INTERNSHIP REPORT on NBP 2013.doc

7/29/2019 INTERNSHIP REPORT on NBP 2013.doc

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Report Presented by: Muhammad Zeshan

Roll No: BE-10-34

Session: 2010- 2014

Submission Date: September 17, 2013

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan. 1


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I dedicate all of my work to my teacher and all of the members of NBP who helpedme to do my internship and to prepare this report.

First of all I am thankful to ALLAH who always helped me in all of the ways in my

life and always gave me courage and patience to do all of my internship in a good

manner and secondly I am thankful to my teacher and all of the staff of the bank that

also helped me to do my internship.

This report is about National Bank of Pakistan. In November 8, 1949, National Bank

of Pakistan was established under National Bank of Pakistan Ordinance 1949.

National bank is owned by the government and act as an agent of the State bank of

Pakistan. Its headquarter is situated in Karachi. It has its national and international

level branches i.e. 1250 national and 22 international branches.National Bank ofPakistan maintains its positions as a pakistans premier bank for higher achievements.

Its subsidiaries include NBP Capital, NBP Modaraba Management Company, NBP

Exchange Company, Taurus Securities, NBP Almaty and others. It offers its unique

products that are affordable for all classes.

During my internship, I learn a lot about working in different departments that are

account opening, clearing and remittance. The main department of any bank is finance

department and the main function of any bank is to deal with finance. Any bank

secures the resources of general public and offers them a good profit. NBP also

provides services for government employees. One portion of bank is reserve for

government employees dealings only.



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

Sections Sub-

Section

Description Page

No.

0 Title Page 0

1 Dedication 2

2 Acknowledgement 23 Executive Summery 2

4 Table of Contents 3

5 Brief intoduction of the organizations business sector 4

6 Overview of the Organization 6

6.a Brief History 7

6.b Organizational Hierarchy Chart 9

6.c Business Volume 10

6.d Product Lines 10

6.e Competitors of NBP 14

6.f Brief Introduction of all the departments 14

6.g Comments on organizational structure 15

7 Plan of Internship Program 16

7.a Brief Introduction of the branch 17

7.b Starting & Ending dates of Internship 18

7.c Training Departments & Duration 18

8 Training Program 19

Detailed description of the Tasks during Internship 19

9

10

11

Ratio Analysis

Horizontal Analysis of Financial Statements

Vertical Analysis of Financial Statements

22

38-40

41-43

12 Banking Analysis (Competitiors of NBP). 4413 SWOT Analysis 44

14 PEST Analysis 45

15 Future Prospects of the Organization 46

16 Conclusion 47

17 Recommendations for Improvement 47-54

18 References & Sources used 54

19 Annexes 54

3


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Definition of Bank:

A bank is a financial institution that deals with de posits and advances and acts as a

financial intermediary. It receives money in the form of deposits and lends that money

to those who need it. A Bank derives a profit from the difference in the interest rates

paid and charged, respectively. Banks are usually charted by state bank or federal

government.

Banking in Pakistan:



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At the time of independence, commercial banking facilities were provided fairly well

here. There were 487 offices of scheduled banks in the territories now constituting

Pakistan. An Expert committee was appointed. The committee recommended that

the reserve bank of India should continue to function in Pakistan until 30th

September 1948, and Pakistan would take over the management of public debt andexchange control from Reserve Bank of India on 1st April 1948 and that India Notes

would continue to be legal tender in Pakistan till 30th September 1948. Moreover

the banks including those having their registered offices in Pakistan transferred them

to India in order to bring a collapse of a new state. By 30th June1948 the number

offices of scheduled banks in Pakistan declined from 487 to only 195.

The Governor General of Pakistan QUAID-E-AZAM MUHAMMAD ALI JINNAH

inaugurated the State Bank of Pakistan on July 1, 1948, after the state Bank of

Pakistan Order was promulgated on May 12, 1948. The first Pakistan notes were

issued in October 1948. As the Centered Bank of the country, the State Bank

addressed itself with the equally urgent task of creating a national banking system. In

order to attain this goal it provided every help and encouragement to Habib Bank to

expand its network of branches and also recommend to Government the establishment

of a new bank which could serve as an agent to the State Bank. As the result the

National Bank of Pakistan came into over the agency function from the Imperial Bank

of India. More Pakistan scheduled banks continued to be established which included

the Commerce Bank Limited and the Standard Bank Limited. By June 1965, the

number of scheduled banks stood at 36.

Banking structure in Pakistan:

Banking structure in Pakistan consists of the following:

1. (SBP) State Bank of Pakistan (Central Bank)

2. Commercial Banks

3. Exchange Banks

4. Saving Banks



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6. a. Brief History:

NBP is the largest commercial bank operation in Pakistan. In 1949, NBP was

established under National Bank of Pakistan Ordinance 1949. NBP head office is

located in Karachi. NBP has moved from a public sector organization into modern

commercial bank and acts as an agent of central bank. It provides both public sector

and commercial banking services. The bank also handles treasury transactions for the

government of Pakistan (GOP) as an agent of State Bank of Pakistan (SBP). The

National Bank of Pakistan was established on November 29, 1949 as a semi public

commercial bank.

NBP has diversified its business portfolio and is today a major lead player in the debt

equity market, corporate investment banking, retail and consumer banking,agricultural financing, treasury services and is showing growing interest in promoting



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and developing the country's small and medium enterprises and at the same time

fulfilling its social responsibilities.

Vision:

To be recognized as a leader and a brand synonymous with trust, highest

standards of service quality, international best practices and social

responsibility

Mission:

NBP will aspire to the values that make NBP truly the Nations Bank, by:

Institutionalizing a merit and performance culture

Creating a distinctive brand identity by providing the highest standards of

services

Adopting the best international management practices

Maximizing stakeholders value

Discharging our responsibility as a good corporate citizen of Pakistan and in

countries where we operate

Core Values:

Highest standards of Integrity

Institutionalizing team work and performance culture

Excellence in service

Advancement of skills for tomorrows challenges

Awareness of social and community responsibility

Value creation for all stakeholders



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Goal:

To enhance profitability and maximization ofNBP share through increasing leverage

of existing customer base and diversified range of products.

6. b. Organizational Hierarchy Chart:

Internship Report on NBP, Jalal Pur Pir Wala Branch Multan. 84. SVP 5. VP3. EVP2. SEVP

Executives

1. President

6. AVP


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6. c. Business Volume:

2012 (Particulars) (Rs.)

Total Assets 1309339305

Deposits 1037784947

Advances 657381154

Investments 343537529

Shareholders Equity 151277750

Pre-tax Profit 23257706

After-tax Profit 16162635

Earning Per Share (Rs.) 8.75Number of Branches 1289


OG-I

Officers

OG-IIOG-III

Cash

Dept.

Clerical

Staff

Head Cashier

Cashier

Non Clerical

Staff

Peon, Guards

etc

Assistant


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Number of Employees 16457

6. d. Product lines:

1. NBP Premium Aamdani (Monthly Income Scheme):

Earn up to 12.25% p.a. +

Minimum deposit of Rs. 20,000/- with maximum balance of Rs. 10 million for 5

years

Free Demand Draft, Pay Order and Cheque Book*

Convenience of NBP online Aasan Banking (for online banking customers)

Free NBP Cash Card (ATM+Debit)

Running finance facility up to 90%

2. NBP Premium Saver (PLS Saving Account)

Earn up to 8.50% p.a. +.

Minimum saving balance of Rs. 20,001/- & a maximum balance of Rs. 1 million*.

Free NBP Cash Card (ATM + Debit).

Convenience of NBP Online Aasan Banking (for online banking customers).

Two debit withdrawals allowed in a month & no limit on number of deposit

transaction. Profit calculated on monthly and paid on half yearly basis.

