Documente Academic
Documente Profesional
Documente Cultură
Name of Organization:
Submitted By:
Javed Hussain
MC062000032
S u b m i t t e d To :
Instructor PRO619
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Acknowledgement
All praise to Allah, the most merciful, kind and beneficent, and the source of all
knowledge, wisdom within and beyond my comprehension. He is the only God, who
can help us in every field of life. All respect and possible tributes goes to my Holy
Prophet Mohammad (SAW), who is forever guidance and knowledge for all human
beings on this earth.
Heart full thanks for Mr. Muhammad Imran Wahid Principal IPS- Intellectual Prestige
Computer Science College Mailsi (PMLS01), for special arrangement of equipments
in computer lab and providing informative books in library. Without his co-operation
it was not possible for us to complete my MBA Program.
I am very grateful to my Project supervisor at Virtual University of Pakistan. He
guided and helped me through timely suggestions, valuable advices and specially the
sympathetic attitude, which always inspired me for hard work.
I am proud to say that I am very grateful to my family whose kind prayers and
cooperation helped us at every step of my work. Special thanks go to my parents for
their cooperation for the sake of my knowledge.
I am really very thankful to Ch. Ikram Ullah Operational Manager National Bank
Main Branch Mailsi for her cooperative attitude during the completion of my project
work. He helped and supported me during gathering and analyzing information. I am
really very thankful to one of my friend Mr. Mohsin Raza for his cooperative attitude
during the completion of my project work. He helped and supported us during
gathering and analyzing information.
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Executive summary
4
Internship Certificate
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Table of Contents
MC062000032
.....................................................................................................
1
Dedication......................................................................................................................2
Acknowledgement .........................................................................................................3
Executive summary........................................................................................................4
.......................................................................................................................................4
Internship Certificate......................................................................................................5
Table of Contents............................................................................................................6
Introduction....................................................................................................................7
.......................................................................................................................................7
Overview of the organization.......................................................................................10
Organizational structure...............................................................................................20
Number of employees .............................................................................................22
International Level.......................................................................................................23
Plan of your internship program...................................................................................23
Introduction of Branch ................................................................................................23
xiv) Islamic Banking ..............................................................................................26
Functions of the Finance Department..........................................................................28
Accounting system of the organization ...................................................................28
Finance system of the organization .........................................................................28
Use of electronic data in decision-making ..............................................................28
Mobilization of funds...............................................................................................29
Generation of funds .................................................................................................29
Allocation of funds ..................................................................................................29
Critical analysis............................................................................................................29
.....................................................................................................................................33
SWOT Analysis of the organization.............................................................................34
.................................................................35
...........35
Opportunities............................................................................................................35
Threats......................................................................................................................35
Conclusion & recommendations .................................................................................36
References ...................................................................................................................37
Annexes........................................................................................................................37
.....................................................................................................................................38
6
Introduction
7
term short-term loans, term finance and musharika certificates, etc.
• Buying, selling, dealing, including entering into forward contracts of foreign
exchange.
• Financing of seasonal crops like cotton, wheat, rice, sugar cane, tobacco, etc.
• Receiving of bonds, scrip’s, valuables, etc. for safe custody.
• Carrying on agency business of any description other than managing agent, on
behalf of clients including Government and local authorities.
• Generating, undertaking, promoting, etc. of issue of shares and, bonds, etc.
• Transacting guarantee and indemnity business.
• Undertaking and executing trusts.
• Joint venturing with foreign dealers, agents and companies for its representation
abroad.
• Participating in "World Bank" and "Asian Development Bank's" lines of credit.
Branch Network
Presently the Bank is divided into 10 Groups headed by SEVPs/EVPs. 9 Regions
reporting to as many Regional Chiefs and 15 Single Branch Zones headed by Zonal
Chiefs; 12 Corporate branches and 1,254 domestic branches headed by Branch
Managers control its field operations.
With the geographical development of its branches, the Bank has been able to extend
its services to a much larger number of Pakistanis all over the country. Today it has
more than 8.5 million accounts. Bank maintains its presence in all the major financial
centers of the world through its 21overseas branches and 4 representative offices. Of
these, three representative offices have recently been set up at Tashkent (Uzbekistan),
Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging
opportunities in CIS countries. Bank’s role globally is well assisted by its network of
correspondent banks located strategically in Asia, America, Europe and Africa.
