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Awards and Recognitions of NBP


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Purpose of Internship

The university syllabus compels us to have 6 to 8 weeks internship in


any recognized organization. We being the student of Bachelor of Business
Administration have two options, one to get a project on any particular
organization and second to have 6 to 8 week internship in any bank. The
students are required to work in their own field in which they have done their
specialization.
The purpose behind the internship program or the project work is to get
the students familiarize with the practical implication of what they have
learned. Because there is huge difference between the bookish knowledge
and practical work.

Other objectives of the study are as follows:

• To gather relevant information then interpret and analyze it in a useful


manner.

• To define and describe various functions of the bank.

• To highlight the outline facilities and products offered by organization


to its customers.

• To analyze the bank through different techniques i.e. Horizontal,


Vertical, and SWOT analysis.

• To get exposure and to develop the interpersonal communication skill.


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Importance of study

Banks play a central and very important role in the economic life of a
country, that’s why they are considered as the lifeblood of modern economy.
Today no one can deny the importance of banking in the economy. They
facilitate and expedite trade and commerce and provide a variety of services
that one can’t imagine with out banks.

Research methodology

There are basically two main types of methods that can be used by the
researcher or observer. Both of these methods have their own implications
and merits and demerits. The selection of the methods can depend on the
specification and circumstances. At some circumstances the primary methods
are applicable, on other hand secondary methods are more suitable. This
selection of methods among two option also largely base of the cost allocated
to the research and also the time available for the research.
The methodology that I adopted for this research project is based on
both the primary as well as secondary data. The reason behind the selection
of both primary and secondary method is that in banks the overall data about
all branches of a bank are in fact impossible for an individual to collect. And
on other hand the data about the departments of National Bank of Pakistan
should be collected by the observer.
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The sources of primary data were


• Formally arranged interview/ discussions with Management, Officers of
the Bank.
• Personal observations.
• The time I had spent in each department.

The sources of secondary data were;

• The annual reports of National Bank of Pakistan.


• The internet- the site of NBP from where the history of NBP can be
arranged.

During the research project, I observed that enough written material regarding
the Bank is not available, so I had count on my personal observation and
interviews with directors.

I spent lot of time in the branch at each department and collected information
from discussion and interviews with Managers Officers, so most of the data of
this report is primary source .I also availed assistance from few relevant
books

The term “Bank” & “Banking”

The term bank and banking is today quit renowned to everyone.

Everyone knows about the term bank and they know that what the bank

means. It is generally perceived that the bank is a place where one can
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deposit their money and from where one can borrow the funds for his or her

personal use.

It has not so far been decided as to how the word ‘Bank’ originated.
Some authors have got the opinion that this word is derived from the words
‘Bancus’ or ‘Banque’, which mean a bench. Other authorities hold the opinion
that the word ‘Bank’ is derived from the German word ‘Back’, which means
‘joint stock fund’. It is therefore, not possible to decide as to which of the
opinion is correct, for no record is available to ascertain the validity of any of
the opinions.

Banking in fact is primitive as human society, for ever since man came
to realize the importance of money as a medium of exchange; the necessity
of a controlling or regulating agency or institution was naturally felt. Perhaps
it was the Babylonians who developed banking system as early as 2000 BC.
It is evident that the temples of Babylon were used as ‘Banks’ because of the
prevalent respect and confidence in the clergy.

Banking system in Pakistan.

At the time of independence, there were 631 offices of scheduled


banks in Pakistan, of which 487 were located in West Pakistan alone. As a
new country without resources it was very difficult for Pakistan to run its own
banking system immediately. Therefore, the expert committee recommended
that the Reserve Bank of India should continue to function in Pakistan until
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30th September 1948, so that problems of time and demand liability, coinage
currencies, exchange etc. are settled between India and Pakistan. The non-
Muslims started transferring their funds and accounts to India. By the end of
June 1948 the number of officers of scheduled banks in Pakistan declined
from 631 to 225. There were 19 foreign banks with the status of small branch
offices that were engaged solely in export of crop from Pakistan, while there
were only two Pakistani institutions, Habib Bank Pakistan and the Australian
Bank. The customers of the bank are not satisfied with the uncertain condition
of banking. Similarly the Reserve Bank of India was not in the favor of Govt.
of Pakistan. The Govt. of Pakistan decided to establish a full-fledge central
bank. Consequently the Governor-general of Pakistan Quaid-I-Azam
inaugurated the State Bank of Pakistan on 1st July 1948. Thus a landmark
was made in the history of banking when the state bank of Pakistan assumed
full control of banking and currency in Pakistan.
“Government of Pakistan inaugurated the State Bank of Pakistan on
July 1,1948, after the State Bank of Pakistan order was promulgated on May
12,1948. In order to bring the situation under control “As the central bank of
the country. The state Bank of Pakistan addressed itself with the equally
urgent task of creating and developing the Baking system of the country. To
achieve this goal, it provided every help and encouragement to Habib Bank to
expand its network of branches and also recommended to Government, the
establishment of a new bank, which could serve as an agent of the State
Bank of Pakistan in areas where State Bank branches are not present. As a
result, the National Bank of Pakistan came into being in 1940 and by 1952 it
became strong enough to take over the agency functions from the Imperial
Bank of India. In order to develop sound banking and weed out weak
institutions, the Banking companies (control) Act was promulgated in 1949,
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empowering the State Bank to control the operations of banking companies in


Pakistan. Further The State Bank of Pakistan limited the opening of new
branches by foreign banks in coastal towns or in big cities from where trade
was being carried out with foreign countries, while Pakistani banks were
encouraged to open as many branches as possible within the country”. In
order to broaden the scope of banking system in Pakistan, The State Bank of
Pakistan also helped in the establishment of specialized credit institutions in
the fields of agriculture and industry. At the end of June 1958, the number of
branches of Pakistani banks increased from 195 to 307 and, the number of
scheduled banks increased to 36 by June 1965. The following figures reflect
the rapid development of banking system in Pakistan from 1948 to 1993.

1948 1993 % increase


Amount deposited in Banks 880m 290,000 m 329.54
Amount landed to customers 200m 21,000 m 105.00
Offices of scheduled banks 81m 7,100 m 87.65

The banking structure in Pakistan comprises of the following types.


• State Bank of Pakistan
• Commercial Bank of Pakistan
• Saving banks.
• Cooperative banks
• Specialized credit institutions.