3. NBP Saibaan (Home Financing):

NBP Saibaan

(Open the Door to Your Dream Home)



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Home Purchase

Home Construction

Home Renovation

Purchase of Land + Construction

Balance Transfer Facility (BTF)

4. Advance Salary (Personal Loan):

Easy installments of 1 to 60 months at your choice.

No minimum income, collateral & insurance charges required.

Quick processing and fastest disbursement.

For permanent employees of Government, Semi Government and Autonomous

bodies receiving salaries through NBP.

5. Cash Card (ATM + Debit Card):

Use it as an ATM in any of the ATMs in Pakistan

Use it as Debit Card in any of the outlets with ORIX POS machine

Cash withdrawal up to Rs. 20,000/- per day Account Balance Enquiry

Mini Statement (Only at NBP ATM)

PIN Change facility (Only at NBP ATM)

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

Comfortable environment for trading

No security requirement, except for the customers equity

Customers equity freely available for investment

Equity acceptable in cash or approved shares

7. Cash n Gold (Ready Cash against Gold):

Facility of Rs. 20, 000/-against each 10 gms of net weight of Gold Ornaments

http://www.nbp.com.pk/CashnGold/index.aspxhttp://www.nbp.com.pk/Margin/index.aspxhttp://www.nbp.com.pk/cashcard/index.aspxhttp://www.nbp.com.pk/advancesalary/index.aspx


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No maximum limit of cash

Repayment after one year

Roll over facility

No penalty for each repayment

8. NBP Karobar (Mera Apna Karobar):

Minimum down payment, 10% of asset price (5% for PCO & Telecaster)

Tenure 1 to 5 years (for PCO 2 years)

Grace period 3 months

Maximum loan amount Rs. 200,000/-

Age 18-45 years Mark-up (variable) 1 year KIBOR + 2.00% p.a.

The customer will pay markup @ 6% p.a.

9. Kisan Dost:

Competitive mark-up rate

Quick & easy processing

Delivery at the farmers doorstep

Technical guidance to farmers

Wide range of financing schemes for farmers

Finance facility up to Rs. 500,000/- for landless farmers against personal

guarantee.

Financing available against pass book, residential/commercial property, gold

ornaments and paper security.

Loan facility on revolving basis for three years (renewable on yearly basis

without obtention of fresh documentation and approval).

10. NBP PAK Remit:

Pak remitis aninternet based Home Remittance Service. This service is

available to U.S. residents for sending money to their family and friends in

Pakistan.

One must have a valid US Dollar account with a U.S. bank or a US Dollarcredit or debit card in order to remit funds through this channel.

http://www.nbp.com.pk/Pakremit/index.aspxhttp://www.nbp.com.pk/KisanDost/Index.aspxhttp://www.nbp.com.pk/Karobar/index.aspx


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Remitters in USA can log on to NBP user friendly website,

www.pakremit.com and easily remit funds to Pakistan from the comfort of

their homes, in a matter of minutes.

The service is fully secure with advance encryption application and is

available for use 24 hours a day, 7 days a week.

Fees and exchange rate have been set at competitive levels and the remitters

have the ability to track delivery of funds as well.

11. Protection Shield (Personal Accident Insurance):

(Life is precious)

No documentation

No medical required

Premium Auto Debit facility & choice of deactivation

Coverage includes death due to: Natural Calamities e.g. Earthquake, Flood,

Cyclone etc. Accident, Riots, Civil Commotion, Strikes and Acts of

Terrorism.

6. e. Competitors of NBP:

The competitors of NBP at public sector:

The competitors of NBP at private sector:

Competitors at Private SectorMy Bank Limited Allied Bank Limited


Competitors at Public Sector

First Women Bank Limited (FWB)

The Bank of Khyber (KB)

The Bank of Punjab (BOP)

13


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Bank Al-Falah Limited Atlas Bank

Bank Al Habib Limited Habib Bank Limited

Askari Bank Saudi Pak Bank Limited

Faysal Bank Limited

Metropolitan Bank limited

Muslim Commercial Bank Limited

6. f. Brief Introduction of all the departments:

1. Finance department

2. Deposit department

3. Credit department4. Operation department

5. Human Resource (HR) department

1. Finance department:

Finance department of any organization controls and manage all routine financial

matters. This department helps to maintain the books of account of any organization.

It performs the investing and lending functions. This department not only prepares the

income statements and balance sheet of any bank but also it estimates the profit and

loss of any bank. It keeps record of total deposits of the bank. It keeps eye on total

worth of the bank.

2. Deposit department:

Deposits are the lifeblood of any bank. This department promotes all of the

departments in a bank. Without deposits, a bank can not perform its banking function.

This department keeps it eye on potential customers for deposits. This department

motivates the branches to get a fixed target through different schemes like cash prizes

and special increments. This department helps to run a banking function.

3. Credit department:

Credit department includes all the credit policies of the NBP. It controls all the credit

policies in this bank like loans and keeps eye on securities, mortgages, pledges and so

on. This department fixes the markup rate for credit.

4. Operation department:

Operation department concerned with the operation in a bank. This department helps

in handling the routine work in a bank. Without this department, bank cannot

maintain its operations. If there is any problem in working area in any branch, this



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department helps to correct the error and make sure that all operations are working

correctly. Account opening is also handled by this department.

5. Human Resource (HR) department:

Human resource department is basically concerned with the employees. Thisdepartment works for the benefits of the employees. This department also helps how

to assign the task and jobs of the employees. It helps to the employees to do their

work easily and to get more and more benefits and incentives for the employees. This

department works in hiring and firing to the employees. Its work is all about the

human resources/ work forces.

6. g. Comments on organizational structure:

NBP is one of the oldest banks in Pakistan. It has the biggest structure in Asia.

National Bank has not been changed its structure from many years so it is not so

good. NBP has its great contribution towards building structure and is serving for all

classes of the society. In any branch of NBP, branch manager perform all the

activities in a branch. NBP has not a rigid structure. It has decentralized structure that

can be adopted easily by all the employees. NBP has large its network because it is

the major business partner for the Government of Pakistan because of its special

emphasis to fostering pakistans economic growth through various services like

aggressive and balanced lending policies, technologically oreinted products and

services offered through its large networks of brances like nationally andinternationaly. So NBP has its good structure as compared to other banks.

7. a. Brief Introduction of the Branch:

National Bank of Pakistan

Main Branch, Jalal Pur Pir Wala

Branch Code: 0544

Branch Manager: Sabir Ali Khan (AVP/Manager).

Operations Manager: Mian Fiyyaz.

Hierarchy of Branch:



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Departments in Branch:

1. Cash Department:

Cash department is such department that purely deals with cash. It is the most critical

part of departments. Three main cashiers in cash department are cash receipts, cash

payments and bill payments. One deals with cash receipts, second deals with the cash

payments and the last one deal with the bill payments. It is supervised by CD in

charge and head.

2. Govt. Department:

This department deals with all the govt. things like govt. receipts, govt. payments

pension, taxes, bills, salaries etc.

3. Credit / Advances Department:

Credit department includes all the credit policies and control these policies. This

department gives different types of loan and chare a fix markup rate for credit. Threemain types of loans are:


Branch

Manager

Credit Officer

Operations

Manager HR Officer

All other staff

16


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1. Personal loans 2. Agricultural loans 3. Commercial loans

4. Operation Department:

This department deals with all general banking operations. Dealing with customers,

HR maintenance and account opening etc all these dealings relate to this departmentand is controlled by it.

5. Account Opening Department:

Account opening department deals with opening the account of the customers on the

bank. In this department different types of account are opened like PLS saving

account, Current account etc.

6. Clearing Department:

Clearing department deals with clearance of the payments within the branches of the

same bank and with the branches of the other banks.