Apart from having a vast branch network, Bank is at the forefront in the acquisition and
application of new technologies in every aspect of its banking facilities. It has acquired
leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centers
to cover various on-line and batch system requirements of branches and controlling
offices. Bank has also a presence on the Internet. It has modernized its services by
installing Automated Teller Machines (ATMs) called "CASH LINK" at selected
branches and presently 17 ATMs are operational in major cities.
Branch Network: (As of September, 2007)
1236 Domestic Branches, 18 Overseas Branches,
4 Representative Offices, 5 Subsidiaries and a Joint Venture.
Overseas Branch Network:
Paris, Frankfurt, New York, Washington D.C., Tokyo, Osaka, Hong Kong, Kowloon,
Seoul, Bahrain, Dhaka, Chittagong, Ashgabat, Bishkek, Baku, Kabul, Jalalabad and
KEPZ Offshore Banking Unit
Representative Offices:
Beijing, Tashkent, Chicago and Toronto
Subsidiaries:
CJSC Almaty, Kazakhstan
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NBP Capital Ltd.
National Bank Modaraba Management Co.
Taurus Securities Ltd.
NBP Exchange Company Ltd.
Joint Venture:
Prospects
The Bank's principal strategic going forward objective is to make the transition from a
public service institution to a modern commercial bank. Being the country's largest
financial institution, the Bank is uniquely positioned to leverage its large branch
network and its 8.5 million-customer base to consolidate its core businesses as well as
develop new revenue generating opportunities.
The new management team is in place combining the Bank's existing personnel with
professionals recruited from outside. Operating procedures are being re-defined and
internal controls strengthened utilizing a revamped IT architecture. A brief on the
progress on some critical areas is as follows:
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Overview of the organization
Vision
To be recognized as a leader and a brand synonymous
with trust, highest standards of service quality,
international best practices and social responsibility.
Mission
NBP will aspire to the values that make NBP truly the Nation’s Bank, by :
Core Values
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Brief History
National Bank of Pakistan was established on November 9, 1949 under the National
Bank of Pakistan Ordinance, 1949 in order to cope with the crisis conditions, which
were developed after trade deadlock with India and devaluation of Indian Rupee
in1949. Initially the Bank was established with the objective to extend credit to the
agriculture sector. The normal procedure of establishing a banking company under the
Companies Law was set aside and the Bank was established through the promulgation
of an Ordinance due to the crisis situation that had developed with regard to financing
of jute trade. The Bank commenced its operations from November 20, 1949 at six
important jute centers in the then 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 nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. 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, whereas in 1960
financing under this head was only Rs. 1.54 billion.
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.
National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally
and internationally and representative offices.
Bank of the Year 2001: awarded for the year 2001 by the world renown “The Banker”
magazine owned by the Financial Times Group, London.
Bank of the Year 2002: awarded for the year 2002 by the world renown “The Banker”
magazine owned by the Financial Times Group, London.
The Best in the Emerging Markets: World’s leading financial journal, “Global
Finance” after a worldwide survey declared NBP in its issue of May 2003 as one of the
Best in the Emerging Markets.
The “Bankers Magazine” in July 2003 recognized NBP as the bank with the highest
return on capital in Asia and No.8 in the world.
In its issue of March 2004, “Global Finance” has also declared NBP as “The Best
Foreign Exchange Bank” in Pakistan.
In May 2004, NBP’s standard long-term rating was upgraded by JCR-VIS Credit Rating
Agency to AA(double A) from AA- ( double A minus) with “stable outlook” while
standalone short-term rating was maintained at A-1+ (A one plus). This is now the best
rating for a local commercial bank in Pakistan.
WEBCOP-AASHA, an alliance against gender discrimination at workplace, presented a
Recognition Award to NBP on December 18, 2004 for having a Gender Sensitive
Management.
Bank of the Year” award for the year 2004 by the world renowned “The Banker”
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magazine owned by the Financial Times Group, London.
“Euromony” Magazine, a leading and prestigious journal, published from London, UK,
in its issue of March 2005 has published Moody’s Investors Service rankings in which
NBP in the only Pakistani bank which has been ranked among the Top 100 banks of
Asia for it performance in the fiscal year 2003.
