NBP presentation

Samina Ameer Din Mc090404110MBAFinance

National Bank of Pakistan

Brief Introduction of the Organization

History of National Bank of Pakistan NBP is the largest commercial bank. Acts as an agent of central bank. Moved from public sector organization to commercial bank. Provide both public sector and commercial banking services. Handle treasury transactions. A major lead player.

Business Volume of NBP

2010 (Particulars) (Rs. in Million) Total Assets 1,035,025Deposits 832,152Advances 477,507Investments 301,324Shareholders Equity 103,762 Pre-tax Profit 24,415After-tax Profit 17,563Earning Per Share (Rs.) 13.05Number of Branches 1,289 Number of Employees 16,457

Competitors of NBP

Competitors at Public Sector

First Women Bank Limited (FWB) The Bank of Khyber (KB)The Bank of Punjab (BOP)

Competitors at Private Sector

My Bank Limited Allied Bank Limited Bank Al-Falah Limited Atlas BankBank Al Habib Limited Habib Bank LimitedAskari Bank Saudi Pak Bank LimitedFaysal Bank Limited Metropolitan Bank limited Muslim Commercial Bank Limited

Organizational Hierarchy Chart

4. SVP5. VP3. EVP2. SEVPOG-IExecutivesOfficersOG-IIOG-IIIClerical StaffHead CashierCashierNon Clerical StaffPeon, Guards etcAssistant1. President6. AVP

CashDept.

Hierarchy of Branch

Branch Manager

Credit OfficerOperations Manager

HR Officer

All other staff

Training Program Account Opening Department Clearing Department Remittance Department

Description of the Tasks Assigned to me During my InternshipPLS Saving A/C Current A/CInward / Out ward ClearingLocal Clearing Intercity Clearing Pay Order (PO)Demand Draft (DD)Call Deposit at Receipts (CDR)

Ratio Analysis

Financial StatementsAll the financial statements for the preparation of these PPT slides are downloaded from the Website of NBP: www.nbp.com.pk

Ratio AnalysisNational Bank of Pakistan (Net profit/ Revenue) *100Year 2010Year 2009Year 20081. Net Profit Margin 17,563,214/88,472,134*100=19.85%17,561,846/77,947,697*100= 22.53% 15,458,590/60,942,798*100= 25.36%

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0.2536

0.2253

0.1985

Net Profit Margin

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Net Profit Margin

Year 200825.36%

Year 200922.53%

Year 201019.85%

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0

0

0

Net Profit Margin

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Ratio AnalysisNational Bank of Pakistan (Mark-up / return / interest earned - Mark-up / return / interest expensed) / Mark-up / return / interest earned*100 Year 2010Year 2009Year 20082. Gross Spread Ratio 43,221,658/88,472,134*100 = 48.85%37,458,048/77,947,697*100= 48.05% 37,058,030/60,942,798*100= 60.80%

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0.608

0.4805

0.4885

Gross Spread Ratio

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Gross Spread Ratio

Year 200860.80%

Year 200948.05%

Year 201048.85%

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Gross Spread Ratio

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Working of Net Interest Margin Net Interest Margin = Mark-up / return / interest earned - Mark-up / return / interest expensed

2010) Net interest margin = (88,472,134-45,250,476) = 43,221,6582009) Net interest margin = (77,947,697-40,489,649) = 37,458,0482008) Net interest margin = (60,942,798-23,884,768) = 37,058,030

Ratio AnalysisNational Bank of Pakistan non mark-up/interest income/ (non mark-up/interest income +Mark-up/return/interest earned)*100Year 2010Year 2009Year 20083. Non Interest Income to Total Income 17,632,640/106,104,774*100 = 16.61% 19,025,357/96,973,054*100= 19.61% 16,415,862/77,358,660*100= 21.22%

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0.2122

0.1961

0.1661

Non Interest Income to Total Income Ratio

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Year 200821.22%

Year 200919.61%

Year 201016.61%

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Working of Total Income Total Income = (non mark-up / interest income +Mark-up / return / interest earned)