Commercial Banks
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Commercial banks have been the most effective mobilizes of savings


and have been providing short-term requirements of working capitals to trade,
commerce and industry.
Up to 31st December 1973, there were 14 Pakistan commercial banks
that were performing their functions all over the country and in some foreign
countries through a network of branches, the name of these were:
• National Bank of Pakistan
• Habib Bank Limited
• Habib Bank (Overseas) Limited
• United Bank Limited
• Muslim Commercial Bank Limited
• Commerce Bank Limited
• Australia Bank Limited
• Standard Bank Limited
• Bank of Bahawalpur Limited
• Premier Bank Limited
• Pak Bank Limited
• Lahore Commercial Bank Limited
• Sarhad Bank Limited
• Punjab Provincial Co-operative Bank Limited
All these commercial banks were nationalized in 1stJanuary 1974, and
were recognized and merged into the following five banks:

• National Bank of Pakistan


• Muslim commercial bank limited
• Habib Bank Limited
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• United Bank Limited


• Allied Bank of Pakistan
The state bank of Pakistan is the Central bank of the country and was
established on 1st July 1948. The separation of East Pakistan and its
repercussion in the form of economic depression has caused a lot of
difficulties to the banking system in Pakistan. The network of bank branches
now covers a very large segment of national economy. The numbers of
branches have increased appreciably and there is now one branch of bank for
every 3000 heads of population approximately. There is done reasonable
growth in deposits from the establishment of Pakistan. Besides this growth,
specialized credit and financial institutions have also developed over the
years.
The Government of Pakistan in the late 90’s introducing the need for
the privatization of state owned banks and companies. The private sector
has accepted the challenge and most of the banks are privatized today. The
State Bank of Pakistan issues the shares of these periodically. Bank
employees and other common the people can also purchase these shares
and earn profit. Through out the period of banking history the banks have
been expanding rapidly and achieved the desired goal of progress

Functions of Commercial Banks


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There are two broad categories of banks almost in every country of


world. They are Central bank and Commercial banks. Each has their own
functions to be performed. The functions of Commercial banks are generally
managed (controlled) by the central bank of that country. Here are some
common functions that are performed by almost every commercial bank.

Creating Money
Commercial banks have the ability to create and to utilize the money.
This is accomplished by lending and investing activities of commercial banks
in cooperation with central bank. The power of commercial banking system to
create money is of great economic significance. It results in the elastic credit
system that is necessary for economic progress of relatively steady rate of
growth. If bank credits were not available, the expansion of our productive
facilities would have been severely limited. Under such conditions, productive
units would have been forced to maintain large working balances to meet
fluctuating requirements for fund. Such a practice would be uneconomical
since large sums would have to be held idle for some period. While during the
seasonal peaks of business activities such sums might be insufficient. We
need an adequate but not excessive money supply in our economy.

The increase in supply of money causes inflation and decrease in


supply than the rate of production of goods causes deflation and both have
bad effects on the economy. The purpose of central bank is to provide stable
rates and maximum employment, for this purpose the commercial banks are
used as conduit through which money supply is controlled.
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Payment Mechanism
Providing for payment mechanism or the transfer of funds is one of the
important functions performed by commercial banks and it is increasingly
important as greater reliance is placed on the use of checks and credit cards.
The increasing deficiency with which funds are managed is indicated by the
gradual decline in money holding relative to the GNP (Gross National
Production) over the year.

Pooling Of Savings
Commercial banks perform a very important service to all sectors of
economy by providing facilities for pooling of savings and making them
available for economically and socially desirable purposes. The saver is
rewarded by the payment of interest on his saving which are safe and in a
highly liquid form. These pooled funds are made available to businessmen
who may use them for the expansion of their productive capacity and
consumers for such items as housing and consumer goods.

Extension of Credit
The primary function of commercial banks is the extension of credits to
worthy borrowers. From the beginning, organizers of banks have been
motivated by the opportunities presented by lending function and charters
have been granted by the governments primarily because there was a need
for credit in a particular community. In making credit available, commercial
banks are rendering a great social service through their actions, production is
increased, capital investments are expanded and higher standard of living is
realized.
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Bank lending is very important to the economy for it makes possible


the financing of the agricultural, commercial and industrial activities of the
nation. It makes possible indirect roundabout production as compared to the
direct production where consumable goods are secured by direct application
of labor to the land or natural wealth.

Bank loans enable the farmers to purchase seeds, fertilizers and many
other items necessary for agriculture and enable the manufacturer to
purchase raw material and machinery, facilitates the employment of labor and
production of goods demanded by the industry, government and consumers.

It also enables government to run activities smoothly by getting


temporary funds by purchasing bonds.

Facilities for Financing of Foreign Trade


Although foreign trade is basically the same as domestic trade, some
differences necessitate international banking services provided by
commercial banks. These differences arise because of the existence of
national monetary system, unfamiliarity with the financial ability of the buyers
and sellers in foreign countries. For example a person who orders sports car
from Germany and shoes from Italy may discover that foreign sellers are not
willing to take the currency of the importers’ country. Therefore arrangements
must be made in foreign currencies e.g. in Marks and Lira, to do this, the
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purchasers can go to commercial banks and quickly and efficiently make the
arrangement for foreign exchange needs.

The purchaser may encounter a situation where the foreign seller is


not willing to place the goods on ship and wait for payment to arrive in the
next mail. The transaction might be handled more satisfactorily through the
issuance of commercial letter of credit (LC). This protects both the purchaser
and seller.

Utilization of Resources
In the competitive era, it is difficult to imagine that in the absence of
banks people can make possible their savings and then their investments in
different businesses. It is through the agency of banks that people can make
savings and then these savings automatically flow into the channels, which
are productive, both for saver and investor. The banks deposit the people’s
money, which ensures the economic development by mobilizing the financial
resources of the community and making them possible to flow in desired
channels.

Capital Formation
Capital formation is one of the major factors in economic development.
It is the increase in the stock of both material and humane capital. Capital
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formation results when some proportion of society’s present income is saved


and invested in order to increase materials as well as humane capital.

The importance of capital formation can be seen from the following;

• It helps in breaking through the vicious circle of poverty.

• Capital formation increases the stock of material and human capital.

• It increases the investment in various sectors of economy.

• Leads to expansion of both national and international markets.

• It helps in building import substitution industry.

• Commercial banks play an important role in creating domestic


resources like;

• Voluntary savings.

• Involuntary savings

• Government borrowings

• Use of idle resources for capital formation

Safe Keeping Valuable things


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The safe keeping of valuables is one of the oldest services provided by


commercial banks. They have vaults that are difficult to enter even by the
best of burglars and have established record of proper custody.

