TNTERNSHIP REPORT

ON

NATIONAL BANK OF PAKISTAN

This Internship report is submitted in partial fulfillment of the

requirements for the degree of Bachelor of Business Administration
(Finance)

By

Ishaq Ahmad
REG. NO: 13-03122-00270

Department of Management Sciences

Govt College of Management Sciences
University of Swabi, Pakistan

Session (2013-17)

1
 INTERNSHIP REPORT
ON
NATIONAL BANK OF PAKISTAN

This Internship report is submitted in partial fulfillment of the

requirements for the degree of Bachelor of Business Administration
(Finance)
By
Ishaq Ahmad
REG. NO: 13-03122-00270

Department of Management Sciences

University of Swabi

Approved by:
___________________ __________________
Mr.Muhammad Arif Name:
(Internal Supervisor) (External Supervisor)

___________________ __________________
(Head of Department) Mr.Adnan Parwar
(Internship Coordinator)

2
 STUDENT DECLARATION

I Ishaq Ahmad hereby declare that the presented report of internship entitled “General Banking
activities of National bank of Pakistan, Swabi Main Branch” a study On NBP Swabi Is
Uniquely prepared by e after the completion of two months’ work experience in Habib Bank
Limited.

I Also confirm that, the report is only prepared to my academic requirement not for any other
purpose .It might not be used with the interest of opposite a party of the cooperation.

Ishaq Ahmad
REG.NO: 13-03122-00270
Major in Finance
Department of management sciences
University of Swabi

3
 Dedication

I am proudly dedicating my Internship report to my Beloved Parents for

all their love &
guidance, which grow me in a shape that I make it up to this point.
Moreover, I am
dedicating my work to my teachers as well as the Internship Advisors,
who filled me with
courage, commitment and the awareness to follow the best possible
route, by his
unmatchable style and by best possible training.

4
 Acknowledgement

First of all, I would like to thank my ALMIGHTY ALLAH, the CREATOR of universe, the
most
Gracious & merciful, and the source of all knowledge, wisdom within and beyond my
Comprehension. ALLAH is the only, WHO can help us in every field of life. I bow my
Head before HIM who enabled me to work on this report and helped me to complete this
Report successfully.

I would like to express my special appreciation and thanks to Mr.Nisar and Mr.Raza khan for
their expert advices, valuable and their constructive suggestions during the planning and
development of this research work.

I would like to thank Mr.Fazalullah as Head, Department Of Management Sciences, Govt.

College of Management Sciences Swabi Providing the Freedom to use all the conveniences
available in the department, especially the laboratories and the library.

I am Happy to express my deep sense of gratitude to my supervisor, Dr. Arif for Providing us
an adequate facilities to pursue our project.

I would also like to thank to the staff of NBP Main Branch of Swabi for their extended
cooperation.

I would also like to thank all of my friends especially Irfan, Khaliq, and Zia ur rehman for their
kind of support and cooperation.

Special thanks are extended towards my parents for their support and encouragement
throughout my study.

5
 TABLE OF CONTENTS
Chapter-1 Introduction to Report……………………………8
1.1 National Bank of Pakistan………………………….9
1.2 Mission Statement………………………………….9
1.3 Vision and Goals…………………………………...10
1.4 The Objectives……………………………………...10
1.5 Functions of NBP…………………………………...11

Chapter-2 Organizational Structure………………………….17

2.1 Head Office…………………………………….17
2.2 Board of Director……………………………….18
2.3 Regional Head Quarter…………………………19
2.4 Account Opening………………………………20
2.5 Remittances…………………………………….20
2.6 Advances……………………………………….20
2.7 Govt Department………………………………20
2.8 Pension Department……………………………21
Chapter-3 Departments and Experience………………...........27
3.1 What I Learned?....................................................27
3.2 Participation in Departments…………………….27
Chapter-4 Financial Swot and Analysis………………………28
4.1 Strengths ………………………………………..28
4.2 Weaknesses……………………………………..29
4.3 opportunities………………………………........32
4.4 Threats…………………………………….........33
4.5 Financial Analysis……………………………...34
Chapter-5 Findings, Recommendations and Conclusion….49
5.1 Output Monitoring……………………………...49
5.2 Implementation / Action Plan…………………..51
References………………………………………
Annexes…………………………………………

6
 EXECUTIVE SUMMARY

National Bank of Pakistan is a well-reputed organization and is leading bank of Pakistan. Since
its establishment, it has expended its network to great extent. NBP is performing all the
functions of the state bank of Pakistan and has based its management on the functional basis.

The report is based on my two months internship program in National Bank of Pakistan.
The biggest source of information is my personal observation while working with staff and
having discussion with them. Formally arranged interviews and discussions also helped me in
this regards.

The main purpose of the study is to compile the internship report, and also to get some
practical exposure to the market. To serve the main purpose of the study, and to compile the
internship report in a shape, I have collected primary data as well as secondary data.

Main problems identified during the course of internship are as following:

a) Absence of proper information technology tools

b) Lack of efficiency of employees.

c) Presentation styles of bank especially at retail level are not good.

d) Management style is centralized.

The recommendations are as follow:

 Establishment of Data bank at Swabi office, so that information can be obtained in time.

 Proper designing of the jobs should be performed similarly clear-cut division of work
to increase efficiency.

 Special attention should be given to exterior/interior layouts, cleanliness and office

furniture.

 Decentralization of authority at different level to fasten the decision making process.

7
CHAPTER 1

INTRODUCTION TO REPORT

HISTORY OF MONEY AND BANK

In the beginning there was no exchange of goods and everybody was self-sufficient, in
that he provided all the basic needs, foods, clothing and shelter, for himself and his family
through such as hunting and fishing, there was no need for money. Then there were the
introduction of barter system; in this system there is exchange of goods for goods.

But there were some problems in the barter system for this reason a new system that is
indirect exchange was established. Gradually this turns to exchange the goods for the precious
metal like gold, silver, bronze etc… the people use the precious metal because of their intrinsic¹
value. About at the end of 13th century these precious metals were used and the first gold pound
was introduced in the 14th century. But the person starts clipping and debasing the coinage. In
the eighteenth century the value of gold was fixed for next two years.

At the advent of civilization priests were the bankers and their temples were the banks.
But in the London it was the goldsmiths, who initially kept peoples’ valuables for safe custody,
then started giving loans out of these deposits and finally their “receipts” for deposits, started
changing hands like currency note. The first such receipt was perhaps the first Bank note.

Gradually some goldsmiths started concentrating on Banking instead of their own

businesses. Others also joined them and thus many large private banks came into being, with
them their own notes that circulates in the market. Series of legislation in the 19th century
brought an end to the private note issue. Monopoly of note issue got vested in the Central Bank
with the exception of some banks in Europe, who have still limited authority.

8
 In Banking companies ordinance 1962 section 5(b) of which say, “Banking means the
accepting the deposits for the purpose of lending or investment, repayable on demand or
otherwise, draw able by cheques.

1.1 NATIONAL BANK OF PAKISTAN

Before we begin with a detailed explanation of the services offered by NBP let us give
a brief introduction of the history of NBP. The organizational culture of any organization
largely depends on its history. NBP is the beaurocratic organization and the history of NBP
was very much affected by National Political changes that occurred as the Government
implemented different policies.

In order to meet the challenge of financing Pakistani exports, the government

established the National Bank of Pakistan in November 1949 ahead of schedule. Originally the
NBP was to be established in 1950. Since Dhaka was occupying an important position those
days because of jute which was on top of the exports list in the early days of Pakistan hence
the first branch of NBP was established in Dhaka, the capital of the then East Pakistan.