World’s leading financial journal, “Global Finance” in an exclusive survey has named
NBP as the Best Emerging Market Bank from Pakistan for the year 2005.
On an all Pakistan basis NBP was awarded the “Kisan Times Award” for the year 2005
by the Prime Minister of Pakistan Mr. Shaukat Aziz, fir its services in the Agriculture
Sector.
Bank of the year” awarded for the year 2005 by the world-renowned “The Banker”
magazine owned by the Financial Times Group, London.
The “Banker Magazine” in July 2005 recognized NBP as the 10th Best Bank in terms of
‘Profit on Capital’ in the world.
On the basis of overall financial performance during 2004, NBP has been listed
“Amongst top 1000 banks in the world” and “Number 1 Bank in Pakistan” by the
prestigious “Banker magazine” in its issue of July 2005.
The Asian Banker, a reputable financial journal, has published the report of its research
project on the ranking of 300 of Asia’s Strongest banks based on a 11-Dimensional
Dynamic Scoring Criteria has adjudged National Bank of Pakistan as the Strongest
Bank in Pakistan.
“Best Bank-Pakistan” award for the year 2005 by world’s leading financial journal
“Global Finance”.
Best Foreign Exchange Bank- Pakistan” award for the year 2005 by world’s leading
financial journal “Global Finance”.
Due to consistent improvement in NBP,s Core Profitability, Asset Quality and Economic
Capitalization in recent years, Moody’s Investors service upgraded the Financial
Strength Rating (FSR) rom+ to D-, in November 2005.
Best Foreign Exchange Bank-Pakistan” award for the year 2006 by world’s leading
financial journal “Global Finance”.
World’s leading financial journal, “Global Finance” has named NBP as the Best
Emerging Market Bank from Pakistan for the year 2006.
Best return on Capital for 2006 amongst all banks in Asia “Banker magazine” in July
2007.
Stable AAA/A-1+ (Tipple A/A-One Plus) rating (Standalone Basis) by JCR-VIS (July
2007).
World’s Best Foreign Exchange Bank 2008” awarded by world’s leading financial
journal Global finance”.
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Nature of the Organization
National Bank of Pakistan is a Governmental Organization. It is functioning as an
agent of State Bank of Pakistan. It implements the policies of SBP. Its basic objective
was to extend credit to the agriculture sector. It is the major business partner for the
Government of Pakistan with special emphasis on fostering Pakistan's economic
growth through aggressive and balanced lending policies, technologically oriented
products and services offered through its large network of branches. It deals all Govt
Revenue, collection and payments of salaries, pensions and Govt Treasury. It is a
complete commercial, retail and corporate bank as well.
National Bank of Pakistan is naturally a Financial Organization, which deals with
lending, and borrowing and investing activities.
The National Bank of Pakistan a commercial bank generally makes advances for a
period not exceeding one year, except in case of small and medium industries for
which advance may be made for a maximum period of five years. The bank makes not
only against the security of stocks and goods hypothecated or pledged to the bank, but
also against documents of goods and properly, shares are various joint stock
companies, Government securities, Insurance policies deposits receipts, etc. The
margin, and rate of interest are determined by several factors including the type of
security the size of loan and the integrity of the party.
The nature of responsibilities of the Bank is different and unique from other
Banks/financial institutions. 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.
National Bank of Pakistan maintains its position as Pakistan's premier bank
determined to set higher standards of achievements. It is the major business partner
for the Government of Pakistan with special emphasis on fostering Pakistan's
economic growth through aggressive and balanced lending policies, technologically
oriented products and services offered through its large network of branches locally
and internationally and representative offices.
Business Volume
National Bank of Pakistan’s business volume is expanding day by day and now it becomes
largest bank of the country.
