Muhammad Asif Imran MC070400910 MBA Finance

Report on National Bank of Pakistan

Shahpur Kanjran Branch (1655)

Introduction
Overview
NBP was established on November 9, 1949 NBP is a major business partner of Government of Pakistan NBP listed on the Karachi, Lahore, and Islamabad stock exchange
A large network with 1284 Branches NBP has 98 ATMs with 101 ATM Machines 221 Online Branches, 06 Customer Facilitation Centers 12 Swift Branches, 24 Overseas Branches

Introduction

Business Volume
Total number of shares 876975 Total assets 817,758,326,000 (2008) Profit after Taxation 15,458,590,000 (2008)

Introduction
Competitors
There are several bank acting as competitors of National Bank of Pakistan, some of those are Habib Bank Ltd. Allied Bank Ltd. Bank Alflah Muslim Commercial Bank United Bank Limited Standard Charted Bank Bank Al-Habib

Organizational Hierarchy
President Board of Directors Senior Management Regional Chief Zonal Chief Branch Manager

Training Program
During the internship period of 6 weeks I got training in various departments in the branch. A brief introduction of these departments is as under: Deposit of Current and PLS Saving Accounts & Account Opening Remittances and Bills Govt. Payments and Receipts Credit

Deposit of Current and PLS Saving Accounts & Account Opening

A/C opening. Issuance of cheque book. Current a/c Saving a/c Cheque cancellation Cash

Remittances and Bills

Preparation of Demand Draft Pay Orders Mail Transfer Telegraphic Transfer Western union money transfer Cheque Collection Payments

Government receipt and Payment

Credit & Loan

Net collection of Utility Bills Payment of utility bills through cheque Tax Collection,
Issuance of short term and long term Loan Financing small investors through various financing schemes. Loan against Gold Agricultural Advance to farmers

Functions of Finance Department

Accounting system of the organization NBP Uses BBO (Branch Bank Office) for the computerized recording of Transaction Mostly Used Thing in the Program is Individual Ledger where In first Column Deposits and other Debit entries are recorded Second Column is used for Withdraws and Credit Entries Third Column Shows the balance after every transaction End of the day report is generated

Use of Electronic Data in Decision Making

Information System is very helpful in decision making process. Various applications are used for the purpose like MIS, ERP, BBO and Office Suit etc. Critical Analysis help in finding out where the necessary step should taken

Sources of Funds

NBP raise it fund through following sources Share Capital Reserves Borrowings Deposits Other Liabilities Mark Up/Return/Interest

Allocation of Funds

NBP allocate its fund to following sources Lending to Financial Institutions Investments Advances Operating Fixed Assets Other Assets

Ratio Analysis
Current Ratio =Current Asset / Current Liabilities 2008 Current Ratio 2.86 2007 7.40

Current Assets = Cash and Balance with Treasury Bank + Balance with other Banks Current Liabilities = Bills Payable + Borrowings Current ratio decrease due to Increase in borrowing in year 2008

Net Working Capital Ratio = Current Asset - Current Liabilities/ Total Assets Net Working Capital Ratio 2008 2007

0.15
Time Interest Earned = EBIT / Interest Charges Time Interest Earned 2008 1.18

0.15

2007 1.95

Fixed Charges Converge Ratio = EBIT+ Fixed Charges / Fixed Charges + Interest Fixed Charges Coverage 2008 2007

0.98 Debt Ratio = Total Debt / Total Assets

Debt Ratio Debt to Equity Ratio = Total Debt / Total Equity Debt to Equity Ratio 2008 8.79 Debt to Tangible Worth Ratio = Total Debt / Tangible Net Worth Debt to Tangible Net Worth Ratio 2008 5.66 2008 0.33 2008 0.87

1.36
2007 0.85 2007 9.32 2007 5.64 2007 0.14

Total Capitalization Ratio = Long Term Debt / Long Term Debt + Equity

Total Capitalization Ratio

Net Profit Margin = Net Income / Revenue Net Profit Margin 2008 2007

25% Return on Asset = Net Income / Average Total Assets

Return on Asset Operating Margin = Gross Profit / Revenue Operating Margin 2008 69.74% 2008 Operating Assets Turnover 0.10 2008 0.02 Operating Assets Ratio = Net Income / Operating Assets Operating Assets Ratio 2008 1.9%

38%
2007 2.5% 2007 83.95% 2007 0.09 2007 0.03

Operating Assets Turnover Ratio = Revenue / Operating Assets

Revenue to Fixed Assets = Total Revenue / Fixed Assets Revenue to Fixed Assets 2008 2007

2.52 Return on Total Equity = Net Income / Total Equity

Return on Total Equity 2008 0.19 Gross Profit Margin = Revenue Cost of Sale / Revenue Gross Profit Margin 2008 0.61 Earning Per Share = Net Income / Number of Common Shares Earning Per Share 2008 17.23 2008 0.58

1.95
2007 0.27 2007 0.67 2007 23.34 2007 0.43

Price Earning Ratio = Market Value Per Share / Earning Per Share Price Earning Ratio

Horizontal Analysis: Each amount is divided by previous year amount

to get its change in percentage.