Commercial Banking in Pakistan

South Asia has proved to be fertile land, not just for crops, but also for
intelligent and learned brains. People of this area have God gifted ability of
mathematics and calculations. The Indian society was quite familiar with the
banking right from the beginning. Informal banking practices and banks
existed in one form or the other.
The English, brought with them much developed and organized banking
methods and practices. Being home to nearly one third of world’s population,
this region has always been the center of attention of world’s economic
powers. The sense of competition between the local and international banks
has proved to be fruitful in the development of the banking sector thus
contributing towards the growth of the region’s economy.
At the time of independence, the areas which now constitute Pakistan were
producing raw material in the form of food grains and different other
agricultural products. There was practically no industry setup in Pakistan.
However, the commercial banking facilities were well established. As a
country without enough resources it was very difficult for Pakistan to run its
own banking system but the father of the nation, Muhammad Ali Jinnah took
the bold step to establish the State Bank of Pakistan in July, 1948.
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At the time of partition only 38 banks were operating in Pakistan. Out


of 38 banks, only 2 were Pakistani, 29 were Indian and 7 were exchange
banks. Commercial Banks have constituted the most important part of the
intuitional credit in the economy of Pakistan. Being the largest source of
credits, banking industry is the pivot of whole the economic activities in
Pakistan. State Bank of Pakistan Act of1965 lays down the rules and
regulations to organize banking companies known as scheduled bank

Commercial banks & Economic Development of Pakistan

Banks play an important role in the economic development of a


country. If the banking system is unorganized and inefficient, it creates
maladjustment and impediments in the process of development. In Pakistan,
the banking system is very well organized. The State Bank of Pakistan
established on July 1, 1948 stands at the apex and is responsible for the
operation of the banking system in Pakistan. The other banks, which form the
banking structure in Pakistan, are playing an active role in the economic
development of the country.

The role of commercial banks in the growth and development of sound


and healthy economy of the country is briefly discussed as under;

Saving Mobilization
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The commercial banks like National Bank of Pakistan, Habib Bank,


Allied Bank, United Bank and Muslim Commercial Banks have opened up
branches in urban and rural areas to mobilize savings of people.

Financing Development Projects


The banks and other development finance institutions like IDBP,
ADBP, PICIC etc advance short and medium term loans for financing of the
development projects both in the private and public sector and thus help in
accelerating the rate of economic development in the country.

Facilitating Trade Activities


The credit institutions collect the savings of the people and make them
available for facilitating trade activities, both inside and outside the country.

Creating Climate for Capital Formation


A developed banking System is stimulant to growth and creates
favorable climate for capital formation in the country.

Helping SBP in Achieving Monetary Policies


The Commercial Banks under the supervision and guidance of the State Bank
of Pakistan help in implementing and achieving the objectives of the monetary policy,
which vary from time to time.

Assisting in Development
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The commercial banks are profit-seeking enterprises. In order to


maximize the profits, they have to maximize the loans. An organized banking
system keeps a balance between liquidity and profitability and thus assists in
the planned development of the economy.

Provision of Agency Services


The commercial banks provide agency services to the clients. They
collect dividends and pay interest and premium on behalf of the clients. They
keep their customers’ valuables in safe custody. They help in the mobility of
capital and thus stimulate capital formation in the country.

Making Capital Available for Investment


The organized banking system helps in directing physical resources
into productive channels. It also keeps a balance between the availability and
requirements of the capital in the country.

Less Reliance on Foreign Capital


A planned banking system by launching a vigorous campaign of
mobilizing idle savings in the country can meet the capital development
requirements from within the country. The country will thus have to rely less
on foreign capital in financing the development projects.
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Profit Sharing Scheme


The commercial banks receive surplus balances of households in
business and pay interest on the deposits of the clients. The banks have now
introduced interest free banking in Pakistan. The depositors, instead of having
a fixed rate on the deposits, will share the profit and loss of the banks. The
profit and loss sharing (PLS) arrangement, which is an alternative to interest
under Islamic Economic System, is now operating in Pakistan.

Provision of Qarz-e- Hasna


Qarz-e-Hasna Scheme has been prepared and launched by Pakistan
Banking Council through nationalized commercial banks. Under the Qarz-e-
Hasna Scheme, financial assistance is provided to the outstanding students,
who are unable to pursue their studies due to financial difficulties. Loans are
provided for pursuing studies both in and outside Pakistan.

Export Promotion Cell


In order to boost the exports, the banks have established Export
Promotion Cell for the information and guidance of the exporters.

Importance of banking in the world’s economy


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The world economy has witnessed in recent years a phenomenal


growth in financial transactions surpassing that of transactions on goods and
services. It has been estimated that transaction operations on financial assets
are ten to fifteen times those on goods and services. Financial flows are likely
to continue to grow at a faster pace than out put. The banking system
happens to be at the center of this increase in financial transaction. It has a
leading role not only in financing of product trade but also relatively in new
areas like such as financing of project companies and states.

The solidity of the world banking system depends on the solidity and
stability of national economies. Economic growth will naturally have a positive
influence on the performance of banking system. Conversely, recession and
inflation would affect this performance negatively.

In the 1980’s cross-country financial flows became a considerable


mainstay of the world economy. This situation owes much to four major
developments;

First, changes in the regulatory environment. These changes have


permitted domestic markets to compete with international markets.

Second, technological change especially the advances in


computer and telecommunication technologies. This has made possible
new methods of mobilizing and placing financial resources. It has speeded up
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the implementation of transactions, reduced costs and has contributed to the


expansion of international financial market.

Third one is financial innovation. This has been motivated by the


drive to avoid regulatory constraints. Further more, changing technical and
economical environment have favored the launching of innovative methods in
response to changing needs of customers as well as rising concern of
financial institutions regarding the protection of their profitability and aversion
of risk.

Fourth one is growth diversity in financial system and greater


flexibility or responsiveness to changing needs and environments.

Overview of National Bank of Pakistan

National Bank of Pakistan was established on November 9, 1949 as a result


of deadlock with India and the devaluation of the Indian rupee where Pakistan
much to India and British consternation did not follow suit. The objective of
establishing the bank was to provide much needed financing to the
agricultural sector, particularly to facilitate the badly hit jute trade. The bank
then went on to become the sole agent of the State Bank of Pakistan for
handling provincial and federal government receipts and payments.
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The paid up capital of National Bank is 4924.106 million rupees. This is 14


percent of the combined paid up capital of the 18 listed commercial banks
amounting to Rs.3.528 billion. Such a large paid up capital places National
Bank at the number one slot in the entire financial sector. Muslim Commercial
Bank Limited and Faysal Bank Limited are placed second and third
respectively on basis of paid up capital. Meezan Bank Limited is last and
smallest on the list with a paid up capital of Rs.1170.450 million.

The bank maintained its position as the largest bank deposit holder in
Pakistan. The integration of corporate and investment banking efforts in
enabling the bank to offer wider products range besides making it a major
player in debt and equity market. The Bank has one joint venture in U.K. and
one wholly owned subsidiary in Kazakhstan. The U.K. Operations of the Bank
were merged with that of United Bank Limited to form a Joint Venture Bank
namely Pakistan Investment Bank (PIB) incorporated in U.K. NBP has 45% of
share holding while the balance 55% is with UBL.
On the retail-banking front, the bank successfully launched a product “ghar
ghar television” which not only brought additional revenue but also served as
a launching pad for similar initiatives. NBP launched a housing scheme to
cover all sections of the society with monthly income starting from as low as
Rs.5000/- per month. Branded as ‘NBP Saibaan’ (Housing for all), the
scheme offers a maximum loan of Rs.10 million in accordance with the debt
burden criterion. Loans are available for Home Construction, Home Purchase
and Home Improvement. For Home Improvement Loans the maximum
amount is Rs.2.00 Million.