(Rs. In Millions)
2003 2004 2005 2006 2007
Total Assets 468,972 553,231 577,719 635,133 762,194
Deposits 395,492 465,572 463,427 501,872 591,907
Investment 166,196 144,736 156,986 139,947 210,788
Interest Earned 19,452 20,947 33,634 44,014 50,569
Advances 161,266 220,794 268,839 316,110 340,677
Share Holder’s Equity 18,134 24,900 36,158 53,045 69,271
Pre-Tax Profit 9,009 11,978 19,056 26,311 28,061
After-Tax Profit 4,198 6,195 12,709 17,255 19,034
Earning Per Share (Rs.) 8.53 10.48 17.92 24.01 23.34
Return on Assets
2.0% 2.4% 3.4% 4.3% 4.1%
(Per-Tax Profit)
Number of Branches 1,199 1,226 1,242 1,250 1,254
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Product Lines
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National Bank Cash Gold Scheme
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International Baking
DEMAND DRAFTS:
If you are looking for a safe, speedy and reliable way to transfer money, you can now
purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an
account holder of the bank or not, can purchase a Demand Draft from a bank branch.
MAIL TRANSFERS:
Move your money safely and quickly using NBP Mail Transfer service. And we also
offer the most competitive rates in the market.
PAY ORDER:
NBP provides another reason to transfer your money using our facilities. Our pay orders are a
secure and easy way to move your money from one place to another. And, as usual, our
charges for this service are extremely competitive.
TRAVELER'S CHEQUES:
LETTER OF CREDIT:
NBP is committed to offering its business customers the widest range of options in the
area of money transfer. If you are a commercial enterprise then our Letter of Credit
service is just what you are looking for. With competitive rates, security, and ease of
transaction, NBP Letters of Credit are the best way to do your business transactions.
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COMMERCIAL FINANCE:
Let us help make your dreams become a reality. Our dedicated team of professionals
truly understands the needs of professionals, agriculturists, large and small business
and other segments of the economy. They are the customer’s best resource in making
NBP’s products and services work for them.
FOREIGN REMITTANCES:
New Features:
The existing system of home remittances has been revised/significantly improved and
well-trained field functionaries are posted to provide efficient and reliable home
remittance services to nonresident Pakistanis at 15 overseas branches of the Bank
besides United National Bank (the joint venture between NBP and UBL in UK)., and
Bank Al-Jazira, Saudi Arabia. Zero Tariff: NBP is providing home remittance services
without any charges. Strict monitoring of the system is done to ensure the highest
possible security.
Special courier services are hired for expeditious delivery of home remittances to the
beneficiaries.
SWIFT SYSTEM:
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication)
has been introduced for speedy services in the area of home remittances. The system
has built-in features of computerized test keys, which eliminates the manual
application of tests that often cause delay in the payment of home remittances.
The SWIFT Center is operational at National Bank of Pakistan with a universal access
number NBP-PKKA. All NBP overseas branches and overseas correspondents (over
450) are drawing remittances through SWIFT.
Using the NBP network of branches, you can safely and speedily transfer money for
our business and personal needs.
AGRICULTURAL FINANCE:
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers
who produce some of the best agricultural products in the World.
Agricultural Finance Services:
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“I Feed the World” program, a new product, is introduced by NBP with the aim to
help farmers maximize the per acre production with minimum of required input.
Select farms will be made role models for other farms and farmers to follow, thus
helping farmers across Pakistan to increase production.
Agricultural Credit:
Watercourse improvement
Wells
Farm power
Development loans for tea plantation
Fencing
Solar energy
Equipment for sprinklers
Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a
renewal basis.
Operating loans
Land improvement loans
Equipment loans for purchase of tractors, farm implements or any other equipment
Livestock loans for the purchase, care, and feeding of livestock
Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature.
Seeds, fertilizers, sprayers, etc are all covered under this scheme.
If you require any further information, please do not hesitate to e-mail us.
CORPORATE FINANCE:
With National Bank’s Cash Management Services (in process of being set up), the
customer’s sales collection will be channeled through vast network of NBP branched
spread across the country. This will enable the customer to manage their company’s
total financial position right from your desktop computer. They will also be able to
take advantage of our outstanding range of payment, ejection, liquidity and
investment services. In fact, with NBP, you’ll be provided everything, which takes to
manage your cash flow more accurately.
EQUITY INVESTMENTS:
NBP has accelerated its activities in the stock market to improve its economic base
and restore investor confidence. The bank is now regarded as the most active and
dominant player in the development of the stock market. NBP is involved in the
following:
Investment into the capital market
Introduction of capital market accounts (under process)
NBP’s involvement in capital markets is expected to increase its earnings, which
would result in better returns offered to account holders.
