NBP -FINANCE Internship Report 2012

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Virtual University of Pakistan

Evaluation Sheet for Internship Report

Spring 2012

FINI619: Internship Report (Finance)Credit Hours: 3

Name of Student: BABAR WAQAS

Student’s ID: MC100200422

Evaluation Criteria Result

Report writing Pass

Presentation & VivavoceFinal Result

1



2



Internship report

On

NATIONAL BANK OF

PAKISTAN

Name: BABARWAQAS

Student ID: MC100200422

Session: Spring 2012

Submission date of internship report: 22JUNE

2012

3



Virtual University of

Pakistan

Scanned copy of letter of

undertaking

Scanned copy of internship

completion certificate

4



Dedication:

This internship report is dedicated to my Parents and all

staff of NATIONAL BANK OF PAKISTAN TIP

BRANCH Haripur branch from whom I got training

without whose efforts, supervision and also prayers I would

have been nothing. My parents who ever wished to see me

as a successful man in every field of my life praying for

their long and prosper life.

5



Acknowledgement:

I am very thankful & want to express my deepest gratitude

to my remittance officer, pension assistances and casher for

there supervision, contribution, intellectual guidance,

constructive suggestions, valuable time, patience and wise

comments to make this report.

I wish to express my deepest and sincere appreciation to

my friend Mr.waqas his help, cooperation, and moral

support

6



Executive summary

This report is based on internship in National Bank

of Pakistan .the report is based on the activities

which are performed in national bank branch and

detailed of main head office branch by using

secondary resources. This report contains

introduction, overview of the organization and the

brief history of the organization. There are also

stated the activities which I performed during my

internship in national bank of Pakistan TIP branch

haripur.

National Bank of Pakistan is a Govt. bank. The

head office of NBP is in Karachi. It has over 1250

branches in Pakistan and 22 branches abroad..

Bank is involved in performing many function and

7



services like accepting deposits and making

advances of loans, and utility service and also

gives overdrafts facility to its credit worthy

costumer, loans for investment and credit creation

and discounting of bills.

During the course of internship I have been

assigned different duties. I have worked in all

Banking Departments especially in, Cash

Department, and Remittance Department

&pension department foreign exchange

department, account opening department. I tried

my best to made repot using the learning and

observations during the course, with conclusion

and some recommendations.

8



This report highlights the operation and functions

of national bank of Pakistan. NBP act as financial

agent to its customer in return it gets reward for its

services in the shape of profit. Being a government

owned institution it plays an important role in

development of society as well as in development

and growth of the economy.

The main purpose of the internship is to gather

relevant information to compile internship report

on national bank of Pakistan and the branch in

which I have completed my internship.

The report is based on my six week internship

program in national bank of Pakistan tip branch

haripur. The methodology reported for collection

of data is primary as well as secondary source date.

The biggest source of information is my personal

9



experience observation while working with staff

and having discussion with them.

Recommendations are presented at the end which

is based upon the analysis of the data and findings

of the study.

Table of contents

S.No Page

No

1 Brief introduction of the organization’s business sector:

•

NBP work to;• NBP aim to be people who

• Bank has confidence that tomorrow it will be

10-1

2 Brief history:

• Vision

• Mission

12-1

3 Organizational Hierarchy chart:

Tip branch hierarchy chart

15-1

4 Business Volume 2011 17

10



5 Product and services

• Product lines

• Treasury products

• Derivatives products

• Services

• Trade Services

17-2

6 Competitors:

•Public sector

• Private sector

20-2

7 Brief Introduction of all the departments

• Cash department:

• CLEARANCE DEPARTMENT

• Advances department:

• REMITTANCE DEPARTMENT :

• DEPOSIT DEPARTMENT:

FOREIGN EXCHANGE DEPARTMENT:• CREDIT AND RISK MANAGEMENT:

• HUMAN RESOURCE MANAGEMENT

23-2

8

Comments on the organizational structure:

25

9 A brief introduction of the branch where you did your

internship

26-2

10 Starting and ending dates of your internship 27

11



11 Names of the departments in which you got training and

the duration of yourTraining

27

12 Detailed description of the tasks assigned to you during

the internship program

• Deposits

• Advances

• remittances

•

collections• trade finance

• foreign exchange

• inland bank guarantees

27-3

13 Ratio Analysis: 33-5

14

Future Prospects of the Organization:

50-5

15 Conclusion: 51-5

16 Recommendations for Improvement: 53

12



Brief introduction of the organization’s

business sector:

National bank of Pakistan incorporated under the

national bank of Pakistan ordinance 1949 and

listed on the all stock exchanges in Pakistan its

head office is situated at chundrigar road Karachi.

