Internship Report

on

NATIONAL BANK OF PAKISTAN MALIKPUR

MANAWALA BRANCH FAISALABAD

Name : Muhammad Faisal

Class : M.com(Finance)

Registration No : 2014-GCUF-013357

Roll No : 9838

Session : 2014-2016

COLLEGE OF COMMERCE

GOVERNMENT COLLEGE UNIVERSITY, FAISALABAD

 Dedication

Our worthy parents and the respected teachers who always try to find ways and
thinks to provide which

We do not know and don’t have.

 Acknowledgment
All praises are for Allah almighty that has bestowed upon human being the
crown of creation and has endowed him with knowledge and wisdom. After
Allah, is the last prophet Mohammed (SAW) who brought for us revelation and
unlimited knowledge and civilized the barbarian human being.
Although this report base only my name but numerous people were very
important to the development of this report without the support of them I could
never successfully completed the internship as well as the report.

I am highly thank full to the staff member of NBP. Who really cooperated with
me and provide me their complete guidance. As banks are very much sensitive
about their secrecy, even then after taking an understanding, they let me handle
their delicate operations.
 Executive summary

To interpret our skills and educational knowledge of Finance we make report on

National Bank of Pakistan.It is the major business partner for the Government
of Pakistan withspecial 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.The National Bank of Pakistan offers a
wide range of products& services to its customers & recognizes the importance
of efficient business delivery & providing timely solutions. Their competitors
are untied bank, Allied bank, Habib bank, First women bank, Bank of Punjab
etc. The essence of business philosophy is to cater to the banking requirements
of small & medium sized entrepreneurs, providing them qualitative
&competitive services with emphasis on encouraging exports. Its products are
Pay Order, Mail Transfer, Foreign Remittance, Foreign Currency Account,
Short Term Investment, cash in gold, Commercial Finance etc.Every student of
Bachelor degree has to practically work for six weeks for learning of theoretical
concept which he read during the session. It is very helpful during practical life
and awareness about the economy of the country. This purpose is to explain the
student with practical work that how to apply what they have learned in
practical work. It is a nice opportunity for the student to have a short
relationship in theoretical concept and practical work.I got the chance to get my
internship from one of the renowned bank of the Country “The National Bank
of Pakistan”, it was a nice opportunity for me to apply my theoretical work and
learn from seniors having years of experience. All the efforts on the way are
summarized in the shape of this Internship Report. Internship Report contains
the Short introdection of the NBP Bank in Pakistan,Study purpose, Over
view,Structure,role of the organization, NBP
departments,OwnExperience,AnalysisoftheOrganization ,suggestions and
conclusion.

CONTENTS
Chapters Titles P#
1 Introduction
1.1 Vision Statement
1.2 Mission Statement
1.3 Reginal Branches of NBP
1.4 Objectives of NBP
2 Organizational Structure / Hierarchy
2.1 Organization Structure of Head Office
2.3 Hierarchy of NBP
3 Product Introduction
3.1 Products Line of NBP
4 Own Work
4.1- 1st& 2ndWeek
4.2- 3rd& 4thWeek
4.3- 5th& 6thWeek
5 SWOT Analysis
5.1 Strenght
5.2 Weakness
5.3 Opportunities
5.4 Threats
6 Financial Analysis
6.1 Financial Statements
6.2 Ratio Analysis
6.3 Trend Analysis
6.3.1 Horizental Analysis
6.3.2 Vertical Analysis
7 Suggestion / Recommendation
8 Conclusion
 CHAPTER NO.1

NBP INTRODUCTION

Organization Name National Bank of Pakistan

Year of Foundation 1949

Authorized Capital Rs.25 Billion

National Tax Number 0700271-8

General Sales Tax Number 1700981302646

Business Nature Parent Company

Organization/Company Type Government

Principal Activity Capital market related services, depository services etc

Major Product(s)/Service(s) Loans,Credit Cards, Savings, Consumer Banking etc.

Premium Aamdani, NBP Premium Saver , NBP

Bi Product(s)/Service(s) Saibaan, NBP Advance Salary, NBP KisanTaqat, NBP
Student Loan scheme

manager0760@nationalbank.com.pk ,
Mailing Address
opsmanager0760@nationalbank.com.pk

Website www.nbp.com.pk

manager0760@nationalbank.com.pk ,
E-Mail
opsmanager0760@nationalbank.com.pk

Facebook https://www.facebook.com/NBPTheNationsBank
History of the National Bank

The history of National Bank of Pakistan is part of Pakistan’s struggle for

economic independence. National Bank of Pakistan was established on
November 9, 1949 under the National Bank of Pakistan Ordinance, 1949 in
order to cope with the crisis conditions which were developed after trade
deadlock with India and devaluation of Indian Rupee in 1949. Initially the Bank
was established with the objective to extend credit to the agriculture sector. The
normal procedure of establishing a banking company under the Companies Law
was set aside and the Bank was established through the promulgation of an
Ordinance, due to the crisis situation that had developed with regard to
financing of jute trade. The Bank commenced its operations from November 20,
1949 at six important jute centers in the then, East Pakistan and directed its
resources in financing of jute crop. The Bank’s Karachi and Lahore offices were
subsequently opened in December 1949. The National Bank of Pakistan came
forward to establish its offices in the Cotton growing areas and extended credit
facilities liberally in order to restore stability to the market. In 1951, the country
was once again faced with a crisis in the cotton trade when prices was crashed
and touched the lowest level since independence following the cessation of
hostilities in Korea. The bank in collaboration with the cotton board provided
the necessary Credit facilities to the trade and the crisis was tided over. The
nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The Bank acts as the agent to the State Bank of
Pakistan for handling Provincial/Federal Government Receipts and Payments on
their behalf. The Bank has also played an important role in financing the
country’s growing trade, which has expanded through the years as
diversification took place.
The National Bank of Pakistan has its headquarters in Karachi, Pakistan. The
bank operates 1249(2008) branches in Pakistan and 22(2008) overseas
branches. Under a trust Deed, the bank also provides services as trustee to
National Investment Trust (NIT) including safe custody of securities on behalf
of NIT.
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, Global Finance, Best Emerging Market Bank
from Pakistan for the year 2005, Global Finance, Kisan Time Awards – 2005
for NBP's services in the agriculture field. It is listed amongst the Region's
largest banks and also amongst the largest banks in South Asia 2005, The Asian
Banker. It has also been presented a Recognition Award –– 2004 for having a
Gender Sensitive Management by WEBCOP AASHA besides other awards.
The precise summary of National Bank of Pakistan regarding its countrywide
and overseas operations is as fallows:

 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.
 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.
 2010 NBP opened its branch in Karaganda (Kazakhstan).
 2011 NBP opened its representative office in Toronto (Canada).
1.1 Vision

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

highest standards of service quality, international best practices and social
responsibility."