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Competitors
Competitors of National Bank of Pakistan are all scheduled banks, which are
listed/trading under Banking Companies Ordinance 1962.
Competitive Banks are as under:
• Habib Bank Limited
• United Bank Limited
• Muslim Commercial Bank Limited
• Allied Bank Limited
• Askari Commercial Bank Limited
• Soneri Bank Limited
• Bank Al-Habib Limited
• Bank Al-Falah Limited.
• Standard Chartered Bank Limited & The Bank of Punjab
Organizational structure
Organizational Hierarchy Chart
PRESIDENT
DIRECTORS / SEVPS
Voice President
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Syed Ali Raza
President & Chairman
Sikandar Hayat Jamal Azam Farooque Mian Kausar Hameed Ibrar A. Mumtaz
Director Director Director Director
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Span of Control
Number of employees
Main Offices
Audit Committee
Chairman Azam Faruque
Ibrar A. Mumtaz
Mian Kausar Hameed
Auditors
Legal Advisors
NBP Building
I.I. Chundrigar Road, Karachi
Pakistan
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Website
www.nbp.com.pk
Branches
National Level
International Level
15 Branches
Introduction of Branch
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Departments of Training
During the internship period of 8 weeks I got training in various departments in the
branch. A brief introduction of these departments is as under:
Deposit of Current and PLS Saving Accounts & Account Opening (2 Weeks)
Remittances and Bills (2 Weeks)
Govt. Payments and Receipts (2 Weeks)
Advances (2 Weeks)
Training program
i) Deposit
Customers keep their savings in PLS Saving Accounts and businessmen save their
money in bank Current Accounts. NBP gives profit on saving accounts and special
saving accounts i.e. Premium Saving Accounts and NBP Premium Amadni
Certificates for one to five year’s period.
NBP give loans to the borrowers for different purposes. These loans are given for
various sectors for different periods. Small Finance, Cash Finance, Agriculture
Finance, Cash & Gold Loan, Personal Loans, Demand Finance, Running Finance,
Corporate Finance, Export Import Financing, House Building Finance (Saiban) and
NBP Karobar Scheme etc.
In this department all types of Government receipts i.e. Revenues, Taxes, Abyana,
Agriculture Tax, Government Fees, EOBI Funds and Utility Bills are deposited. This
way NBP is serving great job of revenue collection.
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v) Remittances
Another important department in the bank is remittances. People send their money to
the other persons and organizations through various way i.e. Bank draft, Telegraphic
Transfer, Mail Transfer, Coupons, Govt. Draft and Western Union Money Transfer
etc. It works both inward and outward.
vi) Bills
Customers collect their money/amount through bills. They present their cheques,
drafts and other bills for collection within the city and out of the city through mail.
Now a days Online Banking is becoming more popular for this purpose but the branch
where I got training is still not have this facility.
National bank deals Government treasury on behalf of State Bank of Pakistan. There
are Chest, Sub-chest and Non-chest branches in the bank. SBP supplies currency
notes to the bank and monitors its cash flow. Cash In charge and other cashiers deal
with cash receipt and payment in the bank.
viii) Compliance
Bank’s data collection and information system run by Regional Data Collection
Center. This department manages staff training programs regarding computer.
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xi) Online Banking
This department is functioning only in online branches in the bank. This is a fast track
banking system in modern banking. NBP is also trying to enhance this facility for
their customers.
This is the department that boosts the profitability of the bank. National Bank
becomes the largest profit-earning bank of the country by introducing personal loans
i.e. NBP Advance Salary Scheme and Saiban Scheme.
NBP is playing great role for collection of FBR (CBR) taxes/revenue. A separate
counter is established at branch level to facilitate the taxpayers.
The year 2007 marked the first year of Islamic banking operations. During the
year under review, in addition to active participation in various Sukuk transactions,
two more Islamic banking branches at Lahore and Peshawar started operations.
NBP’s plans for the year 2008 include opening of Faisalabad and Rawalpindi branches
with the focus on growing organically by opening more standalone Islamic banking
branches, utilizing NBP’s existing branch network of 1,200 plus conventional
branches and looking into strategic acquisitions for expansion in this field
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Another important department in the bank is remittances and Bills for Collection.