The national bank is engaged in providing the

commercial banking and related services in the

Pakistan and overseas. Bank also handles the

treasury transactions for the government of

Pakistan as agent to the state bank of Pakistan’s.

National bank of Pakistan (NBP) is one of the

leading and first government recognized bank in

Pakistan. NBP was established in November 9,

1949. And it started functioning from November

20, 1949.

13



There are certain characteristics, which sets NBP

apart from other nationalized commercial banks.

The most important characteristics of NBP is that

it works as an agent of the State Bank, where State

Bank does not have a branch of its own, The NBP

also acts as a trusty to the National investment

trust (NIT), which is one of the premier financial

institution of the country. It is charged with the

responsibility to mobilize of the mobilizing small

savings. The establishment of the NBP thus

signaled the achievement of another milestone in

the development of banking industry in Pakistan.

National Bank of Pakistan is one of the pioneer

financial institutions of the country, which is

working actively in all the field of financings

14



National bank of Pakistan is the largest

commercial bank operating in Pakistan. It has

redefined its role and has moved from a public

sector organization in to a modern commercial

bank. NBP headquarters in Karachi and has over

1200 branches country wide. National bank

provide both public commercial sector banking

services.

NBP consolidated its position as one of the top

players in corporate and investment banking of the

country in 2010 and has built a strong customers

relationship with the premier corporate clients

NBP work to;

• Meet expectations through Market-based

solutions and products.

• Reward entrepreneurial efforts.

15



• Create value for all stakeholders.

NBP aim to be people who;

• Care about relationships.

• Lead through the strength of commitment

and willingness to excel.

• Practice integrity, honesty and hard work.

Believe that these are measures of true

success.

Bank has confidence that tomorrow it will be

• Leaders in the industry.

• An organization maintaining the trust of

stakeholders.

16



• An innovative, creative and dynamic

institution responding to the changing needs

of the internal and external environment

Brief history:

National bank of Pakistan was established on

November 8, 1949 through passing of a special

ordinance in the national assembly. The

establishment is came due to the reason when

newly born country was facing economic crises.

To get rid of the intervention of from the reserve

bank of India a self owned and operated central

bank by the name of state bank of Pakistan was

formed in July 1948 to carry on the responsibilities

of issuing the currency and most importantly

controlling the flow of money in side the country.

17



The bank commenced its operations from

November 20, 1949 at 6 important jute centers in

the East Pakistan and directed its resources in

financing of jute crop. The bank’s Karachi and

Lahore offices were subsequently opened in

December 1949.the bank acts as the agent to the

state bank of Pakistan for handling

provincial/federal government receipts and

payments on their behalf. The bank has also played

an important role in financing the country’s

growing trade, which has expanded through the

years as diversification took place. Today the bank

finances import/export business to the tune of RS.

52.7 Billion Where as in 1960 financing under this

head was only Rs.1.54 billion

18



After the quick growth of 50’s NBP branches

worked to establish itself as sound & stable Bank

in the early 60’s. The expansion efforts were put

into force during these years and Marketing efforts

were made to target specific market. The bank also

plays a vital role in financing the country’s

growing trade which was extended through the

years as diversification took place.

National bank has earned recognition and

numerous awards internationally .it has been the

recipient of the bank of the year 2001,2002,2004

and 2005 award by the banker magazine the best

foreign exchange bank Pakistan for

2004,2005,2006 and 2007.it has also been

presented a recognition award 2004 for having a

gender sensitive management by WEBCOP

AASHA besides other awards.

19



Vision:

To be recognized as a leader and a brand

synonymous with trust, highest standards of

services quality, international best practices and

social responsibility

Mission:

• 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

20



• Discharging our responsibility as a good

corporate citizen of Pakistan and in

countries where we operate

Organizational Hierarchy chart

21



22



NATIONAL BANK OF TIP BRANCH

HIERARCHY CHART

MANGE

R FOREGIEX

EXCHANGE

OFFIECE

REMITTANCE

CLEAR

PENSION

ACCOUNT

OPENING

PUNCING

CASHIER

23



Business volume:

YEAR 2011

Revenue (Rs. In 000) 95,325

Deposits (Rs. In 000) 927,421

Advances (Rs. In

‘000)

525,045

Total assets 1,149,577

Share holder equity 110,520

Earning per share 10.47

No of Employees 1 4,481

PRODUCT AND SERVICES

Product lines

• NBP PREMIUM AAMDANI

• NBP PREMIUM SAVER (PLS SAVING

ACCOUNTS)

24



• NBP SAIBAN

• ADVANCE SALARY

• One Card does it all (ATM +Debit Card)

• investor advantage (margin finance facility

• NBP Cash n Gold(ready cash against gold)