The NBP was founded as a public sector entity with 25 per cent of the paid up capital
sponsored by the government of Pakistan. Both SBP and NBP performed well because the
managements of these two banks was in the hands of the young professionals having rich
experience of working in Reserve Bank of India and The Bank of India.

National Bank of Pakistan maintains its position as Pakistan's premier bank

determined to set higher standards of achievements. It is the major business partner for the
Government of Pakistan with special emphasis on fostering Pakistan's economic growth
through aggressive and balanced lending policies, technologically oriented products and
services offered through its large network of branches locally, internationally and
representative offices.

1.2 MISSION STATEMENT

9
“To be recognized in the market place by Institutionalizing a merit & performance culture,
Creating a powerful & distinctive brand identity, Achieving top-tier financial performance, and
Adopting & living out our core values
We aim to be an organization that is founded on…
Growth through creation of sustainable relationships with our customers.
Prudence to guide our business conduct.
A national presence with a history of contribution to our communities.
We shall work to…
Meet expectations through Market-based solutions and products.
Reward entrepreneurial efforts.
Create value for all stakeholders.
We aim to be people who…
Care about relationships.
Lead through the strength of our commitment and willingness to excel.
Practice integrity, honesty and hard work. We believe that these are measures of true success.
We have confidence that tomorrow we will be…
Leaders in our 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”

1.3 Vision and Goals

“To be the pre-eminent financial institution in Pakistan and achieve market recognition both in
the quality and delivery of service as well as the range of product offering. To be recognized
in the market place by institutionalizing a merit and performance culture, creating a powerful
and distinctive brand identity, achieving top financial performance, and adopting and living
out our core values”

1.4 The Objectives

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 All the objectives of the National Bank of Pakistan were compatible to the mission
statement of the bank. As a business organization its main objective is profit maximization.
National Bank of Pakistan (NBP) tries to maximize its profits by its two basic functions,
deposits and finances. The tool used by the bank in order to increase its deposits was to provide
the best of facilities to their customers. By the increase in profits of bank mean that bank
becomes capable of lending more loans to the clients and hence earning profit from them.

1.5 Functions of NBP

Since NBP is a commercial bank, it performs a variety of functions. Like other

commercial banks, NBP is engaged in financing international trade. Its other major functions
include receiving deposits, advancing loans and discounting of exchange. The functions
performed by NBP are:

1. Primary function

2. Secondary function

3. Role in economic development function

These functions are discussed in detail below:

1.5.1 Primary Function:

Primary function include those which form the basis of National bank operations. These
functions are central in nature and are the core of the whole operations of bank. Primary
functions includes the following:

Accepting Deposits:

This function is important because banks largely depend on the funds deposited with
them by its customers. Deposits are of many types.

Current Deposits:

Current deposits are also called demand liability on current deposits. NBP pays
practically no interest on current deposits. Businessmen usually open current accounts. In NBP
current account can be opened with a minimum amount of Rs.500/-.

11
PLS Saving Deposit:

Profit and loss sharing deposits (PLS) are also called checking accounts. One can
deposit and draw money easily. Profit on PLS is calculated every month but paid after six
months. PLS account can be opened with a minimum amount of Rs.500/-.

PLS Term Deposits

Fixed term deposits are deposits with the bank for certain fixed period before the expiry
of which they cannot be withdrawn unless giving due notice. In this case the rates of profit will
be different depending upon the time period..

Advancing Loans

Now, what banks do with the money that they have received from the general public in
the form of deposits? The answer is, they lend from this money at a rate of interest higher than
that are paying to the depositors. This process of advancing loans is the second fundamental
function of a National bank. The National banks do not lend blindly while lending 5 basic
principles are duly observed.

1. Safety

2. Liquidity

3. Dispersal

4. Remuneration

5. Suitability

National Banks may advance loans in any of the following form.

Overdraft

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 This is a short period financing facility. Under this bank allow his client to withdraw
certain amount from his account over and above the balance actually lying in his current
account. The bank charges interest in the amount overdrawn by the client. When the client has
surplus funds at his disposal, he can pay the amount to settle his overdraft balance. The
overdraft facility is for short term and is provided on the current account only.

Discounting bills of exchange

Discounting of bill is practically speaking lending for exchange at their market worth
i.e. it pays to holder of the bill an amount equal to the face value after deducting interest at the
current market rate for the period. This bill has to be mature. This is the common way used for
keeping a part of assets of the bank in a liquid form.

Loans

National Banks advance short medium and long term loans to investors and
businessmen. While advancing such loans a complete legal systematic procedure is followed.
As the banks deal in some other people’s money, the bank management takes all necessary
precautions to make certain the return of the money advanced. The loans are normally advanced
against securities which are valued by the bank’s experts. The amount of the loan is credited in
the borrower’s account and from there money can be drawn through cheques.

Cash credit

The bank normally provides this facility to business houses and commercial units. The
facility is provided against appropriate security. The bank in this case sanctions a particular
amount. The borrower is allowed to draw amount within the sanctioned limit. In this case the
interest is charged only in the amount drawn by the borrower.

1.6.2 Secondary Functions

The secondary functions can be classified as follows:

a) Agency function

b) General Utility Services

13
 c) Miscellaneous/ Others

a. Agency Functions

NBP also provides best and unique service to its valued customers. NBP provide the
following agency functions to the customers:

Collection of dividends:

As NBP deals with the purchase and sale of various types of securities, therefore NBP
also provide dividend or interest earned on share or bonds or invested money.

Collection of Cheques

In the collection and payment of Cheques, bills and promissory notes etc. National bank
of Pakistan acts as an agent for its customers.

Selling & Purchasing Securities:

National bank sometimes purchases or sells securities or shares on behalf of its clients.

Obeying Standing Institutions:

Sometimes clients order the bank to make payments of regularly recurring nature
directly. Such payments may include subscription fees of clubs or journals, annual membership
fees etc. The bank charges a minute amount for the execution of such instructions.

Funds Transfers

National banks can transfer funds from one bank or branch to another. This gives an
ease to the clients and in a way increases the liquidity of the money deposited in the bank. A
client can use his cheques book even at a place where his bank has no branch.

Acting as an agent

NBP also acts as an agent correspondent or representative for its customer at home or
abroad.

b. General Utility Services

14
 Utilities provided by NBP are as follows:

Clearance of utility bills

NBP provides the service of clearing the utility bills i.e. electricity, gas and telephone
bills of its customers. For this purpose it also provides evening banking services.

Providing Lockers

National Banks provide lockers for their clients. This is a mean of providing safe
custody to the valuables of the clients. This has minimized the risk of losing valuables due to
robbery.

Issuance of Credit Instruments

National bank issue various forms of credit instruments and through this they play a
unique role in increasing the liquidity power of their clients. National banks issue Travelers
Cheques (TC,s), Draft etc. which are now considered more convenient and safe substitute for
cash.

Providing Trade Information

National banks publish journals that contain information about on going economic
situation, Such information help the clients in deciding that whether it is a right time to invest
or purchase or it is better to wait.

Zakat collection

National bank in Pakistan collect Zakat from the Account holders. Zakat is deducted
from the account on a prescribed date on behalf of government.

Collection of Utility Bills

15
 National bank on the behalf of government collect utility bills from the general public.
In this way it becomes convenient for the masses to pay off the utility bills in time.

Haj Services

National bank help pilgrims in submission of Haj applications and they also guide them
in other procedural matters.

Student Loan

Pursuant to the announcement made by the Federal Finance Minister in his 2001-2002
budget speech, a STUDENTS 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.

