1

INTERNSHIP REPORT ON THE NATIONAL BANK OF PAKISTAN MANSEHRA

City Branch Mansehra (Village Dab)

Submitted By: Aqil Aziz

Roll# 1003

BBA (FINANCE)

Supervised By:_____________

Jinnah Degree College Of Commerce And Management Sciences Mansehra

Session 2009-2013
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INTERNSHIP REPORT ON THE NATIONAL BANK OF PAKISTAN MANSEHRA

Submitted By: Aqil Aziz

Roll # 1003

BBA (FINANCE)

Supervised By: _______________

This internship report is submitted in partial fulfillment of requirements for degree of Bachlor
of Business Administration awarded by Jinnah Degree College Of Commerce And
Management Sciences Mansehra

Jinnah Degree College Of Commerce And Management Sciences Mansehra

Session 2009-2013
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INTERNSHIP REPORT ON THE NATIONAL BANK OF PAKISTAN MANSEHRA

City Branch Mansehra (Village Dab)

Approval Sheet

Approval Committee
1. External Examiner

Mr/Ms_____________________________________________ Signature_______________
2. Superviso

Mr. /Ms____________________________________________ Signature_______________

3. Head of Department

Mr. /Ms___________________________________________ Signature ________________

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DEDICATION

Our beloved Prophet Mohammad (P.B.U.H) from where all things and standards for
excellence can be downloaded, which are applicable all over the places, from normal routine
life to the ever changing business environment”. And Dear Parents and Teachers who taught
me the true meaning of life”
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Acknowledgements

For the completion of my report I am indebted to plenty of people for their very sincere
cooperation that they extended to me at various stages. First and foremost problem that every
student faces is the completion of a report is gathering of data while it is very difficult to learn
& rotate in different department of the bank especially in National Bank of Pakistan where
work burden is quite higher compare with other banks. On the other hand there is too much
short time of our internship (Six weeks), furthermore staffs of the bank are too busy in their
work so that we cannot be able to learn and do according to our report requirement. Therefore,
I am very thankful to my supervisor madam Tahira for helping me out in time of confusion and
give helpful tips and suggestion for completion of my report. During our course and the
execution of my report, I had a real chance to learn from his vast experience and immense
knowledge.

I am very thankful to staff members of National Bank of Pakistan, Mansehra, for guidance and
provide me valuable information regarding my report completion.

Finally I am thankful to the most merciful and Almighty Allah who gives me the strength that I
fulfill my task efficiently.

Aqil Aziz
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TABLE OF CONTENTS

Acknowledgement
xi

Abbreviation
xii

Executive Summary
xiii

1 Introduction 14
1.1 Purpose of Study ................................................................................................................... 14

1.2 Scope of Study ...................................................................................................................... 15

1.3 Objectives of Study ............................................................................................................... 15

1.4 Limitations of Work .............................................................................................................. 16

1.5 Benefits of the Study ............................................................................................................. 16

1.6 Research Methodology.......................................................................................................... 16

1.6.1 Primary Data Includes: .................................................................................................. 16

1.6.2 Secondary Data Collection ............................................................................................ 17

1.7 Scheme of Study.................................................................................................................... 17

2 Evolution of Banking 19

2.1 Definitions of Bank ............................................................................................................... 20

2.2 Introduction of NBP .............................................................................................................. 20

2.3 Present Status of NBP ........................................................................................................... 20

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2.4 Islamic Banking..................................................................................................................... 21

2.4.1 Vision of Islamic Banking ............................................................................................. 21

2.5 Credit Rating ......................................................................................................................... 24

2.6 Auditors ................................................................................................................................. 24

2.7 Mission Statement ................................................................................................................. 24

2.7.1 Vision Statement ............................................................................................................ 24

2.8 Objectives: ............................................................................................................................. 25

2.9 Core Values: .......................................................................................................................... 25

2.10 Organization Structure of NBP ............................................................................................. 25

2.11 Organizational Structure of NBP Main Branch Mansehra: .................................................. 26

2.11.1 Site Of NBP Main Branch Mansehra............................................................................. 26

2.11.2 Number of Total Employees Currently in NBP Branch: .............................................. 26

2.11.3 Organizational Structure of NBP Mansehra: ................................................................ 27

3 Deposit Department 28

3.1 Account Opening Department ............................................................................................... 28

3.1.1 Procedures of Opening Account .................................................................................... 28

3.1.2 Account Types ............................................................................................................... 29

3.1.3 Issuance of Cheque Books: ............................................................................................ 31

3.1.4 Letter of Credit:.............................................................................................................. 31

3.2 Advances ............................................................................................................................... 32

3.2.1 Types of Short Term Finances ....................................................................................... 32

3.2.2 Long Term Finance: ....................................................................................................... 33

3.3 Cash Department: .................................................................................................................. 34

3.3.1 Cash Receipt: ................................................................................................................. 35

3.3.2 Cash Payment: ............................................................................................................... 35

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3.3.3 Requisites of Cheques: ................................................................................................... 37

3.4 Remittance Department ......................................................................................................... 37

3.4.1 Telephonic Transfer (TT): ............................................................................................. 37

3.4.2 Mail Transfer ................................................................................................................. 38

3.4.3 Demand Draft................................................................................................................. 38

3.4.4 Pay Order ....................................................................................................................... 39

3.4.5 Demand Draft Purchase ................................................................................................. 39

3.5 Computer Department ........................................................................................................... 40

Clearing Department ......................................................................................................................... 40

Government Department of NBP Mansehra: .................................................................................... 40

4 FINANCIAL ANALYSIS 41
4.1 Common Size Analysis ......................................................................................................... 42

4.1.1 Vertical Analysis ............................................................................................................ 42

4.1.2 Vertical analysis of NBP Balance sheet: ....................................................................... 44

4.1.3 Horizontal Analysis ....................................................................................................... 46

4.2 Ratio Analysis ....................................................................................................................... 49

4.2.1 Profitability Ratio........................................................................................................... 49

4.2.2 Efficiency Ratio ............................................................................................................. 58

4.2.3 Branch’s Last Year Advances, Deposits And Net Profit ............................................... 63

2011................................................................................................................................................... 65

Profit Earns Through......................................................................................................................... 65

Advance Salary ................................................................................................................................. 65

NPL Rate ........................................................................................................................................... 65

600 Cases .......................................................................................................................................... 65

9.5 millions .....................................................................................................................................+65

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6% ..................................................................................................................................................... 65

2011................................................................................................................................................... 65

Profit Earns On ................................................................................................................................. 65

Cash In Gold ..................................................................................................................................... 65

NPL Rate ........................................................................................................................................... 65

450 Cases .......................................................................................................................................... 65

5.4 millions ....................................................................................................................................... 65

2% ..................................................................................................................................................... 65

4.3 SWOT Analysis..................................................................................................................... 65

4.4 SWOT Analysis of NBP ....................................................................................................... 66

4.4.1 Strengths of NBP ........................................................................................................... 66

4.4.2 Weaknesses .................................................................................................................... 67

4.4.3 Opportunities.................................................................................................................. 69

Threats............................................................................................................................................... 70

4.4.4 Comparison of Assets of NBP with Others Banks ........................................................ 72

4.4.5 Summary ........................................................................................................................ 74

5 Conclusion: 75
5.1 Recommendations for NBP ................................................................................................... 76

5.1.1 Network Error Should Over Come ................................................................................ 76

5.1.2 Adjust Employees According to Need ........................................................................... 76

5.1.3 Expenses Should Control ............................................................................................... 76

5.1.4 Close Unnecessary Branches ........................................................................................ 76

5.1.5 Try TO Overcome Political Influence ........................................................................... 76

5.1.6 Make Effective Marketing Efforts ................................................................................. 77

5.1.7 Management Should Acquire Modern Equipment ........................................................ 77

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5.2 Recommendations For Mansehra .......................................................................................... 77

5.2.1 Account Opening Department Should Be Efficient....................................................... 77

5.2.2 Distribute Work Appropriately ...................................................................................... 77

5.2.3 Delay In NADRA Verification ...................................................................................... 77

5.2.4 Jobs Rotation.................................................................................................................. 78

5.2.5 Provides Computers To Govt’s Department .................................................................. 78

5.2.6 Hire Person For Data Entry............................................................................................ 78

5.2.7 Need Training To Employees ........................................................................................ 78

5.2.8 System of Measuring Performance Should Improve ..................................................... 78

5.2.9 Building Of NBP Should Freshen The Paint ................................................................. 78

5.2.10 Repair Or Purchase New Generators ............................................................................ 79

5.2.11 Marketing Efforts Should Enhance ................................................................................ 79

5.2.12 Deal With Customer Complaints ................................................................................... 79

5.2.13 Time For Clearing Credits Should Minimize ................................................................ 79

5.2.14 One Person Should Guide For Parking .......................................................................... 79

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Table of Tables

Table 1 Charges for Mail Transfer.................................................................................................... 38

Table 2Charges for issuance of DD .................................................................................................. 39
Table 3Charges for issuance of Pay Order ....................................................................................... 39
Table 4 Vertical analysis of NBP income statements ....................................................................... 43
Table 5 Common size vertical analysis of NBP's balance sheets ..................................................... 46
Table 6 Common size horizontal analysis of NBP’S balance sheets................................................ 47
Table 7 Horizontal analysis of income statement ............................................................................. 48
Table 8 Net interest margin of NBP in 2012 and 2011..................................................................... 50
Table 9 Earning assets to total assets ................................................................................................ 51
Table 10 Net interest to average total asset earning ......................................................................... 52
Table 11 Return of earning asset ...................................................................................................... 53
Table 12 Operation cost to income ................................................................................................... 54
Table 13 Equity to total assets .......................................................................................................... 55
Table 14 non performing loan to total loan ...................................................................................... 56
Table 15 Credit to deposit ratio ........................................................................................................ 57
Table 16 Loan to coverage ratio ....................................................................................................... 58
Table 17 Interest income per employee ............................................................................................ 59
Table 18 Profit per employee ............................................................................................................ 59
Table 19 Business per employee....................................................................................................... 60
Table 20 Business per branch ........................................................................................................... 61
Table 21 Employees per branch ........................................................................................................ 62
Table 22 share of Government's department .................................................................................... 64
Table 23 Advance salary at main branch .......................................................................................... 65
Table 24 Cash in gold ....................................................................................................................... 65
Table 25 Comparison of asset of NBP with other banks .................................................................. 73
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Table of Figures

