range of products. Board Of Directors The board of directors is the supreme governing body of National Bank of Pakistan. It comprises of a government representative, Pakistan Banking Council Nominee, Nominee of corporate sector and three directors from National Bank of Pakistan.

QAMAR HUSSAIN (CHAIR PERSON AND PRESIDENT)

TARIQ KARAMI
BASHIR (DIRECTOR)

Mrs HANIYA SHAHID NASEEM

(DIRECTOR)

MsNAZRAT
(DIRECTOR)

EKHLAQUE AHMED (DIRECTOR)

IBRAR A. MUMTAZ (DIRECTOR)

KOUSER HAMEED (DIRECTOR)

M..AYUB KHAN (DIRECTOR)

SIKANDAR HAYAT (DIRECTOR)

M.ARSHAD (DIRECTOR)

Senior Management: Masood Karim Sheikh Shahid Anwar Khan Dr. Asif A. Brohi Imam Bakhsh Baloch Ziaullah Khan Dr. Mirza Abrar Baig Amer Siddiqui Muhammad Nusrat Vohra Amim Akhtar Ekhlaq Ahmed Tajammal Hussain Bokharee Mrs. Khurshid Maqsood Ali Tahir Yaqoob Anwar Ahmed Meenai Naeem Syed Aamir Sattar Atif Hassan Khan SEVP & Group Chief, Corporate & Investment Banking Group SEVP & Group Chief, Credit Management Group SEVP & Group Chief, Operations Group SEVP & Group Chief, Audit & Inspection Group SEVP & Group Chief, Compliance Group SEVP & Group Chief, Human Resources Management & Administration Group SEVP & Group Chief, Commercial & Retail Banking Group SEVP & Group Chief, Treasury Management Group EVP & PSO to the President EVP & Secretary Board of Directors EVP/Divisional Head, Special Assets Management Group EVP & Divisional Head Employee Benefits, Disbursements & Trustee Division EVP & Group Chief, Overseas Coordination & Management Group EVP & Divisional Head, Islamic Banking EVP & Head, Core Banking Application, PMO Financial Controller & Divisional Head, Financial Control Division Group Chief (A), Information Technology Group

ORGANIZATIONAL HIERARCHY
PRESIDENT SENIOR VICE EXECUTIVE PRESIDENT (SVEP) EXECUTIVE VICE PRESIDENT (EVP) SENIOR VICE PRESIDENT (SVP) VICE PRESIDENT (VP) ASSISTANT VICE PRESIDENT (AVP) OFFICER GRADE III OFFICER GRADE II OFFICER GRADE I

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Objectives of NBP Objectives are ends towards which an enterprise activity is aimed. The purpose of business is production and marketing of economic goods and services but to accomplish these objectives to a number of enterprise objectives may be necessary. National bank of Pakistan has certain objectives. These objectives are (1) Advancing loans: One of the main objectives of NBP is advancing loans to industrialists and traders against security of stock, debentures or other securities (2) Accept deposits: Bank provides deposit facility to its customers. The types of deposits are Profit and loss saving accounts Fixed account Current account Basic banking account (bba account) PLS Term deposit account (3) Remitting of funds: The bank provides the facility to its customers remitting large amounts of money in the form of bank Drafts, Telegraphic Transfer, Mail Transfer to where ever the customers want. (4) Sale of promissory notes: To sell and realize the proceeds of sale of any promissory notes, debentures, stock receipts, bonds, shares etc. (5) Selling and realizing property of bank claims: To manage sell and realize all property whether moveable or immoveable which may come in any way of the bank in satisfaction of its claim. (6) Investment or underwriting of stocks:

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To invest the funds of the bank in or the underwriting of any of stocks, funds, shares securities, debentures, bonds or scripts or other securities for money issued by any public limited companies and to convert them into money when required.

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Branches & Centers Branches: Currently more than 1500 branches are working in over all Pakistan in different cities and regions including all major and minor cities of Pakistan. Online Branches: Following are the online branches that are currently working in Pakistan. Karachi Islamabad Rawalpindi Gujar Khan Sialkot Gujranwala Sheikhupura Hyderabad Quetta Lahore Burewala Multan Muzaffarabad Faisalabad Peshawar Kohat Mirpur Gujrat Abootabad Bhawalpur DG Khan DI Khan Jhang Ladkana Mardan Sahiwal Sargodha Sucker Jhelum Wah Cantt

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Swift Centers SWIFT is a main center that is interconnecting all branches with each other. SWIFT channels mainly do the international transactions of NBP. These transactions include Foreign Exchange Dealings, Foreign Telegraphic Transfer and Letter of Credit.

NBP SWIFT Local Centers

City

FAISALABAD GUJRANWALA HYDERABAD ISLAMABAD LAHORE MULTAN PESHAWAR QUETTA RAWALPINDI SIALKOT MIRPUR MUZAFFARABAD KARACHI

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NBP SWIFT International Centers City K.S.ARABIA KYRGYZ Rep ASHKHABAD CHAINA SOUTH KOREA BANGLA DESH BISHKEK FRANKFURT HONG KONG KABUL MANAMA NEW YORK PARIS SEOUL TOKYO KAZAKHASTAN Branch name Regional Office Saudi Arabia National Bank Of Pakistan, Bishkek National Bank Of Pakistan Regional Office, Beijing National bank of Pakistan ,Seoul Branch National Bank of Pakistan, Chitta gong Branch National Bank Of Pakistan, Bishkek Branch National Bank Of Pakistan, Frankfurt National Bank Of Pakistan, Hong Kong National Bank Of Pakistan, Kabul National Bank Of Pakistan, Bahrain National Bank Of Pakistan, USA National Bank Of Pakistan, France National Bank Of Pakistan, Seoul Branch Korea National Bank Of Pakistan, Tokyo Japan Regional Office KHAZAKHSTAN

Through these channels NBP Super Market is sending messages for Letter of Credit, foreign trade etc. because in every branch SWIFT system is not available because of IT problems.

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Therefore other branches send application letters to local branches in which SWIFT system is available and these local branches send message to international branches for further transactions. Different Schemes Conducted By NBP National Bank of Pakistan always makes efforts to improve its goodwill in the general public. It introduces different kind of schemes time to time. The most popular schemes conducted by NBP are as under: Hajj Mubarak Scheme NBP Advance Salary Scheme Fund Management Scheme

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Hajj Mubarak Scheme For the convenience of a person with a limited income who desires to perform Hajj, Hajj Mubarak Scheme is introduced. Moreover, National Bank of Pakistan processes the Hajj applications of thousands of people successfully more than any other bank in Pakistan. NBP Advance Salary Scheme Do you need urgent funds? If yes then head to National Bank of Pakistan and avail NBP Advance Salary Scheme, which allow you to draw twenty months salary in one go. This facility is available to permanent employees of the:

Federal and Provincial governments Semi-governments, autonomous, semi-

autonomous, local bodies, and government corporations

Other corporations approved by NBP

No guarantee, collaterals, or insurance is required to avail this scheme. NBP gives the facility to repay the excessive amount within 1 to 60 months. The procedure is very easy, just fill the application form and choice between 1 to 60 months and take your NBP. NBP received 20% markup on this loan. It advances twenty salaries at once. Fund Management Scheme This scheme is offered to corporate under customer and is aimed at providing better rate of return up to 15% per annum. One of the objectives of the scheme is to develop the secondary market for government securities.

