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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 ResultReport writing PassPresentation & Viva voceFinal 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
10-12
2 Brief history:• Vision • Mission
12-14
3 Organizational Hierarchy chart:Tip branch hierarchy chart
15-16
4 Business Volume 2011 17
10
5 Product and services • Product lines• Treasury products • Derivatives products • Services • Trade Services
17-20
6 Competitors:• Public sector • Private sector
20-23
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
23-25
8Comments on the organizational structure:
25
9 A brief introduction of the branch where you did your internship
26-27
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
27-33
13 Ratio Analysis: 33-50
14Future Prospects of the Organization:
50-51
15 Conclusion: 51-52
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
MANGER
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 1,149,577Share holder equity 110,520Earning 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 2011Ending date of internship 31DEC2011
Names of the departments in which you got training and the duration of yourTraining
• 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 2011Net 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%
17,604,722/95,325,179
=18.46%
2009
2010
2011
20090.00%
500.00%1000.00%1500.00%2000.00%2500.00%
200920102011
Interpretation
Interest income has been contributed in the total bank profit is decreasing and net profit margin is low in 2011 as compare to other years. Ratio show downward trend. Net profit margin is decreasing in 2009, 2010 and in 2011 while the 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 the total 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 the interest 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 has affected this change in the percentage, along with your given explanation.
2Gross spread ratioGross Spread Ratio = Net interest margin ÷ mark-up/return/ interest earned. *100Net Interest Margin= interest earned – interest expensed. Both the items of the net interest margin are available in the Profit and Loss statement of the bank.
Net Interest Margin= interest earned – interest expensed Interest earened = mark-up/return/ interest earned.
48
Interest expensed = mark-up/return/ interest expense
No 2009 2010 2011Net interest margin
77,947,697-40,489,649=37458048
88,472,134 -45,250,476=43221658
95,325,179 -48,515,618=46809561
Mark-up/return/ interest earned.
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%
46809561/95,325,179*100
= 49.10%
2009
2010
2011
20094750.00%4800.00%
4850.00%
4900.00%
4950.00%
200920102011
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/interest income (profit and loss)Total Income = Mark-up/return/Interest Earned + Non Mark-up/ interest income. ( p & L )Net interest income and total income are also available in the Profit and Loss statement of the bank. No 2009 2010 2011
50
Non-interest income
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 20112009
0.00%5.00%
10.00%15.00%20.00%25.00%30.00%
200920102011
Interpretation
Ratio show’s that non-interest income of NBP bank is 0.24 times of total income in 2009, 0.27 in 2010 and 0.16 time in 2011, which is low in 2011 as compare to other two years. Ratio shows increase in 2010 because of increase in non-interest income of the bank. And the decrease in ratio in 2011 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/Interest Expense (P & L)
No 2009 2010 2011Interest Earned
77,947,697 88,472,134 95,325,179
Interest Expense
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
95,325,179/48,515,618 = 1.96times
52
2009 2010 20112009
191.00%192.00%193.00%194.00%195.00%196.00%
200920102011
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 2011Net profit after 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%
17,604,722/1,149,577,736*100
=1.53%
2009 2010 20112009
0.00%
50.00%
100.00%
150.00%
200.00%
200920102011
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(Net income/sales)*(sales/total assets)*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%
17,604,722/95,325,179*95,325,179/1,149,577,736*100=1.53%
2009 2010 20112009
0.00%
50.00%
100.00%
150.00%
200.00%
200920102011
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 2011Net income
17,561,846 17,563,214 17,604,722
Total equity
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%
17,604,722/110520012*100=15.9%
56
2009
2010
2011
20091400.00%1500.00%1600.00%1700.00%1800.00%1900.00%
200920102011
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 RATIOSDebt ratio= total liabilities / total assets No 2009 2010 2011total liabilities
825,676,384 906,528,852 1,016,926,288
total assets
944,582,762 1,035,024,680 1,149,577,736
57
Total 825,676,384/944,582,762= 0.87times
906,528,852/1,035,024,680=0.87 times
1,016,926,288/1,149,577,736 =0.88times
2009 2010 20112009
86.50%
87.00%
87.50%
88.00%
200920102011
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
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No 2009 2010 2011total liabilities
825,676,384 906,528,852 1,016,926,288
shareholders 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
1,016,926,288/110520012 =9.2times
2009 2010 20112009
840.00%
860.00%
880.00%
900.00%
920.00%
200920102011
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
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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) /interest expense EBIT =profit before tax+ interest expenseProfit 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 2011Earning before income tax (EBIT) /interest expense
61,789,822/40,489,649=1.53 times
69,665,595/45,250,476=1.54times
74526791/48,515,618 =1.53times
Working 2009
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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 20112009
125.00%130.00%135.00%140.00%145.00%150.00%155.00%
200920102011
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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 2011Advances 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
525,045,764/927,421,438
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=0.65 times =0.57 times = 0.56TIMES
2009 2010 20112009
50.00%
55.00%
60.00%
65.00%
200920102011
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 from operating /current liabilities
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Cash flow from operating= net cash flow from operating activities Current liabilities = maturity table /
Working of current liabilities Current liabilities
2011:Current liabilities=9,104,710+236867755+911298458Current liabilities =1,157,270,923
2010Bills payable =8,006,631Borrowings (current portion) =17,154,131Deposit 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
2009Bills payable =10,621,169Borrowings (current portion) =37,057,189
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Deposit and other accounts (current portion) =655,031,896 Other 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 2011cash flow from operating
41,576,364 93,163,784 41,345,222
current liabilities
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
41,345,222/1,157,270,923== 0.035TIMES
2009 2010 20112009
0.00%2.00%4.00%6.00%8.00%
10.00%12.00%
200920102011
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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 2011Dividend amount
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
8,072,777/1,345,462.8RS=6.00RS
10,090,971 /16, 818,285
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RS=5.42RS Rs =0.6 RS
2009 2010 20112009
0.00%100.00%200.00%300.00%400.00%500.00%600.00%
200920102011
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:
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Earning per share= net profit after tax/ number of shares issued No 2009 2010 2011Net profit after tax
18,211,846,000
17,563,214,000 17,604,722
No of shares issued
1,076,370,200 1,345,462,800 16, 818,28.5
Total 18,211,846,000 /1,076,370,200RS=16.92RS
17,563,214,000/ 1,345,462,800RS=13.05RS
17,604,722 /16, 818,285 RS= 10.4RS
2009
2010
2011
20090.00%
500.00%
1000.00%
1500.00%
2000.00%
200920102011
Interpretation
Ratio indicates that bank earns too high in the year of 2009
.while other years as 2010and 2011 the earning per share
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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 shareNo 2009 2010 2011Market 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
41.05/10.47RS= 3.92
http://www.kse.com.pk
2009 2010 20112009
0.00%100.00%200.00%300.00%400.00%500.00%600.00%
200920102011 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
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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
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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
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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
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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.
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References and source:Websitehttp://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 internship Information from staff of NBP
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http://www.nbp.com.pk/Publications/AnReport2011.aspxhttp://www.nbp.com.pk/Publications/AnReport2011.aspxhttp://www.nbp.com.pk/Publications/AnReport2010.aspxhttp://www.nbp.com.pk/Publications/AnReport2010.aspxhttp://www.nbp.com.pk/Publications/index.aspxhttp://www.nbp.com.pk/
.
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