People send their money to the other persons and organizations through various way
i.e. Bank draft, Telegraphic Transfer, Mail Transfer, Coupons, Govt. Draft and
Western Union Money Transfer etc. It works both inward and outward.
Customers collect their money/amount through bills. They present their cheques,
drafts and other bills for collection within the city and out of the city through mail.
Now a days Online Banking is becoming more popular for this purpose but the branch
where I got training is still not have this facility.
In this department all types of Government receipts i.e. Revenues, Taxes, Abyana,
Agriculture Tax, Government Fees, EOBI Funds and Utility Bills are deposited. This
way NBP is serving great job of revenue collection.
Another important department in the bank is remittances. People send their money to
the other persons and organizations through various way i.e. Bank draft, Telegraphic
Transfer, Mail Transfer, Coupons, Govt. Draft and Western Union Money Transfer
etc. It works both inward and outward.
NBP give loans to the borrowers for different purposes. These loans are given for
various sectors for different periods. Small Finance, Cash Finance, Agriculture
Finance, Cash & Gold Loan, Personal Loans, Demand Finance, Running Finance,
Corporate Finance, Export Import Financing, House Building Finance (Saiban) and
NBP Karobar Scheme etc. The National Bank of Pakistan has also been trying to
ensure that loans are disbursed to genuine agriculturists within a reasonable time and
that the bank turns down no viable loan request.
Retail and Commercial wing enhanced the profitability of the bank. National Bank
became the largest profit-earning bank of the country by introducing personal loans
i.e. NBP Advance Salary Scheme and Saiban Scheme.
27
Structure of Finance Department
Department Hierarchy
Finance Director
Accounts Officer
Numbers of Employee
Accounting system of the bank especially where I done internship is very bad due to
non-availability of Information Technology trained staff which is most requirement of
the bank. Bank use manually accounting system during its operational activities.
Financial system of the bank where I done my internship is mixed and complicated
because being government bank, bank deals with all kind of lending and investing
activities and also hold down the cash position of others financial institutions i.e. banks
like MCB, UBL, ABL etc.
There is lack of use of electronic data in decision making being a operational branch of
the bank all the decisions make by higher offices i.e. Regional Office or Head Office and
this branch only act upon on the order received from high command.
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Mobilization of funds.
The branch where I have got training, is mobilizing his fund through lending or
receiving only. Branch provides various kind of lending facilities all kind of as stated
above in product line.
Generation of funds
Sources of funds
Allocation of funds
Critical analysis
Financial Analysis
Pre tax profit stood at Rs. 12,674 million from Rs. 14,002 million of corresponding
period of last year, a reduction of 9.5%. Bank’s operating performance have been
quite impressive, operating revenue increased by 30% from Rs. 20376 million to
Rs.26,497 million, while pre provision profit increased by Rs. 4,293 million an
increase of 31.4%. Diluted earning per share declined to Rs. 8.79 from Rs. 10.05
during the same period of last year. Pre tax return on equity stands at 35.8% whereas
Pre tax return on assets is at 3.3%. Cost to income ratio of the bank remained in the
top tier at 0.32
Net interest margin registered an impressive growth of Rs. 2,670 million or 16.4%
mainly due to growth in volumes. Net advances increased by Rs. 41 billion and Rs. 32
billion as compared to corresponding period of last year and year end 2007. The
growth in advances mainly emanated from corporate and commodity financing.
Deposits show impressive growth of Rs. 68 billion or 12.3% over corresponding
period last year. Compared to year end December 2007 the deposits have increased by
Rs. 29 billion or 5% mainly due to our marketing efforts and the trust that customers
have in NBP.
Non interest base income has shown an impressive increase of Rs. 3.4 billion or 84%
over corresponding period due to higher commission, exchange income and a one off
receipt of Rs. 977.8 million as compensation for delayed tax refunds. The
compensation on delayed refunds pertains to various assessment years from 1991-92
to 2001-02.
Administrative expenses show a rise of Rs. 1,828 million or 27% compare to
corresponding period mainly due to inflation and salary increases. Going forward we
expect that with the technological / human resource up gradation program our costs
29
will rise in short term however we need to invest today for better returns in the future.
