national bank internship report

Internship Report on NBP

Internship Report

NATIONAL BANK OF PAKISTAN District Branch Rajanpur: Code (0392)

Rajanpur, Punjab

Submitted To: Sir, Zahid Ali (Internship Supervisor)

Submitted By: Rahib HussainRoll No: M. Sc Accounting & Finance-B-74Session: 2010-2012Submitted Date: 28-11-2012Contact No: 0334-6681566

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Acknowledgment

I have taken efforts in this project. However, it would not have been possible without the

kind support and help of many individuals and organizations. I would like to extend my

sincere thanks to all of them.

I would like to express my gratitude towards my parents, my internship supervisor Mr.

Zahid Ali & member of National Bank of Pakistan for their kind co-operation and

encouragement which help me in completion of this Internship Report.

I would like to express my special gratitude and thanks to Bank persons for giving me

such attention and time.

My thanks and appreciations also go to my department in developing the Report and

people who have willingly helped me out with their abilities.

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Dedication:

This internship report is dedicated to my Parents and all staff of NATIONAL BANK OF

PAKISTAN Rajanpur branch from whom I got training without whose efforts,

supervision and also prayers I would have been nothing. My parents who ever wished to

see me as a successful man in every field of my life praying for their long and prosper

life.

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Table of ContentTopics Page No

Executive Summary………………………………………………………………05Brief introduction of the organization’s business sector……………………….07Brief history……………………………………………………………………….08 Vision…………………………………………………………………………….13 Mission…………………………………………………………………………...13Organizational Hierarchy Chart………………………………………………...14NBP Rajanpur Branch Hierarchy Chart……………………………………….15Business Volume 2011………………………………………………………….....16Product & Services………………………………………………………………..16 Product lines……………………………………………………………………...16 Treasury products………………………………………………………………..28 Derivatives products……………………………………………………………..28 Services…………………………………………………………………………..28 Trade services…………………………………………………………………….28Competitor……………………………………………………..………………….29 Public sector……………………………………………………………………...29 Private sector………………………………………………….………………….29Brief introduction of all the departments……………………………………….30 Cash department…………………………………………………………………30 Clearance department…………………………………………………………….30 Advances department……………………………………………………….........30 Remittance department…………………………………………………………...30 Deposit department………………………………………………………………30 Foreign exchange department…………………………………………………….30 Credit & risk management………………………………………………………..30 Human resource management…………………………………………………….30Comments on the organizational structure……………………………………...31A brief introduction of branch where I did my internship……………………..32Starting and ending dates of my internship……………………………………..32Names of department in which I got training…………………………………...32Detailed description of the tasks assigned during the internship program……32 Deposits…………………………………………………………………….....…..32 Account opening….……………………………………………………………….33 Advances department….………………………………………………………….33 Collections…………………………………………………………………….......35 Trade finance……………………………………………………………………...35 Foreign exchange………………………………………………………………….35Ratio Analysis…………………………….…………………………….…………..36Future prospects of the organization……………………………………………..53Conclusions…………………………….………………………….………………..53Recommendations…………………………….…………………...…….…………54

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EXECUTIVE SUMMARY

This report is about my internship program with National Bank of Pakistan. In this

comprehensive report, I have discussed about every major aspect of the bank, which I

observed and perceived during my internship program. In this report you will be able to

find the detail about the bank, right from its incorporation to the current position. Along

with it, the processes, policies and procedures of the bank are also discussed in detail.

As the main purpose of internship is to learn by working in practical environment and to

apply the knowledge acquired during the studies in a real world scenario in order to

tackle the problems using the knowledge and skill learned during the academic process.

National Bank of Pakistan maintains its positions 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.

I have completed my Internship at National Bank of Pakistan District Rajanpur Branch

Code (0392). I have started my six week internship on 23-07-2012 and got training

regularly in various departments of the bank up to 15-09-2012

I have explained the working process of the departments that I have worked in as well as

the departments functioning there. I worked in the following departments; Deposit,

Advances, Accounts Opening, Bills & Remittances, Clearing Section, Government

Section.

After my Internship at National Bank of Pakistan, I am of the view that, the bank has

historically been the financial arm of the government and has enjoyed the blessings of

state support in the form of huge public-sector funds and deposits.

The bank has to ensure that, quality of human resource is needed to register marked

measurable improvement both in terms of skills and productivity. NBP, being the only

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lending arm to the government for public sector development, should design, develop and

deliver products and services for economic growth. NBP should provide sustainable

financing for growth of industries of critical national importance such as energy,

education, healthcare, transport, shipping, Research and Development. NBP should

identify new venues for financing for economic growth- curbing poverty and

unemployment

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Brief introduction of the organization’s business sector:

National bank of Pakistan incorporated under the national bank of Pakistan ordinance

1949 and listed on the all stock exchanges in Pakistan its head office is situated at

chundrigar road Karachi. The national bank is engaged in providing the commercial

banking and related services in the Pakistan and overseas. Bank also handles the treasury

transactions for the government of Pakistan as agent to the state bank of Pakistan’s.

National bank of Pakistan (NBP) is one of the leading and first government recognized

bank in Pakistan. NBP was established in November 9, 1949. And it started functioning

from November 20, 1949.

There are certain characteristics, which sets NBP apart from other nationalized

commercial banks. The most important characteristics of NBP is that it works as an agent

of the State Bank, where State Bank does not have a branch of its own, The NBP also

acts as a trusty to the National investment trust (NIT), which is one of the premier

financial institution of the country. It is charged with the responsibility to mobilize of the

mobilizing small savings. The establishment of the NBP thus signaled the achievement of

another milestone in the development of banking industry in Pakistan. National Bank of

Pakistan is one of the pioneer financial institutions of the country, which is working

actively in all the field of financings

National bank of Pakistan is the largest commercial bank operating in Pakistan. It has

redefined its role and has moved from a public sector organization in to a modern

commercial bank. NBP headquarters in Karachi and has over 1200 branches country

wide. National bank provide both public commercial sector banking services.

NBP consolidated its position as one of the top players in corporate and investment

banking of the country in 2010 and has built a strong customers relationship with the

premier corporate clients

NBP work to;

Meet expectations through Market-based solutions and products.

Reward entrepreneurial efforts.

Create value for all stakeholders.

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NBP aim to be people who;

Care about relationships.

Lead through the strength of commitment and willingness to excel.

Practice integrity, honesty and hard work. Believe that these are measures of true

success.

Bank has confidence that tomorrow it will be

Leaders in the industry.