Figure 1 Organizational Structure of NBP........................................................................................ 26

Figure 2Organizational Structure of NBP Mansehra ........................................................................ 27
Figure 3Net interest margin of NBP in 2012 and 2011 .................................................................... 50
Figure 4 Earning assets to total assets............................................................................................... 52
Figure 5 Net interest to Average total asset earning ......................................................................... 53
Figure 6 Return of earning asset ....................................................................................................... 54
Figure 7 Operation cost to income .................................................................................................... 55
Figure 8 Equity to total assets ........................................................................................................... 56
Figure 9 Non performing loan to total loan ...................................................................................... 57
Figure 10 Credit to deposit ratio ....................................................... Error! Bookmark not defined.
Figure 11 Interest income per employee ........................................... Error! Bookmark not defined.
Figure 12 Profit per employee .......................................................................................................... 60
Figure 13 Business per employee ..................................................................................................... 61
Figure 14 Business per branch .......................................................................................................... 62
Figure 15 Employees per branch ...................................................................................................... 63
Figure 16 Branch's last year advances, deposits and net profit ........................................................ 64
Figure 17 Comparison of growth rate of NBP with other banks ...................................................... 72

List of Annexes

Annexure A: Profit and loss Account……………………………………………………65

Annexure B: Statement of financial position….…………………………………………66

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EXECUTIVE SUMMARY

This internship report is about National Bank of Pakistan, which is one of the largest banks in
the country. NBP is a profitable organization, having a large network within and out of the
country. To know about the organization and its function it was important to work there. Being
a student of BBA, the purpose of this report is to critically define and describe different
functions and products offered by the bank to its valued customers.

To identify some weakness related to management of the bank, the aim is to analyze the
performance of the bank and make a financial analysis of it and suggest recommendations. The
intense competition, among banks, the privatization of the financial institution and financial
liberalization in general are gradually and continuously making the banking sector efficient and
effective and because of the reasons mentioned above banking has always been the main field
of interest for most of the students of business administration. It is also an academic
requirement to undergo internship therefore the main purpose behind this report is partial
fulfillment of requirements, for the degree of BBA.

The report is categorized into the following chapters:

In the first chapter introduction to the report, background of study, scope of the study, merits,
limitations and scheme of the study are given. The second chapter is about history of banking,
banking in Pakistan, introduction to the organization, its historical background, role and
functions of organization, its core values, and miscellanies topics related to banking. The third
chapter is the major portion of the report. It covers the NBP’s products and services. The fourth
chapter of the report is about the financial analysis of NBP. This chapter also covers in detail
strengths, weaknesses, opportunities and threats of the organization. SWOT analysis no doubt
acts as a mirror for the management to know the strengths and weaknesses so that it can take
appropriate corrective actions. The management should develop elaborate plans for capitalizing
on the available opportunities. The end of the report is about recommendations based on the
analysis in chapter four. It mainly focuses on the recommendations pertaining to managements
or administration, to let NBP capitalize on the opportunities and overcome the weaknesses by
using its strengths
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Chapter # 1

Introduction Of The Report

INTRODUCTION

Internship report is the crucial part for the completion of 16 year’s education in Bachlors of
Business Administration. This internship helps the students to gain practical knowledge and
match their skill to work in financial institute. So every student has to undergo to eight year
internship in any financial institute. Through internship students apply their theoretical
knowledge to gain practical practice. I also have performed eight week’s internship and by the
grace of Allah I successfully completed this task.

This report is regarding the National Bank of Pakistan. National bank conventional under the
National bank ordinance no XIX in 1949, since then, National Bank of Pakistan prolonged its
system and fetching the prime and leading commercial bank of Pakistan. Now national bank
put forward numerous different products and service to its customer and responsibility altos for
attracting fresh customers.NBP is the foremost partner of Pakistani’s government for raising
the economy of Pakistan and implemented the strategies make by state bank of Pakistan.

As I have completed my internship in Main Branch Mansehra (0364). So its brief history is that
in 1964 SBP licensed to NBP to work in city area, so National Bank open a main branch in
Mansehra in 1964. This branch started its operation in 5th of May, 1964. The central place of
the city was selected for the building of the SBP main branch Mansehra. But few years later
this branch is shifted into another place on Shinkiari Road. Now NBP main branch Mansehra is
located at place which name is ziarat kahou. NBP Main Branch Mansehra is, now managed by
Ishtiaq Awan.

Purpose of Study

The rationale of study is to collect the information which is used to compile the internship
report on the National Bank of Pakistan, and get the familiarity about the functioning of the
department of in NBP to clear the financial health of in NBP. Another purpose of this
Internship curriculum is to facilitate the students to use the management techniques acquired
during their courses, and find out the potential way out of management tribulations faced by
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the organization. The purpose of study in short is to gain practical skills, to develop
interpersonal skills and dealing in real world case. Being the learner of Finance to evaluates the
financial position, and compares the performance of NBP with other banks and also with
previous years.

Scope of Study

As an internee in main branch Mansehra the main focus of revise is to know the general
banking principles and procedures in that NBP branch. The NBP main branch Mansehra deals
in operations such as remittance, deposit, advances, clearing, foreign exchange and
Government department. The government department deals in two districts district Mansehra
and district Tor-Garh.

Objectives of Study

The objective in first hand is to fulfill the academics obligation as eight’s weeks internship is
unavoidable for the completion on 16 year’s education. The purpose of study is also to do
practical work, and apply classroom lectures in practical field. I summarize the objectives of
study as given below.

 To do practical work and get command in practical work.

 To understand the management techniques.
 To study the organization structure of organization.
 To develop interpersonal skill.
 To know the cultural and environment of NBP.
 To observe the employee loyalty toward NBP.
 To give the wide-ranging analysis of the NBP.
 To compose recommendation and suggestion.
 To how to deal with customers.
 To develop critical skill for financial analysis, and for institute investigation.
 To know the general principles of banking.
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Limitations of Work

Every internee has to face different problems during the internship, which limited the work of
study. Few are given below

 Eight‘s weeks internship is insufficient to completely understand the banking practices.

 Due to confidentiality of banking system staff members don’t provided all the
information to internee.
 Employees and management have to do their own banking matters and, so it was big
dilemma for them to confer time to internee.
 As primary objective of this study was to put in order report for the achievement of
Master degree, so student may not include broad enlightenment of figures.

Benefits of the Study

This study is reimbursement as it helps the internee to grooms up personally, rationally and
professionally. This internship gives prospect to the apprentice to improve verbal and in print
skills. This study is more than ever advantageous for the business student, because financial
analysis at the end of the section of report broadly encompasses all the respects of financial
analysis. Father added, NBP also payback from this report, because recommendation and
suggestion were made in this testimony.

Research Methodology

The most important task for me during the 6 Weeks internship is to bring together precise
information. The tactic which I used to assemble information was primary data gathering as
well as secondary data gathering. Major starting place of information collection is my personal
surveillance, and conversation with the workforce. I used both primary and secondary
methodology for collection of information; NBP site and last years financial report help to
compile internship report. The major source of primary and secondary data collection includes:

Primary Data Includes:

Primary methods which I used were:

 Personal surveillance
 dialogue with staff members
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Secondary Data Collection

Secondary data includes the following:

 Books
 Internet
 Annual report
 Magazine and journals
 Financial statement

Scheme of Study

This internship is divided into 5 chapters

Chapter 1

Chapter one is an introductory chapters it includes

 Introduction of report

 Purpose of report

 Scope of report

 Methodology of data collection

 Limitations of report

Chapter 2

 Evaluation of banking

 Background and brief history of NBP

 Introduction of NBP

 Mission and vision statement of NBP

 Islamic banking

 Vision of Islamic banking

 Organization structure of NBP main branch Mansehra

 Objectives and functioning of NBP

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Chapter no 3

Chapter No 3 will tell about:

 Departments of NBP Main branch Mansehra

 Finances and its types which offers NBP

 Cheque and its types

 Requisites of cheques

 Remittance

Chapter no 4

Chapters four will tell about:

 Financial analysis of NBP

 Branch’s last year performance

 SWOT analysis of NBP

 Major strengths of NBP

 Major weakness of NBP

 Major opportunities for NBP

 Threats of NBP

Chapter no 5
Chapter five will tells about:
 Conclusion and recommendation
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CHAPTER #2

Introdution To National Bank Of Pakistan

Evolution of Banking

Banking in fact is as ancient as human society. For ever since man came to realize the
importance of money as a medium of exchange. Concord on the origination of word Bank has
not thus far reached. According to various authors this word is consequent from the words
Bancus or Banquet hat signify bench. The explanation of this origin is attributed to the fact
that the Jews in Lombard perform the business of money swap on benches in the souk place,
and when the business failed, public devastated the Banco. By the way the word bankrupt is
said to have been evolved from this put into practice.

It is consequently, not probable to decides to which of the opinions is right, for no record is
available to ascertain the validity of any of the opinion.