NBP further consolidated its market position in the consumer financing and its
product “NBP-Advance Salary” has been availed by approximately 475,000
customers. Overall loan growth was also impressive as net advances
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increased by Rs.26 billion as compared to December 2003. Within a period of


18 months, NBP has disbursed approximately 23 Billion Rupees to over
425,000 customers under this scheme.
National Bank of Pakistan through its branch in Kabul formally commenced
operations in Afghanistan from October 07, 2003, thus becoming the first
foreign commercial bank to open its branch in Afghanistan. Since then,
another branch has been added to it. NBP is one of the top performers in
Afghanistan and within a short span of one year; the deposit base of NBP’s
branches in Afghanistan has surged to Rs2 billion. With the opening of trade
prospects with India, the NBP would enter the competitive Indian banking
market.
The State Bank of Pakistan has instructed all commercial banks to switch to
only one link, which would enhance the availability of numbers of ATM to
cardholders by many times. By the end of June 2004, NBP planned to have a
minimum 70 new ATMs at various business centers. With the current figures
at 30, NBP has fallen far short of its target. Interestingly, 16 of the ATM’s are
in Islamabad along, that’s more than the number in the rest of the country put
together.

The National Bank has set a growth rate of eight per cent in its deposit base
during 2004, especially targeting deposits from the private sector. Recent
surge in domestic interest rates poses no threat to the national economy.
Blue chip companies are still getting loans at competitive interest rates on the
basis of their stable balance sheets.

The bank is witnessing major developments in the field of technology. For


facilitating the customers round the clock payment of utility bills, around 100
kiosks are being established in the important cities. In addition, branches
covering 80% business are converted into fully automated on real time basis.
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NBP is the most profitable bank in the history of Pakistan, with a record high
before Tax profit of over Rs.9.00 Billion. It is already the best bank in Asia and
the 8th Best in the world in terns of return on capital in 2002 and declared as
one of the top Banks in emerging market - 2003, by global finance USA as
well as Bank of the year in 2001 and 2002 by the Banker Magazine UK. In its
issue of March 2004, “Global Finance” has also declared NBP as “The Best
Foreign Exchange Bank” in Pakistan. With the technology of modern cash
flow based lending now in place, NBP will remain a strong force in the
national development. In short, NBP is the ‘Nation’s Bank’ with an
international recognition and acclaim, working towards national development
and raising the overall standard of the people of Pakistan.
The year 2003 saw National Bank post the highest ever profit for Pakistan’s
financial sector. This can be attributed to the successful strategic and
operational repositioning of the bank by management confronted with the dual
challenges of appreciably lower spreads and intense competition.
I believe that despite competitive interest rates, slim margins and standard
retail banking, NBP is expected to be a major beneficiary of our economic
revival due to its low cost deposit base and branch network. At the end of the
financial year 2003 NBP realized a pre-tax profit of Rs. 9 billion, a Rs. 3 Billion
increase and a 50% growth over 2002. What is more encouraging is that the
boost to profitability was on account of the higher net asset margin achieved
from rebalancing of the bank’s earning asset mix. This was evident from a 2%
pretax return on assets, a 40% improvement over last year whereas the pre-
tax return on equity at 55% placed NBP in the top tier of Pakistan’s listed
corporate and financial institutions. Earning per share has consequently
almost doubled from Rs. 5.49 in 2002 to Rs. 10.23, the highest in the banking
sector.
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Vision

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


standard of quality, international best practices and social responsibility.

Core values of NBP

• Highest standard of integrity.


• Institutionalizing team work and performance culture.
• Excellence in services.
• Advancement of skills for tomorrow’s challenges.
• Awareness of social and community responsibility.
• Value creation for all stakeholders.

Mission of NBP

NBP will aspire to the values that make NBP truly the
nation’s bank by;
To be recognized in the market place by
• Institutionalizing a merit & performance culture
• Creating a distinctive brand identity by providing the highest standard
of services.
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• Maximizing stockholder’s value.

• Discharging our responsibility as a good corporate citizen of Pakistan


and in countries where we operate.

Goals & Objectives of National Bank of Pakistan


To enhance profitability and maximization of NBP shares through
increasing leverage existing customer base and diversified range of products.

Objectives are ends towards which an enterprise activity is aimed. The


purpose of business is production and marketing of economic goods and
services but to accomplish these objectives to a number of enterprise
objectives may be necessary.

National bank of Pakistan has certain objectives. These objectives are

• Advancing loans
• Accept deposits
• Remitting of funds
• Sale of promissory notes
• Selling and realizing property of bank claims
• Investment or underwriting of stocks
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Grading in banking system.

In every organization there are different grading for there employees. This
grading is made in order to set the pay program as well as the level of
responsibility that should be assigned to the person on that grade. The
meaning of the word “grade” is “a certain degree in rank, merit”, “class of
person or the group of same type”. So the grading is an important activity of
an organization. Generally the government has its own grading system but
the private organization may have there own grading system. Bank also has
its own grading system that is applicable in every bank. The grading is as
under according to their hierarchy

• President. (President)
• Senior Executive Vice President (SEVP)
• Executive Vice President (EVP)
• Senior Vice President (SVP)
• Assistant Vice President (AVP)
• Officer Grade I (OG I)
• Officer Grade II (OG II)
• Officer Grade III (OG III)
• Senior Assistant
• Assistant.
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Organizational Chart

Senior Executive Vice-President

Executive Vice-President

Senior Vice-President

Vice-President

Assistant Vice-President

Officer Grade 1

Officer Grade 2
Branch Hierarchy

Officer Grade 3

Senior Assistant

Assistant
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Electronic banking system

The advancement in information system had affected each individual


as well as organizations. In today’s rapidly advancing world the need to
respond to the ever changing technology is of vital importance to survive in
challenges. Today all the private banks has their online branches all over the
Pakistan. The online banking system had make the banking system more and
more easier for the bankers and also more accurate i.e. there are very few
chances of mistakes.
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In this context the National Bank of Pakistan is not so active, they are
the lowest scorer in responding the changing banking environment. The
branches of National Bank are not online with each other. The management
of National Bank realize that this can turn into weakness so due to this
awareness they have designed their own electronic banking system. These
electronic banking systems had improved the efficiency of the employees and
also increase their accuracy as well. Though they still don’t rely on this
banking system in a way that they are still maintaining there BBO system.