16
Chapter 2

ORGANIZATIONAL STRUCTURE

ORGANIZATIONAL STRUCTURE

Organizational structure is the framework that defines the boundaries of the formal
organization and with which the organization operates. A suitable organizational structure for
the nature of the organization leads to better performance.

The new organizational structure of the bank constitutes a board of directors and an
executive committee as the governing bodies. The National Bank of Pakistan (NBP) has 1183
branches all over the country and 16 overseas branches. The head office is operationally in
charge of central affairs including the delegation of power and authority to the regional
headquarters all over the country.

2.1 HEAD OFFICE

The National Bank of Pakistan consists of a Head Office situated at I.I. Chundrigarh Road
Karachi. All branches and regional offices work according to the rules and regulations
issued by the Head Office from time to time. The Head Office of National Bank of Pakistan,
which is primarily responsible for making policies and execution of policy decision include,

1. Board of Directors
2. Group or Divisional Chiefs

17
 The Head Office operationally in charge of central affairs including the delegation of
powers and authority to the 29 Regional Headquarters all over the country.

2.2 BOARD OF DIRECTORS

The Board of Directors nominates the executive committee, which consists of one
President or Chairman and seven Directors and among these seven members, one member
perform functions of both member and Secretary.

Board of Directors of NBP

Syed Ali Raza

(President)

Dr. Waqar Masood Khan Iftikhar Ali Malik Mohammad Arshad

(Director) (Director) Chaudhry (Director)

Syed Shafqat Ali Shah M. Zubair Motiwala Sikandar Hayat Jamali

Jamote (Director) (Director) (Director)

Muhammad Khakis
Malik (Director)

18
 2.3 Regional HEADQUARTERS (RHQ)
:

Regional
Business Chief
Chairman

Regional Regional Risk Regional

Operations Chief Mgt. Chief Compliance Chief
(Member) (Member) (Member)

NBP Topi Branch

Manager/AVP

Operation Manger

Foreign Advance PLS Saving Establishment

Exchange Incharge Seating Incharge

19
 Remittances Computer Cash
Incharge Incharge Incharge

Pension Computer
Incharge Incharge

DEPARTMENTALIZATION OF ORGANIZATION

2.4 Account Opening

In the NBP there is different section for the account opening. There is one supervisor
who will open the accounts of different types and different nature of accounts.

When customer opens the account, he will first fill the application in which date,
account number, branch number, legal hire (Reference) who should have account in NBP,
administrator, addresses of (Reference and administrator) and copies of CNIC and one picture
of customer.

2.5 Deposits

Customers account is maintained in deposits department. Customers account is also

debited and credited through this department of the bank. New accounts are also opened and
accounts are also closed through department cheque books are issued through this department.

2.6 Remittances

Cleaning is done through this department. Demand draft and cheque collection is also
done through this department.

20
2.7 Advance

Short term and long term loans are given to general public through this department of
the bank. Now a day mort efficient NBP advance schemes are gold finance, advance salary and
Saiban.

2.8 Cash

Cash of the bank is maintained in this department of the bank. Cheques and money deposited
by the costumer are also received in this department there fore this is the most sensitive area of
the bank.

2.9 Govt Department

In the Govt department, the NBP main branch Swabi bazaar Topi allocated a separated
space for this department. In this department there is very high flow of customers these includes
pensioners and utility bills etc. For this regard there is large number of customers.

2.10 Pension Department

All the retired govt employees, semi govt employees and factory employees to which
the pension is to be paid are concerned with this section. And the bank has specified certain
days of every month for this purpose but some time special days are also allotted.

During the internship in the National Bank of Pakistan Main Branch tehsel Bazar Topi,
I have worked in the fallowing sections. I have undertaken different nature of works and
activities at the organization and much have learned from this internship.

I) Opening Of Account:

21
 Any individual, firm & a corporate body which can enter into a contact, can open an
account with a bank. The following formalities are required to be completed before a current
account is opened in a bank
.

CNIC Verification
Any person who is desirous of opening an account with a bank must have CNIC. If so,
the bank sends his CNIC to NADRA office for verification. If NADRA verifies, that the
person is a Pakistani resident, then he is allowed to open his account in the bank.

a) Account Opening Form

The person has to fell in the “Account opening form”.

The applicant writes his name, address, occupation, qualification, cell number, type of account,
the initial amount to be deposited & other relevant information in the form.

b) Next Of Kin

The applicant also writes the name of the person who can operate his account in case
of his death or insanity.

II) BANK ADVANCES OR CREDIT SECTION

We know that banks borrow to lend. Bank attracts surplus balances from the customer
at lower rate of interest and makes advances at higher rate of interest to the individuals and
firms. After keeping portion of the total deposits, as cash reserve, the balance amount is either
invested or advanced to needy person and businessmen to earn profit.
The commercial banks usually sanction short term advances; however, they started lending
now for a long period to agricultural and industrial fields on the securities of assets. The main
advances made by the commercial banks are as under:
a) Bank overdraft.
b) Cash credit.

22
c) Fixed loans.

23
 a) Bank overdraft

By this way banker allows their customer to draw over and above the money actually
deposited by him in his account, up to a fix limit for a short period. The overdraft facility is
provided only to those who have good financial and credit standing. The overdraft advance is given
on the basis of personal security. When the overdraft is given against the personal security, it is
called clean draft. When the overdraft is given against the collateral security then it is called
secured overdraft.
The granting of overdraft facility to a customer is advantageous to both the customer and
the bank. On one side, the customer is temporary accommodated and can be able to meet with the
short term requirements for money with the facility of overdraft. On the other side, the bank
charges interest on the amount actually overdrawn from the date of drawing. The civil officer and
other salaried persons are allowed to overdraw equal to their twenty month salary with the
condition to deposit their salary bill with the bank till the recovery of overdraft.

b) Cash credit (cash finance)

Cash credit is a common form of advancing by the commercial banks. The customers are
granted an advance up to a certain limit, which they can draw from time to time require by them.
In this method a bank opens a loan account in the name of borrower and hounor the checks drawn
by him. It is a contractual advance and the borrower is required to pledge security of goods
produced, merchandise or tangible security. It is an advance to industrial and commercial concern
for the meeting the working capital requirements.
The banks allow the borrower to borrow up to certain limit in either in lump sum or in installments.
The main advantage of cash credit is that the borrower can operate the account within the fix limit
as and when required and can save interest by reducing the debit balance whenever he is in a p
osition to do so. The bank charges mark up on the amount actually drawn for the period it remains
drawn, however, some bankers make it essential to charge interest on some part of cash credit
wheather the customer utilized it or not. The bank should take the following precautions in
advancing cash finance against the security of goods pledged with it.

24
 a) Customer to be honest
b) Familiarity with different markets
c) Salable commodities
d) Provision of adequate warehouses
e) Possession of goods

The main difference between overdraft and cash credit is that overdraft is allowed in current
account only while the cash credit needs opening a separate cash credit account.
Secondly the rate of interest on overdraft is relatively lower than cash credit.

c) Fixed Loan

Commercial banks also advance fixed loan for fairly long period to industry and agriculture
sector. These loans are repayable either in periodic installments or in lump sum at a fixed future
time. A separate loan account is opened in the name of borrower with the amount sanctioned.
Interest is charged on the full amount of the loan for the whole of the period. These loans are
granted against the security of gold armaments, real estate, stock etc.
However, some unsecured loans are also provided to the customers having good credit standing.
The bank before sanctioning term finance, examines the assets and liabilities, earned profit and
earning capacity of the customer and the purpose of the loan applied for.