The first stage in evolution of banking in Pakistan sees very rigid days for the whole banking
industry. The area now constituting Pakistan was, reasonably speaking, moderately well
provided with banking facilities in unbroken India, in March 1947 there were 3496 offices of
Indian scheduled banks out of which as many as 487 were to be founding territories now
comprise Pakistan. The Set aside bank of India was the central banking sanctioning India. At
the time of panel it was decided that in the interest of smooth transition it should continue to
purpose in newly growing state of Pakistan, pending Sep 30, 1948.

In 1947 due to uncertainty and unsuitability the banking sector suffer heavy losses. This
resulted in a negative effect on banking service in Pakistan. The banks, which had their
registered offices in Pakistan, transferred them to India. In an effort to bring about the collapse
of the new state by pushing a deliberate policy of withdrawals the Indian bank offices closed
quickly. Those banks, which stayed, operated only in name awaiting the winding up of their
business. The number of scheduled banks thus declined from 487 branches before
independence to only 195 branches by 30 June1948 (Business-articles/banking/121).
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Definitions of Bank

In general words we can define bank as

“Bank is pecuniary organization which collects wealth from the persons, who have spare of it
at lower interest rate, and lends to needy persons at higher interest rare. The difference between
interest rate is the profit of bank. ‘’

In the book principles and practices banking J.W Gilbert define the word banker as:

“A banker is deals in capital or more correctly deals in money he is intermediary party amid
bowers and lenders. He brows from one person and lend to another persons.’’

By ‘’Banking’’ we mean that any institute trade in credits, and by bank we mean ‘’Bank’’, we
embrace every person, firm or company having a place of business where credits are opened by
deposits of collection of money or currency. Subjects to be paid or remitted on Cheques or
order, money is advanced or loaned on stocks, bonds, bullion, bill of replace, promissory notes
are received for discount or sale”.

Introduction of NBP

Under the National Bank of Pakistan Ordinance no XIX, National Bank of Pakistan was
recognized in 9, November, 1949. National bank of Pakistan established in order to wrap with
the state of affairs, which were urbanized after the trade impasse of India and devaluation of
India Rupee in 1949. At former bank was established to give loans to agriculture sector. The
bank started its operations in 20, November, 1949. The Bank Karachi and Lahore are then
opened in 1949. The bank plays significant role in financing the country’s trade

Present Status of NBP

National bank of Pakistan is leading profitable bank. NBP is in the position of leadership.
Now national bank consists of over 16,648 employees. And there are 1279 branches in
Pakistan. Now NBP is going to operate internationally. Bank has 24 globally sites. National
Bank of Pakistan is the prime profitable bank in service in Pakistan. Its balance sheet size
surpasses that of every of the other banks functioning locally. It has redefined its responsibility
and has moved from a communal sector organization into a modern commercial bank. The
Bank's services are available to individuals, corporate entities and government. While it
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continues to be active as trustee of public funds and as the mediator to the State Bank of
Pakistan (in places where SBP does not have a presence) it has diversified its business portfolio
and is at present a major pilot player in the debt equity market, corporate investment banking,
retail and consumer banking, agricultural financing, treasury services and is showing growing
interest in promoting and developing the country's small and middle enterprises and at the
similar instance gratifying its social farm duties, as a commercial civilian.

National Bank of Pakistan is at the moment a progressive, resourceful, and customer alert
body. It has urbanized a ample sort of consumer products, to add to business and furnish to the
different segments of society. Some schemes have been explicitly premeditated used for the
squat to focal point revenue segments of the population. These take account of NBP Karobar,
NBP Advance Salary, NBP Saiban, NBP KisanDost, and NBP Cash and Gold.

Islamic Banking

Islam is the legitimacy that God revealed through all his Prophets. All religions are the same in
spirit whether given to Noah, Abraham, Mosses, or Jesus or to the Holy Prophet (P.B.U.H) of
Islam. Islam is a both religion and complete code of life. The link between Islamic Banking
and Islamism is anything but imaginary. The founder and executives of Islamic banks see
themselves as contributory to the reinstatement of the primacy of the Islam in the lives of the
Muslims. Islamic banking means interest free banking system.

Vision of Islamic Banking

Islamic banking refers to a banking system which is unshakable with Islamic Law (Shariah)
philosophy. Islamic banking is a new recognizable fact that has taken a number of observers by
revelation. Islamic rules forbid the collection and paying of interest; also in general called Riba
in Islamic revelation. Islamic regulation also prohibits trading in financial threat which is
kernel as a form of having a bet. The crucial attribute of Islamic banking is that it is interest-
free. Even though it is habitually claimed that there is more to Islamic banking, such as
offerings towards a more evenhanded circulation of income and wealth, and enlarged equity
contribution in the financial system it even so derives its definite foundation from the
information that there is no lay for the body of interest in the Islamic order.
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Nevertheless Islamic banking is no less vital than Islamic rule at the state level, as it was
mentioned in the Quran in four different revelations.” The first revelation emphasizes that
interest deprives wealth of God's blessings. The second revelation condemns it, placing interest
in juxtaposition with wrongful appropriation of property belonging to others. The third
revelation enjoins Muslims to stay clear of interest for the sake of their own welfare.

The fourth revelation establishes a clear distinction between interest and trade; influence
Muslims to take only the principal amount and to give up even this sum if the borrower is
incapable to pay back. It is additional stated in the Quran that those who ignore the prohibition
of interest are at war.

.Modern banking structure was introduced into the Muslim countries at a time when they were
not politically and economically strong in the 19th century the first modern experimentation
with Islamic banking was undertaken in Egypt under cover, with no projecting an Islamic
reflection, for terror of being seen as a manifestation of Islamic fundamentalism which was
abomination to the political regime. The pioneering attempt lead by Ahmad El Najjar5 took the
form of a savings bank based on profit-sharing in the Egyptian town of MitGhamr in l963. This
trial lasted until l967 by which time there were nine such banks in the country. These banks,
which are neither charged nor paid interest, invested mostly by engaging in trade and industry,
directly or in partnership with others, and shared the profits with their depositors. Thus, they
functioned essentially as saving investment institutions rather than as commercial banks. The
Nasir Social Bank, established in Egypt in l97l, was declared an interest-free commercial bank,
although its charter made no reference to Islam or Shariah (Islamic law).

Early seventies saw the institutional involvement. Conference of the Finance Ministers of the
Islamic Countries held in Karachi in 1970, the Egyptian study in 1972, First International
Conference on Islamic Economics in Mecca in 1976, International Economic Conference in
London in 1977 were the result of such involvement. The involvement of institutions and
governments led to the application of theory to practice and resulted in the establishment of the
first interest-free banks.

The Islamic Development Bank, an inter-governmental bank established in 1975, was born of
this process. It was primarily an inter-governmental bank aimed at providing funds for
development projects in member countries. The IDB provides fee- based financial services and
 23

profit-sharing financial assistance to member countries. The IDB operations are free of interest
and are explicitly based on Shariah Principles. The whole banking system has been Islamized
in both Iran and Pakistan. In addition, there are some thirty Islamic banks in operation in other
parts of the globe, including the Jeddah-based Islamic Development Bank (IDB) but excluding
numerous Non bank Islamic financial Institution. What is more, the speed with which Islamic
banks have sprung up and threat at which they have progressed make it worth-while to study
them systematically.

As per Article 2 of Constitution Islam is the state religion of Pakistan6. The objectives
resolution was adopted by first Constituent Assembly in1949; it was preamble of 1956, 1972
and 1973 constitution. It provided that no law should be enacted that is repugnant to the
injunctions of Islam. It was made substantive part of the constitution in 1985. The8th
Amendment of the 1973 Constitution adopted by the National Assembly in 1985 also made
room for creation of Federal Shariat Court (FSC). Creation of the council of Islamic Ideology
(CII) in 1962: The report of CII on Elimination of interest (June1980) is genuinely considered
to be first major Comprehensive work on Islamic Banking and Finance. From July 1, 1985 all
commercial banking in Pak Rupees was made interest free. However procedure adopted by
banks was declared un-Islamic by the Federal Shariat Court (FSC) in November 1991. The
governments and some banks preferred appeals the Shariat Appellate Bench (SAB) of Supreme
Court of Pakistan. Shariat Appellate Bench (SAB) delivered its judgment of December 23,
1999 rejecting the appeals and directing that laws involving interest would cease to have effect
finally by June 30, 2001.However, SAB gave exemption for dealing with foreign parties on the
basis of interest. On June 24, 2002 the same judgment of Supreme Court was set a side in
review petition by the Supreme Court by holding that “The Riba Judgment” had errors on the
surface of the records The government constituted a high level commission with directives of
Shariat Appellate Bench (SAB) and Supreme Court to study the prospects of transformation of
Pakistan’s financial system for interest based to Shariah complaint. However government came
to conclusion that it is difficult to transform the whole financial system. Therefore it was
decided that to promote Islamic banking parallel basis with conventional system. State bank of
Pakistan has issued the criteria for establishment of Islamic Banks in private sectors,
subsidiaries and Stand-alone branches by existing commercial banks to conduct Islamic
Banking. A full fledged Islamic banking department has been created in the State Bank and
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would serve as a focal point for all matters relating to Islamic banking and finance in the
country.

A Shariah board comprises Two Shariah Scholars and three experts in the areas of banking
accounting and legal framework has been established in the State Bank of Pakistan to advise it
on modes, procedures, laws and regulations for Islamic banking ensuring Shariah compliance
and smooth operations of Islamic banks.

Credit Rating

National Bank of Pakistan is enjoying uppermost credit rating. JCR-VIS Credit Rating Co.
Limited awarded premier eminence distant Credit Rating of AAA to NBP. The JCR-VIS
Credit Rating Co. Comments about NBP says a lot about the bank: “The organization has been
able to strategically manage and construction its competitive advantages which have translated
into the strong and well managed development in profitability trend observed over the last few
years, a substantial balance sheet of sound asset quality, and strong liquidity and capitalization
levels.”