The electronic banking system of National Bank of Pakistan had


following options on its main page;

• 01 Financial Transactions
• 02 Non Financial Transactions
• 03 Queries
• 04 Updating of account
• 05 Reports
• 06 Foreign currency reports

The codes given with the options are used as a path to that option. For
Example if a person want to go to first option that is “Financial Transactions”
so he should enter “01” from his keyboard and after pressing enter he will see
another window opened on his screen, having an options regarding Financial
Transactions.
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Same is the case with all other options, say if the operator want to get
modification in any of above option he can do this by simply entering the code
and pressing “Enter”. As the first option is regarding financial transactions like
Cash Receipts and Cash Payments. Suppose if a person come to a bank and
deposit a cash of 20000 so these 20000 should be entered in his account.
This 20000 is a cash receipt for National Bank so the operator shall first enter
"01” to open the list of Financial Transaction and then should enter the code
of Cash Receipts. After entering the code the window of cash receipts shall
be on the screen, then after entering the number of cash memo, he should
enter the account number of the customer and then the amount, which is
20000 in our example. So in this way the amount of 20000 will be added to
the account of this customer.

So the other options are “Non Financial Transactions” is an option for


the new account opening, so if a new customer comes and wants to open
his/her account with National Bank of Pakistan so he /she should be dealt in
this option.

The next option in Electronic Banking system of National Bank of


Pakistan, main branch Abbottabad is of “Queries” this option is available for
operator to answer the Queries of customer. Some people visit bank to
inquire their account balance or to check their last transactions. So the banker
had quite facilitated with this option and they can easily answer them in less
time and accurately.
The fourth option is of updating account, this option can be use to
update the account of the customers. The changes may be in the form of
change in address of a person or etc.
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The next option is of “Reports” this option is used for the reports like
Bank Statement. Many customers visit the bank to get their bank statements
either for reconciliation or for some other purpose. Generally the reports are
taken by the institutions and thus for report a person must have the
application for the bank statement, then this application is approved by the
Operation Manager and the operator is obliged to give the print command for
the bank statement of that account. In this way a person can get his/her
statement.

National Bank of Pakistan also operates in foreign currency as well. So


the last option is of” Foreign currency reports”. Those customers who operate
with the National Bank in foreign currency are dealt under this option.

Departments in NBP Main Branch Abbottabad

The national bank operates in different departments. Those departments


are made in order to get the same type of job in a same department.
Department generally means to put the same type of activities under a single
head, this not only help in easy management but also facilitate the customer.
In this way the customer’s time can also be saved and they can be turned into
loyal customers of organization. There are eight different departments in
National Bank of Pakistan Abbottabad main branch, they are

• Saiban loans department.


• Advance salary loan department.
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• Deposit loan & Running Finance department.


• Cash Receipts department.
• Cash deposit department.
• General Banking.
a) Clearing department.
b) Government department.
c) Foreign currency department.

Cash Deposit Department


National Bank of Pakistan accepts/collects deposit from their
accountholders. An account opening form is provided to prospective
Customer. At the same time introduction of that Customer is an integral
condition so that provided information by that Customer may be got
authenticated. An existing Accountholder may introduce the incoming
Customer. The Manager takes the Account holder’s specimen signatures on
signature Card in order to avoid future problems. At the occasion withdrawal
of fund Accountant compares the signature on cheque to the provided
Specimen of Signatures.

Cash Receipt department (Payment of Cheque at Counter)


When cheque is presented at counter for payment, the officer examines
the cheque before issuing a token. The following is looked into:

• The cheque is drawn on the same branch of the bank.


• The cheque is not crossed that it is open cheque.
• It is not stale or post dated.
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• The drawer has signed the cheque.


• The amount written in words and figure is same.
• The drawer of the cheque duly signs all alteration or cancellation.
• The presenter has signed at the back of the cheque.
• The cheque is not payable to the limited company.

Saiban loan Department

NBP Saiban is the most affordable House Financing Scheme.You can avail
now and repay over a 3 to 20 years period.
Home purchase loans up to 10 million.
Home reconstruction loans up to 10 million.
Home improvement loans up to 2.0 million (3 to 15 years).
One of the Top Banks on Emerging Markets - 2002
(Global Finance, USA)
A secure and reliable government bank since 1949.
A strong network with approximately 1200 branches around the world.
Wide range of products and services
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Saiban loan department is the result of the National Bank’s service to


provide loan to the customers for their houses. Saiban is basically an urdu
term mean “home”. So the National Bank also serves those customers who
are in need of finance for construction of their houses.
The NBP Saiban Home financing
scheme provide finance for:
• Home purchase
• Home Construction
• Home Renovation
• Land purchase + Construction.

Advance Salary Loan Department

National Bank of Pakistan is also operating in a service known as


Advance Salary Loan. This service focus on those customers of NBP who are
the permanent employees of any Govt. or semi government organization. If
those people who are permanent employees of government and they are in
need of lumsum amount so they can take amount equal to their 20 salaries.
Suppose a person is a permanent employee of government having
salary of 20000, so NBP make it possible to take 400000 (20000*20) with
himself. Some main points of this program are;

• Take upto 20 time your take home salary.


• 1 to 60 months installments (5 years).
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• No minimum income requirements.


• Interest charges 19 %.
• Maximum limit upto Rs. 490000.
• Government and Semi government employees only.

Documentation required for this loans are:


• Three signed update cheques (blank cheques).
• Three CNIC copies.
• Service certificate.
• Salaries slip three copies.
• Stamp papers.
• Annexure C
• Annexure D
• Account opening form
• Bank statement.
• ECIB & ICIB (Customer from Education Department only)

Those who qualify for this scheme should have:

 Three years of service age remaining


 Salary account at NBP

Procedure
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After filling the application customer signed it with his salary-disbursing


officer then under taking is officer approving it. Open the account that is calls
separate loan account, which is once Debit and many time credits.
National Bank of Pakistan (NBP) has announced the launch of a housing
scheme to cover all sections of the society with monthly income starting from
as low as Rs. 5000/- per month*. *(Conditions apply)
Branded as 'NBP Saiban' (Housing for all), the
Scheme offers a maximum loan of Rs 10 million
In accordance with the debt burden criterion.
Loans are available for Home Construction,
Home Purchase and Home Improvement.
For Home Improvement Loans the maximum
Amount is Rs. 2.00 Million.
Home Construction and Home Purchase loans can be repaid over a period of
20 years, whereas the repayment period for Home Improvement loan is 15
years.
The scheme was launched at a function in Karachi presided over by Mr.
Shaukat Aziz, Pakistan's Finance Minister.

Advances Department

“The sale of goods and services and money claims in the present in
exchange for a promise to pay in future. “
The most important activity of the bank is the granting of credit to the
customers. NBP provides short term long terms financing for domestic and
international trade. The policies made by central office of the cash can be
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amended on the basis of the rules and regulation, economic risk of each
country board of directors and committee of the NBP made this type of
decisions and informed about these decisions to the branch managers.
Manager can grant the credit limit to each customer with in the declared limits
approved by the controlling offices i.e., co, GHQ, circle and zonal. Banks
grant credit

Types of Advances

Demand Finance

One time disbursement of the whole amount sanctioned, as the limit


for the credit allows. Any person, individual, group, company, firm and all
others can achieve this
Mode of financing. The mark-up or interest is calculated on the total
amount disbursed and requires to be paid before the date of final adjustment.
Regarding the amount, limit and period, it depends on the nature of the case
in review.