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Functions of NBP The National Bank of Pakistan performs two types of function. It acts as an ordinary commercial bank, and at places where there are no branches of State Bank of Pakistan it represents Pakistan, that is why it cannot be privatized. As a commercial bank it performs the following functions. Accepting of deposits of money on current Borrowing money and arranging finance from Advancing and lending money to its clients. Financing of projects including technical

account, saving, term deposit and other profit and loss sharing accounts. other banks.

assistance, project appraisal through long term/short term loans. securities etc. rice. custody. local authorities. of shares, bonds. Transacting guarantees and indemnity business. Undertaking and executing trusts. Generating, undertaking, promoting etc. of issue Carrying on agency business of any description other than managing agent on behalf of clients, including government and Receiving of bonds, scripts, valuable etc. for safe Foreign exchange business. Financing of seasonal crops like cotton, wheat, Buying, selling, dealing and discounting of bills of exchange, promissory notes, drafts, bill of lading, other instruments of

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Making investments in other banking companies. Joint venturing with foreign dealers, agents and Participating Utility services. Providing Hajj services to intending Hajjis. Agent to State Bank of Pakistan for collecting. Payment of pension on behalf of provincial and Treasury business. Gold finances. World Bank and Asian

companies for its representation abroad. Development bank's lines of credit.

central governments.

Functions of NBP as A Representative of State Bank of Pakistan customers. Paying insurance premium, rent or other obligations of the customers. Collecting interests due, dividend pensions and Transferring of money from place to place. Acting as an executor, trustees for the customers. Providing safe custody and jewelry documents or Issuing of travelers cheques and letter of credit Purchasing shares for the customers.
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Collection of cheques and bill of exchange for its

other sums due to customers.

securities.

to give credit facilities for travel.

 customers. advice to customers. banks.

Accepting bills of exchange on behalf of Undertaking foreign exchange business. Furnishing trade information and tendering Formulating operation policy guidelines for the Laying down performance criteria for banks and Evaluating the performance of the banks in the Determining the areas of coordination of the Formulating schemes under section of the act. Making recommendations to the federal

taking steps for ensuring their observance. context of operational guidelines issued to the banks. banks. executive board. Analyzing and appraising financial statement including balance sheets and profit and loss accounts of banks and appointment of auditors of the bank. Conducting such surveys, inquiries and appraisals Exercising and performing such powers and as may be necessary for the purpose of this act. functions of the federal government under the act and such other functions as the federal government may assign to it. Establishing a research department or conduct banking research and in particular study overseas banking operation and problems of the agricultural financing.

government for the appointment of the president and members of the

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 improving bank services.

Establishing a central training institution for Coordinating the planning of the operations of

nationalized commercial banks, and exercising general overall checks on the cost of their operations.

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CHAPTER - 3

SERVICES OF NATIONAL BANK OF PAKISTAN

Service is an identifiable, intangible activity that is the main object of a transaction designed to provide want satisfaction to customers. International Banking National Bank of Pakistan is at the forefront of international banking in Pakistan, which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is: To effectively manage NBPs exposure to foreign Manage the monetary aspect of NBPs

and domestic correspondence relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the banks profitability and revenues Generation of incremental trade-finance business

NBP offers: The lowest rates on exports and other

international banking products international banking DEMAND DRAFTS Access to different local commercial banks in

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If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch Mail Transfers Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market. Pay Order NBP provides another reason to transfer your money using our facilities. Our pay orders are a secure and easy way to move your money from one place to another. And, as usual, our charges for this service are extremely competitive. Traveler's Cheques Negotiability: Validity: Availability: Encashment: Limitation: Safety: Pak Rupees Travelers Cheques are a negotiable instrument There is no restriction on the period of validity At 700 branches of NBP all over the country At all 400 branches of NBP No limit on purchase NBP Travelers Cheques are the safest way to carry out money

Letter Of Credit NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.

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Commercial Finance Us help make your dreams become a reality Our dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customers best resource in making NBPs products and services work for them. Foreign Remittances To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:

Increase home remittances through the banking

system. Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries. New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides United National Bank (the joint venture between NBP and UBL in UK)., and Bank Al-Jazira, Saudi Arabia. Zero Tariffs: NBP is providing home remittance Strict monitoring of the system is done to ensure

services without any charges. the highest possible security.

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Special courier services are hired for expeditious delivery of home remittances to the beneficiaries. Swift System The SWIFT system (Society for World-wide Interbank Financial

Telecommunications) has been introduced for speedy services in the area of home remittances. The system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-PKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs. Short Term Investments NBP now offers excellent rates of profit on all its short-term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBPs rates of profit are extremely attractive, along with the security and service only NBP can provide. Equity Investments NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following:

Investment into the capital market Introduction of capital market accounts (under

process)
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NBPs involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders N.I.D.A National Income Daily Account The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. Trade Finance Other Business Loans Agricultural finance NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World. Agricultural Finance Services: I Feed the World program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production. Agricultural Credit: The agricultural financing strategy of NBP is aimed at three main objectives:

Providing reliable infrastructure for agricultural Help farmers utilize funds efficiently to further

customers.

develop and achieve better production.

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Provide farmers an integrated package of credit

with supplies of essential inputs, technical knowledge, and supervision of farming. Agricultural Credit (Medium Term):

Production and development. Watercourse improvement. Wells. Farm power. Development loans for tea plantation. Fencing. Solar energy. Equipment for sprinklers.

Farm Credit: NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.

Operating loans. Land improvement loans. Equipment loans for purchase of tractors, farm Livestock loans for the purchase, care, and

implements or any other equipment.

feeding of livestock.

Production Loans:

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Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme. Corporate Finance: Working Capital and Short Term Loans: NBP specializes in providing Project Finance Export Refinance to exporters Pre-shipment and Post-shipment financing to exporters Running finance Cash Finance Small Finance Discounting & Bills Purchased Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans. Medium term loans and Capital Expenditure Financing: NBP provides financing for its clients capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients vision. This type of long term financing proves the banks belief in its client's capabilities, and its commitment to the country. Loan Structuring and Syndication: National Banks leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction. Cash Management Services:

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With National Banks Cash Management Services (in process of being set up), the customers sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their companys total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, youll be provided everything, which takes to manage your cash flow more accurately.

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Lockers service: National bank of Pakistan also provides lockers facility in the country. The lockers issued only to the depositors. No lockers are issued to any unknown person. The dual control system is used for lockers. The officer has master key to apply on the locker but he cannot open the locker of any person. The locker holder provides the bank has specimen signature. Whenever the locker holders come to open the locker, his signatures are verified by the officer and then will be able to open his locker. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his heir as mentioned in his will or and his belongings are given to them and the locker is closed.