Auditors

National banks of Pakistan’s auditors are the subsequent Chartered Accountants.

 AnjumAsimShahid Rahman& Co.

 M.YousafAdiSaeem& Co.

Mission Statement

“To make the bank complete and cutthroat with all international standard in
performing quality of operation, staff, financial strength, and products and services to develop
a culture of fineness in every spare of activity of bank’’

Vision Statement

“To be the pre-eminent financial tradition in Pakistan and attain market detection both in the
superiority and delivery of service as well as the collection of product offerings.”
 25

Objectives:

NBP has the objectives to increase the profitability and maximization of the NBP shares
through increasing the influence of the current customer base and diversified range of product.
The following are the some main objectives of the NBP.

 Its primary objective is to earn profit

 To develop the economy of the country
 To facilitate its customers with the latest banking facilities
 To improve the customer service
 To provide specialized services to major businesses
 To low the size of Non-Performing loan (NPL).

Core Values:
 Highest standards of reliability.
 Institutionalizing team work and performance culture.
 Quality in services
 Advancement of skills for tomorrow's Challenges
 Awareness of social and community responsibility.
 Value creation for all stakeholders

Organization Structure of NBP

NBP organizational structure consists of one president, and 4 directors. Selecting one from
NBP, one from Pakistan Banking Council, one from Ministry of Finance and another one who
is the secretary of the board manages NBP. So the board of directors manages the overall
operations of the bank.
 26

Figure 1 Organizational Structure of NBP

President

Director Director Director

Director Director Director

Secretary

Organizational Structure of NBP Branch Mansehra:

Site Of NBP Main Branch Mansehra

NBP Main Branch located in the mid of Mansehra city. The site where NBP main branch
Mansehra is located is known aspakhwal chok Mansehra. This place is easy transported so it
gathered customers from city.

Number of Total Employees Currently in NBP Main Branch:

There are 8 employees currently working in the NBP Mansehra beside the class four. Mr.
Adeel Ahmed is currently designated as branch Manager while and Mrs. Sehrish is Credit
Manager. They all work hard and with whole heartedly.
 27

Organizational Structure of NBP Mansehra:

Manager

Operational Credit
Manager Manager

Account
Opening Dept

Cash Dept

Clearing Dept

Marketing
Dept

Government
Dept

E Remittance
Dept

Westren
Union Dept
Figure 2Organizational Structure of NBP Mansehra
 28

Chapter #3

DEPARTMENTS of NBP BRANCH MANSEHRA

Every organization is divided into department so NBP Mansehra also divided into many
departments. NBP branch divided into following departments

DEPOSIT DEPARTMENT

Deposit department deal in following area:

 Account opening (current account, PLS, saving accounts and NIDA majorly)
 Issuing of Cheque book
 Cancellation of cheques

ACCOUNT OPENING DEPARTMENT

Accounting opening department deal with opening of accounts

Account opening is contract between the person who opens the account and bank. The bank
first, makes query and investigation in order to avoid the fraud. Bank first the take the National
identity card from the customer and from the Next of King. After that bank take the NADARA
Varies.

PROCEDURES OF OPENING ACCOUNT

Account is opened after the permission of Mangers. First customer have to fill the account
Opening application form the application form investigate the following

 Name of the customer

 Father name customer
 Mother name of customer
 NIC NO
 Contact no (mob no. or office no.)
 Address of customer
 Accommodation type
 Account type
 29

 Transportation type
 Monthly income
 Monthly turnover
 Initial deposit

After filling the account opening form the customer goes to account opening department

And here he has to present the following documents.

 Photocopy of CNIC of customer.

 Photocopy of CNIC of Next of king.
 Photocopy of driving license if CNIC is without the photograph.
 Zakat exception certificate, if applicant wants to take exemption of zakat.
 Picture of applicant incase of shaky signature or illiterate person.
 In the case of Govt account or Govt office the applicants have to give the stamp of head
of department’s officers.

And that the account opening departments create CIF, and started the accounting opening
procedure online.

ACCOUNT TYPES

Current Accounts

It is that type of account in which you can deposit and withdraw money at any time. It is a
running account, in this account no needs to be given notice for the withdraw amount or money
from the bank. Usually that type of account is opened by businessmen. The deposit in this
account is known as demand deposit. Various types of transaction can be made in this account
such as collection of dividends, discounting of bill of exchange, etc. in current account the has
an obligation to honor all the cheques provided they are draw properly and are with in the
balance of account .

Current account are usually opened and operated by the companies, trades, industrialist of
liquidity, institutions, etc. There need to have current account arises from their need of liquidity
to satisfy the monetary needs of frequently business transactions along with keeping their
 30

money safe and to take full advantage of other services provided by the bank. In this bank also
provided the overdraft facility to the trust worthy student.

Profit and Loss Sharing Account

Profit and loss sharing accounts are based on the principles o f Islamic teaching. There were
started as a step to eradicate interest from the economy. Islamic mind people feel satisfaction
with that type of account. In keeping the need of people’s two types of PLS account are
normally operated.

PLS Saving Accounts

These accounts are similar in operation with the ordinary interest earning saving accounts. The
only different is that instead if earning interest at fixed rate depositor of that account are share
the profit and loss with bank.

Features of PLS Saving Account

 Initial deposit are minimum amount of Rs.500/-
 The account holder must maintained minimum balance
 Zakat are deducted in this account
 Bank issue the Cheque to depositor

PLS Terms Deposit Account:

These accounts are just like fixed deposit accounts. The only difference is that they are free of
interest. PLS term deposit holder share profit and losses on the rate determined by the bank
after every six months on the basis of profit earned by the bank amount can be deposited for a
minimum period of six months and account can be opened with the balance of Rs 1000- which
is to be maintained at all times. There is no limit on the maximum amount.

Saving Account:

Saving accounts are specially suited for such people who can save money from their monthly
income but they have not got means to invest it such people can deposit money in saving
accounts and can earn interest at a prescribed rate. These deposits are also important from
bank’s point of view. This is because that these deposits are used by bank to create credit.
 31

Foreign Exchange Account

Foreign exchange accounts are opened for the person who live abroad or any person who want
to deposit amount in foreign currencies. These accounts are operated either singly or jointly by
the person. Zakat are exempted from these accounts. The minimum balance necessary for
foreign currency account is five hundred USD.

National Income Daily Account (NIDA)

NBP also offer NIDA accounts. This scheme launched 5th December 1995. The purpose of
this scheme was to attract corporate customers. It is running account and part of the profit and
loss account in operation.

Issuance of Cheque Books:

Deposit department also issue Cheque book to the account holder. Cheque books are issued
after the later of thanks from the branch or remark of manager/operational manager giving
explanation for the issuance of the Cheque book. In cheque book cheques are recorded in
serials. Cheque books are finished account holder can request for the new cheque book.
Cheque books charges are deducted from the account of the account holder or paid in cash.

Letter of Credit:

National bank issue letters of credit on the behalf of its customer if customer wants, to import
any thing from another country, national bank write letter of credit on the behalf of the
customer to the bank of exporter. The national bank clear the financial position of its customer
to the exporter in case of any fraud National bank is responsible. Similarly exporter bank also
take the responsibility to deliver the goods safely in this way bank promote foreign trade and
make run the businesses smoothly.

National bank writes following types of letter of credit

 Revocable letter of credit

 Irrevocable letter of credit
 Confirm letter of credit
 Transferable letter of credit
 Back to back letter of credit
 32

 Send by letter of credit

Advances

National Bank provides both short term and long term finances.

National Bank engages in the following types of finances.

Types of Short Term Finances

National bank give finance for one year in short term financing. National bank deal with the
following types of short term finances

Gold Finance:

National bank issues loan against the gold. National bank provide Rs 35000/- against one
gram of gold. There is no limit of maximum loan against gold it depend upon the weight of the
gold. National bank charged 15.5% markup per annum against gold. Mark up is calculated on
day basis. The amount of loan is recovered or repay in lump sump after one year. One can
renew his loan after maturity if he/she short of cash.

Procedure for Gold loan:

First bank take NADRA varies to check the nationality of person or any objection.

After that bank takes ECIB reports to ensure either person already has taken loan or not. If he
has taken, he has repaid or not.

If ECIB clear the customer, then the credit officer ask the customer to file the document of
gold loan.

Documents of Gold Finance:

 Photocopy of CNIC of the customer.
 Photocopy of CNIC of the witness.
 Jeweler’s verification of gold and net weight of gold.
 IB-12 promissory notes, here amount of loan + mark up is mentioned.
 Undertaken of customer.
 IB/6A it is the agreement for the financing of the mark up basis.
 IB-2 letter of Pledged.
 33

Cash Finance:

Business concern, commercial concern and the industrial concern brow cash from the bank to
meet their cash requirements. NBP granted advances to business concern up to a limit against
the securities such as pledge of goods and mortgage securities. Borrower pays interest only on
the amount which he has utilized. This cash finance is granted in short term as well as long
term bases. NBP Main Branch Mansehra does not provide cash finance, because this facility is
available only in big cities.

Running Finance:

Bank lend against property which is used as securities. This is the common type of loan and
riskless financing because liquid, property in the name of bank. Its maturity one year and many
types f transaction are allowed in this. A bank opens account of borrower, and issue cheque
book to borrower. Borrower can withdraw and deposit money several times within that year up
to a limit.

Long Term Finance:

Bank issues loan term advances which are for five years or more. Following are the types of
the long term finances.

 House building finance

 Advance salaries
 Agricultural loan
 Development loan
 Corporate loan
 Motor car loan
 Student loan
 Staff loan

House Building Loan:

Bank issue loan for building house and charge their interest. This loan is recovered in
installments for the ease of borrowers. Bank takes the security against the house building.
 34

Advance Salaries:

Bank give advance salaries loan to the employee. Advance salary was introduced in 2003
Following are the features of the advance salary loan.