1.2 Mission

NBP will aspire to the values that make NBP trulythe Nation’s Bank, by:
• 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.
1.3 Branch Network of NBP

The Branch network of National Bank of Pakistan in year 2013 is divided into
following categories:

 ATM network (368 Total ATMs)

 Domestic network (1318 Branches)
 Islamic network ( 8Branches)
 Online network (1318 Branches)

All domestic branches are online.

 Overseas network ( 23Branches)

 Swift network ( 14 Branches)
 Customer Facilitation Centers ( 6 Centers)
 Agriculture branches ( 800+ Above Branches)

Types of Branches

There are a lot of different branches of National Bank of Pakistan. We explain

them one by one.

 There are main branches in every city. In one city there is only one main
branch, it is directly under the zonal office.
 Then there are commercial branches. These are the ordinary branches and
are in the commercial areas such as the Mall Road Branch.
 The Industrial Branches are exclusively in industrial zones.
 There are also Residential Branches. These are exclusively in residential
colonies.
 Another type is the Mixed Branch such as civil secretariat branch. Every
kind of work is done.
 There are also Project Branches created for specific purposes i-e the
project and are at the site.
 Another unique type is the Model Branch. No other bank in Pakistan has
these. In these branches all the work is done by the officers. Even the
officers sit on the counters. Model Branches are in Karachi, Lahore and
Islamabad.
1.4 Core Values

• Highest standards of Integrity

• Institutionalizing team work and performance culture

• Excellence in service
• Advancement of skills for tomorrow’s challenges
• Awareness of social and community responsibility
• Value creation for all stakeholders

1.4.1 Goals

To enhance profitabilityand maximizationofNBP share through

increasing leverage of existing customer base and diversified range of
products.
 CHAPTER NO. 2
ORGANIZATIONAL STRUCTURE / HIERARCHY
2.1 Organization Structure of Head Office
2.1.1 Staff members
NBP PirMahal Branch (0533) is a Main Branch working in this City.NBP
facilitating their customers through offering different services like hajj
application, advancing loans at lower rate of returns etc.The branch staff is
consisting of 8 members. Which include manager, cashier, security guards and
operating officers. Staff of bank is too much cooperative with each other as well
as with customers. They try their best to provide best services to their customers
according to customer’s requirements.

2.1.2 Board of Directors

Name Designation
Mr. Muneer Kamal Chairman

Mr. Syed Ahmed Iqbal Ashraf President

Mr. FarrakhQayyum Director

Mr. Rana Assad Amin Director

Mr. Tariq Kirmani Director

Mr. Iftikhar A. Allawala Director

Mr. Muhammad Naeem Director

Mr. Mir BalakhSherMarri Director

Mr. Syed Muhammad Ali Zamin EVP, Secretary Board of Directors

2.1.3 Management

Management is a distinct process consisting of activities of planning,

organizing, actuating and controlling performed to determine and accomplish
stated objectives with the use of human being and other resources.

The management has two types.

 Centralized

Centralized Management tends to concentrate decision making at

the top of the Organization.

 Decentralized

Decentralized disperses decision making and authority throughout

and further down the organizational hierarchy.

NBP has a centralized type of management because all the decisions are taken
by the top management.
2.1.4 Senior Management of National Bank of Pakistan

Syed Ahmed Iqbal Ashraf President, NBP

NausherwanAdil SEVP & Group Chief Operations Group

Mudassir H. Khan SEVP & Group Chief, Commercial & Retail

Banking Group

Nusrat Vohra SEVP & Group Chief, Treasury Management

Group

Khalid Bin Shaheen SEVP & Group Chief, Global Home Remittance
Management Group/Corporate Communication
Division

Tariq Jamali SEVP & Group Chief, Logistics Support, Security

& Engineering Group

Kausar Iqbal Malik SEVP & Group Chief, Compliance Group

Masood Karim Shaikh SEVP & Group Chief, Overseas Banking Group

Asif Hassan SEVP & Group Chief, Audit & Inspection Group

Wajahat A. Baqai SEVP & Group Chief, Credit Management Group

AamirSattar SEVP & CFO, Financial Control Division

Sultana Naheed SEVP & Group Chief, Risk Management Group

Qamar Husain SEVP & Divisional Head, Organization
Development & Training Division

Akbar Hasan Khan EVP & Head, Corporate & Investment Banking
Group

ZaheerBaig EVP & Head (A), Human Resources Management

and Administration Group

SahibzadaRafatRaoof Ali Khan EVP & Head, Assets Recovery Group

Khawaja Muhammad EVP & Head, Islamic Banking Group

AminulAzam

Raza Mohsin Qizilbash EVP - Divisional Head, Legal Division

Mahmood Siddique EVP, Divisional Head & CIO, IT Division

ShaharyarQaiserani EVP & Divisional Head, Agriculture & Business

Development Division

S.M. Ali Zamin EVP, Secretary Board of Directors & Secretary

Credit Committees

Mufti EhsanWaquar Ahmad Shariah Advisor

Mirza Babur Baig EVP & Principal Staff Officer(PSO) to the

President
2.1.5 Hierarchy of National Bank of Pakistan

President

Board Directors

Provincial Chief

Zonal Chief

Voice President

Assistant Voice President

Officer Grade I OGD IIOGDIII

Clerical and Non Clerical Staff

 CHAPTER NO. 3

PRODUCT / SERVICES

3.1 Products Line and Services of National Bank of Pakistan

1 NBP Saibaan  Home Purchase

 Home Construction
 Home Renovation
 Purchase of Land + Construction
 Balance Transfer Facility (BTF)

2 Premium  Earn up to 8.55% p.a. +

Aamdani  Minimum deposit of Rs. 20,000/- with maximum
balance of Rs. 10 million for 5 years
 Free Demand Draft, Pay Order and Cheque Book*
 Convenience of NBP online Aasan Banking (for online
banking customers)
 Free NBP Cash Card (ATM+Debit)
 Running finance facility up to 90%

3 NBP Premium  Earn up to 7.00% p.a. +.

Saver  Maximum balance of Rs. 1 million.
 Free NBP Cash Card (ATM + Debit).
 Convenience of NBP Online Aasan Banking (for online
 banking customers).
 Profit calculated on monthly and paid on half yearly
basis.