7. Remittance/ Bills Department:

Remittance department deals with the transfer of money. It transfers money from one

place to another place or from one branch to another branch.

8. Establishment Department / HRM:

This department basically works for staff benefits like medical, traveling etc

9. Electronic Banking System (EBS):

This controlls the over all banking system in a bank.

10. Compliance Group / Auditor:

The work of compliance group / auditor is to audit all the banking work.

7. b. Starting & Ending Dates of Internship:

Starting Date: 10-06-2013

Ending Date: 26-07-2013

7. c. Training Departments & Duration:



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Departments Duration

Account Opening 10-06-2013 28-06-2013

Clearing 01-07-2013 12-07-2013Remittance 15-07-2013 26-07-2013

Detailed description of the tasks assigned to me during myInternship:

1. Account Opening Department

2. Clearing Department

3. Remittance Department

1. Account Opening Department:

The first task assigned to me was the account opening. Fisrt of all I asked the

customer to give me his/her ID card. In ID card, I checked the Expiry Date of the ID

card. If the expiry date of the card is corect and it has not been expired then I took

interview of the customer so that I can know what type of account he wanna open

PLS saving or current account and what is his/her source of income for which he/shewant to open this account. After the interview, he asked me that he wanna open



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saving account. I said ok then I tell him that the minimum amount for opening the

saving account is Rs. 100 and maximum amount you want to deposit and I also told

him that in this account zakat will be deducted and profit will be added. He said ok I

will deposit Rs. 500. After this, I asked the customer you will have to take some

necessary things to open this account that are as follows:

Photocopy of your C.N.I.C

Photocopy of Next of Kin C.N.I.C

Photocopy of your mother C.N.I.C

Photocopy of the your home electricity bill

3 Photos if he/she cant sign means illiterate or sign in urdu and can be copied

by other.

After taking these documents I filled the Customer Information Folio (CIF) and in

CIF I asked the customer of whom person you want to make your Next of Kin. He

told me the name of next of kin, whats his relation with him/her, photocopy ofhis/her C.N.I.C and his mobile number. After filling these information I took a verisys

of his/her C.N.I.C from Nadra from the operations manager so I can know is this

correct C.N.I.C. After all these things I opened the account of customer . After this I

took print of all the forms and then I took the signature card and took the signature of

that person whose account I opened and I used the Brach Stapm on signature card.

After this I took the sign of the designation authority means my supervisor and I also

used the stamp of attested on the photocopy of C.N.I.C.After this, I filled his/ her

deposit slip with that amount from which he wanna open this account that is Rs. 500

and asked him to pay the money to the cash counter and then your account will be

opened. When he came back to pay the amount then I gave his all the forms and asked

him that a letter of thanks will be reached your home address by post. I told him youwill have to sign on letter of thanks and post it. Then I told him when the bank will

receive this letter of thanks then the bank will issue you the check book. At the last, I

asked the customer now you are free and you can go now. In this way , I opened the

account of a person completely and I accomplished my task.

The same procedure I used for opening the current account. But the minimum amount

for opening the current acount is Rs. 5000 and this account is not profit oriented and

no zakat deduction is made in this account and this account is for businessman and

companies etc.

2. Clearing Department:

The second task assigned to me was the clearing which means the clearance of

payments and cheques within city or with different cities. In clearing, I learnt about

the inward clearing, outward clearing, intercity clearing and local clearing. My

supervisor told me that the clearing we receive is inward clearing and that we sent to

other is outward clearing. After that my supervisor gave me some intercity and local

cheques and asked me to clear them. First of all I went to the clearance counter and

applied the CROSSING STAMP at the front of all the cheques. After that I separatedall the cheques of Lahore. And all the cheques of other cities like Islamabad,



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Gujranwala, and Faisalabad etc. After this I applied the CLEARING STAMP with the

same date of all the cheques of Lahore and the CLEARING STAMP with the next

day date of other cities cheques. After that I used the INTER CITY CLEARING

stamp of all the inter city cheques. After that I used Govt. Account Credited stamp for

all the govt. cheques and Payees Account Credited stamp for account holders. After

that I used the Collecting Bank Endorsement Confirmed stamp for other bankscheques which are made collection from our branch and Our Branch Endorsement

Confirmed stamp for those cheques if any branch from outside said to our bank to

collect money. After completing these stamps I took the registers of local clearing

and intercity clearing. In the register of local clearing, I entered all the local cheques

and in intercity register, I entered all the intercity cheques. After that entering the

cheques in register I total all the amount of entered cheques and confirm that total

with total amount of cheques. After completing this work, I made one list for local

cheques and the other list for intercity cheques and entered the amount of all the

cheques and made total of it. After this, I put them in an envelope and then I put

stamp of the bank on it. In this way, I completed my whole work

3. Remittance Department:

The third task assigned to me was the remittance. In remittance department, I learnt

about how the pay orders (PO), demand draft (DD) and call deposit at receipts (CDR)

are made. My supervisor asked me to make a pay order of the customer. First of all I

asked the customer, are you account holder of NBP or not? He asked me I am account

holder of NBP. I said ok the charges for making pay order for account holders of NBP

are Rs. 100 and for non account holders are Rs. 150. He asked me to make the payorder. Then I asked the customer gave me the photocopy of your C.N.I.C. He gave me

the photocopy of his C.N.I.C and told me his account number. After this I took the

pay order (PO) book and filled it with his name, account number, amount in figures

and words and the name of the bank. After writing these things, I applied two stamps

at the front of the pay order that are branch stamp and stamp of the date. After this my

supervisor signed the pay order (PO). After signed I gave the pay order (PO) to the

customer. In this way, I made the complete pay order of the customer.

The same procedure I used for making demand draft (DD) and call deposit at receipts

(CDR). But the charges rates for making demand draft (DD) and call deposit at

receipts (CDR) are also different for account holders & non account holders. During

making the demand draft (DD), I used the same stamps like branch stamp and stampof the date but the charges rates that I used for making the demand draft (DD) for

account holders are Rs. 80 and for non account holders are Rs. 100 that I used during

my work and I used the demand draft (DD) book for making DD. Similarly, the

charges rates that I used for making call deposit at receipts (CDR) for account holders

are Rs. 100 and for non account holders are Rs. 200 and I used the call deposits at

receipts (CDR) book for making CDR. In this way, I made all these things that are

pay order (PO), (DD) demand draft and call deposit at receipts (CDR). Hence, I

completed my whole in a good manner.



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We can use Ratio analysis to check out how profitable a business is, we can use it to

check out how much enough money a business has to pay its bill and we can even tell

whether its shareholders should be happy.

Ratio analysis can also help us to check whether a business is doing better this year

that it was last year, and it can tell us if our business is doing better or worse than

other businesses doing and selling the same things.

1. Net Profit Margin

Formula:

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

Calculation:

2012 2011 2010

Net profit= 16162635

Revenue/sales= 100092132= (net profit/ revenues)*100

= (16162635/ 100092132)*100

= 19.85%

Net profit= 17,709165


= (17,709165/ 95689741)*100= 18.50%



= (17738405/ 88681381)*100= 20.%

16.15% 18.50% 20.0%

Graphical Representation:


0.00%

5.00%

10.00%

15.00%

20.00%

Year

2010

Ye ar

2011

Ye ar

2012

Net Profit Margin


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Interpretation:

This graph is showing that the net profit margin of NBP for the year 2010, 2011 &

2012 is 20%, 18.5% & 16.15% respectively. This ratio is not constant in all over the

years. Its showing that the net profit margin of NBP is decreasing day by day due toincrease in non mark-up interest expenses and taxes.

As the net profit margin of NBP is decreasing in all over the years it is showing that

the NBP is not efficient to converting its revenue into actual profits. As we know, the

higher the net profit margin the better it is. So this decreasing trend is not a good sign

for NBP.