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CHAPTER - 4

ORGANIZATIONAL REVIEW
Work Done By Me: During my stay in National Bank of Pakistan, saddar road branch Peshawar. I found it as among one of the best bank in Pakistan. As an internee, I enjoy working their, .NBP has a very cooperative staff .I worked there in very congenial and supportive environment. The staff over there is always being ready to guide about bank and its systems. According to its financial statements it is on a way to progress. I joined National Bank of Pakistan, saddar road branch Peshawar on 17th June, 2011.On my first day Mr. Waqar Ahmed Awan introduced me about the functioning of the branch and the staff. He told me that all departments are very important for banking functions. During the Two Months of my internship, I worked in different sections of the branch and did the maximum practice of banking system details of which is as under: Departments In NBP 1. Foreign Exchange department 2. Credit & Advance department 3. Bills section/department 4. Remittance section/ department 5. Deposit section/ department 6. Govt. section/ department 7. Cash section/ department 8. Establishment /administration section/ department

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ORGANOGRAM OF NBP
NATIONAL BANK OF PAKISTAN

Compliance Officer

Manager

Operations Manager

Foreign Exchange Deptt

CREDIT SECTION / DEPARTMENT

Credit (CAD Officer)

Bills Section/Deptt

Remittance Section/Deptt

Deposit Section/Deptt

LOAN OFFICER

Govt Section/Deptt

Cash Section/Deptt

Estab/Admn Section/Deptt

Each Department is headed by Departmental Head with a number of staff reporting to them as per volume of the work

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ORGANOGRAM OF FOREX DEPTT

INCHARGE

DEPOSIT SECTION

IMPORT

REMMITANCE S

1. Foreign Currency Saving/Current A/C Punching and Maintenance. 2. Deduction of Service Charges. 3. Opening/Closing of F.C Accounts and issuance of cheque Books. 4. Foreign Exchange relevant Returns. 5. Western Union Payment. 6. up-date Record of Foreign Exchange Rates. 7. FE inward remittance 8. FDDP

Overall Incharge of Foreign Exchange Department and responsible for all affairs of Foreign exchange. 1. Checking and ensuring effectiveness of controls. 2. Ensure satisfactory services to Customers. 3. Review of daily activity and daily transaction. 4. Import L/C opening lodgment and retirement. 5. Opening of Foreign Currency Account approval. 6...Rectification of Audit Irregularities. 7. Checking of all relevant daybooks 8. Daily activity report of FC Deposits. 9. Sale purchase of F.C Notes 10. T.Cs Encashment/USD bonds and their profit payment.. 11. Issuance /Authentication of Form E. 12.NOSTRO a/c Reconciliation. 13.Monthly mismatch of FE 25 Deposit. 14.Relevant returns.

1. Outward Remittances. 2. Daily FET Preparation and Reporting to TMG H.O by Fax. 3. Foreign Bills Collection of Cheques/Instruments. 4. Local US$ Clearing & Settlement. 5. Maintenanace of Assignment A/cs and their balancing with NBP New York and SBP. 6. Export and maintenance of relevant books/other records. 7. Processing /Payment of Freight subsidiary claims. 8. Reconciliation of Assignment A/cs. 9.SBP Summary Statement.

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Foreign Exchange Department In this department I work for one week with Mr. Waqar ahmed Awan. I also deal the Western Union Money Transfer activities in this department. It has specific software which link with the Head office of NBP. For receiving money the ten digits code number is require, the name of receiver & sender is also require, along with this the NIC No of the receiver is necessary. The amount transfer is also entering & it provides the complete information. The detail of the process is print out. It has three parts on for the customer, other for the in charge of department & the 3rd is for the purpose of sending to the head office of NBP. All the activities perform in this department are mention in the above chart of department. Credit and Advances Department: It may be defined as: The sale of goods and services and money claims in the present in exchange for a promise to pay in future. The most important activity of the bank is the granting of credit to the customers. NBP provides short term long terms financing for domestic and international trade. The policies made by central office of the cash can be amended on the basis of the rules and regulation, economic risk of each country board of directors and committee of the NBP made this type of decisions and informed about these decisions to the branch managers. The in charge of this department is Mr. Naveed . They are working under the control of manager only & free of the control of operational manager. In this department I work two weeks I only perform the duty of President Rozgar Scheme and Gold loan. The requirements & procedure of Gold loan is following.

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Gold Loan Service First of all the person who need the money from bank as in the form of credit the NBP provide this facility under the Gold loan for this he need to get the ECIB (Electronic Customer Investigation Bureau) through it checked that the customer may or may not borrow money from any other bank of Pakistan. It is software that is providing to all banks by SBP. After this step the NADRA verification of the borrower NIC is made. And it is also the necessary step of Gold loan requirements that the current account will be open in the account opening department, for the purpose of deposit of insurance and installments to the bank. When it is clear than the approval is made. The borrower is send to the ANDARSHER for the purpose of weighting of Gold. The bank made a contract with the Goldsmith that he performed the duty on behalf of NBP. He weight and valued the Gold and write a receipt for bank. The bank receives the documents and Gold. The payment is made to he borrower and the gold is kept in the locker of bank. Under the authority of Chief Cashier. The Gold loan is the demand finance. The form is containing of the following requirements. Proposal of Rs-------------. Terms & conditions. Name Limit Purpose Security Date of expiry Date of final adjustments Date of markup Mode of repayment Documents President's Rozgar Scheme

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If you are aged between 18 and 45 years, you could be eligible for easy financing for self employment in the categories below: NBP Karobar Utility Store . NBP Karobar Mobile Utility Store. NBP Karobar Mobile General Store. NBP Karobar Transport. NBP Karobar PCO. NBP Karobar Tele-Centre. In this department only provide the transport facility as Rickshaw. The requirements & procedures for the product is the following. ECIB, NADRA verification of NIC, current account. Application form, legal documents, Authority letter, Sanction letter, Delivery order, purchase order, registration, insurance. Repayment schedule, To Whom It May Concern, credit approval memo, internal verification of applicant& witnesses. Other services of this department: This department also provides the service of House Building Finance, Car finance, computer finance to the employees of NBP only. And Advance salary is providing to those departments employees which have account with NBP. Account Opening Department: In this department, I gain the practical knowledge about opening account. This department deals with opening current and saving account for its customers and all matters regarding thereof. The customers opening current and saving accounts can be categorized as following.

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Individual. Firm. Company. Trust. Staff. Others.

Opening Accounts In order to open an account, first of all the customers have to a verified NIC from NADRA. The requirements of the account opening form are type of account, nature of account, currency, Next of kin, personal information, signatures etc. Types of accounts Following types of accounts are open in NBP

Saving account Current or demand account Fixed account

Saving account (PLS) This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship. Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. Saving accounts with the banking sector represent a very small proportion of total deposits.

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Current or demand account These are those deposits, which can be drawn by the depositor at anytime by presenting a cheque to the bank. People deposit their money in this account they gave a ready command on their account in developed and under developed countries of the world, a very significant part of money is kept under current or demand account. Fixed account Fixed accounts are those, which are deposited for a fixed period of time and are repayable after the expiry of stipulated time to the customers. Those people who have surplus funds and want to have save investments deposit the amount in the fixed account. The rate of interest given to depositor varies with the length of deposit, i.e. it is higher for longer period and lowers for shorter period. Issuance of Cheque Book After opening the account, a cheque book is given to the customer to sign upon which the number of cheque book issued and the name of the customer is written. Bank issues a cheque book against requisition. A cheque book may be of (PLS), 25 & 50 or 100 leave (current A/C). A cheque book register is maintained by the office. In this register, the cheque book inventory, cheque books issue is recorded. Issuance of New Cheque Book to Old Customer The accountholders request for the new chequebook by presenting the requisition slips along with the authority letter to the concerned office. His signatures are verified before giving him a new chequebook. The presence of the accountholders

38

is compulsory to get a new chequebook. But if he sends a third person to get his chequebook then the procedure is as follows; the accountholders. The accountholders verify the signature of the The bank officer gets the signature of that third third person on that authority letter.