An organization maintaining the trust of stakeholders.

An innovative, creative and dynamic institution responding to the changing needs

of the internal and external environment

Brief history:

National bank of Pakistan was established on November 8, 1949 through passing of a

special ordinance in the national assembly. The establishment is came due to the reason

when newly born country was facing economic crises. To get rid of the intervention of

from the reserve bank of India a self owned and operated central bank by the name of

state bank of Pakistan was formed in July 1948 to carry on the responsibilities of issuing

the currency and most importantly controlling the flow of money in side the country.

The bank commenced its operations from November 20, 1949 at 6 important jute centers

in the East Pakistan and directed its resources in financing of jute crop. The bank’s

Karachi and Lahore offices were subsequently opened in December 1949.the bank acts as

the agent to the state bank of Pakistan for handling provincial/federal government

receipts and payments on their behalf. The bank has also played an important role in

financing the country’s growing trade, which has expanded through the years as

diversification took place. Today the bank finances import/export business to the tune of

RS. 52.7 Billion Where as in 1960 financing under this head was only Rs.1.54 billion

After the quick growth of 50’s NBP branches worked to establish itself as sound & stable

Bank in the early 60’s. The expansion efforts were put into force during these years and

Marketing efforts were made to target specific market. The bank also plays a vital role in

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financing the country’s growing trade which was extended through the years as

diversification took place.

National bank has earned recognition and numerous awards internationally .it has been

the recipient of the bank of the year 2001,2002,2004 and 2005 award by the banker

magazine the best foreign exchange bank Pakistan for 2004,2005,2006 and 2007.it has

also been presented a recognition award 2004 for having a gender sensitive management

by WEBCOP AASHA besides other awards.

SUMMARY OF ACHIEVEMENTS AND GROWTH OF NBP :

The precise summary of National Bank of Pakistan regarding its countrywide and

overseas operations is as follows:

1949 National Bank of Pakistan (NBP) was established under the National Bank

of Pakistan Ordinance 1949 and was 100% govt.-owned. NBP acted as an agent

of the Central Bank wherever the State Bank did not have its own Branch. It also

undertook Government Treasury operations. Its first branches were in jute

growing areas in East Pakistan. Offices in Karachi and Lahore followed.

1950 NBP established a branch in Jeddah, Saudi Arabia.

The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on December4,

1947 by the former Bahawalpur State

1955 By this time NBP had branches in London and Calcutta.

1957 NBP established a branch in Baghdad, Iraq.

1962 NBP established a branch in Dar-es-Salaam, Tanganyika.

1964 The Iraqi government nationalized NBP's Baghdad branch.

1965 The Indian government seized the Calcutta branch on the outbreak of

hostilities between India and Pakistan.

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1967 The Tanzanian government nationalized the Dar-Es-Salaam branch.

1971 NBP acquired Bank of China's two branches, one in Karachi and one at

Chittagong. At separation of East Pakistan NBP lost its branches there. NBP

merged with Eastern Mercantile Bank and with Eastern Bank Corporation.

1974 The government of Pakistan nationalized NBP. As part of the concomitant

consolidation of the banking sector, NBP acquired Bank of Bahawalpur (est.

1947).

1977 NBP opened an offshore brain Cairo.

1994 NBP amalgamated Mehran Bank (est. 1991).

1997 NBP's branch in Ashgabat, Turkmenistan commenced operations.

2000 NBP opened a representative office in Almaty, Kazakhstan.

2001 State Bank of Pakistan and Bank of England agree to allow only 2 Pakistani

banks to operate in the UK. NBP and United Bank agreed to merge their

operations to form Pakistan International Bank, of which NBP would own 45%

and United Bank 55%.

2003 NBP received permission to open a branch in Afghanistan.

2005 NBP closed its offshore branch in Cairo.

Nature of National Bank of Pakistan

National Bank of Pakistan was incorporated in Pakistan under the National Bank of

Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. The bank is

engaged in providing commercial banking and related services in Pakistan and overseas.

The bank operates 1,249 (2007:1,232) branches in Pakistan and 22 (2007:18) overseas

branches (including the Export Processing Zone branch, Karachi). Under a Trust Deed,

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the bank also provides services as trustee to National investment Trust (NIT) including

safe custody of securities on behalf of NIT.

The nature of responsibilities of the Bank is different and unique from other

banks/financial institutions. The bank also handles treasury transactions for the

Government of Pakistan as an agent to the State Bank of Pakistan for handling

provincial/Federal Government receipts and payments on their behalf. The National Bank

of Pakistan has also played an important role in financing the country’s growing trade,

which has expanded through the years as diversification took place.

SUMMARY OF DIFFERENT FUNCTIONS:

The bank is providing all banking services of mercantile and commercial banking

permissible in the country, which include:

Accepting of deposits of money on current, fixed, saving, term deposit and profit

and loss sharing accounts.

Borrowing money and arranging finance from other banks.

Advancing and lending money to its clients.

Financing of projects, including technical assistance, project appraisal through

long 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, valuables, etc. for safe custody.

Carrying on agency business for any description other than managing agent, on

behalf of clients including Government and local authorities.

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Generating, undertaking, promoting, etc. of issue of shares and, bonds etc.

Transacting guarantee and indemnity business

Joint venturing with foreign dealers, agents and companies for its representation

abroad.

Participating in “World Bank” and “Asian Development Bank’s” lines of credit.

Providing personalized Hajj services to intending Hajjis

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Vision:

To be recognized as a leader and a brand synonymous

with trust, highest standards of services quality,

international best practices and social responsibility

Mission:

Institutionalizing a merit and performance culture

Creating a distinctive brand identity by providing the highest

standards of services

Adopting the best international management practices

Maximizing stakeholders value

Discharging our responsibility as a good corporate citizen of Pakistan

and in countries where we operate

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Organizational Hierarchy Chart

NBP Rajanpur Branch Hierarchy Chart

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Business Volume:

15

Foreign exchange

Manage

Cashier

Puncing

Account Opening

Pension

Clear

Remittance


YEAR 2011

Revenue (Rs. In 000) 95,325

Deposits (Rs. In 000) 927,421

Advances (Rs. In ‘000) 525,045

Total assets 1,149,577

Share holder equity 110,520

Earnings per share 10.47

No of Employees 1 4,481

Products & Services:

Product lines

Current Deposits

These are payable to the customer whenever they are demanded. When a banker accepts

a demand deposit, he incurs the obligation of paying all cheques etc, drawn against him

to the extent of the balance in the account. Because of their nature, these deposits are

treated as current liabilities by the banks. Bankers in Pakistan do not allow any profit on

these deposits, and customers are required to maintain a minimum balance, failing which

incidental charges are deducted from such accounts. This is because Current Deposits

may be withdrawn by the depositors at any time, and as such the bank is not entirely free

to employ such deposits. Current Accounts/ Basic Banking accounts are opened, on

proper introduction and submission of required documents along with initial deposit

prescribed from time to time. Basic banking accounts are opened for an individuals

(single or joint) only whereas current accounts are opened for individuals (single or joint)

Charitable institution, provident and other funds of benevolent nature of local bodies,

autonomous corporations, companies, associations, educational institutions, firms etc.

and in all other cases where the accounts are too opened under the order of a competent

court of law. No profit is paid on the balances of current/basic banking accounts. The

bank is authorized to deduct service charges (incidental charges) on current accounts

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levied through its half yearly schedule of charges, in case the average balance falls below

the minimum balance as prescribed by the bank. No balance maintenance condition is

applied on basic banking account.

PLS Saving Deposits :

In Pakistan a Savings Deposits Account can be opened with a very small amount of

money, and the depositor is issued a cheque book for withdrawals. Profit is paid at a

flexible rate calculated on six monthly bases under the Interest Free Banking System.

There is no restriction on the withdrawals from the deposit accounts but the amount of

money withdraw is deleted from the amount to be taken for calculation of products for

assessment of profit to be paid to the account holder. It discourages unnecessary

withdrawals from the deposits. In order to popularize the scheme the SBP has allowed the

Savings Scheme for school and college students and industrial labour also. The purpose

of these accounts is to inculcate the habit of savings in the constituents. As such, the

initial deposits required for opening these accounts are very nominal. iNBP charge Rs.500

for opening of PLS Savings deposits.

The salient features of profit and loss sharing and saving accounts of NBP are as fallows:

1. These accounts can be opened by individuals in their own single or joint name.

The PLS savings account can also be opened for provident fund or other

benevolent funds of companies, firms, organizations, NGO’s and educational

institutions.

2. PLS saving account can be opened with a minimum amount of Rs.500/- only

3. To share in the profit a minimum balance of Rs.500/- must be maintained in the

account. The minimum balance on sixth and last of month will qualify for the

profits. The profits will be calculated on the basis of monthly minimum balance

for the periods of six months i.e. from January to June and July to December

4. The head office of NBP determines the profit or loss on PLS saving deposits and

advice its branches the rate and time of distribution of these profits.

5. There shall be no restrictions on maintaining the maximum balance in PLS saving

account.

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6. On the first day of Ramzan each year the Zakat at the rate of 2.5% will be

deducted from these deposits on the balance of that day. But if depositors affix an

affidavit of Zakat deduction along with account opening form or he is a non-

Muslim, no Zakat will be deducted from his account.

Fixed Deposit Account (Time Deposits) :

The deposits that can be withdrawn after a specified period of time are referred to as

Fixed or Term Deposits. The period for which these deposits are kept by the bank

ordinarily varies from three months to five years in accordance with the agreement made

between the customer and the banker. Profit/Return is paid to the depositors on all fixed

or Time deposits, and the rate of profit/Return varies with the duration for which the

amount is kept with the banker. By lending out or investing these funds, the bank earns

more than the Profit/Return that it has to pay on them to the depositors. ii By giving an

advance notice to the bank the deposit can be withdraw from the bank before the expiry

of the period. Fixed deposit accounts have higher rate of interest as compare to other

accounts. The rate of interest rises with the length of period and the amount of deposit.

The bank grants to the depositor a fix deposit (FDR) which is not transferable to any

other person. The silent features of fixed deposit account of NBP are as fallows

1. The PLS term deposit are opened for individuals in their own single or joint

names, companies firms and other organizations.

2. The PLS term deposit receipt are issued for any amount. There is minimum or

maximum limit or deposits in a single term deposit account.

3. PLS term depositors may be allowed some facilities against the security of these

receipt credits, after making “Lien” on the relevant receipt and subject to recovery

of service charges.

4. Under term deposit scheme the depositors not cease to earn the profit

immediately, after the respective maturity date.

Foreign Currency Account :

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Government of Pakistan has introduced many important reforms in Foreign Exchange

Control in the country since February, 1990, for the purpose of strengthening the Foreign

Exchange Reserves. One of these reforms relates to foreign currency accounts, which can

be opened in United States Dollars, Pound Sterling, Euro and Japanese Yen in any of the

authorized branches of commercial banks throughout the country.iii Foreign currency

accounts are opened, on proper introduction and submission of required documents along

with an initial deposit prescribed from time to time. Rates of return on foreign currency

deposits are subject to fluctuation as determined in accordance with State Bank of

Pakistan directives and will be paid on six monthly basis whereas the return on term

deposit/SNTD will be paid on maturity or as prescribed by SBP. The bank shall have no

responsibility for or liability to the account holders for any diminution due to taxes

imposed or depreciation in the value of funds credited to the account whether due to

devaluation or fluctuation in the exchange rate or otherwise.

Products :

NBP Premium Aamdani :

NBP Premium aamdani is a retail product of the bank. The amount of investment

required for this account is Rs. 20,000/-to Rs. 5,000,000.The investment period is 5 years.

Zakat and withholding tax will be deducted as per rules. In NBP premium aamdani, the

account holders have benefit of free demand draft, pay order; free cheque book and NBP

cash card (ATM+Debit). The Financing facility is available up to 90% of the deposit

value. Profit paid every period as follows:

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NBP Premium Saver:

NBP Premium saver is a retail product of the bank. The minimum saving balance of Rs.

20,001 and a maximum balance of Rs. 300,000 are required for opening a premium saver

account. Two debit withdrawals allowed in a month and no limit on number of deposit

transactions. The profit is calculated monthly and Paid on half yearly basis. Free NBP

Cash Card (ATM + Debit) facility is available to account holder.

National Income Daily Account (NIDA) :

The scheme of National income daily account was launched in December 1995 to attract

corporate customers. It is a current account scheme and is part of the profit and loss

system of accounts in operation throughout the country. Deposits in the NIDA accepted

on the condition that the depositor shall always maintain a minimum balance as

prescribed by the bank in his account. In the event however, that any depositor wishes to

withdraw the amount and the balance in his account is less than the required amount, the

account will be converted to the ordinary PLS SB account for the purpose of calculating

profit.