.

2. Gross Spread Ratio

Formula:

Gross Spread Ratio = (Mark-up / return / interest earned - Mark-up / return / interestexpensed) / Mark-up / return / interest earned*100

Calculation:

2012 2011 2010

Spread = 43674305

Revenue/ sales=

= (Spread / Revenue)*100

= 43674305/ 100092132*100= 43.63%

Spread = 47173224

Revenue/ sales= 95689741


= 47173224/ 95689741*100= 49.29%

Spread = 43511637

Revenue/ sales= 88681381


= 43511637/ 88681381*100= 49%

43.63% 49.29% 49.0%


Interpretation:

This graph is showing that the Gross Spread Ratio of NBP for the year 2010, 2011&

2012 is 49%, 49.29% and 43.63%. It is showing that the Gross Spread Ratio of NBPis not constant and is going to decrease day by day due to increase in interest


40.00%41.00%42.00%43.00%44.00%45.00%46.00%47.00%48.00%49.00%50.00%

Year

2010

Year

2011

Year

2012

Gross Spread Ratio


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expenses. This ratio was high in 2010 but due to increase in interest expenses this

ratio is decreasing in 2011 and 2012 that is not a good sign for the national bank.

3. Non Interest Income to Total Income Ratio

Formula:

(Non Mark-up / interest income to total income ratio= non mark-up / interest

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

Calculation:

2012 2011 2010

non mark-up / interest income=

23849322

Total income = 123941454

= (non mark-up / interest income /

Total income)*100

= (23849322 / 123941454)*100

= 19.24%


19,754420

Total income= 115444161

= (non mark-up / interest

income / Total Income)*100

= (19,754420 / 115444161)*100

= 17.11


18150883

Total income = 106832264

= (non mark-up / interest income /

TotalIncome)*100

= (18150883 / 106832264)*100

= 16.99%

19.24% 17.11% 16.99%

Working of Total Income:

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

earned)

2012) Total Income = 23849322+100092132= 123941454

2011) Total Income = 19754420+95689741= 115444161

2010) Total Income = 18150883+88681381= 106832264



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Interpretation:

This graph is indicating that the Non Interest Income to Total Income Ratio of NBP

for the year of 2010, 2011 & 2012 is 16.99%, 17.11% and 19.24% respectively. It is

showing that this ratio of NBP is not constant in all over the years. It is increasing day

by day.

It indicates that non markup income is how much percent of the total income of the

NBP. In 2010, this ratio is low but in 2011 and 2012 this ratio is increasing it means

in 2010 & 2011 NBP is not gaining more non interest income like commission,

brokerage income & income from dealing in foreign currencies etc due to which this

ratio is decreasing in 2010 & 2011 than 2012

4. Spread Ratio

Formula:

Spread Ratio = Interest Earned / Interest Expensed

Calculation:

2012 2011 2010

Interest Earned= 100092132

Interest Expensed= 56417827

= (Interest Earned / Interest

Expensed)

= (100092132 /56417827)

=1.77 times

Interest Earned = 95689741

Interest Expensed= 48516517


Expensed)

= (95689741 / 48516517)

= 1.97 times

Interest Earned = 88681381

Interest Expensed = 45169744


Expensed)

= (88681381 / 45169744)

= 1.96 times

1.77 1.97 1.96



15.50%

16.00%

16.50%

17.00%

17.50%

18.00%

18.50%

19.00%

19.50%

Year

2010

Year

2011

Year

2012

Non Interest Income

to Total Income Ratio


25/53

Interpretation:

This graph is showing that the Spread ratio of NBP for the year 2010, 2011,& 2012 is

1.96, 1.97 & 1.77 Times respectively. Its showing that the Spread Ratio of NBP is

not constant. This ratio is much lower in 2012 as compared to 2010 and 2011. It is

showing that the interest expenses in 2012 are more than 2010 and 2011 that is

becoming cause to decrease the ratio.

5. Return on Asstes

Formula:

Return on Assets = (Net profit/ Total assets) *100

Calculation:

2012 2011 2010


Total Assets= 1309339305

= (Net profit/ Total assets) *100

= (16162635/1309339305)*100= 1.23%

Net profit=17709165



= (17,709165/ 1153480100)*100= 1.53%


Total Assets=1038018467


= (17738405/ 1038018467)*100= 1.70%

1.23% 1.53% 1.70%

Total Assets

Year 2010

1309339305

Year 2011

1153480100

Year 2012

1038018467



1.65

1.7

1.75

1.8

1.85

1.9

1.95

2

Year 2010 Year 2011 Ye ar 2012

Spread Ratio


26/53

Interpretation:

This graph is indicating that the Return on Asset ratio of NBP for the year 2010, 2011

& 2012 is 1.70%, 1.53% and 1.23% respectively. It is showing that the Return on

Assets Ratio of NBP is not constant and is decreasing with the passage of time. This

ratio is high in 2010and 2011 but is decreasing in 2012. Its indicating that the

management of NBP is not utilizing its assets in an efficient manner in generating

earnings and revenues for the NBP.

6. Return on Total Equity

Formula:

Return on total Equity=Net Income/ Total equity*100

Calculation:

2012 2011 2010

Net income= 16162635

Total Equity= 116034637

=Net Income/ Total equity*100

= 16162635/ 116034637*100

= 13.92%




= 17,709165/ 112736906*100

= 15.70%




= 17738405/ 105687665*100

= 16.78%

13.92% 15.70% 16.78%

Working of Total Equity:

Total Equity


0.00%

0.20%

0.40%

0.60%

0.80%1.00%

1.20%

1.40%

1.60%

1.80%

Year

2010

Year

2011

Year

2012

Return on Assets


27/53

Description 2012 2011 2010

Share capital

Reserves

Un appropriated profit

18500114

28818528

68715995

16818286

26206507

69712113

13454629

25129425

67103611

Total Equity 116034637 112736906 105687665


Interpretation:

The graph is showing that the Return on Total Equity Ratio of NBP for the year 2010,

2011 & 2012 is 16.78%, 15.70% and 13.92% respectively. Its indicating that this

ratio is not constant in all over the years and is decreasing with the passage of time.

The Return on Total Equity Ratio of NBP in 2012 is lower as compared to 2010 &

2011. This ratio measures the profitability of NBP and is showing that the NBP can

generate much profit by the money invested by shareholders. In 2012, NBP is less

effective in using contributions from stockholders to generate earnings due to which

this ratio is low in 2012.

7. Debt Ratio


0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Year

2010

Year

2011

Year

2012

Return on Total

Equity


28/53

Formula:

Debt ratio= (Total debt/ Total assets)*100

Calculation:

Working of Total Debt:

Total Debt


Total Debt 1158061555 1017685691 906719635

Working of Total Assets:

Total Assets


Total Assets 1309339305 1153480100 1038018467


Interpretation:

The graph is showing that the Debt Ratio of NBP for the year 2010, 2011 & 2012 is

approximately in between 87% and 88%. Its showing that the NBP is using much

debts to finance its assets. This ratio is very high and is not a good sign for NBP. NBP


2012 2011 2010

Total Debt= 1158061555


=(115806155/1309339305)*100

=87%



=(1017685691/1153480100)*100

=87%



=(906719635/1038018467)*100

=87.35%

88.44% 88.22% 87.35%

28

86.80%

87.00%

87.20%87.40%

87.60%

87.80%

88.00%

88.20%

88.40%

88.60%

Year 2010 Year 2011 Year 2012

Debt Ratio


29/53

need to decrease to its debts because high debt shows the NBP has high risk of default

due to which investors will not like the NBP.