Provision charge against advances for the corresponding period last year includes a)
one off items of Rs. 1.4billion on account of one large cash recovery and reversal in
general provision of Rs. 825 million due to reduction in provision requirement on
advance salary from 5% to 3%. If we exclude these one offs the provision charge last
year comes to Rs. 1.8 billion. Further b) last year the SBP changed its prudential
regulations and withdrew the benefit of Forced Sales Value in the third quarter of last
year, therefore this year the banks can no longer take the benefit of forced sales value
of the collateral securities. The additional provision charge on account of withdrawal
of FSV impact last year was Rs. 3.1 billion, which was made in the 3rd and 4th
quarter of last year. This benefit of Rs 3.1 billion was being carried in the first half of
2007. Therefore the comparison between the provisions for the two periods should
take into account both these factors. Additionally the bank is making all out efforts for
recovery of non-performing loans and aggressive targets have been assigned to the
units.
We extend our appreciation to the bank’s staff for their commitment, dedication and
hard work in achieving these excellent results. We would like to express our
appreciation to our stakeholders, regulators and our valued customers for their support
and continued confidence in NBP.
On behalf of Board of Directors
S. Ali Raza
Chairman & President
Date: August 25, 2008
Others Issue
During the internship I got practical experience that does not meet the theoretical
concepts in MBA Program. I present here some critical analysis:
Long Process of Transaction: There are long processes for making a transaction in the
Bank. Especially, during the salary days of Government employees, a customer needs
one or two hours to withdrawal his/her cheque.
Training: NBP has no great facility for their employees for training of new
technologies. This situation creates difficulty for handling new challenge.
Departmentalization: I hardly saw any separate department in the branch where I have
got internship accept cash department. An employee deals various nature of work.
Staff Attitude: Due to heavy load of work staff attitude does not ideal for an
organization where public dealing is at large scale.
Work Environment: Work environment was not ideal due to heavy customers visit in a
single day. Furniture, temperature, light and sitting arrangement was not good for
customers and bank employees.
Professional Approach: Work specialization and job specification are found very low
in bank’s employees. Business administration qualities and education is at low side.
Shortage of Staff: There is shortage of staff in the Bank. Number of customer per
employee is very high. Cash department is suffering very badly and facing great deal
of over workload.
Less use of Technologies: Staff hesitate to use new technologies. Even old employees
are not able to operate PCs.
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Communication Gap: I feel that there is communication gap between top management
and workers. They have fewer chances to communicate effectively.
Not Focusing on Mission and Objectives: Employees just work and work hard as a
routine. They do not know what is the mission ahead and their objectives are also not
crystal clear.
Unjustified Appraisal Criteria: No justified appraisal criteria are implemented for
annual increase in salary and promotion of staff. It creates un-satisfaction among the
employees of the Bank.
Undemocratic Decision Making: I observed that some times employees are not
involved in decision-making process. Manager himself takes decision and orders to
make changes.
Standard Procedure not adapted: In theory, standard procedures for practice and
process of transaction are forced to avoid fraud and forgery but I observed that
standard procedure manual volume I, II and III is ignored.
Ratio Analysis
Net Profit Margin:
This ratio measures the firm’s profitability of sales/ interest earned after taking
account of all expenses and income taxes. This ratio can be calculated as:
Net profit margin ration = Net Profit after taxes / interest earned
Explanation: from the calculation it is very much clear that the performance of NBP is
very good. And the trend is upward. It tells us a firm’s net income per rupee of
revenue. As the trend is upward it shows the high profits in revenue per rupee in case
of NBP. It is because of high advances the NBP has given to the people.
Return on Equity:
Dividing profit after taxation by shareholder’s equity. ROE compares net profit after
taxes to the Shareholder’s Equity.
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2005 2006 2007
Return On Assets:
This ratio shows the efficiency of organization that how efficiently utilizes their
assets. This ratio relates profits to assets.
From calculation it is clear that this ration of NBP is increasing. It shows that NBP
using it’s assets very efficiently. That is why they are earning very high profits. This
shows that how efficiently they investing the assets that’s why they are earning high
profits.
This ratio shows the comparison of investments and deposits. This is calculated as.
This ratio show that how much efficiently the bank advances the deposits of their
customer to borrower.
It is calculated as.