Advances :

National Bank of Pakistan plays a pivotal role in translating the government's

development plans in terms of growth in industrial, commercial and agricultural sectors

in Pakistan. Accordingly the Bank has formulated its Credit Policy under the guidelines

of SBP-the Central Bank of Pakistan. In normal circumstances the bank has consider

following factors in view before framing financing policies.

Capital position

Risk and profitability of various types of financing

Stability of deposits

Economic conditions

Influence of monetary and fiscal policies

Ability and experience of bank personnel

Credit needs of the area served.

NBP Saibaan

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The NBP Saibaan is retail product of the bank. It has different product items which are

home purchase, home construction, home renovation and purchase of land plus

construction. If anyone has a Home Finance Facility outstanding with another bank he

can have it transferred to NBP through a hassle-free process. iv A brief description of

these products is as fallows.

TYPE OF

ADVANCE

Financing

Amount

Financing

Period

Debt to equity

Ratio

Home Purchase (House or

Apartment)

Rs. 35 Million 3 to 20 years 85:15

(maximum)

Home

Construction


(maximum)

Home

Renovation


(maximum)

Purchase of land Plus

Construction

Rs.35 Million 3 to 20 years 80:20

(maximum)

NBP Advance Salary :

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary,

the leading personal loan product of the country, is maintaining its inimitability ever

since it was launched. This was only possible due to its swift growth and remarkable loan

disbursement of over 118 billion.v You can avail up to 20 net take home salaries with

easy repayment installments. Its hassle free acquisition with no prior formalities and easy

availability in a short turnaround time is attributed as the most distinguishing features of

the product. The product is offered countrywide. The terms and conditions of NBP

Advance salary is shown on next page:

NBP Cash & Gold :

With NBP’s Cash & Gold, the customers meet their need for ready cash against their idle

gold jewelry. The rate of mark up is 15.5% p.a. This product has following features

Facility of Rs. 35,000 against each 10 grams of net contents of gold

No maximum limits of cash

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Repayment after one year

Only gold ornaments acceptable

Weight and quality of gold to be determined by NBP's appointed schroffs

No penalty for early repayment

Students Loan Scheme :

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002

budget speech, a Student Loan Scheme (SLS) for Education was launched by the

Government of Pakistan in collaboration with major commercial banks of Pakistan (NBP,

HBL, UBL, MCB and ABL). Under the Scheme, financial assistance is provided by way

of Interest Free Loans to the meritorious students who have financial constraints for

pursuing their studies in Scientific, Technical and Professional education within Pakistan.

The Scheme is being administered by a high powered committee comprising Deputy

Governor, State Bank of Pakistan, Presidents of the commercial banks and representative

of Ministry of Finance, Government of Pakistan.

NBP Karobar- President’s Rozgar Scheme :

The solution of Pakistan’s major socio-economic problems primarily lies in the

development and growth of small & micro businesses. These will not only provide

employment opportunities to ever-growing population demand but will also become the

catalyst for breaking the vicious circle of poverty. In this regard, NBP has developed a

full range of Products under the President’s Rozgar Scheme with a brand name of “NBP

KAROBAR”. The scheme will be offered to eligible young and literate citizens of

Pakistan, falling within an age group of 18-40 years having a minimum qualification of

Matriculation (except for females in the PCO/Tele-center product). The eligible

borrowers will be required to make a down payment of 15%. Asset and Life & Disability

insurances will be mandatory under this scheme. The 15% down payment will include 1st

year’s asset insurance premium. However, the cost of life and disability insurance will be

borne by GOP. The mark-up rate for the 1st year will be 12% and for the subsequent

years it will be 1 year KIBOR + 2%. Fifty percent (50%) of this rate will be paid by the

customer i.e. 6% and the balance of 6% will be borne by GOP. Additionally, first 10% of

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the losses under the scheme will be taken-up by GOP. Initially, under the President’s

Rozgar scheme, NBP will offer following products:

a) NBP Karobar Utility Store (under a Franchise with Utility Stores Corporation)

b) NBP Karobar Mobile General Store (without USC Franchise)

c) NBP Karobar Transport

d) NBP Karobar PCO

e) NBP Karobar Tele-center

Corporate Advances :

Cash Finance :

This is a very common form of borrowing by commercial and industrial concerns and is

made available either against pledge or hypothecation of goods, produce or merchandise.

In cash finance, a borrower is allowed to borrow money from the banker up to a certain

limit, either at once or as and when required. The borrower prefers this form of lending

due to the facility of paying markup/services charges only on the amount he actually

utilizes. If the borrower does not utilize the full limit, the banker has to lose return on the

un-utilized amount. In order to offset this loss, the banker may provide for a suitable

clause in the cash finance agreement, according to which the borrower has to pay

markup/service charges on at least on self or one quarter of the amount of cash finance

limit allowed to him even when he does not utilize that amount.

Running Finance/ Overdraft :

This is the most common form of bank lending. When a borrower requires temporary

accommodation his banker allows withdrawals on his account in excess of the balance

which the borrowing customer has in credit, and an overdraft thus occurs. This

accommodation is generally allowed against collateral securities. When it is against

collateral securities it is called “Secured Overdraft” and when the borrowing customer

cannot offer any collateral security except his personal security, the accommodation is

called a “Clean Overdraft”. The borrowing customer is in an advantageous position in an

overdraft, because he has to pay service charges only on the balance outstanding against

him. The main difference between a cash finance and overdraft lies in the fact that cash

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finance is a bank finance used for long term by commercial and industrial concern on

regular basis, while an overdraft is a temporary accommodation occasionally resorted to.

Demand Finance :

When a customer borrows from a banker a fixed amount repayable either in periodic

installments or in lump sum at a fixed future time, it is called a “loan”. When bankers

allow loans to their customers against collateral securities they are called “secured loans”

and when no collateral security is taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the period

agreed upon, and the borrowing customer has to pay interest on the entire amount. Thus

the borrower gets a fixed amount of money for his use, while the banker feels satisfied in

lending money in fixed amounts for definite short periods against a satisfactory security.

Remittances :

Demand Drafts :

The National Bank of Pakistan provides demand drafts at very reasonable rates with

safety, speedy and reliable way to transfer money. Any person whether an account holder

of the bank or not, can purchase a Demand Draft form a bank.

Travelers Cheques :

They are generally issued for the convenience of person travelling abroad, but some

Pakistani banks issue them in Pakistan currency also for use within the country as well.