4 NBP Advance Personal Loan:

 Salary  Avail financing uptoRs. 1 million against your salary.
 Lowest Mark-up Rate
 Easy installments of upto 60 months at your choice.
 Quick processing and fast disbursement.
 No minimum income, collateral & insurance charges
required
 For permanent employees of Government, Semi
Government
 and autonomous bodies receiving salaries through NBP

5 NBP Cash Card  Use it as an ATM in any of the ATM’s in Pakistan

ATM + Debit  Use it as Debit Card in any of the outlets with ORIX

Card POS
 machine across nationwide.
 Cash withdrawal up to Rs. 20,000/- per day
 Account Balance Enquiry
 Mini Statement (Only at NBP ATM)
 PIN Change facility (Only at NBP ATM)

6 Investor  Financing Facility for Stock Investors:

Advantage  Comfortable environment for trading
 No security requirement, except for the customer’s
equity
 Customer’s equity freely available for investment
 Equity acceptable in cash or approved share

7 NBPCash n Gold  Ready Cash Against Gold*

 Rate of mark-up 15.50% p.a.
 Facility of Rs. 35,000 against each 10 gms of net
 contents of gold
 No minimum income requirement
 Repayment after one year
 One year Rollover tenure
 Only gold ornaments acceptable
 Weight and quality of gold to be determined by NBP's
appointed schroffs
 No penalty for early repayment
 For education, marriage, consumer and other domestic
needs
 No maximum limits of cash

8 NBPKisanTaqat  National Bank of Pakistan is providing loans for the

dairy farms and for the development of the livestock
and dairy farms.
 NBP facilitates with livestock experts
 Less documentation and easy to repay.
 Available at the next door step.
 Scheme is available in more than 50 branches of NBP.

9 NBP Student Loan  Pursuant to the announcement made by the Federal

scheme 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.
 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.

10 NBP Kisan Dost  Agriculture Farming Program:

 Competitive mark-up rate.
 Quick & easy processing.
 Provision of technical guidance to farmers at their
doorstep.
 Wide range of financing schemes for farmers.
 Finance facility is also available for landless
farmers.
 Financing available against Pass Book, Residential
Commercial property, Gold ornaments and paper
security.
 Loan facility on revolving basis for three years
(renewable on
 yearly basis without obtention of fresh
documentation and approval).

11 NBP Pak Remit  NBP's Internet Based Home Remittance Service

 Pakremit is an internet based Home Remittance
Service. This service is available to U.S. residents
for sending money to their family and friends in
Pakistan. One must have a valid US Dollar account
 with a U.S. bank or a US Dollar credit or debit card
in order to remit funds through this channel.
 Remitters in USA can log on to our user friendly
website, www.pakremit.com and easily remit funds
to Pakistan from the comfort of their homes, in a
matter of minutes. The service is fully secure with
advance encryption application and is available for
use 24 hours a day, 7 days a week. Fees and
exchange rate have been set at competitive levels
and the remitters have the ability to track delivery of
funds as well.

12 NBP Protection  FEATURES:

Shield  No documentation
 No medical required
 Premium Auto Debit facility & choice of
deactivation
 Coverage includes death due to:
 Natural Calamities e.g. Earthquake, Flood, Cyclone
etc.
 Accident
 Riots
 Civil Commotion
 trikes
 Acts of Terrorism
Services of National Bank of Pakisatn
Payment Orders
If the customer or account holder wants to make payment within the city, then
this is done through P.O. It can’t be cancelled without the consent of both
parties.

Demand Draft
It is a simple, safe, rapid and reliable way to shift money. For the transformation
of the money an individual has an account in the bank or not can purchase it
from any branch of NBP at very affordable rates.

Mail Transfers
One can move one’s money safely and quickly using NBP Mail Transfer
service. NBP also offers the most competitive rates in the market.

Pay Order
Another reason to move money from one place to another by using NBP’s
services is Pay Order. The charges of this service are very reasonable. Pay
orders of NBP are a safe and straightforward way to shift money from one place
to another.

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 directives/instructions for timely and prompt delivery of

remittances to the beneficiaries.

Letter of Credit
NBP is faithful to present its industrial clients the widest variety of options in
the part of money move. If someone is interested then Letter of Credit service
by NBP is a service for business enterprise and it is fulfill the necessities of
commercial enterprises. With rational rates, safety, and easiness of transaction,
NBP Letters of Credit are the best way to do business transactions.
 CHAPTER NO. 4

OWN WORK

4.1 1st & 2nd Week

ACCOUNT DEPARTMENT

During the period of six weeks I learned a number of things through direct
contact with the persons at the concerned departments and other times I was
also provided with the journals magazines and manuals to enhance my
understanding of the activities.

The details of following departments where I worked.

• Account Opening Department

In this department I had to get information from customers in case of account
opening.Ihave learned the process of account opening with required ducoments.

• Deposit Department

I worked in this department and learned that the acceptance of deposit is the real
source of income of a bank. Deposit Department is the backbone of commercial
banking. Deposit is often used to describe the money which customers of all
kinds leave with the bank. Deposit account can be defined as an account, which
is opened to earn interest.
The term deposit is highly misleading. It is not something deposited for safe
deposit box. Bank deposit is not like that; when one brings currency to the bank
for deposit the bank does not put the currency in the vault. Bank put this
currency to meet the need of others customer.
The procedure undertaken upon receiving deposits from the customer is as
follows:
1) Examining the deposit slip to ensure that the name and the account numbers
are clearly indicated.
2) Counting the cash/cheque and agree the total with the amount on the deposit
slip.
3) After that the pay-in-slip is validated for cash transaction/ transfer/ clearing
transfer as appropriate before the counterfoil a handed over the customer.

• Online Banking (Transfer Amount)

During the internship I am spend some time in online banking (transfer of

amount) department. In this department I take training about transfer of money
from one place to another place. If one person deposit money in one branch and
another person take or draw money another branch is called transfer or online
money system. In this process one branch send request to another branch for
payment of cash to a specific person.