Cash Finance

In this mode of financing the borrower is allowed to make withdrawals of


funds as he requires, but the total amount outstanding cannot exceed the limit
sanctioned. The mark-up/interest is calculated on the amount outstanding on
his account. The calculation of mark-up/interest is based on the number of
days a specific amount is withdrawn. This finance if normally borrowed by
small traders or individuals for their petty matters involving cash transactions
up to rupees three hundred thousand maximum.
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Running Finance

To assist a large-scale business operator to carry on his day to day


requirements of liquid funds, this account is opened is made operation in his
favor. Running finance is provided where the amount goes beyond rupees
three hundred thousand. The mark-up/interest is calculated the same way as
in case of cash finance. Security against running finance is that which is
easily convertible in to cash and bank kept 25% margins with it.

Types of loans
The credit department of NBP has providing the following types of loans

• Short term loans


• Long term loans
• Working capital loan
• Syndicate (project) loan
• Monitoring

Criteria checked for loans


Major areas requiring focused attention of the analyst are:
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Financial Condition

Structural Liquidity

Industry/Business of Operation

Debt Equity Management

Assets Management

Borrower’s Credit Worthiness


o Management
• Securities

Procedure of sanction of loan

In Credit department 1st step is to preparation of credit line proposal for


the preparation of credit report. For this following information required by the
bank from the party
• Purpose of loan
• Details of all firms or companies associated with business
• Name of proprietor/ partner/directors
• Accurate and up-to-date balance sheet and profit and loss statement of
last two years of business
• Market report of the borrower repute
• Report from the bank if borrower has maintain his account with the
bank
• CIB report
• Full details of existing limit and actual liability against the business
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• Particular about the foreign exchange deposits and bills given by the
borrower to the bank
• Memorandum and article of association in case of limited company
• Audited report of balance sheet and income statement of last two
years
After checking all the securities, customer verification the manager done the
following tasks

General Banking
General banking area is also call the operations group. It consist on following
section
• Accounts section
• Remittance
• Clearing system
• Government section
• Consumer and retail business
• Lockers

Accounts section
Accounts Department of the bank can be considered the most important
department. This department is basically concerned with processes and
activities of recovering, sorting, summarizing and reporting data resulting from
the whole day transactions of all the departments. Department starts
performing its function. Proof list is checked by the
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This section performs the following functions:


• Opening of Accounts
• Issuance of cheque books
• Closing of accounts
• Payment of Cheque

Types of accounts
Following types of accounts are open in NBP
• Saving account
• Current or demand account
• Fixed account

Saving account (PLS)


This type of account is designed to encourage the saving habit of the
customer and lead to a long-term banking or investment relationship.
Bank saving accounts are in the nature of deposits accounts and are
not normally available for drawings. Rates of interest are typically ahead, by a
small margin.

Current or demand account


These are those deposits, which can be drawn by the depositor at my
time by presenting a cheque to the bank. People deposit their money in this
account they gave a ready command on their account in developed and
under developed countries of the world, a very significant part of money is
kept under current or demand account.
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Fixed account
Fixed accounts are those, which are deposited for a fixed period of
time and are repayable after the expiry of stipulated time to the customers.
Those people who have surplus funds and want to have save investments
deposit the amount in the fixed account. The rate of interest given to
depositor varies with the length of deposit, i.e. it is higher for longer period
and lowers for shorter period. The rates on this type of deposits are higher
than the saving bank accounts.

Payment of Cheque
It is bank’s primary function to repay the money required for its customer’s
account usually by honoring his cheques. It is a contractual obligation of a
banker to honor its customer’s cheque if the following essential are fulfilled

Cheque should be in a proper form


Cheque should not be mutilated
Cheque should be drawn in this particular branch
Cheque should not be damaged
No unauthorized material alterations
Funds must be sufficiently available
Cheque should not be post date or stale
Cheque should be presenting during the banking hours

Remittances Section

Instrumental Transfer
Instrumental transfers are following
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Demand Draft

It is an instrument, which is payable on demand and it is only presentable in


the city/country. When any draft, i.e., an order to pay money, drawn by an
office of bank upon another office of the same bank for a sum of money
payable to order on demand,

Purports to be issued by or on behalf of the payee, the bank are discharged


by the payment in due course.

Pay Order

It is an instrument, which is payable in demand and only presentable in city.


Pay order is also called the banker’s cheque drawn upon the issuing
bank itself. It is not negotiable and therefore, bankers tend to cross
the instrument “Payee’s account only” to avoid the possibility of
dealing with instruments with forged endorsement. The pay order is
issued favoring individuals, commercial concerns, and government
departments.

Pay Slip

It is an instrument, which is issued by bank and used for expenditure


purposes, i.e., electricity bills, maintenance bills, security bills, fixture and
fitting, etc.

Call Deposit

Call deposit are not actual deposits of bank. It is in fact the liability of the
bank. Call deposit are often prepaid by the bank for contractors.
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Electronic Transfer
Electronic transfer is of following types

Telegraphic Transfer

t is the message, which is sent from one branch to another on the order of
payer to payee through wire. It is one of the quickest means to transfer fund
through the use of

Telex/fax/internet or cable. Payment to the beneficiary is affected directly by


the drawee office upon identification or through credit into beneficiary’s bank
account. As such

Remitting office is not required to issue any instrument payment to the


remitter for delivery to the beneficiary.

Issuance and Payment of Telegraphic Transfer Outgoing


Application form is filled by the client in whom the name and account
number of the beneficiary, which is to be credited and name of customer, is
required. For telegraphic transfer, the payment can be made in case or by
cheque or by debiting the customer’s account if he is the account holder. The
amount of Telegraphic Transfer should be written on the form. The amount is
transferred to beneficiary’s account in the other bank. An advice is given to
the customer but application is filled in the record of the bank.

Issuance and Payment of Telegraphic Transfer Incoming


When a TT is received then an entry is passed in TT incoming register after
verifying the test. When a person comes and wants to encash his TT, bank
checks the statements of that person. If the bank finds any account credited
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to the person’s account against TT, bank prepares a voucher for this payment
against that TT. The customer then presents that certificate to the cash
counter and collects money.

Mail Transfer
It is the same like TT, but in this type, the message is sent through mail
rather than telex. The procedure is same as TT, but the advice is sent
through mail rather than wired.

Billing and Government receipts/payments


This department is performing following functions
• Collection of utility bills
• Collection of dues of education institution
• Payment of salaries
• Payment of zakat
• Payment of pension

Clearing Department
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The major function of Clearing Department is to receive the cheques,


which are drawn on some other bank. The customer can get the money in his
account at NBP, from the cheques drawn on another bank. The bank accepts
these cheques and collects the amount from that bank on which cheque is
drawn through the Clearing House. Bank charges some commission for this
function.

Procedure for Clearing the Cheques

Pay-in Slip
The customer fills pay-in slip. This slip is just like deposit slip. The cheque
number, date, amount and account number must be written on this slip.