III) Government Section

Government section of NBP deals with the govt, receipts & payments. Govt payments
include salaries of the provincial federal & district govt, employees. These also include payment
to the pensioners’ pension of the central & provincial retired employee is paid.

If salaries check of the employees are sent directly to the NBP branch, NBP credit the
account of the employee. If they have account with another bank, the concerned bank clears the
checks from NBP & NBP credit the account of the bank. On the other hand, govt, receipts include
income tax, sale tax, provincial 1, provincial 2, provincial 3 & account 4.

25
 Mostly the same procedure is followed for receiving the govt, receipts through income tax,
sale tax & provincials. For the payment of tax & provincials, a form is filled by the tax payer.
Normally three copies of the form are made, one is given to the tax payer, on is kept by the NBP
& one copy is sent to the tax imposing department & a scroll is made for maintaining the record
for the govt.

3.8 TYPES OF ACCOUNTS MAINTAINED BY NATIONAL BANK OF

PAKISTAN (SWABI BRANCH)
NATIONAL BANK OF PAKISTAN maintain following types of accounts:
1. Current accounts.
2. Profit and loss sharing account.
3. Fixed deposit account.
4. N.I.D.A. Account

2.11 CURRENT ACCOUNT

This account is also known as running balance account. Simply we can say “A bank account which
may be used to lodge payments or to withdraw money on demand.”
Its main purpose is to serve the businessman. Form number F-53 is provided to the person to open
the account. It is a statutory requirement to maintain current account.
Its main features are: -
Minimum amount for opening this account is Rs.500
Any person can open the account with the bank
According to inter banks agreement interest is not paid on current account.
Bank act as custodian of money
Over draft facility is provided to the customers
Customer can withdraw money through cheque supplied by bank
Number of depositors in current account in National Bank of Pakistan up to 31-8-2009 were 900
approximately.

26
2.12 PROFIT AND LOSS SHARING ACCOUNT

In general it is also called saving account .To provide interest free banking facilities in Pakistan,
this type of account was introduced in January 1982 after the islamization of banking.
The main features of this account are: -
Instead of having fixed return in the form of interest the deposited money will be shared in profit
and loss of the bank.
One can open the account by depositing minimum Rs.100
Withdrawal is allowed 8 times in the month total not exceeding Rs.15000.
To withdraw a large amount a notice of 7 days to the bank is necessary.
There is not any kind of interest is provided on money deposited.
Rate of profit is declared at the close of each half-year.
Number of depositors in PLS account in National Bank of Pakistan up to 31-8-2001 were 4000
approximately.

2.13 FIXED DEPOSIT ACCOUNT

This account is the major source of funds for the banks. This account is best for people who have
surplus money and don’t need such funds in nearer future.
The money is deposited for a fixed period of time. Main features of this account are: -
Fixed amount is deposited for fixed period.Amount of profit can be obtained after each six
months.Higher will be the time period, higher will be the rate of profit, and vice versa.A receiptis
used for the amount deposited called fixed deposit receipt.Period of deposit can vary from 3
months to 5 years.
The amount can be withdrawn before maturity after surrendering interest.

27
CHAPTER 3
Departments and Experience

3.1 What I Learned?

It was a good experience working with the whole team. Everyone was so helpful and cooperative.
I never felt that I am a new employee there. Everyone had a lot more experience than me and they
helped me out every time. Management is very kind. The whole team was very professional.

3.2 Participation in Departments during Internship:

•Accounts Section
•Clearance Section
•Remittance Section
•Commercial Section
I worked in National Bank of Pakistan Swabi Main Branch as internee during my bachelor
studies for the degree of BBA (Hons)

Learned so many things during my internship in National bank of Pakistan Swabi Main Branch. I
started from the Account Opening. I spent 15 days in account opening section and i opened 20
accounts. After that I worked in advances section. Then foreign exchange and so on.
I learned practical experience of working under pressure. Problem solving skills, time
management, task management and communication skills.

Also did a Work in Govt.Section and knew about Clearing of different kind of govt.bills etc.

During internship I had learned that how to communicate with different kind of peoples and how
to manage different things in bank.

28
CHAPTER 4

FINANCIAL AND SWOT ANALYSIS

SWOT Analysis is the most important part of the report, because it depends on my personal
observation. Only a good, keen and comprehensive analysis leads to good recommendations for
the improvement of the existing conditions. Therefore in NBP I have observed many things and I
have analyzed them to the best of my efforts & knowledge.

4.1 STRENGTHS

Following are the main Strengths of NBP:

 Serving as an Agent

National Bank of Pakistan main branch Swabi serve as an agent of State Bank of Pakistan. No
other bank is allowed to do the Clearing task but NBP act on the behalf of SBP the clearing task.

 No of Branches

Another strength of NBP is that there are 1183 branches in Pakistan and 16 branches in
overseas of NBP. So NBP staff members are scattered on the land of Pakistan and World to provide
benefits and serve the people.

29
  Experience Employees

The staff members of NBP main branch are an experience, though they are not qualified people
but yet they have enough experience to carry on the work of bank. It is said, “Knowledge is power
and experience is wisdom but experience cannot be defeated by knowledge”.

 Modernization

National Bank of Pakistan is the first bank, which has started a Foreign Exchange Company in
order to regularize the inflows of foreign money and control the undesirable blackmailing of
private foreign exchange companies in the country.

It is the only domestic bank of the country, which has been awarded “The Best Domestic Bank”
consecutively in 2001 and 2002.

4.2 WEAKNESSES

Following are the main weaknesses of NBP:

 Delegation of Authority

National Bank of Pakistan to great extent is a centralized bank. The manager of the main branch
Swabi has very limited authority, especially in case of advances. Lack of delegation of authority
creates problems and when the manager is not present in his office and customers have to wait for
many hours. There is top to bottom flow of authority and lower level of employees cannot
participate in the decision making process. The top level of the organization takes all the decision.
This completely centralized decision-making decreases the interest and also reduces efficiency of
the bank.

30
  Seniority Based Promotions

Promotion in NBP is purely on seniority basis rather than on performance. This really de-
motivates the employees because they know that it doesn’t matter whether they perform well or
bad.

 Job Rotation

Most of the employees work in a particular department and they specialize only in one
department. In case of absence of one employee, any other employee cannot perform this work. In
this way bank not only loses the business but also results in dissatisfaction of the customer.

 Lack of Theoretical Knowledge of Employees

There is a lack of theoretical knowledge of the employees of National Bank of Pakistan.

Although their work is mostly routine and practical but sometimes low background education can
disturb the routine work. They have to consult the Regional Manager Office or General Manager
Office. This factor affects their efficiency.

 Discouragement of Small Depositors

The staff members give proper attention and respect to those customers who have deposited
huge amount of money while the small depositors mostly; the salaried people are discouraged to
open an account within the branch. In this way they discourage saving habits in the general public.

 Lack of Discipline

During my training in National Bank of Pakistan, main branch Swabi I observed lack of
discipline in the way that some of the employees do not care about the office timings. They usually
come late in the morning. Similarly employees take long leaves without any valid reasons.

31
  Excessive Paper Work

There is excessive paper work in NBP, which takes more time and reduces the effective
banking performance.

 Lengthy Process of Loan

To meet the immediate requirements of the business, customers require quick financing but
due to centralization of decision-making there are unnecessary delays in sanctioning of loans,
resulting in dissatisfaction of the customers.

 Inadequate Fringe Benefits

The main purpose of fringe benefits is to retain the employees in the organization on long-term
basis. It has been analyzed that the package of fringe benefits offered by NBP is not much attractive
as compared to other organizations. Recently NBP has furthermore reduced the fringe benefits of
the employees that may result in de-motivation & reduction the performance of existing
employees.