An authority letter is given to the third party by

person to confirm whether he is the same to whom the accountholder has sent.

The bank issues the new cheques book and authority letter is kept by the bank. Clearing Department In this department, I have worked for two weeks. Main branch receives the cheques from all of its branches and makes the list of these cheques again. Main branch sends these cheques to the state bank of Pakistan where a clearinghouse exits. In this clearinghouse the representatives receive their cheques and go back to their bank's main branch. Then the main branch sends these cheques to their relevant branches where the validity of these cheques is verified and the accounts of the relevant clients are affected. The major function of Clearing Department is to receive the cheques, which are drawn on some other bank. The customer can get the money in his account at NBP, from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. function. Stamping Bank charges some commission for this

39

Early in the morning the cheques are received and than arrange in different sets. All cheques are stamped by a number of different stamps, which is use for specific purpose. The original cheque will be marked with two stamps. Mostly used stamps are:

National bank of Pakistan Clearing Stamp

At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House. Remittances Department Remittance is the monitory transfer from one place to another place or from one country to another country to fulfill the requirements of the customers by the order of the customer. I worked in this department for one week. In this department internees are advised only to observe the working of transfer of money from one place to another place of the country by the above modes of transferring money. Issuing a bank draft it is necessary that the draft should be free from alternations. All the details must be written clearly in ink. After issuance a demand draft it is handed over to the applicant and its advice containing the particulars of the draft is sent to drawer branch with its necessary information and payment of the draft is making on its presentation. I learn in this department also the basic of the following instruments: Payment order (p/o) Demand draft (DD) Telegraphic transfer (TT) Mail transfer (MT)

40

Pay Order

It is an instrument, which is payable in demand .Pay order is also called the bankers cheque drawn upon the issuing bank itself. It is not negotiable and therefore, bankers tend to cross the instrument Payees account only to avoid the possibility of dealing with instruments with forged endorsement. The pay order is issued favoring individuals, commercial concerns, and government departments. On the presentation of pay order, the bank is liable to pay the amount to the customer. Demand Draft If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBPs Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch. Telegraphic Transfer It is the message, which is sent from one branch to another on the order of payer to payee through wire. It is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiarys bank account. As such remitting office is not required to issue any instrument payment to the remitter for delivery to the beneficiary. Mail Transfer It is the same like TT, but in this type, the message is sent through mail rather than telex. The procedure is same as TT, but the advice is sent through mail rather than wired.

41

New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia. Zero Tariffs: NBP is providing home remittance Strict monitoring of the system is done to ensure Special courier services are hired for expeditious

services without any charges. the highest possible security.

delivery of home remittances to the beneficiaries.

Dispatch Department I worked in this department for six days. Department deals in receiving of all the posted documents. They receive the posted materials posted by other banks and institutions. Also mail their own documents to other organization. After receiving the documents it is recorded in the registered. ATM Department

42

I work in this department for three days .on the first day I fill the forms for those customers whose ATM card are expired and issue the reminders to those customers through their home address. The ATM is the separate department in the main branch Peshawar Cantt. It is operated by a single person. The NBP due to the fraud in ATM card operation ban the transaction with other banks and the ATM card of NBP not operative in those banks. They also cannot provide the facility of Credit Card because the people cannot repay their dues to the bank.

43

CHAPTER - 5

ANALYSIS OF FINANCIAL STATEMENTS (FOR THE YEAR 2011 & 2010)

Financial Analysis Financial analysis is an evaluation of a firms performance. The source of financial analysis is the financial statements & Director Reports. The main purpose of the financial analysis is to give a clear picture of the financial position by studying the relationship & comparison between the items in the statement. The financial statements are the balance sheet and income statement. The balance sheet summarizes the assets, liabilities and owners equity of a business at a point of time, and the income statement summarizes revenues and expenses of the over a particular period of time. Seven Years Performance of NBP at a Glance (Rs. In million)
Year Items Total assets Deposits Advances Investments Shareholders equity Pre-tax profit After-tax profit Earning per share (EPS) Return on assets (ROA) No of Branches No of employees 2010 762,193 591,907 340,677 210,787 70,907 28,060 19,033 23.34 2.49% 1,243 14,079 2009 2008 2007 2006 2005 2004 415,089 349,617 170,319 71,759 11,959 3,016 1,149 3.08 0.8% 1,245 15,163

635,133 577,719 553,23 1 501,872 463,427 465,57 2 316,110 268,839 220,79 4 139,947 156,985 149,35 0 53,045 37,636 24,900 26,311 19,056 11,978 17,022 12,709 6,195 20.88 17.92 10.48 4.3% 3.4% 2.4% 1,250 1,242 1,226 14,019 13,824 13,745

468,972 432,80 3 395,492 362,86 6 161,266 140,54 7 166,196 143,52 5 18,134 14,279 9,009 6,045 4,198 2,253 8.53 5.49 2.0% 1.4% 1,199 1,204 13,272 12,195

44

On the basis of the view of financial experts I also study and explain the financial performance of the NBP of the last seven years. (2004 to 2010). The above table shows the performance of NBP in the last seven years. The total assets in 2004 are 415,089millions and that increase to 553,231millions in 2007 and also show increasing trend in 2010 is become 762,193 millions. Similarly the deposits increase up to 2007 and than slightly decline in2008, and than start increasing later from 2009 to 2010. The advances are decrease from 2004 to 2005 and than start increasing up to 2010. The investment is fluctuating in the seven years period. The shareholder equity is increasing through the period from 2004 11,959millions to 2010 70,907millions. The pre-tax profit and after- tax profit is increasing through the period. The earning per share is move upward from2004 to 2010. The return on assets is also increase up to 2009 and than decline in 2010. The number of branches and the number of employees is decrease from 2004 to 2005 and start increasing up to 2010.