8. Debt / Equity Ratio

Formula:

Debt / Equity Ratio = (total debt/ total equity)

Calculation:

Working of Total Equity:

Total Equity


Total Equity 116034637 112736906 105687665


Interpretation:

This graph is indicating that the Debt to Equity Ratio of NBP for the year 2010, 2011

& 2012 is 8.79, 8.77 and 8.73 Times respectively. This ratio is not constant in all over

the years and is increasing with the passage of time. NBP has this ratio low in the year

2010 as compared to 2011 & 2012. But this ratio is approximately 9 which indicating

that the NBP has 9 times more debt than its equity that is not a good sign for NBP

because investors like this ratio to be low.


2012 2011 2010



= (115806155/116034637)

= 9.98

Total Debts= 1017685691


= (1017685691/ 112736906)

= 9.02



= (9067196935/105687665)

= 8.58

9.98 9.02 8.58

29

0.75

0.8

0.85

0.9

0.95

1

Year

2010

Year

2011

Ye ar

2012

Debt / Equity Ratio


30/53

09. Time Interest Earned Ratio

Formula:

Time Interest Earned Ratio = (EBIT/ total interest)

Calculation:

2012 2011 2010

EBIT= 79675533

Total Interest= 56417827

= (EBIT/ total interest)

= 79675533/56417827

= 1.41 times

EBIT= 74632519



= 74632519/ 48516517

= 1.54 times

EBIT= 69792031



= 69792031/ 45169744

= 1.55 times

1.41 1.54 1.55

Working of EBIT:

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

2010) EBIT = 24,622287+45,169744= 69,792031

2011) EBIT = 26116002+48516517= 74632519

2012) EBIT = 23257706+56417827= 79675533


Interpretation:

This graph is indicating thatthe Time Interest Earned Ratio of NBP for the years

2010, 2011 & 2012 is 1.55, 1.54 and 1.41 times respectively. Its showing that the

Time Interest Earned Ratio of NBP is not constant. NBP has the ability to cover its

interest expenses with its EBIT in all over the years. This ratio is high in 2010 but it is

decreasing in 2011 and 2012 due to increase in interest expenses


1.3

1.35

1.4

1.45

1.5

1.55

Year

2010

Year

2011

Year

2012

Time Interest EarnedRatio


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10. Advances / Deposits Ratio

Formula:

Advances / Deposits Ratio= Total Advances/ Total Deposits

Calculation:

2012 2011 2010

Advances= 657381154

Deposits= 1037784947

(Advances/ Deposits)

= 657381154/ 1037784947

= 0.633 times

Advances= 527109209

Deposits= 927415132

= (Advances/ Deposits)

= 527109209/ 927415132

= 0.5684 times

Advances= 478886755

Deposits= 832134054

= (Advances/ Deposits)

= 478886755/ 832134054

= 0.5754 times

0.633 0.5684 0.5754


Interpretation:

This graph is indicating that the Adavnces to Deposits Ratio of NBP for the year

2010, 2011 & 2012 is 0.5754, 0.5684 and 0.633 respectively. This ratio is not constant

in all over the years . NBP has this ratio very low in all over the years but the standard

for this ratio is 1:1. This low ratio is showing that the NBP is not using its depositsefficiently in advancing to the borrowers. It means NBP has excess liquidity and

potentially low profits.

11. Dividend Per Share

Formula:

DPS = Dividends paid to Shareholders/ Average common shares outstanding

Calculation:

2012 2011 2010

Dividend paid= 12596042Average common shares




0.530.540.550.560.570.580.59

0.60.610.620.630.64

Year

2010

Year

2011

Year

2012

Advances / Deposits

Ratio


32/53

outstanding= 1850011.4

= Dividends paid to Shareholders

/ Average common shares

outstanding

= 12596042/ 1850011.4

= Rs.6.8 per share

outstanding= 1681828.6



outstanding

= 10077219/ 1681828.6

= Rs.6 per share

outstanding= 1,345,462.8



outstanding

= 8,060510/ 1,345,462.8

= Rs.6 per share

6.8 6 6


Interpretation:

This graph is indicating that the Dividend per Share Ratio of NBP for the year 2010

and 2011 is Rs. 6 and Rs. 6.8for year 2012. Its showing that NBP has positive ratio in

all over the years. NBP is generating more earnings to pay its shareholders for their

common shares outstanding that is a good sign for NBP. It will attract more and more

investors to invest in NBP.

12. Earning Per Share(Given in Annual reports)

2012 2011 2010

8.74 10.53 13.24


5.6

5.8

6

6.2

6.4

6.6

6.8

Year

2010

Year

2011

Year

2012

Dividend Per Share


33/53


Interpretation:

This graph is indicating that the Earning per Share Ratio of NBP for the year 2010,

2011 & 2012 Rs. 13.24, 10.36 and 8.74 respectively. It is showing that the Earning

per Share Ratio of NBP is decreasing in 2011 and 2012. The EPS ratio of NBP in

2010 is more due to the increasing net income than other years that is showing the

shareholders were earning more per share in 2010 as compared to 2011 and 2012.


0

2

4

6

8

10

12

14

Year

2010

Year

2011

Year

2012

Earning Per Share


34/53

BALANCE SHEETRupees in Millions

ASSETS 2010 2011 2012

Cash and balances with treasury banks 115,657,025 131,843,291 158,332,708Balances with other banks 30,743,368 28,069,897 30,222,338

Lendings to financial institutions 23,051,171 44,360,727 8,272,645

Investments 301,078.498 319,527,254 343,537,529

Advances 478,886,775 527,109,209 657,381,154

Other assets 54,026,725 66,469,884 80,162,206

Operating fixed assets 27,620,697 28,126,754 27,949,833

Deferred tax assets 6,954,228 7,973,084 3,480,892

1,038,018,46

7

1,153,480,10

0

1,309,339,30

5

LIABILITIES 2010 2011 2012

Bills payable 8,006631 9,104,710 14,367,639

Borrowings from financial institutions 19,657,207 26,371,675 50,250,684

Deposits and other accounts 832,134,054 927,415,132 1,037,784,947

Sub-ordinated loans _ _ _

Liabilities against assets subject to finance lease 123,413 92,739 29,619

Other liabilities 46,798,330 54,701,435 55,628,666

Deferred tax liabilities net _ _ _

Total 906,719,635 1,017,685,691 1,158,061,555

NET ASSETS 131,298,832 135,794,409 151,277,750

REPRESENTED BY

Share capital 13,454,629 16,818,286 18,500,114

Reserves 25,129,425 26,206,507 28,818,528

Unappropriated Profit 67,103,611 69,712,113 68,715,995

Non

Controling498076 495488 _

Surplus 25,113,091 22,462,015 35,243,113

131,298,832

135,794,409 151,277,750



35/53

Income Statement2010 2011 2012

Markup/return/interest earned 88,681,381

95,689,74

1

100,092,13

2

Markup/return/interest expensed 45,169,744

48,516,51

7 56,417,827

Net markup/interest income 43,511,637

47,173,22

4 43,674,305

Provisions against non-performing advances 7,007,975 6,219,671 7,155,149

provision for/(reversal of) diminution in the value

of investments 2,904,949 3,138,494 842,111

provision against off balance sheet obligations 3,965 Nil Nil

bad debts written off directly 92,593 Nil Nil

10,009,482 9,358,165 7,997,260

Net markup/interest income after provisions 33,502,155

37,815,05

9 35,677,045

NON MARKUP/ INTEREST

INCOME

Fee, Commission & brokerage income 9,871,667 9,948,547 10,706,506

Dividend income 1,067,273 1,595,192 3,626,356

Income form dealing in foreign currencies

Profits from associates

2,278,898

66,906

3,196,630

83,559

3,703,319

_

Gain on revaluation of previously held

equity interest 180,131 _ _

Gain on sale & redemption of securities-net 2,512,363 2,390,211 3,220,442

Investments classified as held for trading

Loss from Joint Venture

6,730

(16,976)

(35039)

32,181

(2,472)

_

Other income 2,183,891 2,543,139 2,595,171

Total non-markup/ Interest income 18,150,883 19754420 23,849,322

Total income ( Interest + non-

Interest) 51,653,038 57569479 59,526,367

NON MARKUP/ INTERSET

EXPENSES

Administration expenses 26,732,045 30760815 35,736,823Other provisions written off 179,819 554,810 371,514

Other charges 118,887 137852 160,324

Total non markup/ Interest expenses 27,030,751 31453477 36,268,661

PROFIT BEFORE

TAXATION 24,662,287 26116002 23,257,706

Taxation Current 9,871,640 9229882 7,526,333

Prior years (938,158) 2,60,000 _

Deferred

(2,049,600

) (1083045) (431,262)

6,883,882 8406837 7,095,071PROFIT AFTER 17,738,405 17709165 16,162,635



36/53

TAXATION

This technique is also known as comparative analysis. It is conducted by setting

consecutive balance sheet, income statement or statement of cash flow side-by-side

and reviewing changes in individual categories on a year-to-year or multiyear basis.