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2005 2006 2007
Advances
Deposit 268839/463427 X 100 316110/501872 X 100 340677/591907 X 100
Ratio
58.01% 62.98% 57.56%
From above table it is clear that the ratio is going high. Which means the efficiency on
NBP is good and they use their deposits efficiently in advancing to borrowers. Here
high ratio is required. The next side of the picture is that the people will think that is
risky to deposit the money in the bank.
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SWOT Analysis of the organization
Strength
• Declared World’s best Foreign Exchange bank in 2008
• Stable AAA/A-1+ (Tipple A/a-One Plus) rated bank
• Best Return on Capital Bank for 2006 amongst all the banks in Asia
• Highest Profitability bank of Pakistan
• 10 the Best Bank in terms of ‘ Profit on Capital’ in the world
• Having Highest Assets and Capital in Pakistan
• Functioning as an agent of State Bank of Pakistan
• Dealing Government Treasury where SBP has not its own branch
• Having unshakable trust of the public and its stakeholders
• Giving Loans alone in the market against Gold Ornaments
• Performing social responsibilities and claiming “The Nation’s Bank”
• Disbursing Salaries and Pensions to the Government employees and earning
high profit on NBP-Advance Salary Loan Scheme
• Earning commission from SBP on Government transaction
• Facing never problem of cash/currency being its Chest and Sub-chest
Branches all over the country
• NBP have presence in the countries having sizeable trade volumes with
Pakistan by its overseas operations
• Holds largest deposit base in the market share in terms of number of accounts
• Leading bank in agriculture financing amongst commercial banks with the
market share of 15%
• Helping in earning of foreign exchange, remittances and leading agent of
Western Union Money Transfer
• SBP rated “Fair” for capital & human resources, “Strong” for assets, “Fair” for
management and “Satisfactory” for both earning (Rs.24.1 for per share) and
liquidity
Weakness
• Lowest Internal Control and Compliance System, SBP rated “Marginal” which
is alarming for the Bank
• Unsatisfactory corporate culture of the Bank
• Physical environment and atmosphere compare to other banks is not meet the
standard
• Less number of Online Branches
• Ineffectively use of technologies i.e. Information technology
• Shortage of staff- per employee customer is very high side
• Technical education and training of staff is insufficient
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Opportunities
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Conclusion & recommendations
• In my opinion the process of a transaction should be short in order in save
time for both customers and the bank.
• Staff strength should be enhanced and professional qualified persons should be
recruited.
• It is recommended that proper training be provided to the staff members that
will ultimately increase the performance of Bank over all.
• It is suggested that promotion be given to the staff in due time and on the basis
of performance to provide job satisfaction.
• The bank should spend more on renovation of the branches to improve
environment and atmosphere to attract the customers.
• Sitting arrangement, air conditioning and new furniture should be facilitated
• The Bank should introduce the computers software to cope the heavy load of
work and better control.
• Extra counters should be established in order to facilitate during the rush days
the difficulties faced by the bank staff as well as the customers.
• All Branches of the Bank must be online.
• All the departments should be established separately.
• Bank can increase its profit ratio by reducing extra expenditures and to enhance
the volume of advanced especially retail loans.
• I done internship, I recommend that security level in the bank should be
enhanced especially where I got internship and operation of Mobile phones must
not be allowed inside the Bank.
• Bank should take step to establish separate counters for the old age employees
and pensioners.
• The Bank should locate new market for its operational activities in the country as
well as abroad.
• The Bank should increase profit rate on deposits and saving schemes
especially for pensioners and old age citizens.
• For improvement of internal control and system the compliance wing and
surprise inspection system should work more effectively.
• To avoid complaints and leaving the bank job number of staff should be
enhanced and their salaries should be leveled to the private/multinational
banks.
• Double shift system should be introduced to improve attitude and behavior of
the employees.
• Payment of salaries and pensions should be made separately to accommodate
the valued customers and depositors.
• For collection of utility bills i.e. Electricity bills, Telephone bills, Water and
Gas bills separate cash receipt counter must be established.
• Procedure of receiving loans should be easy and short time to facilitate the
borrowers and enhance the profitability of the Bank.
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References
1. Website of the Bank i.e. www.nbp.com.pk
Annexes
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• Brochure- NBP Awards & Achievements.
• Brochure- NBP Kisan Dost.
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