Before issuing, the bankers receive an amount equal to the face value of the cheques, and

also charge a small commission. The travelers’ cheques are for fixed amount and are

treated as Order cheques payable only to the purchaser whose specimen signature appears

on each traveler’s cheque itself. Foreign currency travelers cheques are issued and

encashed in accordance with the provisions of the Exchange Control Regulation Act,

1947. While making payment, the paying banker must insist that the holder signs in his

presence.

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Letter Of Credit :

Letters of credit are very useful instruments in facilitating commercial relations between

businessmen at various places. Letter of credit state the limit of the credit and the time

during which it is held at the disposal of the grantee, but they are neither negotiable nor

transferable. Letter of credit may be revocable. There are many kinds of letter of credit

such as Revolving credit, Back to Back credit, Claused credit etc. 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.

Foreign Remittances :

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan

has taken a number of measures to:

Increase home remittances through the banking system.

Meet the SBP directives/instructions for timely and prompt delivery of

remittances to the beneficiaries.

The new features of NBP foreign remittances include:

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 Tariffs: 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.

Mail Transfer :

A Mail Transfer is a form of remittance in which the amount remitted by a customer or a

non-customer is directly credited to the account of the beneficiary with another branch.

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Move your money safely and quickly using NBP Mail Transfer service. And NBP also

offer the most competitive rates in the market. They charges Rs 50/- exchange rate and

Rs 70/- postage charges on issuing mail transfer. When the money is not required

immediately, the remittances can also be made by mail transfer (MT). Here the selling

office of the bank sends instructions in writing by mail to the paying bank for the

payment of a specified amount of money. Debiting to the buyer’s account at the selling

office and crediting to the recipient’s account at the paying bank make the payment under

this transfer. NBP taxes mail charges from the applicant where no excise duty is charged

Rs 16/-. Postage charges on mail transfer are actual minimum Rs. 70/- if sent by

registered post locally Rs.70/- if sent by registered post inland on party’s request.

Telegraphic Transfer :

Telegraphic Transfer is a form of remittance, which is advised by telegram, telex or fax

machines. The fundamental principles of such transfer are otherwise identical with the

Mail Transfer. It 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.

Pay Order :

NBP provides another reason to transfer your money using our facilities. NBP pay orders

are a secure and easy way to move your money from one place to another in same City.

And, as usual, NBP charges for this service are extremely competitive. The charges of

NBP are very low all over the Pakistan. It charges Rs 80/- for NBP account holders on

issuing one payment order, and charges Rs 150/- for NBP non-account holders on issuing

one payment order. It charges Rs 25/- for students on payment of fees of educational

institutions. If some one want a duplicate of payment order they charges Rs 150/- for

NBP account holders and Rs 200/- for non account holders.

26


Treasury products

Pakistan investment bonds

Plain vanilla FX products

Derivatives products

Currency options

Interest rate swaps and FRAS

Cross currency swaps

Services

NBP Online Branch Banking

Demand drafts

Mail transfers

Pay order

Traveler’s cheques

Commercial finance

Letter of credit

Foreign remittances

Swift system

Short term investment

Equity investment

N.I.D.A

Agricultural finance

Corporate finance

Trade services

Letter of credit

Trade collection services

Payment services

Trade financing

Structured trade finance

Competitors:

27


Public sector:

First women bank limited (FWB)

The bank of Punjab BOP

The bank of Khyber

Private sector:

United bank limited

MCB bank ltd

Standard Chartered Bank limited

Bank al al-falah limited

Bank al habib limited

Askari bank

Faysal bank limited

Metropolitan bank limited

Allied bank limited

Meezan bank

Js bank

Kashf bank

Atlas bank

Habib bank limited

Soneri bank limited

28


Union bank limited

Saudi pak commercial bank ltd

Dawood bank

Bank al habib

Citibank

Royal bank of Scotland

Saudi pak bank limited

Brief Introduction of all the departments

Cash department:

Cash department deal with the payment and receipt of the money and record should be

maintained.

Clearance department:

A clearinghouse is an association of commercial banks set up in given locality for the

Purpose of interchange and settlement of credit claims. The function of clearing house is

performed by the central bank of a country by tradition or by law.

Advances department:

Advances department is one of the most sensitive and important department of the bank.

NBP provides advances to different people in different way as demand. Types of

advances are

Cash finance

Overdraft /running finance

Demand financing/ loans

Remittance department:

29


This department deals with the transfer of money from one bank to other bank or from

one branch to another branch for their customers.

Deposit department:

It controls the following activities:

Account opening.

Issuance of chequebook.

Current Account

Saving Account

Cheque cancellation

Foreign exchange department:

This department mainly deals with the foreign business. The main functions of this

Department are:

Letter of credit dealing.

Foreign currency accounts dealing.

Foreign Remittance dealing.

Credit & risk management:

An executive risk management committee has been established to emphasize on the

bank’s commitment to a robust risk management and risk culture.

Human resource management:

NBP is striving to become an employer of choice through improved HR Policies and

competitive remuneration. HRM department hire and train workers.

Comments on the organizational structure:

The bank has clearly defined organizational structure which supports clear line of

communications and reporting relationships. There exist a properly defined financial and

administrative power of various committees and key management personnel which

supports delegation of authorities and accountability.

The organization structure of national bank of Pakistan is centralized because all the

decision of the bank is taken by the top management.

A brief introduction of the branch:

30


National bank of Pakistan Rajanpur branch located on Kachehri Chowk Rajanpur established in 1982.

Names of department in which I got training:

Deposits

Advances

Remittances

Collections

Trade finance

Foreign exchange

Inland bank guarantees

Detailed descriptions of the tasks assigned:

Deposits:

In this department Sheikh Sajjad assigned me different tasks. Customer’s comes in bank

for depositing amount and have no account so firstly they have to open his/her account in

bank. For account opening customer must fill account opening form, signature on the SS

card, and deposit initial amount for account opening. Henceforth my core responsibility

was to help those customers in filling account, opening form, and take their signature on

the SS card, after that I attached SS card with account opening form, and fill the initial

deposit slip of the customer for opening new account. After all this process I give account

opening form and account opening ledger to bank manager for signature.

During my internship period I have learnt about KYC stand for know your customer.

This is helpful for a bank to identify that customers are going to deposit amounts legal

money black. This process protect bank from laundering of money because sometime

people deposit their black money into bank and withdraw it after some time and said this

is legal money so I have deposited it in bank all of process called laundering. So bank in

this way can identify customer source of income.