• Process of money transfer and treatment

Head office given the cord to deferent branch’s and controls the money transfer.
If Toba Tek Singh branch code (0414) transfer the money (request) toVhari
branch code (0342) the head office treat in this case, debit the Vehari branch
and credit the Toba Tek Singh branch. After a specific time these branch’s settle
their account.
4.1.1 Departments of NBP:

Following are departments in NBP

 Deposit Department
 Account Opening Department
 Remittance Department
 Foreign exchange
 Cash Department
 Clearing Department
 Advances Department
 Government Department

a) Deposit Department

It controls the following activities

 Current Deposit Account

 PLS Saving Account
 Foreign Currency Account
 Fixed Deposite Account
 Cheque cancellation

b) Current Deposit 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.

Its main features are

• Minimum amount for opening this account is Rs.1000

 • 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

• No limitation to the number of withdrawal

• No zakat is deducted on current account

c) PLS Saving Account

This type of account is designed to encourage the saving habit of the customer
and lead to a long-term banking or investment relationship.
NBP offered the two types of saving accounts

 Profit and Loss Sharing/Saving Account (PLS A/c)

 National Income Daily Account (NIDA account)

Profit and Loss Sharing/Saving Account (PLS A/c)

In general it is also called saving account .To provides interest free banking
facilities in Pakistan.

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

• The bank is authorized to deduct service charges on half yearly basis.

 • Profit on PLS Saving Account is calculated on minimum monthly basis
and is paid half yearly basis announced by the Head Office after June 30
and December 31.

• Zakat at the rate 2.50% is deducted from the PLS Saving Accounts.

• No limit of withdrawals

National Income Daily Account (NIDA account)

• This scheme did not gain popularity so NBP close this scheme.

d) Foreign Currency Account

These are the accounts in US $, Pound, Euro, yen etc. of different account
holders and either saving or current accounts. . The transactions in these
accounts are translated into Pak. Rupees at the exchange rate prevailing on the
date of transaction..

e) Fixed Deposite 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.
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 receipt is used for the amount deposited called fixed deposit receipt.
 • Period of deposit can vary from 3 months to 5 years depending upon
the nature of scheme offered by bank.

f) Cheque cancellation

This deptt can cancel a cheque on the basis of;

• Post datedcheque

• Stale cheque

• Warn out cheque

• Wrong sign etc

4.2 3rd& 4th Week

ACCOUNT OPENING DEPARTMENT

Account opening section of the bank can be considered the most important
department because banking starts with the account opening. Every customer of
the bank either he is of credit section or foreign section or any other department
must have his account in order to get benefit and transaction with the bank.
Account opening officer take special consideration for the proper recognition of
the customers.

This section performs the following functions

 Opening of Accounts

 Issuance of cheque books

 Closing of accounts

Opening of Accounts

The opening of an account is the establishment of banker customer relationship.

Before a banker opens a new account, the banker should determine the
prospective customer’s integrity, respectability, occupation and the nature of
business by the introductory references given at the time of account opening.
Preliminary investigation is necessary because of the following reasons .

Avoiding frauds, Safe guard against unintended over draft, Negligence and

inquiries about clients.

Terms and Conditions

There are certain formalities, which are to be observed for opening an account
with a bank.

• Formal Application

• Verification of customer's CNIC through the NADRA

• Copy of NIC of the customer

• Specimen Signature

• Minimum Initial Deposit

Qualification of Customer

The relation of the banker and the customer is purely a contractual one,
however, he must have the following basic qualifications.

• He must be of the age of majority.

• He must be of sound mind.

• Law must not disqualify him.

• The agreement should be made for lawful object, which create legal
relationship

• Not expressly declared void.

Steps for Opening of Account:

After entering into bank premises the person goes through the following steps
for opening an account in the bank and for becoming a bank customer.
  Verification

The first important step to take place in bank is to get satisfactory

verification of the person, who wants to become bank’s customer. This
verification is made through the NADRA.

 Account Opening form and Specimen Card

Now the person is provided with an application form known as Account

Opening Form (AOF).

 Specimen Signature Card (SS Card)

Specimen of signatures will be obtained from depositor at the time of

opening his account. A specially designed card is used for this purpose;
the card must be countersigned by an official of the bank not below the
rank of an officer.

 Account Opening Register

Now the name of the customer is recorded in account opening register,

and from here the account no. of the customer will be written on (top
most corners) account opening form and on specimen signature card.

 Letter of Thanks

Letter of thanks is the letter issued by the bank to the customer for two
purposes

• 1st purpose is to say thanks to the customer for opening the account
in their bank

• 2nd purpose is to confirm the address provided by the customer

while opening the account.
  Issuance of Cheque Book:

The cheque book will ordinarily be issued to all customers desiring to

have chequeing facility.

First Cheque book is issued to the customer after sending the letter of
thanks when the customer comes with the latter of thanks and requests for
the issuance of the cheque book.

• OrderIf a person appears himself for new cheque book or

who is the holder of account
• BearerIf the person other than account holder appears then
he is bearer

 Recording into General Ledger

The concerned officer records the name and amount deposited with the
bank in to general ledger. Separate ledgers are maintained for different
types of accounts e.g.

• Current Account Ledger

• Saving Account Ledger

• Fixed Deposit Account Ledger

• Call Deposit Account Ledger

 Documents Enclosed by Customer

• Documents required to be attached by the customer are different for
different accounts.
• Documentation In case of Individuals accounts.
• Documentation In case of Private/ Public limited company accounts.
 • Documentation In case of Partnership account.
• Documentation In case of Club, Society, Association or Trust.
• Documentation in case of agents Account.
• Documentation in case of trust Account.

 Stampingand Scrutinizing
After the fulfillment of all the necessary terms and conditions and checking of
the form the relevant officer of Account Opening then affixed stamps on the
AOF for the sake of completion of all the formal rules and regulations. He
affixed two types of stamps on the form.

Affixed stamps:

• National Bank of Pakistan Stamp, Authorized Stamp and

• Personal Visit Stamp---in case of illiterate person or the person not
having specific sign.

Affixed Documents:

• Know Your Customer Form (KYC) --- Summarizing the context of

AOF briefly

• Signature Card --- For identification and verification of signatures

 LoosseCheque
If any customer forgets or leaves his cheque book at his home, which is far
away from the bank or whatever the case may be, the customer applies with the
bank for the issuance of loose cheque by the bank as he does not has his cheque
book with him and the money is urgently required, the this cheque is called the
loose cheque.
  Closing of Accounts

Account Closing by Customer

The customer can close the account. Customer is required to submit an

application for closing the account. Then the account is closed out and his
balance is paid to him after deducting the closing charges, i.e., Rs. 200 and the
application is filed in Account Closing File.