 Low Rate of Return

Due to low rate of return, the depositors are drawing their money from the banks and depositing
in the saving centers, which are offering a good rate of return as compared to the banks.

 Limited Application of Electronic Media

NBP is not utilizing the electronic media for its promotional campaign. There is lack of
awareness among the customers and general public about the schemes offered by NBP.

32
  Improper Working Conditions

Most of the branches of NBP are facing the problem of shortage of space like NBP, main
branch Swabi. The frequent movement of the staff in the manager’s office discourages the
customers and it is also risky from security point of view.

The arrangement of foreign exchange department in main branch Swabi is even worse. There
is lack of furniture and inappropriate arrangements of the seating for the customers.

 Limited Application of Technology in Bank:

NBP branches are not fully computerized, which is very important to provide the quick and
quality services.

 Political Interference:

Banks are not free from political influences. Due to political pressures on the management for
sanctioning the loans in favor of their political persons resulted in huge amount of bad debts
because in this way the bank is unable to recover the loan very difficult, and these loans are not
used for productive purposes.

4.3 OPPORTUNITIES

Following are the main weaknesses of NBP:

 Financing

Now a day’s people have enough savings and they want some luxurious type’s products such
as Car, House and Business etc. So the opportunity for NBP is to start car-financing scheme to be
beneficial for the organization (Bank).

33
  Modernization

Another opportunity for NBP is to modernize itself because all other banks have best
methodologies to compete others and market their products. As I know that NBP have not enough
modernize system to be compatible with other banks.

 Strong Competition

As we know that today’s era is the era of competition. In Swabi all the banks are involved in
struck competition so; it is an opportunity for NBP to develop a strong marketing policies and
campaign to further develop itself.

4.4 THREATS

Followings are the major threats for NBP:

 Other Banks

The major threat for NBP is other banks that have started function in Swabi such as Bank
Alfalfa, MCB, UBL, ABL, PICIC, Khyber Bank etc. These are the banks that NBP face
competition with them. These banks provides a vide variety of services as compared to NBP.

 Political Interference

Banks are not free from political influences. Due to political pressures on the management for
sanctioning the loans in favor of their political persons resulted in huge amount of bad debts
because in this way the bank is unable to recover the loan very difficult, and these loans are not
used for productive purposes.

34
4.5 FINANCIAL ANALYSIS

Financial statement analysis is the principal mean of reporting the financial condition and the result
of operations of an organization, or in other words we can say that financial analysis are carried
out for the purpose of identifying the financial strengths and weaknesses of an organization by
properly establishing the relationship between the balance sheet and income statement items. This
analysis helps many parties in making decision who are interested in business activities. To
improve the quality of decision making, proper analysis of these statements helps a lot. The firm
itself and outsider providers of capital, creditors and investors all undertake financial statement
analysis. The type of analysis varies according to the specific interests of the party involved.

For example, suppliers are interested in liquidity of the firm. There claims are short term,
and the ability of the firm to pay these quickly is best judged by an analysis of the firm’s liquidity.
The claims of the bondholders, on other hand, are long term. So bond holders are more interested
in cash-flow ability of the firm. Investors are commonly concerned with present and future
earnings. As a result, investors usually focus on analyzing profitability. They would also be
concerned with the firm’s financial conditions insofar as it affects the ability of the firm to pay
dividend and avoid bankruptcy. Management also analyzes financial analysis for the purpose of
internal control and to check the performance of the firm. Similarly government agencies analyze
financial data for the tax purpose. The financial data needed in financial analysis comes from many
sources. The primary source is the data provided by the firm itself in its annual report and required
disclosures. The annual report comprises the income statement, the balance sheet and the statement
of cash flow as well as footnotes to these statement. Certain businesses are required by securities
laws to disclose additional information. Besides information that companies are required to
disclose through financial statements other information is readily available for financial analysis.

35
4.6 BALANCE SHEETS FOR THE LAST FIVE YEARS:

Rupees in Millions
Assets 2005 2006 2007 2008 2009
Cash & Balances with treasury Banks 71,197 78,625 94,873 106,503 115,827
Balances with other Banks 31,019 40,642 37,473 38,344 28,406
Lending's to financial institutions 16,283 23,013 21,465 17,128 19,587
Investments 156,986 139,947 210,788 170,822 217,642
Advances 268,839 316,110 340,677 412,986 475,243
Operating fixed assets 9,454 9,682 25,923 24,217 25,147
Deferred tax assets 3,204 3,062
Other assets 23,941 27,114 30,995 44,550 59,316

Total Assets 577,719 635,133 762,194 817,758 944,232

Liabilities
Bills Payable 1,741 10,606 7,062 10,219 10,621
Borrowings from financial institutions 8,757 11,704 10,886 40,458 45,278
Deposits and other accounts 463,427 501,872 591,907 624,939 726,464
Liabilities against assets subject to finance lease 17 13 33 25 42
Deferred tax liabilities 4,463 2,387 30,869 - -
Other Liabilities 24,974 26,596 5,098 39,656 42,270
Total Liabilities 503,379 553,178 645,855 715,299 824,676

Net assets 74,340 81,955 116,339 102,459 119,556

Represented by
Share capital 5,909 7,091 8,155 8,969 10,763
Reserves 13,536 13,879 15,772 19,941 22,681
Un-appropriated profit 16,713 32,075 45,344 52,456 61,347
Total 36,158 53,045 69,271 81,367 94,792
Surplus on revaluation of assets-net of tax 38,182 28,910 47,068 21,092 24,764

Total Equity 74,340 81,955 116,339 102,459 119,556

36
4.7 INCOME STATEMENT FOR THE LAST FIVE YEARS:

INCOME STATEMENTS

Rs in Million
2005 2006 2007 2008 2009
Mark-up revenue 33,634 43,789 50,569 60,942 77,947
Mark-up exp (10,322) (13,635) (16,940) 23,884 39,489

Gross profit margin 23,312 30,154 33,629 37,058 38,458

Provisions (2,224) (2,372) (4,722) (10,593) (11,669)
Net mark-up income 21,088 27,782 28,907 26,087 26,788
Non Markup income
Fee & commission 4,926 6,145 6,782 7,925 8,930
Dividend income 1,718 2,892 3,263 2,878 1,920
Exchange income 1,206 1,334 1,042 3,969 3,028
Gain on sales of securities - 1,169 2,310 395 4,591
Other income 1,574 623 147 1,245 552
Total non mark-up 9,424 12,163 13,544 16,415 19,025

Total income 30,512 39,945 42,451 42,503 45,814

Non Markup Expenses
Administrative exp (11,195) (13,443) (14,206) (18,171) (22,571)
Other provisions (198) 17 (168) (747) (620)
Other charges (63) (208) (17) (583) (321)
Non markup exp (11,456) (13,634) (14,391) (19,502) (23,513)
Profit before tax 19,056 26,311 28,060 23,000 22,300
Taxation (6,347) (9,289) (9,026) (7,542) (4,088)
Profit after tax 12,709 17,022 19,034 15,458 18,211

37
4.8 ACID QUICK RATIO
A more conservative measure of liquidity is the acid quick ratio. This ratio is same as current ratio
except it excludes inventories and prepayments presumably the least liquid portion of current
assets. The ratio concentrates primarily on the more liquid current assets, cash, marketable
securities, receivables and advances.