45

NATIONAL BANK OF PAKISTAN BALANCE SHEET AS AT 31STDECEMBER, 2011& 2010

2011 (Rupees in 000s) ASSETS Cash &Balance with other Banks Lending to Financial Institution investment Advance Operating Fixed Assets Deferred tax assets Other Assets TOTAL ASSETS LIABILITIES Bills Payables 10,605,663 Borrowings Deposits & other accounts Sub-ordinated loans Liabilities against assets subject to finance lease Deferred tax liabilities-net Other liabilities TOATAL LIAILITIES NET ASSETS 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 25,922,979 30,994,965
762,193,593

2010 (Rupees in 000s) 78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 9,681,974 27,113,698
635,132,711

7,061,902 10,886,063 591,907,435 33,554 5,097,831 30,869,154 645,855,939 116,337,654

10,605,663 11,704,079 501,872,243 13,235 2,387,073 26,596,300 553,178,593 81,954,118

PRESENTED BY
Share capital Reserves Unappropriated profit Surplus on revaluation of assets
8,154.319 15,772,124 45,344,188 69,270,631 47,067,023 116,337,654 7,090,712 13,879,260 32,074,677 53,044,649 28,909,669 81,954,118

46

NATIONAL BANK OF PAKISTAN PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECENBER 2011& 2010
2011 Rupees in 000's 50,569,481 16,940,011 33,629,470 4,723,084 (40,084) 39,899 4,722,735 28,906,735 2010 Rupees in 000's 44,100,934 13,947,218 30,153,716 30,075,723 (709,461) 5,284 2,371,546 27,782,170

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

Net mark-up/interest income

Provision against non-performing loans and advance Reversal of provision for diminution in the value of investments Bad debts written off directly

Net mark-up/ interest income after provision NON-MARK-UP/INTEREST INCOME Fee, Commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale and redemption of securities Unrealized loss on revaluation of investment classified as held-for-trading Other income Total non-markup/interest income NON- MARK-UP/INTEREST EXPENSES
Administrative Expenses Other provision/write offs Other charges

6,781.683 3,263,246 1,042,827 2,341,690 (31,964) 147,363 13,544,845 42,544,845 14,205,911 168,027 17,141 14,391,079 28,060,501 8,311,500 391,497 323,731 9,026,728 19,033,728 32,074,677 39,007 51,147,457 23.34 23.34

6,144,628 2,891,755 1,333,840 1,169,515 (4,464) 627,618 12,162,892 39,945,062 13,443,441 (17,283) 208,327 13,634,485 26,310,577 8,695,598 530,652 61,981 9,288,231 17,022,346 19,372,523 41,060 36,435,929 20.88 20.88

Total non mark-up/interest expenses

Extra ordinary items

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

Basic earning per share Diluted earning per share

47

HORIZONTAL ANALYSIS:
Profit & Loss Account Balance Sheet

The horizontal analysis shows the comparison between the current and past year performance of the organization by comparing the Balance sheet ant profit and loss statement items. The formula use for horizontal analysis as follow.

VERTICAL ANALYSIS: Profit & Loss Account Balance Sheet In vertical analysis all the items of balance sheet and profit and loss statement are divided by the total assets and total equity and liabilities and the revenue or sales in balance sheet and profit and loss statement respectively.

48

National Bank of Pakistan HORIZANTAL ANALYSIS BALANCE SHEET AS AT 31STDECEMBER, 2011& 2010
ASSETS
Cash &Balance with other Banks Balance with other Banks Lending to Financial Institution Investment Advances Operating Fixed Assets Deferred tax assets Other Assets 2011 Rupees in 000s 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 25,922,979 30,994,965 2010 Rupees in 000s 78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 9,681,974 27,113,698 Increase/ decrease Rupees in 000s 16,248,022 (3,168,847) (1,548,132) 70,840,873 24,566,694 16,241,005 3,881,267 %age 20.67 (7.79) (6.72) 50.62 7.77 167.74 14.31

Total Assets

762,193,593

635,132,711

127,060,882

20.00

LIABILITIES
Bills Payables Borrowings Deposits & 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 10,605,663 11,704,079 501,872,243 13,235 2,387,073 26, 596,300 20,319 2,710,758 4,272,854 (3,543,761) (818,016) 90,035,192 (33.41) (6.98) 17.93 153.52 113.56 16.06

Total liabilities NET ASSETS

Share capital Reserves Unappropriated profit

645855939 116,337,654
8,154.319 15,772,124 45,344,188

553178593 81, 954,118

7, 090,712 13,879,260 32, 074, 677

92,677,346 34,383,536
1,063,607 1,892,864 13,269,511

16.75 41.95
15.00 13.63 41.37

69,270,631 Surplus on revaluation of Assets-net 116,337,654 47,067,023

53, 044, 649 28,909,469 81,954,118

16,225,982 18,157,554 34,383,536

30.58 62.80 41.95

49

NATIONAL BANK OF PAKISTAN HORIZONTAL ANALYSIS PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECENBER 2011& 2010

NATIONAL BANK OF PAKISTAN

2011 Rupees in 000's Mark-up return/interest earned Mark-up return/interest expensed Net mark-up/interest income Provision against non-performing Loans and advances Reversal of provision for diminution in the value of investments bad debt written off directly 50,569,481 16,940,011 33,629,470 4,723,084 (40,248) 39,899 2010 Rupees in 000's 44,100,934 13,947,218 30,153,716 3,075,723 (709,461) 5,284 Increase/ Decrease Rupees in 000s 6,468,547 2992793 3475754 1647361 (749709) 34615 Change in %age 14.66 21.46 11.52 53.56 (105.67) 655.09

Net mark-up/ interest income after provision Fee, commission and brokerage Income Dividend income Income from dealing in foreign currencies Gain on sale and redemption of Securities Unrealized loss on revaluation of investments classified as held for trading other income

4,722,735 28,906,735 6,781,683 3,263,246 1,042,827 2,341,690 (31,964) 147,363

2,371,546 27,782,170 6,144,628 2,891,755 1,333,840 1,169,515 (4,464) 627,618

2,351,189 1124565 637055 371491 (291013) 1172175 (36428) (480255)

99.14 4.04 10.36 12.84 (21.82) 100.22 (816.03) (76.52)

Total non-mark-up/interest expenses

NON MARK-UP /INTEREST EXPENCES Administrative expense Other provisions/write Other charges

13,544,845
42,451,580 14,205,911 168,027 17,141 --

12,162,892
39,945,062 13,443,441 (17,283) 208,327 -

1381953
2506518 762470 150744 (191,186) -

11.36
6.27 5.67 872.20 (91.77) -

Extra ordinary items

Profit before taxation

Taxation-Current -Prior years -Deferred

28,060,501
8,311,500 391,497 323,731 9,026,728

26,310,577
8,695,598 530,652 61,981 9,288,231

1749924
(384098) (139155) 261750 (261503)

6.65
(4.42) (26.22) 422.30 (2.81)

Profit after taxation

Unappropriated profit/(loss) brought forward Transfer from surplus on revaluation of fixed assets on account of incremental depreciation

19,033,773
32,074,677 39,007

17,022,346
19,372,523 41,060

2011427
12702154 (2053)

11.81
65.56 (5.00)

Profit available for appropriation

Basic earning per share

51,147,457
23.34

36,435,929
Rupees 20.88

14711528
2.46

40.37
11.78

50

VERTICAL ANALYSIS BALANCE SHEET AS AT 31STDECEMBER, 2011& 2010

2011 Rupees in 000s % 2010 Rupees in 000s 78,625,227 40,641,679 23,012,732 139,946,995 316,110,406 9,681,974 27,113,698 %

ASSETS
Cash &Balance with other Banks Balance with other Banks Lending to Financial Institution Investment Advances Operating Fixed Assets Deferred tax assets Other Assets 94,873,249 37,472,832 21,464,600 210,787,868 340,677,100 25,922,979 30,994,965 12.44 4.91 2.81 27.65 44.69 3.40 4.06 12.37 6.39 3.62 22.03 49.77 1.52 4.26