The most important item revealed by comparative financial statement analysis is

trend. A comparison of statements over several years reveals direction, speed and

extent of a trend(s). The horizontal financial statements analysis is done by restating

amount of each item or group of items as a percentage. Such percentages are

calculated by selecting a base year and assign a weight of 100 to the amount of

each item in the base year statement. Thereafter, the amounts of similar items or

groups of items in prior or subsequent financial statements are expressed as a

percentage of the base year amount. The resulting figures are called index numbersor trend ratios.

Formula = Current Year amount / Base Year amount * 100.

10.a.Horizontal analysis Balance Sheet.

ASSETS 2010% age 2011% age 2012% age

Cash and balances with

treasury banks

100% 114% 137%

Balances with other banks 100% 91% 98%

Lendings to financial

institutions

100% 192% 36%

Investments net 100% 106% 114%

Advances net 100% 110% 137%

Operating fixed assets 100% 102% 101%

Deferred tax assets net 100% 115% 50%

Other assets net 100% 123% 148%

TOTAL 100% 111% 126%

LIABILITIES %age %age %age

Bills payable 100% 114% 179%Borrowings 100% 134% 257%

Deposits and other accounts 100% 111% 125%

Subordinate loan _

Liabilities against assets 100% 75% 24%

Deferred tax liabilities net - - -

Other liabilities 100% 116% 119%

TOTAL 100% 112% 128%

PRSEENTED BY 2010 %age 2011 %age 2012 %age

Share capital 100% 125% 137%

Reserves 100% 104% 115%unappropriate profit 100% 104% 102%



37/53

Surplus on revaluation of

assets

100% 89% 140%

Non controlling 100% 99.5% -

TOTAL 100% 103% 115%

10.b. Horizontal analysis

Profit & Loss A/C:

Particulars 2010% 2011% 2012%

Markup / return / interest

earned

100% 108% 113%


expensed

100% 107% 125%

Net markup / interest

income

100% 108% 100.04%

Provision against non

performing advances-net

100% 89% 102%

Provision for diminution in

the

value of investments net

100% 108% 29%

Provision against offbalance

sheet obligations

100% - -

Net markup / interest

income

100% 113% 106%

Nonmarkup / interest income

Fee, commission andbrokerage income 100% 101% 108%

Dividend income 100% 149% 339%

Income from dealing in foreign

currencies

100% 140% 163%

Gain on sale of securities

net

100% 95% 128%

Unrealized gain on revaluation

of investments

100% - -

Share of loss from joint

ventures

100% 190% -

Share of profits 100% 125% -



38/53

Gain on revaluation of

previously held equity interest

100% - -

Other income 100% 116% 119%

Total nonmarkup / interest

income

100% 109% 131%


Interest)

100% 111% 115%

Nonmarkup / interest expenses

Administrative expenses 100% 115% 134%

Other provision net 100% 309% 206%

Other charges 100% 116% 135%


expenses

100% 116% 134%

Profit before taxation 100% 106% 94%

Taxation Current year 100% 93% 76%

Prior years 100% (28)% -

Deferred 100% (53)% (21)%

100% 122% 103%

Profit after taxation 100% 99% 91%



39/53

Vertical analysis is a technique for identifying relationship between items

in the same financial statement by expressing all amounts as the

percentage of the total amount taken as 100. In a balance sheet, for

example, cash and other assets are shown as a percentage of the total

assets and, in an income statement, each expense is shown as apercentage of the sales revenue. In Vertical analysis, various components

of the financial statements are standardized by expressing them as a

percentage of some bases.

Examples of common-sized statements include:

1. Components of the balance sheet expressed as a percentage of total

assets

2. Components of the income statement expressed as a percentage of

sales orInterest earned

Formula:

The formula for Vertical Analysis is:

Individual item of financial statement/total of items head *100

Vertical analysis of Statement of Financial Position

ASSETS 2010%age 2011%age 2012%age

Cash and balances with

treasury banks

11% 12% 12.09%

Balances with other banks 3% 2% 2.3%

Lendings to financial

institutions

2% 2.7% 0.63%

Investments net 28% 26.5% 26.24%

Advances net 46% 44.3% 50%

Operating fixed assets 3% 2% 2.13%

Deferred tax assets net 5% 6% 0.265

Other assets net 4% 5% 6.12

TOTAL 100% 100% 100%

LIABILITIES

Bills payable .008% .008% 1.1%

Borrowings 1% 2% 3.83%

Deposits and other accounts 81% 83% 79%

Subordinate loan



40/53

Liabilities against assets 0.0012% 0.011% 0.00226

Deferred tax liabilities

Other liabilities 3% 4% 0.0424

TOTAL LIABILITIES 86% 89% 88.4%NET ASSETS 14% 11% 11.6%

Vertical analysis of Profit & loss account

Particulars 2010% 2011% 2012%

Markup / return / interest earned 100% 100% 100%


expensed

52% 51%

Net markup / interest income 49% 49% 43.6%

Provision against non performing

advances-net

8% 6% 7%

Provision for diminution in the

value of

investments net

3% 4% 1%

Impairment of goodwill .1% - -

Provision against off balance sheet

obligations

-.002 - -

11% 10% 8%

Net markup / interest income

after

provisions

40% 39% 35.8%

Non -markup / interest income

Fee, commission and brokerage

income

13% 11% 10.6%

Dividend income 1% 2% 4%Income from dealing in foreign

currencies

2% 3% 3.6%

Gain on sale of securities net 3% 2% 3.21%

Unrealized gain on revaluation

of

investments

- 0.1% -

Share of loss from joint ventures 0.009% 0.1% -

Share of profits from associates 0.1% .1% -

Gain on revaluation of .2% -0.0035 -0.0047



41/53

previously

equity interest

Other income 2% 3% 2.6%


income

20% 21% 24%


Interest)

58% 60% 59.4%

Administrative expenses 31% 32% 35.70%

Other provision net .2% .6% .37%

Other charges .1% .2% .16%


expenses

30% 33% 36.23

Profit before taxation 11% 10% 23.23%

Taxation Current year 11.13% 9% 7.5

Prior years -3% .27% -

Deferred 7% 9%

Profit after taxation 20% 19% 16.14%

12.BANKANALYSISWITHREFERNCETO

COMMERCIAL BANKSLISTEDONSTOCKEXCHANGE

Financial Position of Commercial Banks Internship Report on NBP, Jalal Pur Pir Wala Branch Multan. 41


42/53

Registered in Pakistan Name

of As of June 2012

Commercial Paid up Reserves Assets Deposits Advances Profit Earnings Branch Credit

Bank Capital (Rs. Bn)

(Rs.