 Twenty months salaries are given to employee in advance.

 Minimum documentation is required in that type of loan.
 Loan is recovered in the five years.
 Mark up is paid on the monthly basis.
 20% Mark up is charged monthly.
 In earlier it was manual system now every thing is done with the help of the computer.
 The bank takes three blank cheques from the customer. Because if the borrowers will
default then, direct FIR can be file on the customer.
 In the case of borrower’s death the amount will be recovered from the rating party or
from the person who took security.
 If customer wants to take less than twenty months salaries he can do but can not exceed
form the twenty.
 Maturity period will be same in all cases.
 Bank takes ECIB of borrowers to avoid repetition and fraud
 Bank gives loan to only that employee who is receiving salary from the bank branch.

Agricultural Loan:

Bank issues loan to the agricultural sector to improve the production of farmers. This loan is
given to improve the economy of the Pakistan, as Pakistan is an agricultural country. At the
time to establishment of NBP to strength the agriculture sector was for most motive of the
NBP.

Motor Car Loan:

NBP give loan for the purchase of motor car. The time of maturity is three years or more. This
is a secure type of loan.

Cash Department:

Cash department do the following functions.

 35

Cash Receipt:

Cash department is responsible for the collection of the money in the bank and kept
verification of cash. Every customer of the bank has its own account mean customer are
restricted ledger account. Every customer has its own ledger card when he wants to deposit the
cash, bank give him cash clip colored green. In case customer have to fill the information like
amount to be deposit, date of deposit, signature of the depositor and account no in which he
wants to deposit the sum. After filling the case clip depositor hand over the cash and clip to the
cashier. Cashier signs it and stamps it and record it in the daily cash book. After this cashier
return the one part of the slip to the depositor. Computer department make the record in EBS
(Electronic Banking System).

If customer deposits the cheque the person on the bank’s counter give the cheque slip which is
colored pink. The procedure from here to onward is same, as in the case of cash deposit.

Cash Payment:

Cash department is responsible for cash payment as bank contact with person to repay their
money from their account by the mode of cheque.

Cheque:

According to the Section 6 of Negotiable Instruments Act 1881:

“A cheque is a bill of exchange drawn on a specified banker and not expressed to be payable
otherwise than on demand.”

A “cheque” or “check” is a negotiable instrument instructing a financial institution to pay a

specific amount of a specific currency from a specific demand account held in the
maker/depositor’s name with that institution. Both the maker and payee may be natural persons
or legal entities.

Parties to a Cheque:

There are three parties of a cheque.

 Drawer: he is the person who draws or writes the cheque.

 Drawee: The bank on which cheque is drawn is called Drawee.
 36

 Payee: The person who is entitled to receive payment on a cheque is called payee.

Parts of a Cheque:

Cheques generally contain:

 Place of issue
 Cheque number
 Account number
 Date of issue
 Payee
 Amount of currency
 Signature of the drawer.

Types of Cheque:

Following are different types of cheques.

Open Cheque:

Open cheque can be presented in the bank and the bank makes payment in cash at its counter.
So such cheques are risky in a sense that any one who gets the cheque by mistake can take
payment from bank.

Crossed Cheques:

A crossed cheque is one in which there are two parallel lines. A cross cheque is deposited by
payee in his bank and his bank than collects payment.

Bearer Cheque:

A bearer cheque is one which can be presented by any person. The word or bearer is not
crossed by maker of cheque. The name of payee may or may not state. However the amount is
written by the drawer.

Order Cheque:

If the maker of cheque crossed the word or bearer then the cheque become an order cheque.
The name of the payee is written on cheque and such cheque can only be enchased by the
 37

payee. The payment of the order cheque is made by bank only when the bank becomes
satisfied about the identity of the payee.

Blank Cheque:

In blank cheque no amount is written drawer just signs the cheque and hands it over to the
payee. The amount is than written by payee.

Requisites of Cheques:

Cheque is a negotiable instrument and should be filled appropriately. If cheque is not filled
correctly it will be bounced. Section 6 of Negotiable Instruments Act 1881 mentioned the
requisites of cheques.

 Cheque should be unconditional

 Cheque should be in written
 Cheque should be drawn on specific banks.
 Cheque should be signed by the drawer
 Cheque should be paid to specific person
 Cheque should be dated

Remittance Department

Remittance means long transfer of money. Remittance department deals with transfer of money
from one bank to another or from one branch to another for the ease of their customer.
Following are the forms of remittance.

 Telephonic Transfer (TT)

 Main Transfer (MT)
 Pay order (PO)
 Demand Draft (DD).

Telephonic Transfer (TT):

 Telephonic Transfer is the way for the quickest transfer of money.
 In telephonic transfer bank order by telegram to pay specific sum of money to the
prescribed personal.
 Only NBP branches deal in telephonic transfer.
 38

 For the telephonic transfer person must have account in NBP where TT is sent.
 For payment TT payment order will present to bank.
 In TT money are coded in figure such as one two
 Days are also coded in TT

Mail Transfer
 Mail transfer is the form of remittance in which immediate transfer is not required.
 Both account holder and non account holder mail transfer.
 NBP branches, only issue MT
 A slip is given to the customer who shows the amount exchange and total amount send.

Charges for Mail Transfer

Up to /over Amount Charges Minimum Amount

Up to Rs 100000 0.10% Rs 100

Up to Rs 1000000 0.05% Rs 100

Over Rs 1000000 0.04% Rs 400

Table 1 Charges for Mail Transfer

Demand Draft
 As name suggest demand draft are purchased and presented on demand. DD is the safe
form of remittance for transferring money.
 DD slip is given to the customer which have to fill the by customer and it contain the
following items in written.
 The name of the person who want to make DD
 CNIC no of the customer
 Beneficiary name of the DD
 Amount for which DD made
 Address of customer
 Address of beneficiary
 Signature of customer
 39

 After filling the DD slip customer deposit the amount then DD is prepared and given to
the customer. NBP originating branch advice to responding branch in which they ask to debit
issuing branch general account and credit draft account payable.
 The bank charges the fee against the DD

Charges for Issuance of DD

Up to /over Amount Charges Minimum Amount

Up to Rs 100000 0.10% Rs 100

Up to Rs 1000000 0.05% Rs 100

Over Rs 1000000 0.04% Rs 400

Table 2Charges for issuance of DD

Pay Order
 In pay order bank transfer locally.
 When bank want to transfer money in the same city then pay order is used.
 Pay order is the secure and simple way of transferring money.

Charges for Issuance of Pay Order

For Account Holder Rs 50

For Non Account holder Rs 100

Table 3Charges for issuance of Pay Order

Demand Draft Purchase

 NBP do agency agreement with other banks such as standard chartered bank, city bank
 All these other banks have their account in head office located in Karachi
 National Bank purchases the demand draft and make payment on the behalf of these
bank.
 40

Computer Department

Computer department work in EBS system and provide the facility to the customer in payment
of their cheque and tell the balance of their accounts. Computer department do the following
work

 Cheque the balance of account

 Issue bank statement to the account holder
 Trading western union

Clearing Department

As state bank provide the facility of clearing house and all the registered banks have their
account in SBP, so interchange and settlement of account can be done by SBP because of
clearing house. As NBP is agent is SBP and it providing clearing facility.

Government Department of NBP Mansehra:

Government Department of NBP Main Branch Mansehra is dealing with government accounts.
Due to insufficient banking facilities in new district Tor-Garh, NPB Main Branch Mansehra is
dealing with both Mansehra and Tor- Garh districts.
 41

Chapter # 4

FINACIAL & SWOT ANALYSIS

FINANCIAL ANALYSIS

In order to rank the organization we make financial analysis of the company. There are various
techniques of financial analysis include ratio analysis, common size and study of difference in
the financial statement of components

After the analysis of such type we are able to rank the organization in industries. And we judge
the financial position of the organization after the financial analysis. Analysis of financial
statement is judgment process, after the analysis we make decision about investment or any
type of transaction with particulars companies. In ratio analysis we analysis the particular
companies in the basis of TIE. TIE stand for time, industry and expectation. I compare the
organization on TIE bases if performance of the organization is goods are bad according to
time say for examples performance of company is decreases in current year, we can say that
performance of organization is bad in time bases.

We can compare the performance of the company in the basis of industry average. If company
‘ s performance is good in time basis, but not meeting the industry average we can say that
company performance is bad according to industry basses

Similarly if company‘s management set a target for themselves and company do not meet the
desired result, although performance of the company is good as compared to time bases, we
can say that company performance is bad in term of expectation.

Usually we analysis the company in ratio analysis but there are numbers of way to check the
financial position of the organization. Here I done two types of analysis to know the financial
strengths of the companies

 Common size analysis

 Ratio analysis
 42

Common Size Analysis

In the common size analysis we express the comparison in percentage basis. This type of
analysis is use to know the absolute amount. This type of comparison shows the meaningful
result. There are two types of common –size analysis, one is vertical and other one is
horizontal.

Vertical Analysis

In vertically analysis we compare each amount with taking base amount of the same year. In
vertical analysis take one items of balance sheet or income statements as 100%. This analysis
gives us meaningful result for comparison of organization.

Vertical analysis of NBP income statements

Description 2012 2011

Markup income 100% 100%

Provision for advances 16.11% 13.18

Provision for investments 6.68% 6.65

Bad debts written off 0 0

Net markup income 76.99% 80.16%

NON-MARKUP INCOME

Fee and commission 22.69% 21.09%

Dividend income 2.45% 3.38%

Exchange income 5.24% 6.68%

 43

Other income 5.12% 5.39%

Total non-markup 41.52% 41.88%

NON-MARKUP
EXPENSES

Admin expenses 61.44% 63.21%

Other provisions/write offs 0.41% 1.18%

Other charges 0.27% 0.29%

Total non-markup expense 62.12% 66.68%

Profit Before Tax 56.59% 55.36%

Provision For Taxes 15.82% 17.82%

Profit After Tax 40.77% 37.54%

Table 4 Vertical analysis of NBP income statements

NBP‘s two years, analysis of income statements in 2011 and higher interest rates in 2012.