Total assets LIABILITIES

Bills Payables Borrowings Deposits & other accounts sub-ordinated loans Liabilities against assets subject To finance lease Deferred tax liabilities-net Other liabilities

762,193,593
7,061,902 10,886,063 591,907,435 33,554 5,097,831 30,869,154

100
0.92 1.42 77.65 4.40 0.66 4.05

635,132,711
10,605,663 11,704,079 501,872,243 13,235 2,387,073 26,596,300

100
1.66 1.84 79.01 2.08 0.37 4.18

Total liabilities NET ASSETS

Share capital Reserves Unappropriated profit

645855939 116,337,654
8,154.319 15,772,124 45,344,188

84.73 15.26
1.06 2.06 5.94

553178593 81,954,118
7,090,712 13,879,260 32,074,677

87.09 12.90
1.11 2.18 5.05

53,044,649

8. 69,270,631 47,067,023 116,337,654 9.08 6.17 15.26 53,044,649 28,909,669 81,954,118 8.35 4.55 12.90

Surplus on revaluation of Assets-net

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NATIONAL BANK OF PAKISTAN VERTICAL ANALYSIS ROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31st DECENBER 2011& 2010
2011 Rupees in 000's
Mark-up/ return/ interest earned Mark-up/ return/ interest expensed

% age
100 33.49 66.50 9.33 (0.07) 0.07 9.33 57.16

2010 Rupees in 000's

44,100,934 13,947,218 30,153,716 3,075,723 (709,461) 5,284 2,371,546 27,782,170 100 31.62 68.37 6.97 (1.60) 0.01 5.37 62.99

% age

Net-mark up/interest income

Provision against non-performing loans and advances Reversal of provision for diminution in the value of investments bad debt written off directly

50,569,481 16,940,011 33,629,470 4,723,084 (40,248) 39,899 4,722,735

Net-mark up/interest income after provision

NON MARK UP /INTEREST INCOME Fee, commission and brokerage Income Dividend income Income from dealing in foreign currencies Gain on sale and redemption of Securities Unrealized loss on revaluation of investments classified as held for trading other income

28,906,735

6,781,683 3,263,246 1,042,827 2,341,690 (31,964) 147,363 13,544,845 42,451,580 14,205,911 168,027 17,141 14,391,079 28,060,501 28,060,501 8,311,500 391,497 323,731 9,026,728 19,033,773

13.41 6.45 2.06 4.63 (0.06) 0.29 26.78 83.94 28.09 0.33 0.03 0.47 28.45 55.48 16.43 077 0.64 17.85 37.63

6,144,628 2,891,755 1,333,840 1,169,515 (4,464) 627,618 12,162,892 39,945,062 13,443,441 (17,283) 208,327 13,634,485 26,310,577 26,310,577 8,695,598 530,652 61,981 9,288,231 17,022,346

13.93 6.55 3.02 2.65 (0.01) 1.42 27.57 90.57 30.48 (0.03) 0.47 30.91 59.65 59.65 19.71 1.20 0.14 21.06 38.59

Total non mark-up/ interest

NON MARK-UP /INTEREST EXPENCES Administrative expense Other provisions/write offs/ (reversals) Other charges Total non mark-up / interest expenses Extra ordinary / unusual items PROFIT BEFORE TAXATION Taxation- current -prior years -deferred PROFIT AFTER TAXATION 17,022,346 38.59 Unappropriated profit brought forward 19,372,523 43.92 Transfer from surplus on revaluation

32,074,677 39,007

63.42 0.07

19,372,523 41,060

43.92 0.09

52

of fixed assets on account of incremental depreciation

Profit available for appropriation

Basic earning per share

51,147,457
23.34

101.14

36,435,929
20.88

82.61

RATIO ANALYSIS Financial analysis is the process of identifying the financial strengths and weakness of the firm by properly establishing relationship between the items of balance sheet and profit and loss statement, in order to make rational decision in keeping with the objective of the organization, for that purpose the management use analytical tools. To evaluate the financial condition and performance of the business entity. The financial ratio is a number that expresses the value of one financial variable relative to another. Put more simply, a financial ratio is the result you get when you divide one financial number by another. Calculating an individual ratio is simple, but each ratio must be analyzed carefully to effectively measure a firms performance. It is important way to state meaningful relationship between two components of a financial statement. Ratios are guides or shortcuts that are useful in evaluating a companys financial position and operations and making comparisons with results in previous years or with other companies. The primary purpose of ratios is to point out areas needing further investigation. Therefore in my report I include some of the ratio to show the financial position of the NBP.

53

Margin Of Profit

Net profit
Markup/Return/Interest Earned
2011
19,033,773000 ______________ 50,569,481,000 x 100

x 100
2010
17,022,346000 _______________ x 100 44,100,934000

= 37.93% COMMENTS:

=38.59%

The margin profit ratio show the profitability of bank is not satisfactory.

Return on Total Assets (ROA) =

2011

Net Profit After Tax x 100 Total Assets

2010
17,022,346,000 _______________ x 100 635,132,711,000

19,033,773,000 ________________- x 100 762,193,593000

= 2.49% COMMENTS:

= 2.68%

The return on total assets is also not satisfactory as compare to the 2010.

RETURN ON DEPOSITS
2011

Net Profit Total Deposits

x 100
2010
17,022,346,000 _______________ x 100 501,872,243,000

19,033,773,000 ________________ x 100 591,907,435,000

= 3.21% COMMENTS:

= 3.39%

This ratio is show that the net profit as compare to previous year is

increased but the result is not as favorable as compare to 2010.

Return On Equity (ROE)

_____Net Profit_______ x 100

54

Shareholders Equity
2011
19,033,773,000 ________________x 100 69,270,631,000

2010
17,022,346,000 ______________x 100 53,044,649,000

= 27.47% COMMENTS:

= 32.09%

The ROE (return on equity) is also not show the satisfactory result because the net profit is increased but on the other hand the holder equity is also increase and that is way the result cannot show favorable sign.

Advances To Total Deposits

= __Advances____ x 100 Total Deposit

2011 2010
316,110,406,000 ______________x 100 501,872,243,000

340,677,100,000 ________________ x 100 591,907,435,000

=57.55% COMMENTS:

= 62.98%

The advance to total deposit is increase but by small amounts that are way the result is not favorable show by ratio result.

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Advances To Total Assets Ratio = Advances____ x 100 Total Assets

2011
340,677,100,000 ________________ x 100 762,193,593

2010
316,110,406,000 ______________x 100 635,132,711

=44.69% COMMENTS:

= 49.77%

The advances is increased but by less amount as compare to the increased in total assets therefore the ratio result is not good.

Debt To Equity Ratio =

Total Debt__________ Shareholders Equity

2011

x 100
2010

645,855,939,000 ________________ x 100 69,270,631,000

553,178,593,000 ______________x 100 53,044,649,000

=932.36% COMMENTS:

=1042.85%

The total debt is increased and on the other side the share holder equity is also increased also that is the ratio is decrease show favorable trend for share holders.