Account Closing by Bank

 Dormant Account:

All current accounts which have not been operated for sixmonths or all saving
accounts which have not been operatedupon for one year classify as dormant
account.

 Inoperative Account:
All the current accounts which have not been operated uponfor 2 years or all
saving accounts which have not beenoperated since 3 years are classified under
inoperativeaccounts.

 Treatment of Deposit Declared Unclaimed

Unclaimed Deposit

A debt payable owing by bank due to the reason of deposit inrespect of which
no transaction has taken place and nostatement of account has been requested
by the creditor duringa period of ten years are classified under unclaimed
deposit.
4.3 5th& 6th Week

REMITTANCE DEPARTMENT

Remittance means a sum of money sent in payment for something. This

department deals with either the transfer of money from one bank to other bank
or from one branch to another branch for their customers. NBP offers the
following forms of remittances.

Main modes of remittance are:

 Pay Order
 Mail Transfer
 Demand Draft
 Telegraphic Transfer

Pay Order

Pay order issued from one branch is only payable from the same branch. It is
issued for payment in the same city.

Mail Transfer

The same application form is used for draft and mail transfers generally in
NBP.The mail transfer is not delivered to purchaser but instead the issuing
office to beneficiary’s branch on its own risk and responsibility sends it. This
type of remittance facility is provided only when the beneficiary happens to be
customer of the bank.

• It is the quick and safe mode of transfer of funds.

• Application form submission is same as DD.
• In MT funds are transfer through system within seconds if 2 nd branch is
online.
 • Funds transfer only same branch of the banks.
• It is necessary that the customer must have the Branch Code of the host
branch, account number of a drawer, name of place, etc.

Demand Draft

A method used by individuals to make transfer payments from one bank

account to another. Demand drafts are marketed as a relatively secure method
for cashing checks. It is made for both account holders and non account holders.

Types of Demand Draft

Junior Draft: For 1 to 1000/- Rs. junior draft is made.

Senior Draft:For 1000 to 10 million Rs. senior drafts is made.

Telegraphic 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. It is quickest way of transfer funds from
one branch to another of the same bank through telephone, fax/telex.

FOREIGN EXCHANGE DEPARTMENT

The foreign exchange department has four main parts.

Imports and Exports.

• Open Account
• Advance Payment
• Collection
CASH DEPARTMENT

Cash department of NBP is given the complete responsibility of handling all

receipts & disbursements of cash as a result of transaction in both local and
foreign currencies & near cash items such as traveler'scheque etc.

Cash department performs the following functions.

• Cash receipts for receive deposits.

• Cash payment for encashment of cheques.
Receipt

The money, which either comes or goes out from the bank, its record should be
kept. Cash department performs this function. The deposits of all customers of
the bank are controlled by means of ledger accounts.

Payments

It is a banker’s primary contract to repay money received for this customer’s

account usually by honoring his cheques.

Cash Receipts

The depositor uses pay-in-slip for depositing the amount in their account. There
are two types of pay-in-slip. Both are in different colors for clear identification.

 Cash Pay-in-Slip
It is used whenever the account holder deposit cash in his account.

 Cheque Pay-in-Slip
It is used whenever the account holder deposit amount in his account by the
cross cheques.

Cash Payment
It is the primary function of bank to repay the money received from his
customer’s account usually by honoring the cheques. It is the contractual
obligation of a banker to honor his customer’s cheque. Bankers in Pakistan deal
with three types of cheques.

Types of Cheque

 Bearer Cheques

Bearer cheques are cashable at the counter of the bank. These can also be
collected through clearing.

 Order Cheques

These types of cheques are also cashable on the counter but its holder must
satisfy the banker that he is the proper man to collect the payment of the cheque
and he has to show his identification. It can also be collected through clearing.

 Crossed Cheques

These cheques are not payable in cash at the counters of a banker. It can only
be credited to the payee’s account.

CLEARING DEPARTMENT

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

Two type of clearing books are maintained.

 In word clearing books

The bank uses this book for the purpose of recording all the cheques that are
being received by the bank in the first clearing. All detail of the chequesare
recorded in this book.

 Out word clearing book

The bank uses outward clearing register for the purpose of recording all the
details of the cheques that the banks have delivered to other banks.

ADVANCES DEPARTMENT

Advances department is one of the most sensitive and important departments of

the bank. The major portion of the profit is earned through this department. As
we known bank is a profit seeking institution. It attracts surplus balances from
the customers at low rate of interest and makes advances at a higher rate of
interest to the individuals and business firms. However, at the same time, it is a
very risky task and the risk cannot be completely eliminated but could be
minimized largely with certain techniques.

Principles of Lending
• Character
• Capacity
• Capital
• Collateral
• Condition

Forms of Loans
  Demand Finance

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

 Cash Finance

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

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

 Running Finance

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

of liquid funds, this account is opened is made operation in his favor. Running
finance is provided where the amount goes beyond rupees three hundred
thousand. The mark-up/interest is calculated the same way as in case of cash
finance.

GOVERNMENT DEPARTMENT

In this department all types of Government receipts i.e. Revenues, Taxes,

Agriculture Tax, Government Fees and Utility Bills are deposited. This way
NBP is serving great job of revenue collection and charges commission for
providing services. This department is performing following functions

• Payment of Provident Fund

• Payment of Benevolent Fund
• Payment of pension
• Collection of utility bills, property taxes, Challans and dues of
educational institution.
• Payment of salaries
• Payment of zakat
 CHAPTER NO.5
SWOT ANALYSIS
5.1 Strenghts

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

• Performing social responsibilities and claiming “The Nation’s Bank”

• Earning high profit on NBP-Advance Salary Loan Scheme·

• Earning commission from SBP on Government transaction

• Holds largest deposit base in the market share in terms of number of

accounts

• Advance salary product

• It exists in the list of top 100 banks in the ASIA.
• It has the highest profit among the largest banks of the ASIA.
• Its paid-up capital is very high
• Very less uncertainty because of a Govt. bank
• High confidence due to higher capital investment.
• LC (letter of credit) is acceptable all over the world.
• The biggest customer of NBP is Govt. of Pakistan.
• Provide High packages to employees.
• Provide high staff benefits.