• NBP kisan taqat

• NBP kisan dost

• Pakremit ( internet based home remittance

service)

• NBP Production Shield (Personal Accident

insurance)

• NBP student loan scheme

Treasury products

• Pakistan investment bonds

25



• Plain vanilla FX products

Derivatives products

• Currency options

• Interest rate swaps and FRAS

• Cross currency swaps

Services

• NBP Online Branch Banking

• Demand drafts

• Mail transfers

• Pay order

• Traveler’s cheques

• Commercial finance

• Letter of credit

26



• Foreign remittances

• Swift system

• Short term investment

• Equity investment

• N.I.D.A

• Agricultural finance

• Corporate finance

Trade services

•Letter of credit

• Trade collection services

• Payment services

• Trade financing

• Structured trade finance

E

27



Competitors:

Public sector:

• First women bank limited (FWB)

• The bank of Punjab BOP

• The bank of Khyber

Private sector:

• United bank limited

• MCB bank ltd

28



• Standard Chartered Bank limited

• Bank al al-falah limited

• Bank al habib limited

• Askari bank

• Faysal bank limited

• Metropolitan bank limited

• Allied bank limited

• Meezan bank

29



• Js bank

• Kashf bank

• Atlas bank

• Habib bank limited

• Soneri bank limited

• Union bank limited

• Saudi pak commercial bank ltd

• Dawood bank

30



• Bank al habib

• Citibank

• Royal bank of Scotland

• Saudi pak bank limited

Brief Introduction of all the departments

Cash department:

Cash department deal with the payment and receipt

of the money and record should be maintained .

CLEARANCE DEPARTMENT:

31



A clearinghouse is an association of commercial

banks set up in given locality for the Purpose of

interchange and settlement of credit claims. The

function of clearing house is performed by the

central bank of a country by tradition or by law.

Advances department:

Advances department is one of the most sensitive

and important department of the bank.

NBP provides advances to different people in

different way as demand. type are advance

are

• Cash finance

• Overdraft /running finance

32



• Demand financing/ loans

REMITTANCE DEPARTMENT :

This department deals with the transfer of money

from one bank to other bank or from one branch to

another branch for their customers.

DEPOSIT DEPARTMENT:

It controls the following activities:

• Account opening.

• Issuance of chequebook.

•

Current Account

• Saving Account

• Cheque cancellation

FOREIGN EXCHANGE DEPARTMENT:

This department mainly deals with the foreign

business. The main functions of this

33



Department are:

• Letter of credit dealing.

• Foreign currency accounts dealing.

• Foreign Remittance dealing.

CREDIT AND RISK MANAGEMENT:

An executive risk management committee has

been established to emphasize on the bank’s

commitment to a robust risk management and risk

culture.

HUMAN RESOURCE MANAGEMENT:

NBP is striving to become an employer of choice

through improved HR Policies and competitive

remuneration. HRM department hire and train

workers.

34



Comments on the organizational structure:

The bank has clearly defined organizational

structure which supports clear line of

communications and reporting relationships. There

exist a properly defined financial and

administrative power of various committees and

key management personnel which supports

delegation of authorities and accountability.

The organization structure of national bank of

Pakistan is centralized because all the decision of

the bank is taken by the top management.

A brief introduction of the branch where you

did your internship:

National bank of tip branch haripur established in

1979the branch is established in haripur because

35



near the bank branch there are two main industries

they find an opportunity to established branch in

haripur so that they get profit from these

industries. The name of the bank is national bank

of Pakistan tip branch due to the tip industry. The

main profit comes from these two industries

initially the main source of profit are these two

industries TIP and NRTC. An agreement sign

between tip and national bank of Pakistan that the

national bank will provide the pension to the tip

workers in all cities of the Pakistan and tip open a

pension account in tip branch now all national

bank branches are bound to pay the pension to the

employee of the tip.

Other industry in NRTC that maintain an account

with tip branch haripur. This industry also provides

a big profit to the national bank tip branch. Tip

36



branch also deal the export and import of these two

main industries.

Other sources for revenue are the WAPDA .

WAPDA also maintain a account with tip branch

haripur.

Tip branch use the manual system and customer

faces many difficulties. Tip branch is converted

from manual system to online system on 14 April

2011.and now also providing the ATM facility to

there customers.

Starting and ending dates of your internship

Starting date of internship 15NOV 2011

Ending date of internship 31DEC2011

Names of the departments in which you got

training and the duration of your

Training

• Deposits

37



• Advances

• Remittances

• Collections

• Trade finance

• Foreign exchange

• Inland bank guarantees

Detailed description of the tasks assigned to you

during the internship program

Deposits:

In this department Sir Naseer assign me different tasks.