Account Opening:

31


I have spent my 1st week in account opening section and I learnt about what are the

prerequisites of opening an account of individuals, minors, shaky hand signature persons,

and different company’s account opening procedure and essentials. Brief discussion is

given below.

How to Open an Account

The applicant is provided with a copy of rules and an application form to open an

account. This form is filled by the applicant in a manner prescribed and duly singed by

the applicant. An existing account holder of the bank must introduce the application. A

copy of ID card is attached with the specimen signature card. The application is

presented at the branch with the initial amount of deposit for credit of his account. The

amount is entered in the passbook and is singed by the responsible officer of the bank;

finally a Checkbook is issued to the account holder, for withdrawal purpose.

Classification of Deposits

The deposits can be classified under three main heads.

Current Account

Saving Account

Fixed Deposit

Advances Department:

In advances I have cleared my concepts about the basic terms used in financing and the

brief introduction about the products offered by the bank to its customers. Basic terms are

as follows:

NBP advance salary:

The NBP Advance salary has been the flag-ship product for NBP. NBP Advance Salary,

the leading personal loan product of the country, is maintaining its inimitability ever

since it was launched. This was only possible due to its swift growth and remarkable loan

disbursement of over 118 billion. You can avail up to 20 net take home salaries with easy

repayment installments. Its hassle free acquisition with no prior formalities and easy

32


availability in a short turnaround time is attributed as the most distinguishing features of

the product. The product is offered countrywide.

Terms & Conditions

Eligibility Permanent Employees of Govt., Semi-Govt., Autonomous, Semi Autonomous, Local & other bodies who are maintaining their Salary A/Cs at NBP.

Repayment Direct deduction from Salary A/CMaximum Loan Amount

Rs. 490,000/-

Security Employer will provide undertaking that borrower’s Salary and end of service benefits will route through his/her Salary A/C maintained at NBP during the tenure of the loan and his/her end of service benefits are at least equal to the amount of Advance Salary required.

Hypothecation of Consumer durables owned by the borrower.

Three (3) Undated Cheques Max. Repayment Period

5 years (60 months)

Advance in terms of # of net take home salaries

Up to 20 net take home salaries

Markup Rate 15 % (Based on diminishing balance method)

Processing Fee 1% of Loan AmountVerification Charges

Rs 500/-

Life Insurance No Insurance of any kind.Documentation Charges

at actual

Contact Your Salary disbursing NBP Branch.Remaining Service Age

At the time of approval and disbursement the applicant’s remaining service age should be 6 months after maturity of the loan

Debt Burden 50% Minimum net take home salary

no minimum take home requirement

33


Collections:

This department deals with collection of utility bills, board fee, and deposit of customer.

Prerequisite tasks in this department were making of scrolls of utility bills, electricity

bills, Sui Gas bills and telephone bills.

Trade finance:

My role being an intern in this department was to assist management in facilitating

importers and exporters by ensuring payables to exporters and receivables to importers.

NBP open letter of credit on behalf of exporter on importer that is helpful for payment on

due date as mention in documents.

Foreign exchange:

I spent few days in this department and learnt how to open foreign currency account and

what guidelines before opening any such account. This department deals with foreign

exchange. This department is made for the convenience of customers having foreign

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

34


Ratio Analysis

Net profit margin:

Net profit margin =net profit / net sales *100

No 2009 2010 2011

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

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

Total 18,211,846/ 77,947,697

=23.36%

17,563,214/ 88,472,134

=19.85%

17,604,722/95,325,179

=18.46%

2009

2010

2011

0.00%

500.00%

1000.00%

1500.00%

2000.00%

2500.00%

200920102011

200920102011

Interpretation

Interest income has been contributed in the total bank profit is decreasing and net profit

margin is low in 2011 as compare to other years. Ratio show downward trend. Net profit

margin is decreasing in 2009, 2010 and in 2011 while the net sale of the bank in

increasing in these years due to which net profit margin is decreasing. Net profit margin

of bank is decreasing due to increasing in expenses of bank.

Gross spread ratio

35


Gross Spread Ratio = Net interest margin ÷ mark-up/return/ interest earned. *100

Net Interest Margin= interest earned – interest expensed. Both the items of the net

interest margin are available in the Profit and Loss statement of the bank.

Net Interest Margin= interest earned – interest expensed

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

Interest expense = mark-up/return/ interest expense

No 2009 2010 2011

Net interest

margin

77,947,697-40,489,649

=

37458048

88,472,134 -45,250,476

=

43221658

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

46809561

Mark-up/

return/ interest

earned.

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

Gross spread ratio

37458048/77,947,697*100

=48.05%

43221658/88,472,134*100

=48.85%

46809561/95,325,179*100

= 49.10%

2009

2010

2011

4740.00%

4780.00%

4820.00%

4860.00%

4900.00%

200920102011

200920102011

Interpretation

36


Ratio shows that gross spread ratio is increasing which mean higher the profit margin for

bank. GSR of bank is increasing because of the increase in margin. Ratios show upward

trend. Net interest margin is increasing while interest earned is decreasing year to year

due to which higher the gross spread ratio.

Non Interest Income to Total Income = Non Interest Income / Total Income

Non-interest income = Non mark-up/interest income (profit and loss)

Total Income = Mark-up/return/Interest Earned + Non Mark-up/ interest income. (p & L )

Net interest income and total income are also available in the Profit and Loss statement of

the bank.

No 2009 2010 2011

Non-

interest

income

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

Total

Income

77,947,697+25,788,713

=103736410

88,472,134+33,251,969

=121724103

95,325,179+ 19,337,04

= 114,662,22

25,788,713/103736410

=0.24 times

33,251,969/121724103

=0.27 times

19,337,04

/114,662,22

=

0.168TIMES

2009

2010

2011

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%

200920102011

200920102011

Interpretation

37


Ratio shows that non-interest income of NBP bank is 0.24 times of total income in 2009,

0.27 in 2010 and 0.16 time in 2011, which is low in 2011 as compare to other two years.

Ratio shows increase in 2010 because of increase in non-interest income of the bank.

And the decrease in ratio in 2011 due to decrease in non-interest income of the bank.