2010) Total Income = (17,632,640+88,472,134) = 106,104,7742009) Total Income = (19,025,357+77,947,697) = 96,973,0542008) Total Income = (16,415,862+60,942,798) = 77,358,660

Ratio AnalysisNational Bank of Pakistan Interest Earned / Interest ExpensedYear 2010Year 2009Year 20084.Spread Ratio 88,472,134 /45,250,476 =1.95 times 77,947,697 /40,489,649= 1.92 times 60,942,798 /23,884,768= 2.55 times

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2.55

1.92

1.95

Spread Ratio

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Spread Ratio

Year 20082.55

Year 20091.92

Year 20101.95

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Spread Ratio

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Ratio AnalysisNational Bank of Pakistan (Net profit/ Total assets) *100Year 2010Year 2009Year 20085.Return on Assets17,563,214/1,035,024,680*100= 1.69%17,561,846/944,582,762*100= 1.85%15,458,590/817,758,326*100= 1.89%

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0.0189

0.0185

0.0169

Return on Assets

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Return on Assets

Year 20081.89%

Year 20091.85%

Year 20101.69%

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Return on Assets

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Working of Total Assets

Total AssetsYear 2010(Rs)Year 2009 (Rs)Year 2008(Rs)Cash and balances115,442,360115,827,868106,503,756Balances with other banks30,389,66428,405,56438,344,608 Lending to financial institution-net23,025,15619,587,176 17,128,032 Investments-net301,323,804 217,642,822170,822,491 Advances-net477,506,564475,243,431412,986,865 Operating fixed assets26,888,226 25,147,19224,217,655Deffered tax assets6,952,6663,062,2713,204,572Other assets-net 53,496,240 59,666,438 44,550,347Total1,035,024,680944,582,762 817,758,326

Ratio AnalysisNational Bank of Pakistan ((net income/revenues)*(revenues/assets))*100 Year 2010Year 2009Year 20086. Dupont Return on Assets((17,563,214/88,472,134)*(88,472,134/1,035,024,680)*100= 1.69%((17,561,846/77,947,697)*(77,947,697/944,582,762)*100= 1.85% ((15,458,590/60,942,798)*(60,942,798/817,758,326)*100= 1.88%

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0.0188

0.0185

0.0169

Dupont Return on Assets

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Year 20081.88%

Year 20091.85%

Year 20101.69%

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Ratio AnalysisNational Bank of Pakistan Net Income/ Total equity*100 Year 2010Year 2009Year 20087.Return on Total Equity 17,563,214/103,762,310*100= 16.92% 17,561,846/94,141,919*100= 18.65% 15,458,590/81,367,002*100= 18.99%

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0.1899

0.1865

0.1692

Return on Total Equity

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Year 200818.99%

Year 200918.65%

Year 201016.92%

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Working of Total Equity

Total Equity Year 2010(Rs)Year 2009 (Rs)Year 2008(Rs)Share capital13,454,62810,763,7028,969,751Reserves24,450,24422,681,70719,941,047Un appropriated profit 65,857,438 60,696,51052,456,204Total 103,762,31094,141,919170,822,491

Ratio AnalysisNational Bank of Pakistan (Total debt/ Total assets)*100Year 2010Year 2009Year 20088. Debt Ratio 906,528,852/1,035,024,680*100=87%825,676,384/944,582,762*100=87% 715,299,108/817,758,326*100=87%

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0.87

0.87

0.87

Debt Ratio

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Debt Ratio

Year 200887.00%

Year 200987.00%

Year 201087.00%

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Debt Ratio

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Ratio AnalysisNational Bank of Pakistan (total debt/ total equity) Year 2010Year 2009Year 20089. Debt /Equity Ratio 906,528,852/ 103,762,310= 8.73 times 825,676,384/ 94,141,919= 8.77 times 715,299,108/ 81,367,002= 8.79 times