ACID QUICK RATIO

YEARS Current Assets – Prepayments / ACIDQUICK RATIO

Current Liabilities

2008 365588 – 18091/ 332090 1.05

2009 382889 – 12746 / 348165 1.06

2010 279983543 – 10254 / 417558742 0.67

ACID QUICK RATIO

2010
2009.5
2009

2008.5
2008 ACIDQUICK RATIO
2007.5 YEARS

2007

2006.5
2006
2005.5
2007 2008 2009

INTERPRETATION
The Acid Quick Ratio for the financial year 2008 has slightly improved from 1.05 to 1.06 in the
year 20092. The ratio in 2010 is lesser because of the excessive prepayments. The reason for the
improvement of the ratio in the next year is the less prepayment.

38
4.9 Cash Ratio
Sometimes it needs to view the liquidity of the firm from an extremely conservative point of view,
for example the company may have pledged its receivables and inventories. In such type of
situations, the best indicator of the firm of the short- term liquidity may be the cash ratio.

CASH RATIO

YEARS Cash / Current Liabilities CASH RATIO

2008 84593 / 332090 0.25

2009 63525 / 348165 0.18

2010 59420502 / 417558742 0.14

CASH RATIO
2010.5
2010
2009.5
2009
CASH RATIO
2008.5
YEARS
2008
2007.5
2007
2006.5
2008 2009 2010

INTERPRETATION
The three year comparison shows the smaller cash ratio in 2008, it is clear that probably NBP
carried less cash in 2009 as compared to 2010.

39
4.11 RECEIAVABLES TURNOVER / ADVANCES TURNOVER
Receivables turnover or Advances turnover provides insight into the quality of the firm receivables
or advances and how successful the firm is in its collection.

RECEIVABLE TURNOVER RATIO

YEARS Markup/ Interest Earned / Receivable Turnover

Advances

2008 31290584 / 140547374 0.22

2009 27126839 / 140547374 0.19

2010 19452317 / 160990265 0.12

RECEIVABLE TURNOVER RATIO

2010.5
2010
2009.5
2009
Receivable Turnover
2008.5
YEARS
2008
2007.5
2007
2006.5
2008 2009 2010

INTERPRETATION
The bank has better Advances turnover ratio in the year 2010 compared to the year 2008 and better
in 2009 as well.

40
4.12 TOTAL ASSET TURNOVER
Generally the total assets turnover measures the activity of the assets and the ability of the firm to
generate sales through the use of the asset.

TOTAL ASSET TURNOVER RATIO

YEARS Markup, Interest Earned / TST
Total Assets

2008 31290584 / 17510437 1.78

2009 27126839 / 23936263 1.13

2010 19452317 / 27584014 0.705

TOTAL ASSET TURNOVER RATIO

2010
2009.5
2009
2008.5
2008 TST
2007.5 YEARS

2007
2006.5
2006
2005.5
2007 2008 2009

INTERPRETATION
The Assets efficiency of the NBP has reduced for the year 2010 to 1.13% compared to 2008 which
was 1.78%. In other words we can say that each dollar investment in total assets produces 6 cents
as markup. The decline in ratio is mainly because of decrease in Total Markup / Interest Earned
amount in 2010

41
4.13 NET PROFIT MARGINS
This is the conservative method of sales profitability. This ratio gives a measure of Net Income in
dollars generated by each dollar of sales.

NET PROFIT MARGIN RATIO

YEARS Net Income / Markup or Net Profit Margin

Interest Earned

2008 752226 / 17510437 0.04

2009 3404593 / 23936263 0.14

2010 5897163 / 27584014 0.213

NET PROFIT MARGIN RATIO

2010.5
2010
2009.5
2009
Net Profit Margin
2008.5
YEARS
2008
2007.5
2007
2006.5
2008 2009 2010

INTERPRETATION
The bank has considerably improved the Net Profit Margin. In 2009 it was earning 10 paisa per
rupee markup while previous year 2008 comparisons show 4 cents per dollar markup or return.
And a 7% increase in 2010.

42
4.14 GROSS PROFIT MARGIN
This ratio shows the profit of the firm relative to the sales. It is a measure of efficiency of the firms
operations as well as an indication of how product or services of the firm are provided.

GROSS PROFIT MARGIN RATIO

YEARS Net Markup or Interest GPM

Expense / Markup or
Interest Earned

2008 18877247 / 31290584 0.60

2009 14698507 / 27126839 0.54

2010 6735579 / 19452317 0.34

GROSS PROFIT MARGIN RATIO

2010
2009.5
2009
2008.5
2008 GPM
2007.5 YEARS
2007
2006.5
2006
2005.5
2007 2008 2009

INTERPRETATION
NBP bas a better Gross Profit Margin for the year 2008 compared to the year 2009. It shows that
NBP has become more effective in producing the services reasonably above cost and charging for
them. While in 2010 it again decreases that’s shows its good sign.

43
4.15 RETURN ON INVESTMENT
The return on the Investment measures the firm’s ability to utilize its assets to create profits by
comparing profits with the assets that generate the profits from du pont approach.

RETURN ON INVESTMENT

YEARS Net Profit Margin * Total ROI

Asset Turnover

2005 0.64 * 1.78 1.139

2006 0.14* 1.13 0.158

2007 0.213* 0.705 0.150

RETURN ON INVESTMENTS

2007.5
2007
2006.5
2006
ROI
2005.5 YEARS
2005
2004.5
2004
2003.5 2005 2006 2007

INTERPRETATION
NBP shows a low ROI in the year 2010 compares to the year 2008 &2009. Its ROI has decreased
from, in the year 2009, 0.158 to .15 in 2010. The assets turnover though reduced; still the
improvement in NBP will bring this ratio up.

44
4.16 Horizontal Analysis OR index analysis of Balance Sheet:

2005 2006 2007 2008 2009

ASSETS
Cash 100.00 112.38 11.88 131.86 467.26
Balances with other Banks 100.00 131.08 18.92 222.19 292.45
Lending to other financial inst. 100.00 46.05 1.28 12.26 72.41
Investments 100.00 98.39 15.41 132.30 379.00
Advances -- net of provision 100.00 126.19 14.40 162.09 399.82
Operating fixed Assets 100.00 158.66 18.01 20.80 426.12
Other Assets 100.00 146.24 15.60 357.55 1539.89
Total Assets 100.00 111.02 13.24 137.48 380.26
Liabilities
Deposits & other liabilities 100.0 107.7 122.9 135.3 4.8
Borrowings from other banks 100.0 143.6 363.3 234.3 774.8
Bills Payable 100.0 82.8 110.8 92.5 19,460.6
Sub-ordinate Loans 100.0 100.0 99.9 79.8 -
Other Liabilities 100.0 139.9 182.6 216.3 809.8
Deferred Liability 100.0 396.9 436.2 - -
Total Liability 100.0 109.4 130.1 137.7 342.4
Net Assets 100.0 164.0 217.3 228.3 1,602.1
Share Capital - - - - -
Reserve funds & other reserves 100.0 117.0 102.7 134.7 964.8
Un appropriated profit 100.0 203.5 349.8 248.5 4,423.0
Shareholder’s Equity 100.0 156.9 445.0 469.8 ,406.8
Surplus/(deficit) on revaluation of
Investments 100.0 229.7 33.7 33.6 3,406.4
Total Equity 100.00 164.01 7,322.61 8,279.64 1,601.55

45
4.17 HORIZONTAL ANALYSIS OF PROFIT & LOSS:

2005 2006 2007 2008 2009

Mark-up revenue 100.00 130.19 150.35 181.19 231.75
Mark-up exp 100.00 132.10 164.12 (231.39) (382.57)
Gross profit margin 100.00 129.35 144.26 158.97 164.97
Provisions 100.00 106.65 212.32 476.30 524.69
Net mark-up income 100.00 131.74 137.08 123.71 127.03
Non Markup income
Fee & commission 100.00 124.75 137.68 160.88 181.28
Dividend income 100.00 168.34 189.93 167.52 111.76
Exchange income 100.00 110.61 86.40 329.10 251.08
Gain on sales of securities
Other income 100.00 39.58 9.34 79.10 35.07
Total non mark-up 100.00 129.06 143.72 174.18 201.88
Total income 100.00 130.92 139.13 139.30 150.15
Non Markup income
Non Markup Expenses 100.00 120.08 126.90 162.31 201.62
Administrative exp 100.00 (8.59) 84.85 377.27 313.13
Other provisions 100.00 330.16 26.98 925.40 509.52
Other charges 100.00 119.01 125.62 170.23 205.25
Non markup exp 100.00 138.07 147.25 120.70 117.02
Profit before tax 100.00 146.35 142.21 118.83 64.41
Taxation 100.00 133.94 149.77 121.63 143.29
Profit after tax 100.00 130.19 150.35 181.19 231.75

46
4.18 VERTICAL ANALYSIS OF BALANCE SHEET:

2005 2006 2007 2008 2009

ASSETS
Cash 9.98 10.11 8.95 9.58 12.27
Balances with other Banks 3.91 4.62 5.59 6.32 3.01
Lending to other financial
inst. 10.89 4.52 1.05 0.97 2.07
Investments 23.13 20.50 26.91 22.25 23.05
Advances -- net of
provision 47.87 54.41 52.05 56.44 50.33
Operating fixed Assets 2.67 3.81 3.62 0.40 2.99
Other Assets 1.55 2.04 1.83 4.03 6.28
Total Assets 100.00 100.00 100.00 100.00 100.00
Liabilities
Deposits & other
liabilities 92.32 90.92 87.16 90.65 1.29
Borrowings from other
banks 2.43 3.19 6.77 4.13 5.49
Bills Payable 1.55 1.17 1.32 1.04 88.10
Sub-ordinate Loans 1.34 1.22 1.03 0.78 -
Other Liabilities 2.17 2.77 3.04 3.40 5.13
Deferred Liability 0.20 0.73 0.67 - -
Total Liability 100.00 100.00 100.00 100.00 100.00
Share Capital - - 0.12 0.13 0.90
Reserve funds & other
reserves 31.49 22.46 0.44 0.51 18.97
Un appropriated profit 18.58 23.06 0.89 0.56 51.31
Shareholder’s Equity 90.26 86.36 5.49 5.12 79.29
Surplus/(deficit) on
revaluation of Investments 9.74 13.64 0.04 0.04 20.71
Total Equity 100.00 100.00 100.00 100.00 100.00

47
In the year 2006 while comparing with previous year, the assets of NBP are going up in various
items, these are cash with treasury is 10.11% in the year 2006 instead of figure9.91 % in the year
2005, there is positive sign of change. The balance with other banks are making a down word jump
because the figure in 2005 was 3.91% but in the year 2006 it becomes 4.62% there is a big change
that is 1 time of previous years. The investment of NBP is decreased to 20.5 % but deposits are
arising up to90.92%. The deposits of 2005 are 92.32% and reduced by one point. Other liabilities
are also increased by point as reach 2.17 to 2.77.
In the year 2007 there is same balance with treasury and balances with other banks increased by
8.95%. Lending increased and investments are declining but advances are showing upward trend.
The other assets and operating fixed assets showing the increasing trend by comparing the
liabilities the overall business of NBP is having some decreasing trend in this year, the surplus of
revaluation of assets also going down. The management of NBP does not lose the trust of public
and earn some better profit then last year. So, we can say that the reserves are decreasing and profit
is also decreasing.
In the year 2008 the cash and balances with treasury are 9.58% and the balance with other bank
is 6.32% of total assets but investments is decreasing trend and advances are showing decreasing
trend by comparing last year. There is mix trend, deposits are decreasing and other liabilities are
down trend Share capital is increased12.01% of other liabilities change 0.67%, there is some
change. Reserves are also having increasing trend, the business of NBP is growing well. The
profit of NBP is reducing amount the overall NBP has negative trend. It is due to economic un-
stability in Pakistan during this period.
In the 2009 the changes are very prominent because the figures are growing well, we can’t make
analysis of exact trend for the year of 2009 as result the cash increased and reach to 12.5 of total
assets. Balances with other banks, lending to financial institutions are showing the decreasing the
trend and the investments, advances, other assets and operating fixed assets are showing the
increasing trend, the figures are .09%,23.05%, 50.3% and 1.29% respectively.

48
 4.19 VERTICAL ANALYSIS OF PROFIT & LOSS:

2005 2006 2007 2008 2009

Mark-up revenue
78.11 78.26 78.87 78.78 80.38
Mark-up exp
-23.97 -24.37 -26.42 30.88 40.72

Gross profit margin 54.14 53.89 52.45 47.91 39.66

Provisions
-5.17 -4.24 -7.37 -13.69 -12.03
Net mark-up income
48.98 49.65 45.09 33.72 27.62
Non Markup income

Fee & commission

11.44 10.98 10.58 10.24 9.21
Dividend income
3.99 5.17 5.09 3.72 1.98
Exchange income
2.80 2.38 1.63 5.13 3.12
Gain on sales of securities
2.09 3.60 0.51 4.73
Other income
3.66 1.11 0.23 1.61 0.57
Total non mark-up
21.89 21.74 21.13 21.22 19.62

Total income 100.00 100.00 100.00 100.00 100.00

Non Markup Expenses

Administrative exp -26.00 -24.03 -22.16 -23.49 -23.28

Other provisions -0.46 0.03 -0.26 -0.97 -0.64
Other charges -0.15 -0.37 -0.03 -0.75 -0.33
Non markup exp -26.61 -24.37 -22.45 -25.21 -24.25
Profit before tax 44.26 47.02 43.77 29.73 23.00
Taxation -14.74 -16.60 -14.08 -9.75 -4.22

Profit after tax 29.52 30.42 29.69 19.98 18.78

49
CHAPTER 5

FINDINGS, RECOMMENDATIONS AND CONCLUSION

After critical and SWOT analysis both the operations and financial data of National Bank of
Pakistan, I addressed the findings and recommendations of the report.

The overall performance of NBP in terms of profitability and growth has been rise over the
past few years. The reason is decrease in expenditure and change in the higher management of the
bank. In order to survive and grow in intense competition, the Bank should pay more and more
attention to carry out a detailed market research/analysis and prepare a new product plan before
launching any venture or expansion plan.

5.1 Output Monitoring

There are too many rules and regulations within the Organization, which adversely affects
the performance of the employees. For continuous monitoring and evaluation, the systems and
procedures must be dynamic and flexible. This is very important task as the objective of the
systems must be to facilitate the functions and achieve the desired results. Thus, the changes must
be made and improvements should be done.

Easy procedure of advancing loans:

Most of the customers face difficulties while getting the loan. The procedure for advancing
loans should be simple and easy. In this regard the bank management can play an important role
by means of simplifying the things to the customers.

50
Establish a Customer Complaint Centers

NBP is the public sector bank and due to heavy rush, customers have always complaints
against the staff of the bank. It is essential to open a customer complaint centers at branch levels
so that the management should better understand the problems of the customers and then try to
overcome these problems. This might create a good reputation of the bank in the eyes of customers.