Bn) (Rs. Bn) (Rs. Bn)

After

Tax

Per

share Network Rating

(Rs.

Bn)

(Rs.

Bn) (Rs) (Nos)

Habib Bank 7.59 23.6 735.71 584.85 411.36 7.5 9.75 1400 AA+

NBP 8.97 18.54 788.12 621.53 173.42 8.1 9.03 1249 AAAAllied Bank 6.46 5.48 344.7 293.97 168.45 2.51 3.88 757 AA

MCB 6.28 35.88 450.34 350.72 228.98 7.68 12.22 1038 AA+United Bank 10.12 12.82 576.02 465.54 328.55 5.59 5.53 1100 AA+

First Women 0.28 0.22 8.04 6.4 3.09 0.05 1.67 38 BBB+

Bank of Punjab 5.29 7.43 217.85 180.82 142.85 -2.63 -4.97 272 AA-

Soneri Bank 4.11 1.88 81.61 64.73 45.83 0.47 1.13 90 AA-

Askari Bank 4.06 7.59 194.21 153.32 114.04 0.05 1.01 155 AA

Bank Al- Habib 4.79 2.8 167.36 136.75 93.25 1.25 2.61 203 AA

Bank of Khyber 4 1.34 34.43 24.4 11.14 0.11 0.27 34 BBB+

Bank Al- Falah 8 2.95 333.02 287.77 180.02 1.69 2.12 231 AA

Saudi Pak 5 0.22 50.83 42.35 27.62 -0.81 -1.54 55 A-

Faysal Bank 5.3 3.57 137.31 99.61 87.61 0.75 1.41 111 AA

KASB Bank 4.02 0.17 53.66 44.33 32.65 0.08 0.39 41 A

Meezan Bank 4.54 0.81 71.74 57.84 38.3 0.44 0.98 111 A+

NIB Bank 28.44 8.46 177.98 112.12 85.43 -0.73 0.23 240 AA-

Mybank 4.24 0.41 45.47 31.96 23.03 0.43 1.02 69 AAtlas Bank 5.01 0.52 30.7 22.18 17.5 -0.2 -0.39 31 A-

Standard

Chartered 38.72 1.95 276.38 173.81 126.27 1.31 0.34 176 AA+

JS Bank 5.11 0.01 24.16 14.08 9.57 0.16 -0.31 11 A-Habib

Metropolitan 6.02 6.7 192.45 128.97 101.22 1.57 2.6 100 AA+

SWOT Analysis is a strategic planning method used to evaluate the Strengths,

Weaknesses, Opportunities, and Threats involved in a project or in a business venture.

It involves specifying the objective of the business venture or project and identifying

the internal and external factors that are favorable and unfavorable to achieving that

objective.If SWOT analysis does not start with defining a desired end state or

objective, it runs the risk of being useless. A SWOT analysis may be incorporated into

the strategic planning model. An example of a strategic planning technique that



43/53

incorporates an objective-driven SWOT analysis is SCAN analysis. Strategic

Planning, including SWOT and SCAN analysis, has been the subject of much

research.

Strengths: Attributes of the organization that is helpful to achieving the

objective.

Weaknesses: Attributes of the organization that is harmful to achieving theobjective.

Opportunities: External conditions that is helpful to achieving the objective.

Threats: External conditions which could do damage to the business's

performance.

Strengths:

Advance salary product:

It exists in the list of top 10 banks in the ASIA.

It has the highest profit among the largest banks of the ASIA.

Its paid-up capital is very high

Very less uncertainty because of a Govt. bank

High confidence due to higher capital investment.

LC (letter of credit) is acceptable all over the world.

Chest branches can supply cash on the behalf of state bank.

Chest loans can be used for limited time

Stake holder is Govt. of Pakistan.

It holds the Govt. treasury.

The biggest customer of NBP is Govt. of Pakistan. Work as corresponding of ASKARI bank

Provide High packages to employees.

Provide high staff benefits.

Recruitment occurs after every year.

MTOs selection is planned till 2010.

Weaknesses:

The Major problem with NBP is its image as it is a Govt. bank so the vision of

the customer is not positive about it.

People think it will not provide them satisfactory services.

In many branches management is not up to date.

In small areas branches employees have less education.

Award and promotion policies are not implemented in all branches.

There is no concept of job rotation

Employees have low coordination level among each other.

Opportunities:

Advance salary for employees

Employee benefits

Pensions

Award for employee performance



44/53

Promotions

Corporate planning learning.

Threats:

Turn out of employee

Job security and Strugglers

At a time do no. of jobs due to competitor.

NBP have to do those jobs which have no loss and no profit because of their

competition

Customer dissatisfaction

Slow actions on complains

Political environment.

It is very important that an organization considers its environment before beginning

the marketing process. In fact, environmental analysis should be continuous and feed

all aspects of planning. The organization's marketing environment is made up of:

1. The internal environment e.g. staff (or internal customers), office technology,

wages and finance, etc.

2. The micro-environment e.g. our external customers, agents and distributors,

suppliers, our competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces,

Sociocultural forces, and Technological forces. These are known as PEST factors.

Political:

Privatization policy and deregulation.

Impact of subsidized credit affecting and NCBs.

Employment practices, Unions, Associations.

Political Interference and harassment.

Incidents of high taxation on banking industry.

Economical:

Constraints in mobilization of public savings because of inflation.

Staff cost.

Operating cost.

Bad debts



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Social & Cultural:

Inadequate human resources.

Cultural strain to savings.

Defaulters lobby.

Declining education and work ethics.

Inadequate accountability.

Adequate empowerment.

Technological:

Inadequate communication infrastructure.

Inadequate computer facilities.

Inadequate IT training

NBP is the biggest bank of Pakistan that has its branches at national and international

level. This is only the bank that is owned by the government of Pakistan. NBP acts as

an agent of the State Bank of Pakistan. The future prospect of NBP is looking very

strong because it has its branches at the national and international level. It has huge

amount of profit. No other bank can compete this bank because it works on the behalf

of the government. Management of the NBP is also very efficient to meet the

requirements. Customers have trust on it. NBP also deals with government employees

and provides benefits to them. NBP can touch the heights by the computerized

system. Financial position of NBP is very good. Assets and profits of NBP are in a

position that no other bank will even think to earn. NBP plans to continue its strongfocus on recovery and reduction in non performing loans, deposit mobilization,

expense management and consolidation of loans. Financial position of NBP in 2010 is

good and is expected to be better in the future. NBP is taking IT initiatives to upgrade

and implement new application solutions to meet the challenges of the growing

competition. It will improve the operational efficiency and control, customer services.

It is expected that the NBP will lead to the other banks of Pakistan in the future.



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As a financial analyst I concluded that some ratios are good for NBP while some

ratios are not good. These ratios are as following:

The net profit margin of NBP in all of the years is good. Non Interest Income to Total Income Ratio of NBP is good.

Return on assets ratio of NBP is low.

Return on total equity ratio is good in all over the years.

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

Debt to equity ratio is also too high of NBP that is not god.

Time Interest earned ratio of NBP is good.

Advances / Deposits ratio is very low and not good for NBP.

Operating Cash Flow ratio is also very low in all over the year that is not

good.

Dividend per share ratio of NBP is good. Earning per share ratio is very good.

P / E ratio is also good of NBP.

But despite of all these problems NBP is in good position. If it solves these problems

it can reach at the highest position and no one can touch its hights.

As a financial analyst I will recommend that some necessary points should be

improved that are as following: NBP can also increase the net profit margin ratio by decreasing its non mark-

up interest expenses and taxes.

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

expenses.

Return on assets ratio can also be increased by utilizing the assets in an

efficient manner.

NBP need to decrease its debts to manage the debt ratio because a high debt is

not a good sign for NBP.