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8.79

8.77

8.73

Debt / Equity Ratio

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Debt / Equity Ratio

20088.79

20098.77

20108.73

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Debt / Equity Ratio

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Ratio AnalysisNational Bank of Pakistan (EBIT/ total interest)Year 2010Year 2009Year 200810. Time Interest Earned Ratio 69,665,595/45,250,476= 1.53 times 61,789,822/40,489,649 = 1.52 times 46,885,766/23,884,768= 1.96 times

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1.96

1.52

1.53

Time Interest Earned Ratio

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20081.96

20091.52

20101.53

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Working of EBITEBIT= Profit before Taxation+ Mark-up / return / interest expensed

2010) EBIT = 24,415,119+45,250,476= 69,665,595

2009) EBIT = 21,300,173+40,489,649= 61,789,822

2008) EBIT = 23,000,998+23,884,768= 46,885,766

Ratio AnalysisNational Bank of Pakistan Total Advances/ Total Deposits Year 2010Year 2009Year 200811.Advances/Deposits Ratio 477,506,564/832,151,888= 0.5738 times 475,243,431/727,464,825 = 0.6532 times 412,986,865/624,939,016 = 0.6608 times

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0.6608

0.6532

0.5738

Advances / Deposits Ratio

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20080.6608

20090.6532

20100.5738

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Ratio AnalysisNational Bank of Pakistan Net cash generated from operating activities/ Current LiabilitiesYear 2010Year 2009Year 200812.OCF Ratio 93,163,784/867,626,368 = 0.107 times 41,576,364/725,293,720= 0.057 times 2,532,681/682,905,461= 0.003 times

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0.003

0.057

0.107

Operating Cash Flow Ratio

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20080.003

20090.057

20100.107

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Working of Current Liabilities

Total Current Liabilities Year 2010(Rs)Year 2009 (Rs)Year 2008(Rs)Bills payable (short term)8,006,63110,621,16910,219,061Borrowings (short term)17,154,13137,057,18937,409,288Deposits and other accounts (short term) 816,172,861655,031,896 614,538,859Liabilities against assets subject to finance lease (short term)43,96320,40816,517Other liabilities (short term) 26,248,782 22,563,058 20,721,736 Total867,626,368 725,293,720 682,905,461

Ratio AnalysisNational Bank of PakistanDividends paid to Shareholders/ Average common shares outstandingYear 2010Year 2009Year 200813. Div Per Share8,072,777/1,345,462.8= Rs.6 5,830,338/1,076,370.2= Rs.5.41 6,115,739/869,975.1= Rs.6.81

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6.81

5.41

6

Dividend Per Share

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Dividend Per Share

20086.81

20095.41

20106

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6.81

5.41

6

Dividend Per Share

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Ratio AnalysisNational Bank of PakistanNet income/ outstanding number of sharesYear 2010Year 2009Year 200814. Earning Per Share17,563,214/1,345,463= Rs. 13.0517,561,846/1,345,463= Rs. 13.05 15,458,590/1,076,370= Rs. 14.36

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14.36

13.05

13.05

Earning Per Share

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Earning Per Share

200814.36

200913.05

201013.05

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Earning Per Share

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Ratio AnalysisNational Bank of PakistanCurrent Market Share Price/ EPSYear 2010Year 2009Year 200815. Price /EarningRatio 76.82/13.05= Rs. 5.8874.37/13.05= Rs. 5.69 50.32/14.36= Rs. 3.50

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3.5

5.69

5.88

Price / Earning Ratio

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20083.5

20095.69

20105.88

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ConclusionThe net profit margin of NBP in all of the years is good. Gross spread ratio is also good in all of over the years.Spread ratio of NBP is also good because it covers its interest expenses.Non Interest Income to Total Income Ratio of NBP is good. Return on assets ratio of NBP is low.Dupont return on assets ratio is also 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.

ConclusionDebt 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.

RecommendationsNBP 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 & Dupont 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.

RecommendationsDebt 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.

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NBP presentation