Effective Appraisal System of Employees

Performance of employees within an organization cannot be the same and it is necessary

to evaluate their performance. For this purpose proper employee appraisal system should be
establish for identifying the right persons who are eligible for promotion.

Recruitment

Merit is not considering in the process of selection and recruitment of employees. The
recruitment process suffers from serious drawbacks. There is no concept of job description. For
recruiting, the hiring process and job description should be modified and improved. One of the
cost-effective methods to select competent employees is to offer internship programmers to
graduates from business and management schools.

Friendly Environment

A friendly environment should be created and separate section should be established for
each activity because it will help to gain the interest of employees in work.

Technological Advancement

NBP main branch Swabi is not fully computerized which is very important to provide the
quick services. Therefore NBP main branch Swabi should be fully computerized to expedite the
dealing process among bank and customers. It also reduces the burden of work.

51
5.2 IMPLEMENTATION / ACTION PLAN

Every organization has its own strengths, weaknesses and opportunities and threats.
Nothing is impossible in this world, as someone has rightly said, “An impossible is often untried”.
Here are the implementation/action plans for the recommendations concluded in the previous
pages.

Business Development Plan

In order to develop the implementation procedure to reach business development

objectives, the following steps should be taken:

Campaigns to open More Accounts

In order to increase the number of accounts, there should be a clear market plan. The staff,
branch managers and executives involved in business development should prepare lists of different
groups of prospective account holders and their neighbors, friends and influential people and make
efforts to open their volume of business and deposits by fixing monthly target. This should be done
by coordination among the various branches of the Bank.

Campaigns for Mobilization of Deposits

Deposits are the main source of commercial banks and it is very important for an individual
bank to get funds, because its basic function is to put them to work safely and profitably.

The act of attracting funds is important but there are so many other processes of obtaining
the funds, like the Bank can get funds by advertising, by direct contact or by contacts through their
officers, managers and executives. Thus, they can get the customers and acquire them ultimately
by furnishing banking services.

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Campaigns to Increase Business Share

The management of the Bank should prepare a business development plan by taking into
account the overall market position of the bank in the banking industry. In light of market share,
business development targets should be fixed on an annual basis by fixing monthly targets for
imports, exports, issuance of letters of guarantee, bills etc. The achievement of targets should be
reviewed every month by the respective circles at the Head Office and necessary instructions and
guidelines be provided to the respective area control and zones where the business performance
are not according to the set targets.

Training of Personnel

We all know that the profitability, growth and survival of a bank depend upon business
development. Therefore, the Bank should take steps to impart training to the probationary officers,
senior officers, managers and executives in modern business development techniques and public
relations.

Business development training is the process of imparting knowledge creating skills and
shaping attitude, work habits, and consists of telling, showing and teaching the trainee and then
monitoring his/her results and making constructive corrections.

Market Research & Analysis Plan

Before launching any venture or expansion plan, a detailed market research/analysis must
be carried out using any and/or of the following methods:

 The best method is collecting first hand data from the potential market through surveys.
The questionnaires must be unbiased and should not prompt desired results.
 Historical data, if available could be very useful in determining the potential and trends.
 In case there is lack of awareness about the service or non-existence of historical data
makes it impossible to conduct research, data of the locations, which have similar or close
characteristics, can be used.

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 Plan for Monitoring & Evaluation Systems:

The systems and procedures of the Bank must be dynamic, flexible and subject to
continuous monitoring and evaluation. The pre-requisites of an effective monitoring and
evaluation process are as follows:

 A good, open and unbiased feedback system should be established to identify the problems
and suggesting improvements.
 The feedback system must include the customers and all the staff members from top to
bottom within the Bank.
 The feedback system must allow both as needed and fixed interval information.
 The problems and errors must be analyzed and removed. The suggestions should be
discussed at all levels and implemented if found useful.

Performance Evaluation Plan

Periodic performance evaluation is very important function to be performed. The objective

of evaluation must not be limited for salary review only. It should include and be performed in the
following manner:

 Objectives for each employee must be clearly defined in a measurable quantifiable manner.
 A proper system must be adopted, whereby the employees also participate in the evaluation
process.
 The system must be such that where the performance against the given objectives can be
measured systematically.
 The performance review must be done at short intervals. The periodical performance
reporting and meetings could be effective tools.
 The performance review must be aimed at improving employees’ skills and productivity
by identifying training needs.

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Hiring Process & Job Description Plan

The human resource professionals believe that the failure of sub-ordinate is in fact a failure
of the manager as either he/she has not made the right selection or he/she has not able to manage
people well. The problem could be in the hiring process or an unclear job description. To enable
employees to be most productive at all levels; the Bank should improve its hiring process and job
description.

This can only be attained through the following:

 Preparing qualification and experience specification in accordance with the objectives to

be achieved from the position.
 Implementing standardized selection criterion.
 Offering reasonable compensation package in accordance with job requirements,
experience, and qualification keeping in view the salary packages of the existing staff at
the same level.
 Preparing detailed job description.
 Arranging detailed orientation programmed.
 Setting objectives for the period.

Internship Program Plan

One of the best and cost effective method to select the right people and hire graduates from
business and management schools as internees. The internship programmed should spread over a
period of at least six months. During the internship programmed, a close watch should be kept on
the internees. At the end of the internship programmed, the performance of the internees should
be evaluated and competent, diligent and energetic internees should be hired on permanent basis.

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REFERENCES

INTERNET

www.nbp.com.pk
www.sbp.org.pk
www.kse.com
www.ksedata.com
www.google.com

OTHER SOURCES

Recommended books by A.I.O.U for MBA (B&F)

Financial Statements of National Bank of Pakistan and Other Banks
Information from National Bank of Pakistan Swabi Main Branch

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 ANNEXES:
NATIONAL BANK OF PAKISTAN
ATTACHMENT:
NBP’S ORGANIZATIONAL STRUCTURE:

Organizational Chart
Board of Director

President

Retail & Credit Corporate & Special Asset Audit & Operation Human
a
Management Investment Management Inspection Group Resource
Commercial
Group Chief Banking Group Chief Group Chief Chief Management
Banking Group Group Chief & Admin
Group
Chief

Regional Regional Credit Head of SAM Regional Regional Regional HR

Management
Business North & South Compliance Operational Chief
Chief Chief Chief Chief

Corporate Head Corporate Head Regional Retail Head

South North

Branch Manager
Corporate Branches

57
 NBP’S ORGANIZATIONAL STRUCTURE AT REGIONAL OFFICE LEVEL:

Regional Management
Committee

Regional Regional Regional Regional Regional

Business Credit Operation Compliance HR Chief
Chief Management Chief Chief

Regional Officer In- Operation

charge Credit Staff
Retail Head Processing Regional
Office

MIS & Credit Monitoring

Branch Manager
Branch Operations Manager
Branch Compliance Manager
Credit Officer

NBP’S ORGANIZATIONAL STRUCTURE AT BRANCH LEVEL:

58
 Organizational Chart
Branch Level

MANAGER

Credit Compliance Branch Operation

Relationship Officer Manager
Manager

Credit Officer Processing In-charge In-charge In-charge

Consumer Officer Audit Deposit Govt:
Products & and Compliance Section Remittances Section
General
Finances

MIS In-charge In-charge Cash

Advances Collection Department & Cashiers

59
 STRUCTURE OF NBP FINANCE DEPARTMENT:

PRESIDENT

Corporate & Credit Treasury Commercial

Investment Management Management & Retail
Banking Group Chief Group Banking
Group Chief Group Chief

Corporate Corporate Financial

Head Head Control
South North Division

Corporate Taxation
Branches Equity
Funds
Management
Investments
Foreign &
Local

60
61