Customer’s comes in bank for depositing amount and have

no account so firstly they have to open his/her account in

bank. For account opening customer must fill account

opening form, signature on the SS card, and deposit initial

amount for account opening. I help some customer in

filling account opening form, and take their signature on

the SS card, after that I attached SS card with account

38



opening form, and fill the initial deposit slip of the

customer for opening new account. After all this process I

give account opening form and account opening ledger to

bank manager for signature.

During my internship period I have learnt about KYC stand

for know your customer .this is helpful for bank to identify

that customer are going to deposits amounts legal money

black. This process protect bank from laundering of money

because sometime people

Deposits their black money into bank and withdraw it after

some time and said this is legal money so I have deposited

it in bank all of process called laundering. So bank in this

way can identify customer source of income.

Advance

National bank of Pakistan also provide facility to

government employees for taking advance salary from

39



bank .I have done work in this department specially for

providing advances to government employees .For giving

advance salary employees must provide service card and

NIC copy .Maximum limit of loan that are given to

government employees up to 490,000 and pay back in the

shape of monthly salary.

In this department sir only assign me the task of recording

of advance salary in advance salary ledger, I enter the

following information in the advance salary ledger, date,

application number of advance salary , and amount of

advance salary, loan amount , monthly installment amount ,

also enter the advance salary account number that bank

assign to its customer and also enter the period on the

advance salary on the ledger book.

Remittance

During my internship period I have learnt some important

points about this department.

40



Basically Remittance means transfer of money from one

city to other. And it is safe mode of payment in this

department I have observed some main instruments that are

used in it.

DD

Po

TT

MT

DD means demand draft.

It is an instrument that is used for transfer of money from

one bank / city to other.

I helped the customer in filling dd. In demand draft

beneficiary name, bank name, and amount must Mentioned.

Beneficiary means a person to whom the payment / money

transfer.

41



Po:

Payment orders also an instrument that is used to transfer

money from one place to other easily and safely. It is like

demand draft but main difference is that payment order is

cashed and paid out on that bank branch from where it

made. But demand draft is paid by different branches of

same bank and payment of demand draft is transfer on

account while in case of payment order amount paid in

cash.

TT

Telegram Transfer also used as an electronic instrument for

transfer of money.

MT

Mail Transfer for also used for this purpose.

When issued demand draft from bank some amount paid as

charges in which federal excise duty commission and

postage. Federal excise tax is directly credit in government

account while commission is credit in bank’s own account

42



In this department sir only assign me the task of

making of DD, Sir tell the rate of FED, Postage,

and Commission deduction on different amount of

DD. I make some DD in close supervision of sir

Waqas.

Collections

This department deals with collection of utility

bills, board fee, and deposit of customer. In this

department sir assign me task of making of scrolls

of utility bills, sir provide me different scrolls for

electricity bill, Sui Gas bill and for telephone

bills , I enter the consumer id or consumer number

form the bill on scrolls and the amount paid, after

making all utility bills scrolls I calculate the total

amount of the scrolls.

43



Trade Finance

In this department sir only tell me the general description of

this department. Sir tells me NBP work as a facilitator

between importer and exporter. Tip export their

products to other country with the help of NBP.

Because NBP provide help for ensuring payment

to exporter and also to importers bank and against

receives commission.NBP open letter of credit on

behalf of exporter on importer that is helpful for

payment on due date as mention in documents.

Inland Bank Guarantee

I studied the working process of Inland banking

.There were some files notes from the officer. The

Contract between Tip and WAPADA on behalf of

44



NBP. Because they have no trust to give payments

after receiving a goods that’s why engage bank. So

one party not able to give payment at due date

receiving party have no fear of receiving amount

so in this case bank provide money to that party .

Sir tell me that NBP provide three types of grantee’s

Performance grantee, warrantee grantee and bid bond

Performance grantee to the beneficiary that goods/ services

are delivered on time, and according to the agreement.

Bank provides warrantee grantee to the beneficiary on

behalf of applicant. NRTC is the customer of NBP bank if

NRTC Provide grantee that product of NRTC will work 5

year after delivery , if the product of NRTC not work

NRTC will replace the product or repair in case if NRTC

unable to do that bank will pay the amount to the

beneficiary against warrantee grantee.

Foreign Exchange

45



I spent few days in this department

and learnt how to open foreign currency account and what

guidelines before opening any such account. This

department deals in foreign exchange. This department is

made for the convenience of customers having foreign

dealing. It makes easy for them to pay and receive in

foreign currencies.

Sir Ali told me that foreign currencies account is opened in

NBP such as for dollar account minimum balance is

required for NBP branch as 100$and the other account is

pound is also open that 100pound is the minimum balance

and for euro account is 100 euro minimum is required for

the FC account .