5.2 Weaknesses

• The Major problem with NBP is its image as it is a Govt. bank so the
vision of the customer is not positive about it.
• People think it will not provide them satisfactory services.
 • In many branches management is not up to date.
• In small area’s branches employees have less education.
• Award and promotion policies are not implemented in all branches.
• There is no concept of job rotation
• Employees have low coordination level among each other in some
branches.
• Inefficient Counter Services in the rush Hours
• Technical education and training of staff is insufficient. The work load in
NBP disturbs the workers.

5.3 Opportunities

• Being a Government Bank NBP having wide scope in economic market.

• Trust and reliability creates chances to enhance deposit and profitability.

• Its vast network of domestic and overseas branches can help to expand
business.

• Bank’s deposit is increasing rapidly so there is a great opportunity to

enhance its investment and financing.

• Being an agent of State Bank of Pakistan it can play vital role in local
economy.

• Employee benefits
• Award for employee performance
• Promotions
• Corporate planning learning.

5.4 Threats

• Turn out of employee

• Job security and Strugglers
• At a time do number of jobs due to competitor
• NBP have to do those jobs which have no loss and no profit because of
their competition
• Customer dissatisfaction
• Slow actions on complains
• Political environment
 CHAPTER NO. 6
FINANCIAL ANALYSIS
6.1 Financial Statements
3 Years Statement of Financial Position of NBP
National Bank of Pakistan
Rupees in ‘000’
Particulars 2011 2012 2013
Assets Amount Amount Amount
Cash and balance with 116,668,514 115,657,025 131,843,291
treasury banks
Balance with other banks 28,786,397 30,743,368 28,069,897
Landings to financial 19,683,526 23,051,171 44,360,727
institute
Investment – net 217,596,037 301,078,498 319,527,254
Advances – net 475,338,439 478,886,775 527,109,209
Operating fixed assets 25,200,870 27,620,697 28,126,754
Differed tax assets – net 3,064,559 6,954,228 7,973,084
Other assets – net 59,915,027 54,026,725 66,469,884
Total Assets 946,253,269 1,038,018,467 1,153,480,100

Liabilities
Bills payable 10,621,169 8,006,631 9,104,710
Borrowings 44,828,138 19,657,207 26,371,675
Deposits and other account 727,513,013 832,134,054 927,415,132
Sub-ordinate loan _ _ _
Liabilities against assets 42,629 123,413 92,739
Deferred tax liabilities- net _ _ _
Other liabilities 42,455,768 46,798,330 54,701,435
Total Liabilities 825,460,717 906,719,635 1,017,685,691
Net Assets 58,436,054 69,740,013 79,204,209
Owner’s Equity 2011 2012 2013
Share capital 10,763,702 13,454,629 16,818,286
Reserves 23,395,059 25,129,425 26,206,507
Inappropriate profit 61,696,594 67,103,611 69,712,113
Surplus on revaluation of 24,826,267 25,113,091 22,462,015
assets
Non controlling 110,930 498,076 495,488
Total Owner’s Equity 120,681,622 130,800,756 135,298,921
 3 Years Profit & Loss A/C

Particulars 2011 2012 2013

Mark-up/ return/ interest earned 78,124,796 88,681,381 95,689,741
Mark-up/ return/ interest 40,448,291 45,169,744 48,516,517
expense
Net mark-up / interest income 37,676,505 43,511,637 47,173,224
Provision against non 11,148,773 7,007,975 6,219,671
performing advances- net
Provision for admission in the 651,282 2,904,949 3,138,494
value of investments- net
Impairment of goodwill _ 92,593 _
Provision against off balance 20,237 3,965
sheet obligations _
11,820,292 10,009,482 9,358,165
Net mark- up/ interest income 25,856,213 33,502,155 37,815,059
after provisions
Non –mark-up/ interest
income
Fee, commission and brokerage 8,996,973 9,871,667 9,948,547
income
Dividend income 1,896,817 1,067,273 1,595,192
Income from dealing in foreign 3,103,673 2,278,898 3,196,630
currencies
Gain on sale of securities-net 4,593,041 2,512,263 2,390,211
Unrealized gain on revaluation 2,355 6,730 (35,039
of investment
Share of loss from joint (41,715) (16,976) 32,181
ventures
Share of profits from associates 5,238 66,906 83,559
Gain on revaluation of
previously held equity interest __ 180,131 __
Other income 552,950 2,183,891 2,543,139
Total non-mark-up/ interest 19,109,332 18,150,883 19,754.420
income
44,965,545 51,653,038 57,569,479

Non-mark-up/ interest
expenses
Administrative expenses 22,816,665 26,732,045 30,760,815
Other provision- net 628,391 179,819 554,810
Other charges 321,647 118,887 137,852
Total Non-mark-up/ interest 23,766,703 27,030,751 31,453,477
expenses
Profit before taxation 21,198,842 24,662,287 26,116.002

Taxation – current year 8,890,206 9,871,640 9,229,882

_ prior year (4,137,307) (938,158) 260,000
_ Deferred (1,003,099) ( 2,049,600) (1,083,045)
3,749,800 6,883,882 8,406,837
Profit after taxation 17,449,042 17,738,405 17,709,165
 For the year ended December, 31
6.2 Ratio Analysis
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as:
“The relationship between two or more elements”
In financial ratio analysis a ratio is used as a tool for evaluating the financial
position and performance of a firm.Ratio analysis enables the analyst to
compare items on a single financial statement or to examine the relationships
between items on two financial statements. After calculating ratios for each
year's financial data, the analyst can then examine trends for the company
across years.

Liquidity Ratios
A class of financial metrics that is used to determine a company's ability to pay
off its short terms debts obligations.Generally, the higher the value of the ratio
the larger the margin of safety that the company possesses to cover short-term
debts.
 Current Ratio:
The current ratio is the ratio of current assets to current liabilities.
Formula
Current Ratio = Current Assets / Current Liabilities

Particulars Year 2011 Year 2012 Year 2013

Formula 640476876/ 646363744/ 728683464/
781962320 860262110 962897823

Ratio 0.82 0.75 0.76

Analysis

The current ratio of NBP decreasing in 2012 and in 2013 because of the
increase in current liabilities. The ratio is 0.82 in 2011 and 0.75 in 2012 and in
2013 it is 0.76.This means that for every 1 rupee liability of the bank it has 0.76
rupees IN 2012.It shows the poor short term financial position of NBP.