Elucidation

Tables shows that mark-up income, and non mark-up are increases in 2011,so net decreases in
profit is due to increases in mark-up and non mark up expanses.

It has cleared from the common size analysis that profit before tax and profit after tax is
decreases in 2011 as compared to 2012. Hence we can say that the organization performance is
not good according to time basis.

 Bank profitability is inversely affected in 2011. The reason and suggestion for the
decreases of profit is following.
 44

 Bank administration cost is increases so management of NBP should take step and cut
down unnecessary cost of administration

 Peoples are shifting to private’s banks because they offer high rate of return and attractive
packages to facilitate the customers

 Bank’s deposit is decreases because of inflation peoples do not save money because of
expansive house hold goods.

 Pakistani’s economy is fall in 2011 due to this business health also fall, and business
persons do not takes loans for investment

 Bank’s cost is increases due to open of too many branches. So management should close
the unnecessary branches to cut the cost of employees.

In short we can say that performance of bank is not good in 2011, deposits and profits of banks
become down, and this is not a good sign for the bank. As NBP is leading bank so it takes steps
at immediately to overcome the undesired situation.

Vertical analysis of NBP Balance sheet:

Common size vertical analysis of NBP’S balance sheets

ASSETS 2012 2011

Cash and balance with 11.15% 11.43%

treasury bank

Balance with other banks 2.94% 2.43%

Lending to financial 2.22% 3.85%

institutions

Investments 29.11% 27.70%

 45

Advances 46.13% 45.70%

Operating fixed assets 5.17% 2.44%

Deferred tax liabilities 0.67% 0.69%

Other assets 2.60% 5.76%

Total assets 100% 100%

LIABILITIES

Bill payments 0.77% 0.79%

Borrowing 1.94% 2.29%

Deposits and other accounts 80.40% 80.40%

Finance lease 0.01% 0.008%

Deferred tax liabilities 4.46% 0

Other liabilities 0 4.74%

Total liabilities 87.9% 88.23%

SHARE HOLDERS
EQUITY

Share capital 1.30% 1.46%

Reserves 2.36% 2.27%

Inappropriate profit 6.36% 6.04%

Revaluation of assets 2.40% 1.96%

 46

Total equity 12.41% 11.77%

Total liabilities and equity 100% 100%

Table 5 Common size vertical analysis of NBP's balance sheets

Interpretation

Verticals analysis of the NBP’S balance sheet shows that our advances are increases in 2011;
this is good sign as advances are the important factors to know the strengths of any banks

NBP has more cash in other bank this is tell the inefficient management of the bank,
management should use idle cash for investment sectors

Investment in 2011 is decreases and bank has idle cash so he can make investment.

Verticals analysis tells us about the position of assets and change in the asset in any year, we
can say that banks assets structure is strong but management are not utilization their resources.

Horizontal Analysis

Common Size Horizontal Analysis of NBP’S Balance Sheets

ASSETS 2012 2011

Cash and balance with treasury 99.13% 113.83%

banks

Balance with other banks 106.80% 98.81%

Lending to financial institutions 117.11% 226.48%

Investments 138.36% 146.81%

Advances 100.75% 110.91%

Operating fixed assets 109.60% 111.85%

Other assets 90.17% 112.06%

 47

Total assets 109.70% 122.16%

LIABILITIES

Bills payment 75.38% 85.72%

Borrowings 43.85% 58.24%

Deposits and other accounts 114.38% 127.66%

Finance lease 289.50% 217.55%

Other liabilities 110.23% 129.41%

Deferred tax liabilities 0 0

Total liabilities 109.844% 123.40%

SHARE HOLDERS EQUITY

Share capital 125.00% 156.25%

Reserves 107.41% 115.54%

Inappropriate profit 108.76% 113.64%

Revaluation of assets 101.15% 91.11%

Total equity 108.70% 113.58%

Table 6 Common size horizontal analysis of NBP’S balance sheets

The balances with treasury bank, balance with other banks, advances and other assets of the
NBP’s shows the positive trends in 2011. Mean in 2011 the whole assets of the NBP’S
showing slightly positive movement.
 48

If we go to the liabilities sides of the balance sheets we see that the borrowing is increases it
mean that bank has enough cash to maintain its position in the dynamic environment. Share
holder capital are increases, bank maintain enough retain earning for the time of difficult.

In short, we can say that financial position of the NBP’S is good we can purchase their shares.
Although as compared to time the profit of NBP’S is decreases still NBP is trust worthy and
good financial position.

Horizontal Analysis of Income Statement

Common size horizontal analysis of an NBP’S Income statement

Particulars 2012 2011

interest earned 113.51% 122.76%

Interest expenses 111.67% 122.86%

Net markup/ interest income 115.49% 122.66%

Provisions 62.86% 56.32%

Bad debts written off directly 0 0

Total bad debts 84.68% 80.19%

Net markup/ interest income after 129.47% 141.16%

provision

Total non-markup/Interest income 94.98% 103.83%

Total non-markup/interest expenses 113.73% 133.76%

Profit after tax 101.66% 97.24%

Table 7 Horizontal analysis of income statement

 49

Interpretation

Table show that NBP’S interest earned increases in 2011 as compared to 2012.

Net mark- up interest and non- marked up interest increases in 2011.

Profit after tax is decreases in 2011

This decreases in profit after tax is due to increases in the cost of expenses of interest-mark up
and non-mark up.

Ratio Analysis

Ratio analysis is good method to determine the strength of financial position of the companies.
In ratio analysis we measured the performance on the basis of time, industry and expectation.
After calculating the ratios we make the result. Different ratios tell us different aspects of
organization. Following are the types of ratio.

 Profitability ratio

 Liquidity ratio

 Efficiency ratio

 Gearing ratio

 Investment ratio

Profitability Ratio

Profitability ratio tells us about the profitability position of the company. It tells us that either,
business is running in profit or loses. Profitability ratio measured in %. Following are the types
of profitability.

Net Interest Margin

Net interest margin tells us about the ratio of interest income to ratio of interest expenses. The
net interest margin is same as in the gross profit margin in the non financial institutes. It tells us
how much interest is given to the lenders
 50

Net Interest Margin of NBP in 2012 And 2011

Years Interest expenses/ interest Net interest margin

income

2012 45,169744/43,511,637 1.03%

2011 48,516,517/47,173,224 1.02%

Table 8 Net interest margin of NBP in 2012 and 2011

1.03

1.028

1.026

1.024

1.022

1.02

1.018

1.016

1.014

2012
2011

Figure 3Net interest margin of NBP in 2012 and 2011

 51

Interpretation

This shows that the interest expanses are consistently decreases in 2012 and 2011.

This decrease is favorable for the bank point of view, because bank has to pay little amount o f
interest to lenders

But due to attractive interest rate offer by the competitor’s r bank customer are diverting to
another banks.

Earnings Assets Ratio to Total Assets Ratio

This ratio show those assets which generates money for banking institutes without the efforts
of bankers or bankers has do nothings .these assets includes securities ,loans money market
asset, and etc this ratio tells that how much generated from this types of assets.

Earning Assets to Total Assets

Years Earning Assets/ Total Assets

2012 803,139,837 /1,038,018,467 0.77%

2011 891,089,929/ 1,153,480.100 0.77%

Table 9 Earning assets to total assets

 52

0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2012
2011

Figure 4 Earning assets to total assets

Interpretation

There are no changes in 2012 and 2011. The company asset produces 0.77 % of return to the
banking

It is good for the bank as 0.77 or 1 is good total earning assets to total assets ratios

Net Interest to Average Total Asset Earning

This ratio gives us the % of net interest margin to average earning

Net Interest to Average Total Asset Earning =

Net interest margin/ Avg. earning assets

2012 1.03/ 802,248,608 1.36

2011 1.02/ 802,248,608 1.32

Table 10 Net interest to average total asset earning

 53

1.36

1.35

1.34
1.33
1.32
1.31
1.3
2012
2011

Figure 5 Net interest to Average total asset earning

Interpretation

The net interest margin to average to earnings ratio is consistently decreases this is not
favorable sign for the bank.

Return on Earning Asset

This ratio tell us how organization profitably use their asset and how utilizes their resources.
This ratio show the generation of earring of asset

Return of Earning Asset

years Net income/ Avg. earning assets

2012 33,502,155/ 0.76 44,081,782.89

2011 37,815,059/ 0.76 49,756,656.58

Table 11 Return of earning asset

 54

50000000
48000000
46000000
44000000
42000000
40000000
2012
2011

Figure 6 Return of earning asset

Interpretation

In 2011 return on earning assets has increased as compare to 2012. This is favorable sign for
the bank. This increase is due to increase in earning assets.

Operation Cost to Income:

This ratio shows the non interest cost to income in the financial institute and similar to
operation margin in non financial institutions. This shows how company utilizes their cost.

Operation Cost to Income:

Years Non interest cost/

Income

2012 27,030,751/ 24,622,287 1.10

2011 31,453,477/ 26,116,002 1.20

Table 12 Operation cost to income

 55

1.2

1.15

1.1

1.05
2012
2011

Figure 7 Operation cost to income

Interpretation

 Conclusion shows that operation cost of banks is increased in 2011. it was 1.10 in 2012
and in 2011 it increased to 1.20.

 Due to this increase of cost bank’s profit goes down.

 Company should cut down their cost in order to boost up their profit

Equity to Total Assets

This ratio shows that how much company has equity out of total assets. This ratio also called
fund to total asset measure the extent of equity ownership.