Balance Sheet
2008-2007
Base year 2007 ASSETS %

2007-2006
Base year 2006 %

Cash and balances with treasury banks

Balances with other banks Investments - net Lending's to financial institutions

12.26
2.33 (19.10) (20.20)

20.67
(7.80) 50.88 (6.73)

Advances - net
Operating fixed assets Deferred tax assets - net Other assets - net

21.35
(6.58) 43.73

7.66
167.74 14.31

Total Assets

7.29

20.01

LIABILITIES Bills payable Borrowings 44.71 274.09 (33.41) (7.59)

Deposits and other accounts

Liabilities against assets Deferred tax liabilities - net Other liabilities Total Liabilities Net assets Represented by: Share capital Reserves Inappropriate profit Surplus on revaluation of assets - net of tax Total Liabilities & Equity

5.58
(24.68) 28.17 10.75 (11.93) 10.00 26.43 15.68 (55.19) (0.12)

17.94
153.52 113.56 16.33 16.75 41.95 15.00 13.64 41.37 62.81 0.42

Profit and Loss Statement

2008-2007 base year 2007 %

2007-2006 base year 2006 % 14.67 21.46 11.53 53.56

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision Against Non performing Advances Provision for diminution in the value of investments Provision Against Balance Sheet Obligations Bad debts written off directly

20.51 41.00 10.20 124.29

(1027.37)

(94.33)

(100.00)

655.09

Net mark-up / interest income after provisions Non-mark-up / interest income Fee, commission and brokerage income

132.30 (9.75) 16.86

99.14 4.05 10.37

Dividend income
Income from dealing in foreign currencies Gain on sale of securities - net Unrealized loss on revaluation of investments Other income - net Total non-mark-up / interest income Administrative expenses (Reversal) / Write off / other provision - net Other charges Total non-mark-up / interest expenses Profit before taxation

(11.78)
280.61 (83.11) (105.34) 745.10 21.20 0.12 27.91 344.88 3303.31 35.52 (18.03)

12.85
(21.82) 100.23 616.04 (76.52) 11.36 6.27 5.67 (1072.21) (91.77) 5.55 6.65

Taxation - Current year *Prior years *Deferred

41.52 (100.00) (1403.63) (16.44)

(4.42) (26.22) 422.31 (2.82)

Profit after taxation

Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets

(18.78)
41.37

11.82
65.57

234.44

(5.00)

Profit available for appropriation

19.13

40.38

Vertical Analysis:
Balance Sheet
ASSETS

Each amount is divided by Total Assets (Liabilities) to get its percentage in Balance Sheet and by Sales on P/L Statement. 2008 % 13.02% 4.69% 20.89% 2.09% 50.50% 2.96% 0.39% 2007 % 12.45% 4.92% 27.70% 2.82% 44.65% 3.40%

Cash and balances with treasury banks Balances with other banks Investments - net Lendings to financial institutions Advances - net Operating fixed assets Deferred tax assets - net

Other assets - net

Total Assets

5.45%
100.00%

4.07%
100.00%

LIABILITIES Bills payable Borrowings 1.25% 4.95% 0.93% 1.42%

Deposits and other accounts

Liabilities against assets Deferred tax liabilities - net Other liabilities

76.42%
0.00% 4.85%

77.66%
0.00% 0.67% 4.06%

Total Liabilities
Represented by: Share capital Reserves

87.47%
1.10% 2.44%

84.74%
1.07% 2.07%

Inappropriate profit
Surplus on revaluation of assets - net of tax

6.41%
2.58% 12.53%

5.95%
6.18% 15.26%

Total Liabilities & Equity

100%

100%

Profit and Loss Statement

Mark-up / return / interest earned Mark-up / return / interest expensed Net mark-up / interest income Provision Against Non performing Advances Provision for diminution in the value of investments

2008 % 100.00% 39.19% 60.81% 17.38% 0.61%

2007 % 100.00% 33.50% 66.50% 9.34% -0.08%

Provision Against Balance Sheet Obligations Bad debts written off directly

0.01% 0.00%

0.00% 0.08%

Net mark-up / interest income after provisions Non-mark-up / interest income

18.00% 42.81%

9.34% 57.16%

Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealized loss on revaluation of investments Other income - net Total non-mark-up / interest income

13.00% 4.72% 6.51% 0.65% 0.00% 2.04%

13.41% 6.45% 2.06% 4.63% -0.06% 0.29%

Administrative expenses (Reversal) / Write off / other provision - net Other charges Total non-mark-up / interest expenses Profit before taxation