Stamping and Scrutinizing


The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with
“cheque received” and give a portion of slip to customer and the remaining
portion is attached with the original cheque.

The original cheque will be marked with two stamps.


• National bank of Pakistan
• Clearing Stamp
At the end of day, all cheques are counted and then scrutinized in bank-wise
and sent to the Clearing House.

Computer Section
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Through this department bank has make its way to enter in twenty first
century. This department is playing a very important role in making the
banking procedures faster and helping the bank for providing new services to
its customers. This division provided the bank with online branches, systems
to make the whole procedure foolproof.

Data Entry Department


The next task after receiving the data is to enter that data in to a computer.
The floppy disk is directly inserted in the computer. The program in used is
based on “COBOL” language. This program is designed in away that it demand
“Hash Value” value before opening the floppy for further action this value serve the
purpose of password or pin code send by the branch on entering that value the data
enter in to the computer. This computer is attached with the terminal of central
computer. The operator of that terminal takes the data from the computer and
converted it in to a text file through that terminal the data finally goes to the central
computer.

Code of National Bank

In national bank of Pakistan special codes are assigned to each branch those
codes are set in order to assess the head office in controlling the overall
activities. In this context special code is also given to Abbottabad main
branch. The branch code of national bank Pakistan Abbottabad main branch
is 0301.
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Financial Analysis of the NBP

Analysis of financial statements is called financial analysis of the


organization
These are three types of analysis

Horizontal analysis
In this analysis one particular can compare with the same category of item of
other year. More than one year data is required for this analysis.

Vertical analysis
In common size or vertical analysis we take total assets as a base year and
compare it to all other factors. Company may purchase some fixed assets
and giving loans to their customers. Same like this investment also increases
which means that the company advances the loans and their ability of work
increased due to this.

Horizontal Analysis of Balance Sheet 2008-2009


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Percentage
Particulars 2009 2008 change RS. Change
Cash and Balance with
treasury banks 71196956 94446552 132.655 (23249596)
Balances with other banks 31019330 49784884 160.496 (18765554)
Lending to financial
institutions 16282942 10511322 64.5541 5771620
Current Asset 118499228 154742758 130.585 (36243530)
Investments 156985686 144735672 92.1967 12250014
Advances 268838779 221443963 82.3705 124103107
Other Asset 23941056 18339514 76.6027 5601542
Operating Fixed Asset 9454365 9202969 97.3409 251396
Defer tax Asset - 1275949
Total Asset 577719114 549740825 95.1571 27978289
Liabilities
Bills payable 1741156 7214671 414.360 (5473515)
Borrowings from
Financial 8756847 11084790 126.584 (2327943)
Deposits and other
accounts 463426602 465571717 100.462 (2145115)
Subordinates loan - - - -
Liabilities against leased
Asset 16629 17058 102.579 (429)
Other Liabilities 24974450 23068314 92.3676 1906136
Defer Tax Liabilities 4462718 29185 0.65397 4433533
Total Liabilities 503378402 506985735 100.716 (3607333)
Net Asset 74340712 42936442 57.756 31404270
Represented By
Share Capital 5908927 4924106 83.333 984821
Reserves 13536041 10813914 79.889 2722127
Unappropriated profit 16713506 9161747 54.816 7551759
36158474 24899767 68.862 11258707
Surplus revaluation of 38182238 21345965 55.905 16836273
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asset
Total Representation 74340712 42936442 57.756 31404270

Vertical Analysis of Balance Sheet 2008-2009

%age %age
Particulars 2009 2008 2009 2008
Cash and Balance with
treasury banks 71196956 94446552 12.323 17.180
Balances with other banks 31019330 49784884 5.3692 9.0560
Lending to financial
institutions 16282942 10511322 2.8184 1.9120
Current Asset 118499228 154742758 20.511 28.148
Investments 156985686 144735672 27.173 26.327
Advances 268838779 221443963 46.534 40.281
other Asset 23941056 18339514 4.1440 3.3360
Operating Fixed Asset 9454365 9202969 1.6364 1.6740
Defer tax Asset - 1275949 0.2321
Total Asset 577719114 549740825
Liabilities
Bills payable 1741156 7214671 0.3458 1.4230
Borrowings from
Financial 8756847 11084790 1.7396 2.1864
Deposits and other
accounts 463426602 465571717 92.063 91.831
Subordinates loan - - - -
Liabilities against leased
Asset 16629 17058 0.0033 0.003364
Other Liabilities 24974450 23068314 4.9613 4.5500
Defer Tax Liabilities 4462718 29185 0.8865 0.0057
Total Liabilities 503378402 506985735
Net Asset 74340712 42936442
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Represented By
Share Capital 5908927 4924106 1.0228 0.8957
Reserves 13536041 10813914 2.3430 1.9670
Unappropriated profit 16713506 9161747 2.8930 1.6665
Total 36158474 24899767 6.2588 4.5293
Surplus revaluation of
asset 38182238 21345965 6.6091 3.8829
Total Representation 74340712 42936442

Ratio Analysis 2008-2009

For the analysis of the financial statements of the NBP we use the ratio
analysis in order to get a clear vision about the financial position with simple
interpretation.

Liquidity Ratios

The liquidity of a business firm is measured by its ability to satisfy its short-
term obligations as they came due. Liquidity refers to the solvency of the
firm’s overall financial position the ease with which it can pay its bills. Basic
measures of liquidity are:
 Current ratio
 Net working capital
 Cash ratios
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Current ratio

Formula: Current Ratio=Current Assets/Current Liabilities


Year 2009: Year 2008:
=118499228/167708076 =154742758/177058128
=0.70658 =0.874

Interpretation:
A current ratio of 1.0 is occasionally cited as acceptable, but a value’s
acceptability depends on the industry in which the firm operates. In 2009 bank
was more liquid as compare to 2008. Current Liabilities are more then current
assets. Its means that bank is financing its fixed assets (long term investment
& deposits) with the current Liabilities, which is profitable but risky at the
same time. In 2009 the current liabilities (current deposits) of the bank have
increased but the rise in the current assets (short advances) is more. So in
2009 bank has improved its liquidity position by investing more in current
assets rather then in fixed assets.

Net working capital:

Formula: NWC=Current Assets-Current Liabilities

Year 2009: Year 2008:

=118499228 – 167708076 NWC=154742758-177058128


= (49208848) = (22315370)
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Interpretation:
Net working capital is commonly used to measure a bank overall liquidity.
NBP has more current Liabilities (current deposits) then current assets (short
term advances & investments). So bank is using very aggressive approach by
investing current liabilities in fixed assets. Bank earning profit but at the same
time taking risk as well. In 2008 the NWC of Bank had improved a bit by
investing more in current assets rather then in fixed assets. So bank has
improved its liquid position by investing more in current assets.