Equity to Total Assets

Years Equity/ Total assets

2012 113,232,394/ 1,153,480,100 0.09

2011 106,185,741/ 1,038,018,467 0.12

Table 13 Equity to total assets

 56

0.12

0.1

0.08

0.06

0.04

0.02

0
2012
2011

Figure 8 Equity to total assets

Interpretation

 In 2011 equity to total increases from 0.09 to 0.12 percent

 This is unfavorable sign for bank

Non Performing Loan to Total Loan

This ratio tells us how much amount of non performing loan in total loan amount.

Non Performing Loan to Total Loan

years Nonperforming loans/ total loans

2012 7,007,975/ 501,937,926 0.01

2011 6,219,671/ 571,469,930 0.01

Table 14 non performing loan to total loan

 57

0.01 0.01
0.01

0.008

0.006

0.004

0.002

0
2012
2011

Figure 9 Non performing loan to total loan

Interpretation

There is no change in non performing loan to total loan in 2012 and 2011.

Credit to Deposit Ratio

This ratio shows that how much loan issued by bank against the deposit which is perceived.
This ratio usually is a indicator of the percentage of the fund lend by bank against the deposit
which it received from the depositors.

Credit to Deposit Ratio

Years Advances/ Deposits

2012 478,886,755/ 832,134,054 0.58

2011 527,109,209/ 927,415,132 0.57

Table 15 Credit to deposit ratio

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Interpretation

 In 2011 credit to deposit has decreased from 0.58 to 0.57.

 This is not favorable sign for the bank.

 It shows that bank ability to make loan has decreased.

 This decrease may be due to poor marketing efforts.

 Economy of Pakistan are facing downward trade due to this new business are not opening
in the Pakistan and business people not take loans from the banks for investment.

Loan Loss Coverage Ratio

Banks make loan to the people and usually make provision for the loan losses this ratio shows
that how much bank protect themselves from the problematic loss cause from the borrowers.

Loan Loss Coverage Ratio

years (Pre-tax income + Provision for loan losses)/

Debts written off

2012 31,630,262/ 0 0

2011 32,335,673/ 0 0

Table 16 Loan to coverage ratio

Efficiency Ratio

Efficiency ratio measures how will organization uses their asset. Short to say how much
efficiently utilizes their organizational resources, such as how much take time to recover from
its status how much takes times for payment to their creditors.

Interest Income per Employee

This ratio measure or tell the management’s ability to use their HR resources efficiently to
create profit for banks.

Interest income per employee

 59

years Interest income/ Employees

2012 43,511,637/ 16,457 2,643.96

2011 47,173,224/ 16,645 2,834.08

Table 17 Interest income per employee

Interpretation

 The result shows that ratio of interest income per increases.

 This is favorite trend for NBP

Profit per Employee

This ratio shows that how much average profit generated by per employee; means how much
per employee add value in the net profit of NBP.

Profit per Employee

years Profit/ Employee

2012 17,738,405/ 16,457 1,077.86

2011 17,709,165/ 16,645 1,063.93

Table 18 Profit per employee

 60

1080

1075

1070

1065

1060

1055
2012
2011

Figure 10 Profit per employee

Interpretation

 In 2011 profit per employee has decreased

 This is negative sign for NBP.

 This may due to opening of number of branches; this will be productive in the future.

Business per Employee

This ratio identifies the ability of management to use employees to earn interest.

Business per Employee

Years Interest earned/ Total

employees

2012 88,681,381/ 16.457 5,388.67

2011 95,689,741/ 16,645 5,748.86

Table 19 Business per employee

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5800
5700
5600
5500
5400
5300
5200
2012
2011

Figure 11 Business per employee

Interpretation

 In 2011 the upward trend in business per employee.

 This is good sign of management’s skills.

Business per Branch

Business per branch ratio shows that how much interest earns by each branch of NBP.

Business per Branch

years Profit/ Total branches

2012 17,738,405/ 1,267 14,000.32

2011 17,709,165/ 1,277 13,867.79

Table 20 Business per branch

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14050

14000

13950

13900

13850

13800
2012
2011

Figure 12 Business per branch

Interpretation

 In 2011 business per branch ratio has greatly decreased.

 This is negative sign for NBP.

 This negative trend is due opening number of new branches.

Employees per Branch:

This ratio tells us the average number of employees working in each branch of NBP.

Employees per Branch:

years Total employees/ Total branches

2012 16,457/ 1,267 12.89

2011 16,645/ 1,277 13.03

Table 21 Employees per branch

 63

13.05
13
12.95
12.9
12.85
12.8
2012
2011

Figure 13 Employees per branch

Interpretation

Number of worker increases in 2011 this increase may be productive for the NBP in the future.

Branch’s Last Year Advances, Deposits And Net Profit

As due to secrecy of banking system branch staff does not provide all types of information to
internee. I gathered the information of last year’s branch deposits, advances, and net profits
.NBP Mansehra is working efficiently and during last years it achieve the following.
 64

1200
1200

1000

800
Millions

600

400

220
200
60

0
Advance Deposits Net Profit

Figure 14 Branch's last year advances, deposits and net profit

Seeing the last year performance of NBP Mansehra I can say that this branch greatly add
values in total profit of NBP.

Share of Government’s Department in Total Profit.

2011 Total Branch Share of Govt

Profit Section

70 millions 16 millions

Table 22 share of Government's department

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Advance salary at NBP Mansehra

2011 Profit Earns Through NPL Rate

Advance Salary

600 Cases 9.5 millions 6%

Table 23 Advance salary at main branch

Cash in Gold

2011 Profit Earns On NPL Rate

Cash In Gold

450 Cases 5.4 millions 2%

Table 24 Cash in gold

SWOT Analysis

SWOT analysis tells the strengths, weakness, threats and opportunities. In SWOT analysis
there are two internal factors that are strengths and weakness, and there are two external factors
that are threats and opportunities. One can make strategies through SWOT analysis; matching
strategies are based on the principles of SWOT analysis. In which we compare our strengths
and weakness with threats and opportunities. So in this way we make SWOT Matrix to make
strategies. For instance we make SO (strengths and opportunities strategies). WO (Weakness
and Opportunities) ST (strengths and threats strategies), and WT (weakness and Threats)
 66

SWOT Analysis of NBP

SWOT Analysis of NBP mean major strengths and weakness which NBP have internally, and
major opportunities and threats which opposes from outside the organization. A good
organization keeps in mind their internal strengths and weakness want to achieve the
opportunities arise from outsides environment and try to overcome the threats.

Strengths of NBP

NBP is leading commercial bank and it has the following strengths.

Government Bank

As National Bank of Pakistan is the government bank so, peoples have full confidence in it
because if there is hard time for bank Government of Pakistan will take steps and helps the
NBP to over come the hard time.

Old Bank

As NBP is the first nationalize bank. And exist in the market since 1949. So it has customer’s
base advantages and confidence of the customers make NBP is leading commercial bank.

More Assets than Other Banks

If we see the balance sheet of NBP we will surprise to see the size of assets of NBP.

The asset structure of NBP give strengths over the others bank of the country.

More Deposit than Others

Being the Govt’s bank and initiator in the market peoples have confidence in NBP, so NBP has
relatively more deposit than others banks. And therefore enjoying the leading role in banking
sector, and gets edges over others banks of the country.

Network

NBP has broad networked its covers all most every big city to Pakistan. And know also
expending its network to towns and village for the ease customers and also for attracts the
customers. Now there are 1272 domestic branches of NBP.
 67

Employees

There are 15204 employees working in NBP. As NBP offers attractive salaries and reward to
its employees, so he can attracts the qualified peoples all over the country. Presently NBP
belief in young qualified youths

Stick Culture

NBP has stick culture and every employee has to follow the culture of NBP. And new
employees have to aware themselves with the norms and values of NBP. And there is rating for
employee extra ordinary employees are rated as AA and poor performers are grouped to grade
C.

Established Polices

Customer vales, attractive optional polices, and attractive salaries packages and audit keeps the
employees motivated and devoted toward the organization.NBP gives high values to their
employees and customers.

Management

NBP is control and manage by the efficient and experienced management. NBP management
consists of world best bankers. Which control NBP in best way and put the NBP in leadership
position in Pakistani banking sectors?

Product and Service

NBP offer many innovative product and service which make NBP unique in the banking
sector. NBP offer many types of advances and now NBP also offers making investment in euro
bonds. NBP is consistently making improvement in the domestic service as well as foreign
services for the customers.

Weaknesses

Although NBP is leading commercial banks in Pakistan, and it has many strength but NBP also
have some weaknesses. These are as follows
 68

Political Interference

Being the government bank NBP is not free from the influence of political parties. The party in
power strongly influences the NBP and negatively affecting the banking services of NBP. They
provide loans under the pressure of political party. Even they often select political members for
jobs.

Poor Marketing Efforts

NBP has poor marketing efforts. The marketing department of NBP is not so aggressive and
efficient. In fact NBP doing little in marketing and spent few funds for marketing. NBP has to
improve the marketing department.

Poor Computerized Network

NBP has not strong computer base network, and often the service of NBP is affected due to
poor network system. It will add great strength if NBP is provided strong network of
computers.

Major Employees Do Not Have Computer’s Knowledge

As NBP employees are majorly old persons and they do not have the computer knowledge.
NBP should train their employees in the computer field and also hire new employee having
computer skills.

In Sufficient Modern Equipment

NBP has old equipment and there is insufficient modern equipment. NBP has few note
counting machines in major banks and ATM machines, so NBP has update their equipment
according to the current need of the banking sector.