Solvency Ratio Analysis

Solvency analysis of a firm indicates the amount of the other people‟s money
being used to generate profit.

 Proprietary ratio
Proprietary ratio refers to a ratio which helps the creditors of the company in
seeing that their capital or loans which the creditors have given to the company
are safe.
Formula:Proprietary Ratio = Total Asset / Total Equity

Particulars Year 2011 Year 2012 Year 2013

Formula 120681622/ 130800756/ 135298921/

946253269 103828467 1153480100
Ratio 0.12 0.12 0.10

Analysis

This ratio shows the solvency position of the bank. In 2011, 2012 there is an
increases trend as 0.12 but in 2013 it decline 0.10. It shows that very small
amount of shareholders in asset contribution.
Profitability Analysis
Profitability analysis of a firm indicates the overall efficiently of the
management.Without profit a company cannot attract the outside capital.
Profitability analysis
includes

 Return on total assets

The return on total assets ratio: provides a standard for evaluating how
efficiently financial management employs the average dollar invested in the
firm's assets,whether the dollar came from investors or creditors.
Formula
Return on total assets ratio= Net Profit after Tax/ Total Assets*100

Particulars Year 2011 Year 2012 Year 2013

Formula 17449042/ 17738405/ 17709165/

946253269 103818467 1153480100

Ratio 1.80% 1.70% 1.53%

Analysis

It shows the decrease trend of profitability. It means the assets of business are
fully utilized in 2011 and ratio is 1.80 but the assets of the business are fully not
utilized in more and efficient way in 2013 and ratio is 1.53 and also shows the
unfavorable trend of the business.
  Return on investment
A performance measure used to evaluate the efficiency of an investment or to
compare the efficiency of a number of different investments
Formula:Return on investment= Net Profit after Tax/ Investment *100

Particulars Year 2011 Year 2012 Year 2013

Formula 17449042/ 17738405/ 17709165/

217596037 301078498 319527254

Ratio 8.01% 5.89% 5.50%

Analysis

It means the investment of the business are fully utilized in more and efficient
way it also shows that NBP have large amount of investment.

Return On Equity

Return on equity measures a corporation's profitability by revealing how much

profit a company generates with the money shareholders have invested.
Formula: Net Profit after Tax/ Total Equity*100

Particulars Year 2011 Year 2012 Year 2013

Formula 17449042/ 17738405/ 17709165/

120681622 130800756 135298921

Ratio 14.45% 13.56% 13.08%

Analysis
This ratio is more meaningful for share holders who are interested to know the
profit earned by the company because the dividend paid from available profit
higher ratio means factor of production fully utilized and good position but here
there is decline in ratio.

Net Profit Margin

Net profit margin is the percentage profit your business makes for every dollar
of revenue – whether you‟re making a profit after covering all of your costs.
Formula = net profit/ Interest Earned

Particulars Year 2011 Year 2012 Year 2013

Formula 17449042/ 17738405/ 17709165/

78124796 88681381 95689741

Ratio 22% 20% 19%

Analysis

Although bank is earning huge income but its expenses increased quite a bit
simultaneously. Ultimately result is decrease in the net profit of the bank. It is
decreased 20%to 19% in 2013.

Market analysis

Investor analysis or market analysis are related to firm market valve, as measure
by its current share price to certain accounting values. Investor analysis includes
  Earnings per Share – EPS

The portion of a company's profit allocated to each outstanding share of

common stock.Earnings per share serve as an indicator of a company's
profitability.
Formula: (Net profit after tax − Preference dividend)/No. of equity shares

Particulars Year 2011 Year 2012 Year 2013

Formula 17449042/ 17738405/ 17709165/

1345338 1339758 1680186
Ratio 12.97 13.24 10.54

Analysis

Earnings per share is a good measure of profitability when compared with

similar other business. Here decreasing EPS, which will surely decrease share
price.

Price to Earnings Ratio

The P/E looks at the relationship between the stock price and the company‟s
earnings. Formula: Market price/ Earnings per share

Particulars Year 2011 Year 2012 Year 2013

Formula 45/ 39/ 44/

12.97 13.21 10.54
Ratio 3.46 2.94 4.17
Analysis

Price to Earnings (PE) is ratio often considered to be the most important ratio in
the fundamental analysis of stocks. in 2013 it is high and more attractive for
investors.

Dividend PerShare

The amount of dividend that a stockholder will receive for each share of stock
held
Formula: =Total Dividends/ No of shares

Particulars Year 2011 Year 2012 Year 2013

Formula 5820338/ 8060510/ 10077218/

1345338 1339758 1680186
Ratio 4.32 6.01 5.99

Analysis

DPS shows positive trend in 2012 and 2013 due to increase in shares of bank
there is a little decline in 2013, but over all better.
6.3 Trend Analysis

6.3.1 Horizental Analysis

Formula = Current Year amount / Base Year amount * 100.

Horizontal Analysis of Statement of Financial Position

Rupees in „000

Assets 2011%age 2012%age 2013%age

Cash and balance with 100% 99% 114%

treasury banks
Balance with other banks 100% 107% 97%

Landings to financial institute 100% 117% 225%

Investment – net 100% 138% 146%

Advances – net 100% 100% 110%

Operating fixed assets 100% 109% 111%

Differed tax assets – net 100% 226% 260%

Other assets – net 100% 90% 110%

Total Assets 100% 109% 111%

Liabilities % age % age % age

Bills payable 100% 75% 85%

Borrowings 100% 44% 58%

Deposits and other account 100% 114% 127%

Sub-ordinate loan - - -

Liabilities against assets 100% 289% 217%

Deferred tax liabilities- net - - -

Other liabilities 100% 110% 128%

Total 100% 109% 123%

Owner Equity 2010% 2011% 2012%

Share capital 100% 125% 156%

Reserves 100% 107% 112%

Inappropriate profit 100% 109% 112%

Surplus on revaluation of 100% 101% 90%

assets
Non controlling 100% 449% 446%

Total 100% 108% 112%

 Horizontal analysis
Profit & Loss A/C:

Rupees in „000

Particulars 2011%age 2012%age 2013%age

Mark-up/ return/ interest earned 100% 113% 122%

Mark-up/ return/ interest expense 100% 113% 119%

Net mark-up / interest income 100% 15% 8%

Provision against non performing advances- 100% 62% 55%

net
Provision for admission in the value of 100% 446% 481%
investments- net
Impairment of goodwill __ __ __