Spread ratio= Interest Earned /Interest Expense

Interest Earned = Markup/ Return/Interest earned (P & L)

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

No 2009 2010 2011

Interest

Earned

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

Interest

Expense

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

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

=1.93 times

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

=1.96 times

95,325,179/48,515,618

=1.96times

2009

2010

2011

191.00%

192.00%

193.00%

194.00%

195.00%

196.00%

200920102011

200920102011

Interpretation

38


Larger the interest earn more bank earns. Interest earned is 1.93 time of total income in

2009, 1.96 in 2010 and 2011. NBP spread ratio is increasing which show that NBP worth

is increasing. Ratio show upward trend. NBP interest earning is increasing while the

interest paid by the NBP is decreasing due to which spread ratio of NBP is increasing.

Return on assets:

Return on assets = net profit after tax/ total assets*100

No 2009 2010 2011

Net profit

after tax

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

Total

assets

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

Total 18,211,846/944,232,762

*100

=1.93%

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

100

=1.70%

17,604,722/1,149,577,736

*100

=1.53%

2009

2010

2011

0.00%

50.00%

100.00%

150.00%

200.00%

200920102011

200920102011

Interpretation

39


NBP have 1.93% return on its assets in 2009, 1.70 in 2010, 1.53 in 2011.NBP earnings

before interest and tax is decreasing year to year. Graph show decreasing trend of return

on assets, NBP net profit is decreasing may be due to increase in taxes. NBP return on

assets is declining. Falling return on asset contribute negatively to decrease in ROE.

Banks has decreasing return on assets which show that company is using its assets not

very efficiently to get favorable return on its assets, but return on asset of bank is overall

good.

DuPont Return on Assets

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

No 2009 2010 2011

(Net

income/sales)*(sal

es/total

assets)*100

17,561,846/77,947,

697*77,947,697/94

4,582,762*100

=1.85%

17,563,214/88,472,134*88,

472,134/1,035,024,680

*100

=1.6%

17,604,722/95,325,179*95

,325,179/1,149,577,736*1

00

=

1.53%

2009

2010

2011

0.00%

50.00%

100.00%

150.00%

200.00%

200920102011

200920102011

Interpretation

40


Higher the net income for a given amount of assets, the better is the return.

The diagram depicts that ratios are decreasing in 2010 and 2011 respectively as compared

to that in 2009. In the year of 2009 the DuPont return on assets ratio is at 1.85 times on

which maximum level during the time period as relative to 2010 and 2011.

Return on total equity:

Net income/ total equity *100

No 2009 2010 2011

Net

income

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

Total

equity

94,141,919 103,762,310 110520012

Total 17,561,846/94,141,919*100

=18.6%

17,563,214/103,762,310*100

=16.9%

17,604,722/110520012*1

00

=15.9%

2009

2010

2011

1400.00%

1500.00%

1600.00%

1700.00%

1800.00%

1900.00%

200920102011

200920102011

Interpretation

41


18.6% is return that Bank is earning on shareholder equity in 2009, 16.9 % is return that

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

shareholder equity in 2011. Graph show downward trend. Net income of the NBP is

decreasing trend due to which return on total equity is decreasing.

DEBT RATIOS

Debt ratio= total liabilities / total assets

No 2009 2010 2011

total

liabilities

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

total

assets

944,582,762 1,035,024,680 1,149,577,736

Total 825,676,384/944,582,762

= 0.87times

906,528,852/1,035,024,680

=0.87 times

1,016,926,288/1,149,577,

736

=0.88times

2009

2010

2011

86.40%86.60%86.80%87.00%87.20%87.40%87.60%87.80%88.00%

200920102011

200920102011

Interpretation

42


Ratio show that company have debt 0.87 of total assets in 2009 and in 2010 while in 2011

NBP have debt of 0.88 of its total assets. There is an increase in ratio in 2011 which show

that the deposits of the bank in increase in 2011 as compare to other two years.

DEBT/EQUITY RATIO

Debt/equity ratio = total liabilities/ shareholders equity

No 2009 2010 2011

total

liabilities

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

shareholders

equity

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

Total 825,676,384/94,14

1,919

=8.7 times

906,528,852/103,762,310

=8.7 times

1,016,926,288/110520012

=9.2times

2009

2010

2011

840.00%850.00%860.00%870.00%880.00%890.00%900.00%910.00%920.00%

200920102011

200920102011

Interpretation

43


Ratio show that 8.7 of the NBP Capital structure is debt while the remainder is by

investor capital in 2009 and 2010.while in 2011, 9.2 times of the NBP Capital structure is

debt and remainder is investor capital. Deposit and other liabilities are low as in 2009 and

2010 as compare to 2011. There is increase in ratio in 2011 because deposits of the bank

is increase in 2011. NBP is using more debt in 2011 as compare to other two year which

mean that the deposits of the NBP is increase in 2011.

Time interest earned:

Earnings before income tax (EBIT) /interest expense

EBIT =profit before tax+ interest expense

Profit before tax = from profit and loss statement (before profit taxation)

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

No 2009 2010 2011

Earning before

income tax (EBIT)

/interest expense

61,789,822/40,489,

649

=1.53 times

69,665,595/45,250,476

=1.54times

74526791/48,515,618

=

1.53times

Working 2009

EBIT= profit before tax+ Interest expense

EBIT=21,300,173+40, 48964

EBIT=61,789,822/40489649

EBIT=1.53

Working 2010

EBIT= profit before tax+ interest expense

EBIT=24,415,119+45,250,476

EBIT=69,665,595/45250476

EBIT=1.54

44


Working 2011

EBIT= profit before tax+ interest expense

EBIT= 26,011,173+ 48,515,618=74526791

EBIT=74526791 /48,515,618

EBIT= 1.53

2009

2010

2011

125.00%130.00%135.00%140.00%145.00%150.00%155.00%

200920102011

200920102011

Interpretation

Ratio show that the NBP can meet its interest expenses 1.53 times in 2009 and in 2011

while NBP can meet its interest expenses 1.54 in 2010. Earning of NBP is slightly

increased in 2010 as compare to other two year due to which ratio has slightly increase as

compare to other years.

Advances/Deposits Ratio

Formula = (Advances / Deposits & Other accounts)

45


Advances = assets balance sheet

Deposits & Other accounts = lab balance sheet

No 2009 2010 2011

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

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

475,243.431/727,4

64,825

=0.65 times

477,506,564/832,151,888

=0.57 times

525,045,764/927,421,438

= 0.56TIMES

2009

2010

2011

50.00%52.00%54.00%56.00%58.00%60.00%62.00%64.00%66.00%

200920102011

200920102011

Interpretation

NBP is paying advance and loan 0.65 time of its deposit in 2009 while NBP is paying

advance and loan 0.57 time of its deposit in 2010. NBP is paying advance and loan 0.56

time of its deposit in 2011. Ratio Show downward trend. NBP have potential to pay

advance and additional loans. Downward trend of ratio show that NBP deposit is

increasing while advances of NBP is falling.