NBP deal with three type of foreign currency account

Dolor

Yen

Pound

Ratio Analysis

46



Net profit margin:

Net profit margin =net profit / net sales *100

No 2009 2010 2011

Net profit

18,211,846 17,563,214 17,604,722

Net

sales

77,947,697 88,472,134 95,325,179

Total 18,211,846/77,947,697=23.36%

17,563,214/88,472,134=19.85%

17,604,722/95,3

=18.46%

2 0 0 9

2 0 1 0

2 0 1 1

2009

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%

2009

2010

2011

Interpretation

Interest income has been contributed in the total bank profitis decreasing and net profit margin is low in 2011 ascompare to other years. Ratio show downward trend. Net profit margin is decreasing in 2009, 2010 and in 2011 whilethe net sale of the bank in increasing in these years due to

47



which net profit margin is decreasing. Net profit margin of

bank is decreasing due to increasing in expenses of bank .. You need to interpret the result of the ratios in the

following manner:

In first step, you need to discuss: What percentage of thetotal revenue earned (interest income in case of bank) has been contributed in the total profit of the bank. E.g. if the bank’s net profit margin is 25%, it means that 25% of theinterest income has been contributed in the total profit of the bank.

In second step, you also need to discuss what is the reason behind increase or decrease i.e. which particular factor hasaffected this change in the percentage, along with your given explanation.

2Gross spread ratio

Gross Spread Ratio = Net interest margin ÷ mark-up/return/ interest earned. *100 Net Interest Margin= interest earned – interestexpensed. Both the items of the net interest marginare available in the Profit and Loss statement of the bank.

Net Interest Margin= interest earned – interestexpensed

Interest earened = mark-up/return/ interest earned.

48



Interest expensed = mark-up/return/ interest

expense

No 2009 2010 2011

Net interestmargin

77,947,697-40,489,649=37458048

88,472,134-45,250,476=43221658

95,325,179-48,515,618=46809561

Mark-up/return/interestearned.

77,947,697 88,472,134 95,325,179

Gross

spread

ratio

37458048/77,947,697*100

=48.05%

43221658/88,472,134*100

=48.85%

46809561/959*100

=49.10%

2 0 0 9

2 0

1 0

2 0 1 1

2009

4750.00%

4800.00%

4850.00%

4900.00%

4950.00%

2009

2010

2011

49



Interpretation

Ratio shows that gross spread ratio is increasing which

mean higher the profit margin for bank. GSR of bank is

increasing because of the increase in margin. Ratio show up

ward trend. Net interest margin is increasing while interest

earned is decreasing year to year due to which higher the

gross spread ratio.

3Non Interest Income to Total Income = Non

Interest Income / Total Income

Non-interest income = Non mark-up/interestincome (profit and loss)Total Income = Mark-up/return/Interest Earned +

Non Mark-up/ interest income. ( p & L ) Net interest income and total income are alsoavailable in the Profit and Loss statement of the

bank.

No 2009 2010 2011

50



Non-

interestincome

25,788,713 33,251,969 19,337,04

Total

Income

77,947,697+25,788,713

=103736410

88,472,134+33,251,969

=121724103

95,325,179+19,337,04= 114,662,22

25,788,713/103736410

=0.24 times

33,251,969/121724103

=0.27 times

19,337,04/114,662,22

=0.168TIMES

2009 2010 2011

2009

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

2009

2010

2011

Interpretation

Ratio show’s that non-interest income of NBP bank is 0.24times of total income in 2009, 0.27 in 2010 and 0.16 timein 2011, which is low in 2011 as compare to other twoyears.

Ratio shows increase in 2010 because of increase in non-interest income of the bank. And the decrease in ratio in2011 due to decrease in non-interest income of the bank.

51



4-Spread ratio= Interest Earned /Interest

Expense

Interest Earned = Markup/ Return/Interest

earned (P & L)

Interest Expense= Markup/ Return/InterestExpense (P & L)

No 2009 2010 2011

InterestEarned

77,947,697 88,472,134 95,325,179

InterestExpense

40,489,649 45,250,476 48,515,618

=77,947,697 /40,489,649=1.93 times

=88,472,134/45,250,476=1.96 times

95,325,179/488=1.96times

52



2009 2010 2011

2009

191.00%

192.00%

193.00%

194.00%

195.00%

196.00%

2009

2010

2011

Interpretation

Larger the interest earn more bank earns. Interest earned is

1.93 time of total income in 2009, 1.96 in 2010 and 2011.

NBP spread ratio is increasing which show that NBP worth

is increasing. Ratio show upward trend. NBP interest

earning is increasing while the interest paid by the NBP is

decreasing due to which spread ratio of NBP is increasing.