29.82% 1.23% 0.96%

28.09% 0.33% 0.03%

Taxation - Current year *Prior years *Deferred

19.30% 0.00% -6.92%

16.44% 0.77% 0.64%

Profit after taxation Inappropriate profit brought forward

25.37% 74.40%

37.64% 63.43%

Transfer from surplus on revaluation of fixed assets

0.21%

0.08%

Profit available for appropriation

99.98%

101.14%

Trend Analysis =
BALANCE SHEET For the year ended Dec 31, 20
ASSETS Cash and balances with treasury banks Balances with other banks Investments - net Lendings to financial institutions Advances - net Operating fixed assets Deferred tax assets - net Other assets - net Total Assets 64.31% 28.75% 14.31% 20.01% % 35.46% -5.65% 22.06% -25.57% 30.65% 150.13% Base year 2006 2008 2007 % 20.67% -7.80% 50.88% -6.73% 7.66% 167.74%

LIABILITIES Bills payable Borrowings -3.65% 245.68% -33.41% -7.59%

Deposits and other accounts

Liabilities against assets Deferred tax liabilities - net Other liabilities

24.52%
90.96% 49.11%

17.94%
153.52% 113.56% 16.33%

Total Liabilities
Net assets Represented by: Share capital

29.31%
25.02% 26.50%

16.75%
41.95% 15.00%

Reserves
Unappropriated profit Surplus on revaluation of assets - net of tax Total Liabilities & Equity

43.68%
63.54% -27.04% 25.02%

13.64%
41.37% 62.81% 41.95%

Profit and Loss Statement For the year ended Dec 31, 20
Mark-up / return / interest earned Mark-up / return / interest expensed

Base Year 2006 2008 38.19% 71.25% 2007 14.67% 21.46%

Net mark-up / interest income

Provision Against Non performing Advances Provision for diminution in the value of investments

22.90%
244.43% -152.61%

11.53%
53.56% -94.33%

Provision Against Balance Sheet Obligations

Bad debts written off directly -100.00% 655.09%

Net mark-up / interest income after provisions Non-mark-up / interest income

362.60% -6.10%

99.14% 4.05%

Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Gain on sale of securities - net Unrealized loss on revaluation of investments

28.98% -0.44% 197.57% -66.19% -138.24%

10.37% 12.85% -21.82% 100.23% 616.04%

Other income - net

Total non-mark-up / interest income

98.43%
34.97% 6.40%

-76.52%
11.36% 6.27% 5.67% -1072.21% -91.77% 5.55% 6.65%

Administrative expenses (Reversal) / Write off / other provision - net Other charges Total non-mark-up / interest expenses Profit before taxation

35.17% -4425.18% 180.02% 43.03% -12.58%

Taxation - Current year *Prior years *Deferred

35.27% -100.00% -6908.93% -18.80%

-4.42% -26.22% 422.31% -2.82% 11.82% 65.57%

Profit after taxation Inappropriate profit brought forward Transfer from surplus on revaluation of fixed assets

-9.19% 134.06%

217.72%

-5.00%

Profit available for appropriation

67.23%

40.38%

Industry Analysis (2007)

Descriptions/Banks NBP Total Assets Deposits Advances Capital Profit after Tax MCB UBL 383,472 335,077 254,272 16,807 12,056 Bank Alfalah ABL 317,711 279,917 197,277 14,499 10,555 307,034 251,711 114,971 13,053 9,097

762,194 374,072 591,907 281,349 340,677 243,392 69,271 19,034 43,259 12,444

Future Prospects
Leader in Banking Industry An Organization Maintain the trust of Stakeholder A Fast Peace, Modern and Competitive Bank

SWOT ANALYSIS
Strengths
Highest Profitability among commercial banks One of the Oldest Bank of the Pakistan Alternative in absence of SBP Functioning as an agent of SBP

amount in shape of Deposit Stable and Sound Financial Strength Employees Loyalty, Very Low turnover rate in NBP

SWOT ANALYSIS
Weakness
No proper advertisement for newly introduces services and no attraction towards customer retaining Poor resource utilization Political pressure for financing to politicians Lack of good delegations Decreasing income over last 03 years Poor Record management and record filing

SWOT ANALYSIS
Opportunities
Attraction of the foreign investors Introducing latest computerized Technology to improve operations Introducing E-banking products New deposit schemes Being a nationalized bank strong potential to grow Role playing in economical development Micro financing for SME.

SWOT ANALYSIS
Threats
High interest rate on deposit by competitors Introducing latest computerized Technology to improve operation Emerging new entrant in the sector every year making high competition General economic crises in the country Challenging operating environment Payments and FBR collection create burden on operational staff

Conclusion
ROA, ROE, Profit Margin, Earning per share is
decreasing over the year. National Bank is losing its strength day by day. Most of procedure for function and operating are designed at head office.

Recommendation for Improvement

Modern Banking technology should adopt, and a strong MIS system should be launched.
Profit rate should be increased. Separate Counter for utility bills receiving can help in Speed of services. NBP should Launch Credit Card as these are attractive to customers.

Credit procedure should be short to enhance the organization profitability.

Thank You