Cash to current liability ratio

Cash to current liability ratio =Total Cash/Current Liability

Year 2009: Year 2008:


=102216286/167708076 =144231436/177058128
=0.609489 =0.8146

Interpretation
This ratio will compare the most liquid asset cash with the most short term
liability (current deposits). NBP has less cash then the current Liability
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(current deposits) so its means that bank has invest the depositors money in
different ventures.

Cash to Total Assets

Cash to total assets= Total cash/ Total assets


Year 2009: Year 2008:

=102216286/577719114 *100 =144231436/549740825 *100


=17.69% =26.24%

Interpretation
This ratio will shows that how much the cash has maintained by the bank out
of its total assets. NBP has its assets in the form of investment, advances so
bank is availing its opportunity cost and still has sufficient cash reserves only
to fulfill the demands of Account holders & other financial institution.

Debt Ratio

The debt position of a bank indicates the amount of other people’s money
being used in attempting to generate profits.
Formula:
Debt To Assets Ratio=TL/TA*100
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B.B.A. (HONORS)

Year 2009: Year 2008:

= 503378402/57719114 * 100 =506804383/549740825*100


= 87.13% =92.21%

Interpretation: The debt ratio measures the proportion of total assets


financed by the bank creditors (depositors). The higher this ratio the greater
the amount of other people money being used in an attempt to generate
profits. In 2008 bank leverage ratio had decreased because the total assets
(advances & investments) of the bank has been increased more than total
liabilities (current deposits).

SWOT ANALYSIS

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS

(SWOT) ANALYSIS
SWOT is the abbreviation of strengths, weaknesses, opportunities and
threats. Strength of the organization can be measured from the activities and
resources that give it a competitive edge over competitors. Weaknesses
reflect areas where the organization lacks better performance .threats are the
environmental condition that can affect the performance of the organization in
order to be more competitive.
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B.B.A. (HONORS)

In light of the SWOT analysis, management also reevaluates its current


mission and objectives. Are they realistic? Do they need modification? As we
where we want to be right now?

STRENGTHS

 NBP one of the largest financial institutions of Pakistan with eight million of
customer base NBP holds 24.6% share of time and demand deposits in
the country. Local currency deposits comprise 67% of bank's total
deposits while foreign currency deposits account for the rest.
 NBP has an extensive domestic branch network of 1200 (according to the
latest data) branches located all over Pakistan. The Bank also has a
presence in 19 international locations including the USA, United Kingdom,
Europe and the Far East.
 NBP's total assets stood at Pak Rs.370 billion on December 2000. This
included total earning assets of about Pak Rs.268 billion with gross loan
portfolio of Pak Rs.140 billion. The bank also has an investment portfolio
of Pak Rs.91 billion, which comprises treasury securities, corporate bonds,
shares and other securities.
 NBP cash provision as percentage of non performing loans equal to 60%
this coverage factor for the non performing loans is the highest amongst
the nationalized commercial bank.
 NBP is working as right arm government of Pakistan as it is responsible
for all claims of government for recovery as well as payment. All depositor
of NBP are in relief that their money security is guaranteed by government
of Pakistan.
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B.B.A. (HONORS)

 It acts as an agent of the Central Bank wherever the State Bank does not
have its own Branch.

WEAKNESSES

 NBP staff especially at lower considers their work as burden. They usually
waste time in other task a part in performing their duty. Using government
property for there own need. They are reluctant to accept change brought
by latest restructuring efforts.
 The general out look and interior layout of branches are not as required
according to modern banking
 NBP bearing up large burden in running those branches, which are not
producing any income but keep on adding expenditure.
 NBP is relying on its traditional sources of income it has not taken benefit
from innovation in banking like introducing retail banking or consumer
banking and using any type of scheme to generate more deposits and
producing more advances. Further, more don’t even continue its credit
card due mismanagement and lack of control.
 NBP is far behind in offering modern banking facility like automated teller
machines then other commercial bank in Pakistan as only eighteen
branches in all over country have this facility.
 NBP has only forty-four on line branches. While from remaining branches
data gathering is time consuming, and not fool proof. Quantum of
settlement within
 Different branches are pending because of this updating daily record is
becoming very difficult.
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B.B.A. (HONORS)

 Customers have to fallow long lengthy procedure for opening of account


as well applying for debt. Which discourage most of the people to invest in
NBP?
 In NBP, most of the time merit not has importance in hiring of employees.
Such practices are black spot on the face of bank and resulted big losses
and fraudulent acts by NBP own employees.

OPPORTUNITIES

Reorganizing efforts going on in the NBP has open many opportunities


for NBP to grow. NBP current management has boarder vision. They have
taken steps to improve customer services, streamline internal procedure and
creating a delectating climate for technology initiative.
To achieve above mention objective they have created operation group
 Starting of the retail banking initial working.
 Setting of target for of making at least 300 branches country wide on line.
 Closing of all those branches, which are burden on NBP.
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B.B.A. (HONORS)

 Management to offer specialized services to major corporate including


advisory and debt syndication introduces the concept of relationship
manager.
 Comprehensive training programs has been develop to up grade the core
banking skills of the existing staff as well as integrate high quality hiring.
 To improve the motivation of staff a merit-based culture is being promoted.
Through overhauling the manpower recruitment preservation and
performance appraisal system.
These actions taken by current management provide a great opportunity

for NBP for making it future prosper and can make NBP not less than any

modern commercialize bank in Pakistan.

THREATS OF NBP

Following are the major threats which national bank of Pakistan is facing:
• Major threats NBP facing is from its competitor especially from
denationalized commercial bank. In which MCB is on the top of the list,
The Bank provides 24 hour banking convenience with the largest ATM
network in Pakistan covering 15 cities with over 100 ATM locations.
• Retail banking and consumer banking resulting in the products such as
credit cards, housing finance and automobile finance lending to small
individual consumers, and purchases of automobiles, housing, and
consumer goods are generally made on a cash basis. These are
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B.B.A. (HONORS)

causing another threat, if not counter will result in significance loss of


customers
• Recently banks and other financial institutions have introduced
innovative schemes to attract deposits, like gift cheque scheme by
MCB. These schemes offer prizes on short and long term fixed
deposits, through lucky draws.
• Now banks are using technology which covers the distance no matter
how far away any one, through a satellite based, on-line real-time
banking system and by offering telephone banking, electronic funds
transfer, E-Banking and other modern facilities.

Suggestions

• NBP major fault is that wasn’t keeping its pace with on going changing
in banking industry unlike other banks. Now this bank combining all it
power and trying to approach other banks.
• Latest reorganizing efforts are necessary to make it cost effective also
making its facility accordingly to modern banking. These must
continue.
• Bank management has to put its all effort to change the prevailing
culture of the bank and to put the foundation stone of business
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B.B.A. (HONORS)

oriented culture. In which employees give important to the bank and its
customer.
• To attract the customer in the future NBP have to make extensive
effort to give facilities of retail and consumer banking. Plus the
technology in the banking which will be necessary for future banking is
another week area need to be stressed.

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