Provision against off balance sheet 100% 19% __

obligations
100% 85% 79%

Net mark- up/ interest income after 100% 129% 146%

provisions
Non –mark-up/ interest income

Fee, commission and brokerage income 100% 109% 110%

Dividend income 100% 56% 84%

Income from dealing in foreign currencies 100% 73% 102%

Gain on sale of securities-net 100% 45% 4%

Unrealized gain on revaluation of 100% 185% 420%

investment
Share of loss from joint ventures 100% 159% 101%

Share of profits from associates 100% 177% 24%

Gain on revaluation of previously held 100% __ __

equity interest
Other income 100% 294% 16%

Total non-mark-up/ interest income 100% (5)% 8%

100% 114% 128%

Non-mark-up/ interest expenses

Administrative expenses 100% 117% 122%

Other provision- net 100% 28% 88%

Other charges 100% 36% 42%

Total Non-mark-up/ interest expenses 100% 113% 133%

Profit before taxation 100% 117% 123%

Taxation – current year 100% 111% 103%

_ prior year 100% 22% 6%

_ Deferred 100% 204% 107%

100% 183% 224%

Profit after taxation 100% 102% 101%

6.3.2 Vertical Analysis
Formula:
The formula for Vertical Analysis is:
Individual item of financial statement/total of items head *100
Vertical analysis of Statement of Financial Position
Rupees in „000

Assets 2011%age 2012%age 2013%age

Cash and balance with treasury 13% 11% 12%

banks
Balance with other banks 2% 3% 2%

Landings to financial institute 2% 2% 2.7%

Investment – net 22% 28% 26.5%

Advances – net 50% 46% 44.3%

Operating fixed assets 2% 3% 2%

Differed tax assets – net 3% 5% 6%

Other assets – net 6% 4% 5%

Total 100% 100% 100%

Liabilities 2011 2012 2013

Bills payable 1% 0.008% 0.008%

Borrowings 5% 1% 2%

Deposits and other account 79% 81% 83%

Sub-ordinate loan
Liabilities against assets 0.0042% 0.0012% 0.0011%

Deferred tax liabilities- net

Other liabilities 3% 3% 4%

Total Liabilities 88% 86% 89%

Net Assets 12% 14% 11%

Owner Equity

Share capital 1.5% 2% 1%

Reserves 2.5% 2.4% 2.6%

Inappropriate profit 5.9% 6% 5.2%

Surplus on revaluation of assets 2% 2.2% 2%

Non controlling 0.1% 0.4% 0.2%

Total 12% 14% 11%

Vertical Analysis OfProfit & Loss AccountRupees In 000

Particulars 2011 2012 2013

Mark-up/ return/ interest earned 100% 100% 100%
Mark-up/ return/ interest expense 49% 52% 51%
Net mark-up / interest income 47% 49% 49%
Provision against non performing advances- net 14% 8% 6%

Provision for admission in the value of 0.9% 3% 4%

investments- net
Impairment of goodwill ___ 0.1% ___
Provision against off balance sheet obligations 0.1% _0.002%
___
15% 11% 10%
Net mark- up/ interest income after provisions 33% 40% 39%

Non –mark-up/ interest income

Fee, commission and brokerage income 11% 13% 11%

Dividend income 3% 1% 2%
Income from dealing in foreign currencies 4% 2% 3%

Gain on sale of securities-net 6% 3% 2%

Unrealized gain on revaluation of investment 0.01% % 0.1%

Share of loss from joint ventures (0.1)% 0.1% 0.1%

Share of profits from associates 0.02% 0.1% 0.1%
Gain on revaluation of previously held equity
interest ___ 0.2% __
Other income 0.7% 2% 3%
Total non-mark-up/ interest income 24.5% 20% 21%
57% 58% 60%
Non-mark-up/ interest expenses
Administrative expenses 29% 31% 32%
Other provision- net 0.8% 0.2% 0.6%
Other charges 0.7% 0.1% 0.2%
Total Non-mark-up/ interest expenses 31% 30% 33%
Profit before taxation 11% 11% 10%
Taxation – current year (5)% (1)% 0.3%
_ prior year (1)% (3)% (9)%
_ Deferred 4% 7% 9%
Profit after taxation 23% 20% 19%
 CHAPTER NO. 7

SUGGESTION / RECOMMENDATION

The recommendations are as follows:

1. Regulatory authority is highly needed concerning the disciplinary

matters.
2. A committee of senior qualified expert staff should be physically present
at bank to receive complains by customers and catch the guilty person red
handed.
3. Complain box should be such that no one can bring the compliant papers
out of box.
4. As only head office deals the pension, so this branch should provide
facilities to specially old aged pension holders to increase its good will.
5. Security cameras should be technically alright and latest.
6. Branch must review its strategy whenever any new entrance in market is
visible and whenever any product comes in market as substitute product
of the products of NBP.
7. NBP should introduce deposit mobilization products.
8. A check and balance should be imposed on all employees
9. A handsome amount of fine should be charge to the guilty employees.
10.training session should be held at different intervals in a financial year to
make employees more competent and get a competitive edge overall
11.Rules and regulations should be applied to all employees even to the top
management in any way.
12.Account opening, loan issuing and some other procedures should be more
convenient and flexible.
 CHAPTER NO. 8

CONCLUSION

 The National Bank of Pakistan plays a key role in the strategic national
development. 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.
 In contract to other banks populating the FSI sector, NBP is mandated to
uphold public interest. It is critical too as all other banks and NBFIs in
public sector have been closed down or merged with NBP.
 In contract to other banks populating the FSI sector, NBP is mandated to
uphold public interest. It is critical too as all other banks and NBFIs in
public sector have been closed down or merged with NBP.
 The current management of National Bank of Pakistan was hired purely
for their international experience, business orientation to turn around a
purely public institution into a sustainable and commercially viable bank
serving public interest along the lines of a large modern commercial
bank.
 The National Bank of Pakistan has a comprehensive framework of
written policies and procedures on all major areas of operations such as
Credit, Treasury Operations, Finance, Internal audit and Compliance
approved by the Board.
 The National Bank of Pakistan provides sustainable financing for growth
of industries of critical national importance such as energy, education,
healthcare, transport, shipping, Research & development.