Debt to equity ratio is also very high. NBP should decrease its debts because

the equity investors will not invest in it due to high debts. NBP can increase its advances / deposits ratio by giving advances to the

customers.

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

flow.

Moreover,

Here I am giving some suggestions, which in my view can add some input for

efficiency and better performance of NBP as an organization in general and City

branch in particular.



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The recommendations are as follows:

Professional training

NBP staff lacks professionalism. They lack the necessary training to do the job

efficiently and properly. Although staff colleges in all major cities but they are not

performing well. For this purpose these staff colleges should be reorganized and their

syllabus should be made in such a way to help the employee understand the ever-

changing global economic scenario.

Delegation of authority

Employees of the bank should be given a task and authority and they should be asked

for their responsibility.

Performance Appraisal

The manager should strictly monitor the performance of every staff member. All of

them should be awarded according to their performance and result in the shape of

bonuses to motivated and incite them to work more efficiently.

Transfer

Transfer is not properly carried out. Some of the employees are continually serving at

the same post. They are simply rotated at the same branch. Therefore it is

recommended that evenly rotation of every employee should take place after every

three years in different branches of the bank.

Changes in Policies

There should not be any abrupt policies change by the upper management, as this

practice hurts the customer confidences in the bank. Government should make long-

term policies

Need of Qualified Staff

Required, qualified staff should be provided to branch in order to improve the

functioning of the branch. Especially a telephone operator should be appointed.



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Utility Bill Charges

Bank gets Rs. 10 to processes a utility bill, and it is very tire, tough and hard job.

These charges should be increased to RS 15 per bill to enable the branch to cover their

handling costs and make some profit.

Link with the Head Quarter

100 major branches of NBP should established a direct link with the, head quarter In

Karachi, through Internet or Intranet. This will make the functions and decision

making of the management easier and convenient.

Credit Card

National bank of Pakistan should start its operation in credit card. These cards are

very helpful for the ordinary customer in general and the business people in particular.

To make it more secure and to eliminate the misuse of it, the management is required

to keep proper security against the card.

Installing Validator and ATM

Validator machine is used to count the currency notes and its installation will help to

eliminate to counting errors and will save time.

This branch is situated in the City, which is supported to be the hub of business

activates. In this area an auto teller machine (ATM) is the need of the hour

businessmen can easily check their balance in the bank and also with draw their

money conveniently.

Clean Loans

Clean loan or clean overdraft is the credit facility extended to the customers to the

customers without any security. These types of small term loans should not be



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extended to anybody, because sometime these loans are provided to blue-eyed people

of the management and they become a part of bad debts.

Cash Financing

In this mode of financing the amount of credit not utilized by the borrower is

remained tax-free. It is recommended that a small amount of interest should be charge

on this amount as well because the bank gas kept-aside the amount for that borrower

and cannot advance it anywhere..

Needs to be Flexible in credit Policy

As mentioned earlier, NBP is very conservative in advances and loans policy. It

reduces the investment opportunities. Also loans should be given to the small

businessmen and the agriculture sector at the low markup rate. It should adopt flexible

credit policy while giving credit to the agriculture sector.

Technological Advancement

I would like to suggest that at least all the main branches of NBP should be fully

computerized in order to expedite the dealing process among bankers and their

customers. Every department should be provided a computer with adequate training

(especially Advances, Deposits and Foreign Exchange departments).Daily records

should be entered directly into these computers, (instead entering the overall daily

transactions after the banking hours). It will not only reduce transaction time, will

increase accuracy but will also be efficient as well. Not only it will be economical but

will also reduce the extra burden of work of the bank. It will also help in reducing the

use of excessive paper work.

Improper Distribution of Work

Proper distribution work leads to success in every organization. Proper distribution of

work prevents the employee from over and under work situation. So for a smooth

running of an organization proper distribution of work is the hint to be followed.



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During my internship I observed that there was no proper distribution of work in the

bank. I saw that some of the employee worked like ants other sat idle starting here and

there. So this created a lot of over work situation for while relaxation for other.

Favoritism and nepotism

In the City branch during my internship I saw that when some of the employees are

transfer to other places, due to their relation with influential people and with top

management they can cancel their transfer in few weeks, when they are unsatisfied at

that place.

So I suggest that in the organization there should be no favoritism, nepotism and

politics and their transfer and promotion should be made on merit and according to

the rules and regulations of the bank and provided favorable environment to the

employee to show their performances.

Inter Departmental Transfer

I watched during my internship that, there is number of employee who have worked

on one seat for many a year. It can have negative effects motivation of employee who

is hard working and intelligent. Take the example of advances section. In advance

section if the employee is transfer after sixth month or seven month, how can he be

able to show his performances and how can he be able to know the bank customer in a

short period of time.

Marketing Policy

The branch should adopt various marketing strategy and promotion strategy to

promote the bank and its product. The most important in my opinion is personal

marketing; it is the most effective of all when you think in term of branch level. But

on the whole organization level, they should arrange the seminar within the bank and

outside the bank.

Complaints of Customer



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There should be an information desk to provide the information and to receive the

complaints of the customer in the bank. There is no complaint box available in the

branch and not any person appointed to hear the complaints.

Every person cannot go to the manager for the complaint because most of the people

are hesitant. So I suggest management to install a compliant box in the branch, and

recruit a special person for that guidance of the customer when they are unable to

manage some difficulties in banking matters.

Analysis of the Business:

Proper analysis of the business reports should be conducted before extending any type

of loan. For this purpose professional training of the stuff member is required.

Organizational Commitment

It is suggested that employees working on daily wages basis should be given some

benefits, which the other employees are getting. Their salaries must increase

according to efficiency, performance and service.

Managerial Leadership

In the analysis, we have discussed the difficulties of the assistant in taking any

initiative; therefore it is recommended that the assistants should he given special

training to make them ready for the leadership.

Credit Monitoring

The credit department of the bank should carries out vigilant credit monitoring. They

should ensure the proper payment of installments and the mark-up by the borrower.

The staff members who have done all the paper work of the loan extension should

perform the monitoring, as he/she will be having more information about the

borrower.

Extended Banking Hours

The banking hours may be extended up to six, as being practiced by HBL opposite toit.



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Some of the business community due to law and order situation are now reluctant to

keep the fund in their premises and would want to depart with it. Therefore, City

Branch may extend the night banking to cater to demand of this business community.

The branch could also be opened to cater the requirements of this business community

Limited staff:

Staff of NBP in village branches is limited, they face much difficulty to perform their

task efficiently. So I recommended that staff should increase in those branches for

better development of resources. On other hand I observed that many branches of

NBP are overcrowded. Less people can work which extra people perform. Number of

employees should decrease or new branches should opens for the adjustment of theseextra employees. So there should be effective distribution of human resource achieve

goals effectively and efficiently.

Housing and House Hold Goods loans

Bank should initiate these loans because most of banks customers are middle class

and they cannot afford to buy house or household goods at once by their own.

I took help from the following sources:

Website of NBP: www.nbp.com.pk

www.google.com.pk

www.wikipedia.com

www.investopedia.com

Branch officers like

Operations manager

Compliance officer

Other staff etc

http://www.nbp.com.pk/http://www.google.com.pk/http://www.wikipedia.com/http://www.investopedia.com/http://www.nbp.com.pk/http://www.google.com.pk/http://www.wikipedia.com/http://www.investopedia.com/


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All the material used in this report is obtained from website of NBP. All financialstatements are downloaded from annual report ofwww.nbp.com.pk. Financial reports

are present in Annual reports. I took all the data from the financial statements of 2012.

2011 and 2010. I took the financial statements of 2012 for the preparation of this

report.
http://www.nbp.com.pk/http://www.nbp.com.pk/

Documents

INTERNSHIP REPORT on NBP 2013.doc