Long Term Debt To Fixed Assets Ratio = Long Term Debt x 100 Fixed Assets
2011
10,886,063,000 ________________ x 100 25,922,979,000

2010
11,704,079,000 ________________ x 100 9,681,974,000

=41.99% COMMENTS:

= 120.88%

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The long term debt is decreasing from 2010 & fixed assets are increased more than debts that are good symbol.

Debt Ratio: =

Total Liabilities Total Assets

2011
645,855,939,000

x 100
2010
553,178,593,000 ______________ x 100 635,132,711,000

__________________x 100 762,193,593,000

=84.73% COMMENTS:

= 87.09%

The debt ratio is show that the liabilities are increased at the slow rate than total assets and that is favorable for NBP.

STOCK HOLDER EQUITY TO TOTAL LIABILITIES: = STOCK HOLDERS EQYITY X 100 TOTAL LIABILITIES
2011
69,270,631,000 _________________ x 100 645,855,939,000

2010
53,044,649,000 _______________ x 100 553,178,593,000

= 10.72% COMMENTS:

= 9.58%

The stock holder equity is show favorable trend from 2010.

57

INVESTMENT TO TOTAL ASSETS = INVESTMENT TOTAL ASSETS

2011
210,787,868,000 _________________ x 100 762,193,593,000

X 100
2010

139,946,995,000 _______________ x 100 635,132,711,000

= 27.65%

= 22.03%

COMMENTS: The investment ratio also increase that show the growth of NBP.

DEPOSITS TO TOTAL ASSETS RATIO = DEPOSITS X 100 TOTAL ASSETS

2011
591,907,435,000 _________________ x 100 762,193,593,000

2010
501,872,243,000 _______________ x 100 635,132,711,000

=77.65% COMMENTS:

= 79.01%

The deposit ratio as compare to total assets is decreasing that show that the total assets figure is increased more than the previous year.

PROPRIETARY RATIO =

STOCK HOLDERS EQYITY X 100 TOTAL ASSETS

2011 2010
53,044,649,000 _______________ x 100 635,132,711,000

69,270,631,000 _______________ x 100 762,193,593,000

= 9.08%

= 8.35%

58

COMMENTS: The proprietary ratio is increasing from 2007to 2008that is good news for shareholders. That show the contribution of shareholders is increased.

EARNING PER SHARE: =

______NET PROFIT_____ NUMBER OF SHARES

2010
17,022,346,000 _________________ 709,071

2011
19,033,773,000 ________________ 815,432

= 23.34 COMMENTS:

= 24.00

The earning per share is decreasing from 2010 to 2011 that show unfavorable news for share holders.

AVERAGE PROFIT PER BRANCH = NET PROFIT ____________________________ AVERAGE NUMBER OF BRANCHES
2011
19,033,773,000 _______________ 1243

2010
17,022,346,000 __________________ 1250

= 15,312.76 COMMENTS:

= 13,617.87

The average profit of NBP is increasing that show the efficiency of NBP. The number of branches is decrease and net profit is increased.

CHAPTER - 6
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SWOT ANALYSIS
INTRODUCTION SWOT analysis is an acronym that stands for strengths, weaknesses, opportunities, and threats. SWOT analysis is careful evaluation of an organizations internal strengths and weakness as well as its environmental opportunities and threats. SWOT analysis is a situational which includes strengths, weaknesses, opportunities and threats that affect organizational performance. The overall evaluation of a company strengths, weaknesses, opportunities and threats is called SWOT analysis. In SWOT analysis the best strategies accomplish an organizations mission by: 1. Exploiting an organizations opportunities and strength. 2. Neutralizing it threats. 3. Avoiding or correcting its weakness. SWOT analysis is one of the most important steps in formulating strategy using the organization mission as a context; managers assess internal strengths distinctive competencies and weakness and external opportunities and threats. The goal is to then develop good strategies and exploit opportunities and strengths neutralize threats and avoid weaknesses.

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STRENGTHS
Oldest Institution NBP is one of the oldest bank of Pakistan and first nationalized bank Hence its customer base is strength from this plus point as customers have more confidence in the bank. The additional value services as the privilege for the bank. Alternate Duties in SBP Absence The NBP performs additional services for its customers as well as the other bank customer in the absence of SBP. More Deposits than Other Banks NBP has the relative competence in having more deposits than the other bank. This is because of the confidence the customer have in the bank. The bank being the privileged and oldest bank in banking sector of Pakistan enjoys this edge over all others, lacking it. Employee Benefits The employers at NBP are offered reasonable monetary benefit. Normally two bonuses are given Eid-Ul-Fitar & Eid-Ul-Azha. This serves as an additional benefit and competency for the bank and a source of motivation for the employees. Broad Network The bank has another competency i.e. it has broad-basses network of branches throughout the country also more than one branch in high productive cities. The customers are provided services at their nearest possible place to confirm customer satisfied.

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Strictly followed rules & regulation: The employees at NBP are strict followers of rule & regulation imposed by bank. The disciplined environment at NBP bolsters its image and also enhances the over all out put of the organization. Professional Competence The employees at NBP here have a good hold on their descriptions, as they are highly skilled Professionals with background in business administration, banking, economics etc. These professional competencies enable the employees to understand and perform the function and operation in better way. Healthy Environment The working condition in the NBP branch here is very conductive and favorable for better output. The informal environment affects the performance of the employees in a positive way. Relation between Staff And Other Employees. The bank enjoys a good plus point when it comes to the employee manager relationship,the hearing as removing of discrepancies if any, between the employees, and between the manager and employees.

WEAKNESSES
Lack of marketing effort: The bank does not promote its corporate image, services, etc on a competitive way. Hence lacks far behind in marketing effort. A need for aggressive marketing is there in this ERA marketing is now becoming a part of every organization.

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NBP under Political Pressure. The strong political hold of some parties and government and their dominance is affecting the bank in a negative way. They sometime have to provide loan under the pressure, which leads to uneven and adjusted feeling in the bank employees. Favoritism and Nepotism. The promotions and bonuses etc in the bank are often powered by seniors favoritism or depends upon their wills and decision. This adds to the negative factors, which denominate the employees thus resulting in affecting their performance negatively. Lack of Financial Product The bank falls far behind when the innovative and new schemes are considered. It has not been involved in the tug of war between the competitors to the accounts and strengthens the existing customer base. This stands out to be the major incompetence and weakness of the banks. Inefficient Counter Services In The Rush Hours During the rush hours, the bank is founded out to be a total flop to handle the mob of people peaking from windows and doors. The bank has deficiency to operate in the stages of rush hours where the people find them services entangled in a situation of nowhere because they are not well served. Lack Of Computerized Network The bank lack the strength of being powered by the network of computers, which have saved time, energy and would have lessened the mental stress, the employees have currently. This would add to the strength if it were powered by network of computers.

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Lack Of Modern Equipment The bank lacks the modern Equipment that is note counting machine computers. Even if there is any equipment they lack to fall in the criteria of being rearmed as update and upgraded Uneven Work Distribution The workload in NBP is not evenly distributed and the workload tends to be more on some employees while others abscond away from their responsibilities, which server as a de-motivation factor for employees performing above average work.