5 Return on assets:

Return on assets = net profit after tax/ total

assets*100

No 2009 2010 2011

Net profitafter tax

18,211,846 17,563,214 17,604,722

53



Total

assets

944,232,762 1,035,024,680 1,149,577,736

Total 18,211,846/944,232,762*100=1.93%

17,563,214/1,035,024,680*100

=1.70%

17,604,722/1,,736*100

=1.53%

2009 2010 2011

2009

0.00%

50.00%

100.00%

150.00%

200.00%

2009

2010

2011

Interpretation

NBP have 1.93% return on its assets in 2009, 1.70 in 2010,

1.53 in 2011.NBP earning before interest and tax is

decreasing year to year. Graph show decreasing trend of

return on assets, NBP net profit is decreasing may be due to

increase in taxes. NBP return on assets is declining. Falling

return on asset contribute negatively to decrease in ROE.

Banks has decreasing return on assets which show that

company is using its assets not very efficiently to get

54



favorable return on its assets, but return on asset of bank is

overall good.

.

6 DuPont Return on Assets

(Net income/sales)*(sales/total assets)*100

No 2009 2010 2011

(Netincome/sales)*(sales/totalassets)*100

17,561,846/77,947,697*77,947,697/944,582,762*100=1.85%

17,563,214/88,472,134*88,472,134/1,035,024,680 *100

=1.6%

17,604,722/959*95,325,179/77,736*100=1.53%

2009 2010 2011

2009

0.00%

50.00%

100.00%

150.00%

200.00%

2009

2010

2011

Interpretation

55



Higher the net income for a given amount of assets, the

better is the return

The diagram in which ratios are decreasing in 2010 and

2011 respectively as compare to in 2009. In the year of

2009 the dupont return on assets ratio is at 1.85times on

which maximum level during the time period as relative to

2010and 2011

7 Return on total equity:

Net income/ total equity *100

No 2009 2010 2011

Netincome

17,561,846 17,563,214 17,604,722

Totalequity

94,141,919 103,762,310 110520012

Total 17,561,846/94,141,919*100=18.6%

17,563,214/103,762,310*100=16.9%

17,604,722/1012*100

=15.9%

56



2 0 0 9

2 0 1 0

2 0 1 1

2009

1400.00%

1500.00%

1600.00%

1700.00%

1800.00%

1900.00%

2009

2010

2011

Interpretation

18.6% is return that Bank is earning on shareholder equity

in 2009, 16.9 % is return that Bank is earning on

shareholder equity in 2010. 15.9 % is return that Bank is

earning on shareholder equity in 2011. Graph show

downward trend. Net income of the NBP is decreasing

trend due to which return on total equity is decreasing.

8 DEBT RATIOS

Debt ratio= total liabilities / total assets

No 2009 2010 2011

total

liabiliti

es

825,676,384 906,528,852 1,016,926,28

total

assets

944,582,762 1,035,024,680 1,149,577,73

57



Total 825,676,384/944,582,

762=0.87times

906,528,852/1,035,024

,680=0.87 times

1,016,926,28

,577,736=0.88times

2009 2010 2011

2009

86.50%

87.00%

87.50%

88.00%

2009

2010

2011

Interpretation

Ratio show that company have debt 0.87 of total assets in

2009 and in 2010 while in 2011 NBP have debt of 0.88 of

its total assets. There is an increase in ratio in 2011 which

show that the deposits of the bank in increase in 2011 as

compare to other two years.

9 DEBT/EQUITY RATIO

Debt/equity ratio = total liabilities/ shareholders

equity

58



No 2009 2010 2011

total

liabilities

825,676,384 906,528,852 1,016,926,288

shareholde

rs equity

94,141,919 103,762,310 110,520,012

Total 825,676,384/94,141,919=8.7 times

906,528,852/103,762,310=8.7 times

1,016,926,288/0012

=9.2times

2009 2010 2011

2009

840.00%

860.00%

880.00%

900.00%

920.00%

2009

2010

2011

Interpretation

Ratio show that 8.7 of the NBP Capital structure is debt

while the remainder is by investor capital in 2009 and

2010.while in 2011 , 9.2 times of the NBP Capital structure

59



is debt and remainder is investor capital. Deposit and other

liabilities are low as in 2009 and 2010 as compare to

2011.There is increase in ratio in 2011 because deposits of

the bank is increase in 2011. NBP is using more debt in

2011 as compare to other two year which mean that the

deposits of the NBP is increase in 2011.