Operating cash flow ratio = cash flow from operating /current liabilities

Cash flow from operating= net cash flow from operating activities

46


Current liabilities = maturity table /

Working of current liabilities

Current liabilities

2011:

Current liabilities=9,104,710+236867755+911298458

Current liabilities =1,157,270,923

2010

Bills payable =8,006,631

Borrowings (current portion) =17,154,131

Deposit and other accounts (current portion) =816,172,863

Other liabilities (current portion) = 26,248,782

Liabilities against assets subject to finance lease (current portion) =43,963

Current liabilities total=Rs. 867,626,368

2009

Bills payable =10,621,169

Borrowings (current portion) =37,057,189

Deposit and other accounts (current portion) =655,031,896

Other liabilities (current portion) =22,563,058

Liabilities against assets subject to finance lease (current portion) =20,408

Current liabilities=Rs.725, 293,720

No 2009 2010 2011

cash flow from

operating

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

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

=41,576,364/

725,293,720

=0.058 times

=93,163,784 / 867,626,368

=0.108 times

41,345,222/1,157,270,923

== 0.035TIMES

47


2009

2010

2011

0.00%2.00%4.00%6.00%8.00%

10.00%12.00%

200920102011

200920102011

Interpretation

Cash generated from operating activities of NBP is 0.058 time of total cash flow in 2009.

Cash generated from operating activities of NBP is 0.108 time of total cash flow in

2010 .Cash generated from operating activities of NBP is 0.035 time of total cash flow in

2011. Ratio is increase in 2010 because of increase in cash flow generated from operating

activities and decrease is current liabilities. Ratio is decrease in 2011 because of decrease

in cash flow generated from operating activities and increase in current liabilities.

Dividend per share:

Dividend per share= dividend amount / number of equity shares

No 2009 2010 2011

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

Number of equity

shares

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

Total 5,830,338/1,076,37

0.2

RS=5.42RS

8,072,777/1,345,462.8

RS=6.00RS

10,090,971 /16, 818,285

Rs =0.6 RS

48


2009

2010

2011

0.00%100.00%200.00%300.00%400.00%500.00%600.00%

200920102011

200920102011

Interpretation

Result of ratio show that bank is performing well financially. Number of outstanding

share increase in 2009 and 2011. There is increase in company market value and dividend

per share goes up in 2010 as compare to other two years. In 2011 dividend per share is

very low which show that the market price of per share of NBP is decrease or very low.

Earnings per share:

Earning per share= net profit after tax/ number of shares issued

No 2009 2010 2011

Net profit after

tax

18,211,846,000 17,563,214,000 17,604,722

No of shares

issued

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

Total 18,211,846,000

/1,076,370,200

RS=16.92RS

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

RS=13.05RS

17,604,722 /16, 818,285

RS=10.4RS

49


2009

2010

2011

0.00%

500.00%

1000.00%

1500.00%

2000.00%

200920102011

200920102011

Interpretation

Ratio indicates that bank earns too high in the year of 2009 .while other years as

2010and 2011 the earning per share are low. The year in which bank earning on shares

very high and in annual reports showing better financial position as compared to other

banks .The earning per share of 2010 are slow at small level as compare to 2009. The

year of 2011 the earning per share are too low as relative to 2009 and 2010

Price / earnings ratio:

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

No 2009 2010 2011

Market price per

share

74.37 76.82 41.05

Earning per share 16.92 13.05 10.47

Total 74.37/16.92

=4.40

76.82/13.05

=5.89

41.05/10.47

RS= 3.92

50


Interpretation

This ratio point out that in the year of 2010 price earnings ratio is 5.89 which is positive

sign for bank because in that period banks share prices are becoming too high . But in

other years as 2009 and 2011 is low as relative to 2010. The year of 2009 at slightly less

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

share prices too much low.

Future Prospects of the Organization:

51

2009

2010

2011

0.00%100.00%200.00%300.00%400.00%500.00%600.00%

200920102011

200920102011


Going forward the bank shall continue to focus on the increasing its deposits with stress

on increasing current and saving deposit ratio. Increase in non mark up income with

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

services and strengthening of internal systems and controls shall be remaining a key area

of the work. Capacity building in terms of human resources shall continue. Technology

up gradation in the form of ongoing implementation of core banking, online connectivity

and allied projects will be performed with commitment to complete the jobs on time.

Remain committed to vision, mission and core values. Bank is geared up to meet the

challenges of tomorrow and leveraging on strengths will continue to capitalize on new

opportunities. Add value and esteem for stakeholders.

Conclusions:

NBP have largest branch network of branches in urban as well as in rural areas. NBP is

providing valuable services to its customers like online banking system, ATM card etc

NBP trying to improve its customer’s services to facilitate the customers. During my

internship I observed that branch doing a great business and the management and the staff

of the branch is efficient and the professional. Bank has clearly defined organizational

structure which supports clear line of communications and reporting relationships.

During my internship I observe that behavior of NBP staff is not very good, there is not

help desk in branch for helping customers, NBP staff cannot handle the customer is rush

hour and customer is waiting in lines for taking their own money. Most of the customers

in NBP are from government sector, if it is not necessary for government employee of

having account in NBP then they switch to other banks due to not providing quick

services to its customers.

Net profit margin of bank is decreasing due to increasing in expenses of bank.

GSR of bank is increasing because of the increase in margin

Non-interest income of the bank is decrease in 2011

NBP has decreasing return on assets.

Return on total equity is decreasing of NBP

Recommendation for improvement

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Help desk in branch for helping customers

Provide training to NBP staff to enhance their skills and capabilities

New talent should be hired to provide customer better services

NBP should up-grading their services timely to provide the maximum satisfaction

to their customers.

NBP should pay attention on its marketing efforts to promote its products and

services.

Net profit margin of NBP is decreasing year to year company need to improve its

net profit margin by controlling its expenses.

NBP should use its assets efficiently to get favorable return on its assets.

NBP should expand its operations to increase in net income to improve its return

on equity.

NBP Should offer advance and loans to its customer to improve its advance to

deposit ratio.

NBP should expand its operation and reduce its current liabilities by pay off

current liabilities to improve its operating cash flow ratio.

NBP need to improve its market value per share to improve its dividend per share.

References and source:

Website

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

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

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


Personal experience

Experience during my internship

Information from staff of NBP

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

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

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