OPPORTUNITIES
Electronic Banking The world today has become a global village because of advancement in the technologies, especially in communication sector. More emphasis is now given to avail the modern technologies to better the performances. NBP can utilize the electronic banking opportunity to ensure on line banking 24 hours a day. This would give a competitive edge over others. Micro Financing Because of the need for micro financing in the market, there are lot of opportunities in this regard. Other banks have already initiated, now the time has arrived when the NBP must realize it and take on step to cater an ongoing demand.

THREATS
Emergence of New Competitors The bank is facing threats with the emergence of new competitors especially in terms of foreign banks. These foreign banks are equipped with heavy financial

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power with excellent and competition.

innovative ways of promoting and performing their

services. The bank has to take initiative in this regard or will find itself far back in

Political Pressure by Elected Government The ongoing shift in power in political arena in the country effects the performance of the bank has to forward loans to politically powerful persons which create a sense of insecurity and demoralization in the customer as well as employees. Downsizing The bank is currently acting upon the policy of downsizing which threaten the environment of the bank Employees feel insecurity in doing their jobs and work, hence affecting the over all performance of employees negatively. Customers Complaints There exists no regular and specific system of the removal of customer complaints. Now a day a need for total customer satisfaction is emerging and in their demanding consequences customer's complaints are ignored. COMPETITIVE ANALYSIS Porters five forces model: This approach is widely used for competitive analysis. It is because of the high intensity of competition among companies there five main competitive forces. Rivalry among competitive firms: It is a very powerful force among the competitive forces the strategies pursued by one firm can be successful only to extent that they provide competitive advantages over the competitor. These competitive strategies may be lowering prices, best
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quality series. The NBP offering very low charges and demand draft, telegraphy transfer, mail transfer and give other additional services to the customers and to the Nation. Because NBP is a Nations Bank. Potential entry of new competitors: Whenever new firms can easily enters a particular industry, the competition increases. The gout restriction, tariffs, patents etc can stop new firm to enter into the business as per Banking industry is concerned this market is already very situated in Pakistan and there are banks with quality services and low charges. So there is no threat to NBP from potential entry and NBP is also a public sector bank because of that no other new bank not takes over it. Potential Development of substitute products: This is the third factor affecting the competitions. There may be some other product can be substitute the product of that industry. For example banks offering saving schemes in Pakistan and these schemes are also offered by GPOs in Pakistan so they must compete them in this field. If they offer low rates than GPOs so people will go to deposit in GPOs. People concentration high rates so thats why saving PLS accounts are more then current accounts. The next examples will ATM, which substitute presenting cheques at counter and encash it. The NBP is lacking in this field. It must improve in this field to compete the competitors. Bargaining Power of Suppliers: The bargaining power of supplier affects the intensity of competition, especially when there are a large number of suppliers. In case of banks the suppliers are customers they supply the money to banks. Now they must offer good services, quality, and safety. Low charges etc to customers. In this field NBP is very good. Because it offers good quality services to customers. They charge low charges on remittances. So that it has a competition to other banks.

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Bargaining Power of Consumers: When customers are concentrated or large, or buy in volume, their bargaining power represents a major force affecting intensity of competition. Now the number of customers in Pakistan for banks are very high. Banks offering variety of products and services to their customers. NBP have a large number of customers. Now it must offer good services and products to their customers to attract them to come to NBP. Summation The summary of is SWOT Analysis of NBP. To know how NBP can compete well and how to maintain its position in the market as a best services organization.

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CHAPTER - 7

CONCLUSION & RECOMMENDATIONS

From the above discussion I come to the conclusion that the NBP is prove to a Nations Bank because it provides the large number of services to their customers. On the basis of financial analysis I point out that the trend is positive, which indicates that profitability; solvency and liquidity position of bank is sound. It means that the organization (NBP) is working progressively and the management is performing its role in a very good manner. The global economic environment has changed, creating challenges and opportunities for the worlds policy makers. The privatization drive has emerged as a strong tool of transformation, which is being recognized as an essential ingredient for the economic well-Being of the countries themselves and for the rest of the world. Now there is a greater awareness that in an interdependent world all countries gain individually if these countries become positive contributor to world economic growth as whole. Banks are playing very important role in the economic growth of the countries. NBP no doubts a positive contributor in this respect but I think there are certain points by adopting which can serve more effectively and efficiently. These points are as under:
1.

Uses of computers: This is a computer era. With the use of computer we can increase our efficiency. NBP should computerize all its branches. By the use of computer properly these branches can increase there working efficiency.

2.

Services provider: NBP as public service oriented institution has to create business opportunities for themselves. Now a day there is a competition between the banks.

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3.

Growth oriented: Republic.

Central Asian Republics (CARs) have great

opportunities of new business so N.B.P should open new branches in these

4.

Use of electronic media: Model Banks like City Bank, Muslim Commercial Bank (MCB) is using media very effectively to increase the business of banks. So NBP should use electronic media for its business developments.

5.

Employees unions: The interference of union in banking business should be minimized as it decreases the working efficiency of the employee as well as the bank.

6.

Need of improvement: The working of the Peshawar Cantt. Branch Peshawar is satisfactory but still these working efficiencies are far from the standard of modern banking system.

7.

Self decision making: The bank should finance its loans in those projects that are meeting the required standard and should avoid the political pressure.

8.

Encourage young employment: The bank should bring forward the new talent as fresh knowledge and education is considered very important to increase the efficiency and production.

9.

Efficient branches networking: There is needed to make the outlook situations of branches in those manners that can compete the other modern banks in the banking market.

10.

Performance appraisal: Keeping in view the hard work by the staff members at all levels of management, staff should be given bonus and increment every year.

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11.

Installing ATM: Credit Cards are issued by the different banks like MCB and City Bank etc. but NBP dont issued this type of finance scheme, there is a place for this type of scheme in this bank.

12.

Best customers relationship: Separate desk or counter should be established in every branch to provide the information as required by the clients.

13.

Facilities in bank: The environment of the offices should be comfortable so that the client and staff must feel comfort during business in bank.

14.

Credit monitoring: Unsecured loan are not to be provided in case of banks directions, their families, companies or firms.

15.

Create friendly relation with customers: There are some clients having sound and successful plan but without financially sound and providing securities bank should forms such policies that may solve this problem.

16.

Reduction in number of employees: I observed that many branches of NBP are over crowded. 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.

17.

Professional training: There are some employees untrained which decreases the efficiency of the bank branch. All the employees should well train.

18.

Job rotation: Most of the bank employees are sticking to one seat only, with the result that they become master of one particular job and loose their grip on other banking operation. In my opinion each employee should have regular job change.

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19.

Change with environment: Refreshes courses for staff are most important in any international organization. All the employees should have their courses according to their requirement.

20.

Create international relations: Every year some of the employees should be sent for training to other countries and employees from other countries should be brought here.

21.

Reward & punishment system: In commercial institutions like banks reward and punishment system should be introduced. Means achieve, smart, educated, skilled, self-spoken and well-dressed staff should be rewarded and appreciated and lazy, lethargic staff should be warned and punished.

22.

Time saving of customers: People have to wait for re-cashing their cheques and for paying their utility bills, which are not good for reputation of bank, it should be improved.

23.

Promotion strategy: Promotion should be given to competent persons on merit basis.

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