10 Time interest earned:

Earning before income tax (EBIT) /interestexpenseEBIT =profit before tax+ interest expense

Profit before tax = from profit and loss statement(before profit taxation)Interest expense = from profit and loss statement(Mark-up / return / interest expensed)

No 2009 2010 2011

Earning beforeincome tax(EBIT)/interestexpense

61,789,822/40,489,649=1.53 times

69,665,595/45,250,476=1.54times

74526791/488=1.53times

Working 2009

60



EBIT= profit before tax+ Interest expenseEBIT=21,300,173+40, 48964EBIT=61,789,822/40489649EBIT=1.53

Working 2010

EBIT= profit before tax+ interest expenseEBIT=24,415,119+45,250,476EBIT=69,665,595/45250476EBIT=1.54

Working 2011EBIT= profit before tax+ interest expense EBIT= 26,011,173+ 48,515,618=74526791

EBIT=74526791 /48,515,618EBIT= 1.53

2009 2010 2011

2009

125.00%

130.00%

135.00%

140.00%

145.00%

150.00%

155.00%

2009

2010

2011

61



Interpretation

Ratio show that the NBP can meet its interest expenses

1.53 times in 2009 and in 2011 while NBP can meet its

interest expenses 1.54 in 2010. Earning of NBP is slightly

increased in 2010 as compare to other two year due to

which ratio has slightly increase as compare to other years.

11-Advances/Deposits Ratio Formula = (Advances / Deposits & Other accounts)Advances = assets balance sheet

Deposits & Other accounts = lab balance sheet

No 2009 2010 2011

Advances 475,243,431 477,506,564 525,045,764

Deposits & 727,464,825 832,151,888 927,421,438

475,243.431/727,464,825

477,506,564/832,151,888

525,045,764/92438

62



=0.65 times =0.57 times = 0.56TIMES

2009 2010 2011

2009

50.00%

55.00%

60.00%

65.00%

2009

2010

2011

Interpretation

NBP is paying advance and loan 0.65 time of its deposit in

2009 while NBP is paying advance and loan 0.57 time of

its deposit in 2010. NBP is paying advance and loan 0.56

time of its deposit in 2011. Ratio Show downward trend.

NBP have potential to pay advance and additional loans.

Downward trend of ratio show that NBP deposit is

increasing while advances of NBP is falling.

12

Operating cash flow ratio = cash flow fromoperating /current liabilities

63



Cash flow from operating= net cash flow from

operating activitiesCurrent liabilities = maturity table /

Working of current liabilities

Current liabilities

2011:

Currentliabilities=9,104,710+236867755+911298458Current liabilities =1,157,270,923

2010

Bills payable=8,006,631Borrowings (current portion)=17,154,131

Deposit and other accounts (current portion)=816,172,863Other liabilities (current portion)= 26,248,782Liabilities against assets subject to finance lease(current portion) =43,963Current liabilities total=Rs. 867,626,368

2009

Bills payable=10,621,169Borrowings (current portion)=37,057,189

64



Deposit and other accounts (current portion)

=655,031,896Other liabilities (current portion)=22,563,058Liabilities against assets subject to finance lease(current portion) =20,408

Current liabilities=Rs.725, 293,720

No 2009 2010 2011

cash flowfromoperating

41,576,364 93,163,784 41,345,222

currentliabilities

725,293,720 867,626,368 1,157,270,923

=41,576,364/

725,293,720=0.058 times

=93,163,784 /

867,626,368=0.108 times

41,345,222/1,1

23== 0.035TIME

2009

2010 2011

2009

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

2009

2010

2011

65



Interpretation

Cash generated from operating activities of NBP is 0.058

time of total cash flow in 2009. Cash generated from

operating activities of NBP is 0.108 time of total cash flow

in 2010 .Cash generated from operating activities of NBP is

0.035 time of total cash flow in 2011. Ratio is increase in

2010 because of increase in cash flow generated from

operating activities and decrease is current liabilities. Ratio

is decrease in 2011 because of decrease in cash flow

generated from operating activities and increase in current

liabilities.

13 Dividend per share:Dividend per share= dividend amount / number

of equity shares

No 2009 2010 2011

Dividendamount

5,830,338 8,072,777 10,090,971

Number of equity shares

1,076,370.2 1,345,462.8 16, 818,285

Total 5,830,338/1,076,370.2

8,072,777/1,345,462.8 RS=6.00RS

10,090,971 /818,285

66



RS=5.42RS Rs =0.6 R

2009 2010 2011

2009

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

2009

2010

2011

Interpretation

Result of ratio show that bank is performing well

financially. Number of outstanding share increase in 2009

and 2011. Their is increase in company market value and

dividend per share goes up in 2010 as compare to other two

years. In 2011 dividend per share is very low which show

that the market price of per share of NBP is decrease or

very low.

14 Earning per share:

67



Earning per share= net profit after tax/ number

of shares issued

No 2009 2010 2011

Net profitafter tax

18,211,846,000

17,563,214,000 17,604,722

No of sharesissued

1,076,370,200 1,345,462,800 16, 818,28.5

Total 18,211,846,000 /1,076,370,200

RS=16.92RS

17,563,214,000/1,345,462,800

RS=13.05RS

17,604,722 /818,285RS=10.4RS

2 0 0 9

2 0 1 0

2 0 1 1

2009

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2009

2010

2011

Interpretation

Ratio indicates that bank earns too high in the year of 2009

.while other years as 2010and 2011 the earning per share

68



are low. The year in which bank earning on shares very

high and ,In annual reports showing better financial

position as compare to other banks .The earning per share

of 2010 are slow at small level as compare to 2009 .The

year of 2011 the earning per share are too low as relative to

2009 and 2010

15 Price / earning ratio:

Price/earning ratio= market price per share/earning per share

No 2009 2010 2011

Market price

per share

74.37 76.82 41.05

Earning per share

16.92 13.05 10.47

Total 74.37/16.92=4.40

76.82/13.05=5.89

41.05/10.47 RS=3.92

http://www.kse.com.pk

20092010 2011

2009

0.00%

100.00%

200.00%

300.00%

400.00%

500.00%

600.00%

2009

2010

2011 69

http://www.kse.com.pk/





Interpretation

This ratio point out that in the year of 2010 price earning

ratio is 5.89 which is positive sign for bank because in that

period banks share prices are becoming too high . But in

other years as 2009 and 2011 is low as relative to 2010.

The year of 2009 at slightly less as compare to compare to

2010.while in 2011 is very low because in this year banks

share prices too much low.

Future Prospects of the Organization:

Going forward the bank shall continue to focus on the

increasing its deposits with stress on increasing current and

70



saving deposit ratio. Increase in non mark up income with

particular focus on to fee income shall be a high priority.

Improvement in customer services and strengthening of

internal systems and controls shall be remaining a key area

of the work. Capacity building in terms of human resources

shall continue. Technology up gradation in the form of

ongoing implementation of core banking, online

connectivity and allied projects will be performed with

commitment to complete the jobs on time. Remain

committed to vision, mission and core values. Bank is

geared up to meet the challenges of tomorrow and

leveraging on strengths will continue to capitalize on new

opportunities. Add value and esteem for stakeholders.

Conclusions:

NBP have largest branch network of branches in urban as

well as in rural areas. NBP is providing valuable services to

its customers like online banking system, ATM card etc

NBP trying to improve its customer’s services to facilitate

71



the customers. During my internship I observe that branch

doing a great business and the management and the staff of

the branch is efficient and the professional. Bank has

clearly defined organizational structure which supports

clear line of communications and reporting relationships.

During my internship I observe that behavior of NBP staff

is not very good, there is not help desk in branch for

helping customers, NBP staff can not handle the customer

is rush hour and customer is waiting in lines for taking their

own money. Most of the customers in NBP are from

government sector, if it is not necessary for government

employee of having account in NBP then they switch to

other banks due to not providing quick services to its

customers.

Net profit margin of bank is decreasing due to

increasing in expenses of bank.

GSR of bank is increasing because of the increase

in margin

Non-interest income of the bank is decrease in 2011

72



NBP has decreasing return on assets.

Return on total equity is decreasing of NBP

Recommendation for improvement

Help desk in branch for helping customers

Provide training to NBP staff to enhance their skills

and capabilities

New talent should be hired to provide customer

better services

NBP should up-grading their services timely to

provide the maximum satisfaction to their

customers.

NBP should pay attention on its marketing efforts to

promote its products and services.

Net profit margin of NBP is decreasing year to year

company need to improve its net profit margin by

controlling its expenses

73



NBP should use its assets efficiently to get

favorable return on its assets

NBP should expand its operations to increase in net

income to improve its return on equity

NBP Should offer advance and loans to its customer

to improve its advance to deposit ratio

NBP should expand its operation and reduce its

current liabilities by pay off current liabilities to

improve its operating cash flow ratio

NBP need to improve its market value per share to

improve its dividend per share.

74



References and source:Website

http://www.nbp.com.pk/ http://www.nbp.com.pk/Publications/index.aspx http://www.nbp.com.pk/Publications/AnReport2010.aspx http://www.nbp.com.pk/Publications/AnReport2011.aspx

Personal experience

Experience during my internshipInformation from staff of NBP

75

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

http://www.nbp.com.pk/Publications/index.aspx

http://www.nbp.com.pk/Publications/AnReport2010.aspx




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

http://www.nbp.com.pk/Publications/index.aspx







.

Documents

NBP -FINANCE Internship Report 2012