NBP Do Not Follow Division of Labors

Although NBP has distributed the work load but currently one employee is working on more
then one seat. So bank must hire persons for the vacant seats.
 69

Opportunities

Electronic Banking:

E-banking literally means electronic banking. It signifies the relationship between banking and
the emerging electronic IT products that can assist banking. E-banking can be defined as the
automated delivery of banking products and services to customers through interactive
electronic communication channels. E-banking includes the systems that enable bank
customers to access accounts, withdraw amount from account, bill payment and / or obtain
information about banking products and services, through a network i.e. internet.

E-Banking Products
 Online banking
 Electronic funds transfer
 Credit cards and smart cards
 Automated Teller Machine (ATM)
 Internet Banking
 Mobile Phone Banking

Small Scale Financing

Now major banks have entered in the small scale loans because minimum risk is involved in
small scale financing. NBP has also opportunity to enter into micro financing. Being realizing
this need NBP has to take steps for that.

Extend Foreign Operations

NBP has highly qualified and experienced management so it has to operate internationally.

Business Growth

Due to increase in business and commerce NBP has the opportunity to meet the needs of
business people and maximizes their profits.
 70

Threats

Entering Of New Competitors

Banking sector are growing in Pakistan and new competitors are entering in to the market with
high expertise. This is continuously threatening the NBP. NBP should match with their
competitors.

Policy of Downsizing

NBP is currently follows the policy of downsizing which threaten the pleasant environment of
the banking. Employees feel unsecure and hence their performance is continuously falling.

Surplus of Customer

Being the government bank NBP facing surplus of customer, that is affecting the service of
delivering to the customer.

Entrance of Islamic Banking

Due to introduction of Islamic banking the religious minded people are moving towards the
Islamic banks. No of customer of NBP diverting to Islamic banks.

Changing the Policy of Government

Pakistan is democratic country in which after five years election held and party in power
changes the policy regarding the business, economic, and etc.

Comparison of NBP with Others Banks

 Major competitors of NBP is bank AL-FALAH, HABIB bank limited and Muslim
commercial bank.

 NBP has broad network while in compare to NBP Bank AL-FALAH, HBL and MCB has
limited network.

 NBP has experience human resources while Bank AL-FALAH, HBL and MCB have
young employees who need training for banking practices.
 71

 Bank AL-FALAH, HBL and MCB have vast network of ATM facilities while NBP has
limited numbers of ATM’s

 Financial resources of NBP i.e. profit, assets, deposits and growth rate is good as
compared to Bank AL-FALAH, HBL and MCB.

 Employee benefits and employee cost are superior as compare to Bank AL-FALAH,
HBL and MCB.

 Due to Brand equity, credit ratings, award and achievement, agents of SBP and agent of
Govt NBP enjoying leadership role in banking sector while Bank AL-FALAH, HBL and MCB
do not enjoying the same.

 NBP provide the advance salary; cash in gold while Bank AL-FALAH, HBL and MCB
don’t provide the same facilities.

 Online banking system of Bank AL-FALAH, HBL and MCB is good as compared to
NBP.

 Decision making process in Bank AL-FALAH, HBL and MCB is quick while in NBP the
decision making process is time-consuming.

 The salaries of employees working in NBP is higher then salaries of employee working in
Bank AL-FALAH, HBL and MCB.
 72

Comparison of Growth Rate Of NBP with Others Banks

18

16

14

12

10

0
NBP HBL UBL MCB ABL BAF

Figure 15 Comparison of growth rate of NBP with other banks

It is cleared from the figure that MCB has high growth rate in deposits while NBP is in the
second number. This is due to poor marketing efforts of NBP, so NBP do improvement in this
area.

Comparison of Assets of NBP with Others Banks

Banks Cash & INVES- Lending Loans & Operating Others Tota
l
Bank MENTS To Net Fixed Assets
Profits assets asset
Financial
s
Inst

NBP 146,40 301,078 23,051 478,887 44,493 60,981 1,03

0 8,01
 73

HBL 57,379 254,909 30,339 459,750 16,155 44,493 924,

699

UBL 93,648 231,717 12,385 341,510 24,685 21,445 725,

390

MCB 46,959 215,748 4,402 254,565 21,062 27,746 570,

482

ABL 31,846 121,159 6,498 253,103 15,370 16,999 449,

966

BAF 119,05 113,623 11,489 207,152 14,251 12,901 411,

3 804

Table 25 Comparison of asset of NBP with other banks

From tables we can judge the assets strengths of NBP. NBP has higher assets structure then
any of the banks working in the Pakistan. HBL bank goes sides by sides and it is second
higher assets structure’s bank in Pakistan.

After SWOT analysis we can say that NBP has more competitive advantages over their
competitor. We draw the completive model as;
 74

Competitive Model

Cost Advantage
Resources or differentation Capabilities
advantage

Distinctive
Value Creation
Competencies

Summary

SWOT analysis of NBP show that bank is in good position, it has greater strength. Although
few weaknesses are present but strengths side greater than weakness. NBP is in the position to
operate in new place or make new strategies, such as operating internationally. NBP strength
can minimize the external threat and avail opportunity.

Being realizing that fact management of NBP is making new strategies such inter into the
global market and extending their network all over the country, offering innovated product and
services to the customers and installing advance equipment.
 75

Chapter # 5

Recommendations And Conclusion

CONCLUSION:

After the ratio analysis and two months internship in NBP Main branch Mansehra. I express
my point of view. I here declare that NBP is good organization for the person who wants to
seek career in banking sector. The culture and environment is pleasant for working.
Management of NBP takes good care of their employee and realizes the value of employees. In
main branch Mansehra same culture follow manager deals their employee and customer in
good way. That’s way employee in branch are quite efficient and motivated. They work even
more than their working hours to complete the daily work. In main branch Mansehra there are
surplus of customer in dealing large variety of customer is not easy but due to motivated
employee it make possible. NBP give allowances for over time to employees and also give
many benefits like staff loan, gratuity fund, increments and medical facilities. The entire
customer is well treated by employees and all customers received equal attentions and behavior
from the staff members. All customers can give suggestion to improve the service of banking,

Now in main branch Mansehra all the work is done with the help of computer all record are
kept in computer. All types of transaction and entries are done with the help of computer. This
greatly cut down time required for the work and enables the NBP to deliver the quick service to
their customer and get edge. In past BBO, Branch bank system) was used in banks. Now, EBS
(Electronic Banking System) has replaced the BBO. During my two months internship I found
very cooperative staff in NBP main branch Mansehra, they tell me banking practice in good
way and increase my skills. This internship help me a lot because it aware me the real working
environment and tell the difference between practical and theory. I apply my class room
lectures in real practice. This internship also teaches me how to deal with the customer and
how one person can add value in organization. During my internship I also noticed deficiencies
in main branch Mansehra one employee doing the duty of two posts so work load on employee
is high and employee have to work in pressure hours every time. After ratio analysis I am able
to identify the problems in NBP as a whole and in branch.
 76

Recommendations for NBP

Although NBP is a good profit making organization and making their business smoothly there
is some problem as whole which need to be resolves. SBP is the regulatory body of the NBP it
gives instructions and guidelines to NBP. Head office give procedure to NBP for the function
and operational these procedures still need great advancements. NBP is modernizing with the
passage of time. Following are the problems as a whole.

Network Error Should Over Come

All computers depend on main server through head office (EBS). These systems in much time
get hang due to this all type of transaction are suffered through this. NBP IT technicians need
to develop error free computer system to improve the quality of service.

Adjust Employees According to Need

After making ratio analysis it is observed that profit per employee is down although the
number of employee increases. In this situation management has to focus on the performance
of employees. This observation tells us that NBP is not utilizing their resources not efficiently.
Management has to take steps to efficiently utilize their resources.

Expenses Should Control

Analysis has shown that NBP cost and expenses have increased in 2011 as compared to 2010
which cut down the profit of the organization. So management takes steps to cut down
unnecessary expenses.

Close Unnecessary Branches

NBP are increasing their network and due to poor planning NBP opens many unnecessary
branches which increases the cost so NBP should close unnecessary to cut down their cost.

Try TO Overcome Political Influence

Being the government bank NBP is not free from the influence of political parties. The party in
power strongly influences the NBP and negatively affecting the banking services of NBP. They
provide loans under the pressure of political party. Even they often select political members for
jobs.
 77

Make Effective Marketing Efforts

NBP has poor marketing efforts. The marketing department of NBP is not so aggressive and
efficient. In fact NBP doing little in marketing and spent few funds for marketing. NBP has to
improve the marketing department.

Management Should Acquire Modern Equipment

NBP has old equipment and there is insufficient modern equipment. NBP has few note
counting machines in major banks and ATM machines, so NBP has update their equipment
according to the current need of the banking sector.

Recommendations for Main Branch Mansehra

After completing two months internship report although I found very cooperative staff I also
observe certain problems at the main branch Mansehra.

Account Opening Department Should Be Efficient

Now NBP computerized the procedure of account opening. Computerized procedure take time
in NBP main branch Mansehra account opening department are lazy many applicant form for
account opening will remain pending for many days.

Distribute Work Appropriately

In NBP main branch Mansehra work are not divided correctly in certain employee there is
burden of work and few do little work, so operational manager need to redesign the work
distribution.

Delay In NADRA Verification

As all branches of Mansehra district take NADRA verification from Mansehra the employee
who deal in NADRA verification are careless. Much verification is not cleared even five to ten
days.
 78

Jobs Rotation

Organization do job rotation to make employee available in the absent of another employee. In
NBP main branch Mansehra one employee is prefect in their own he do not know the job of
other so in case of absent work of another employee well suffer.

Make Sure the Working of ATM

Although NBP main branch Mansehra has installed ATM but this ATM often remain jammed
and the user always complain about the working of ATM.

Provides Computers to Govt’s Department

Government department need two or more computers but currently there is only one computer
so management of NBP main branch Mansehra should provide computer to the government
department.

Hire Person for Data Entry

NBP main branch Mansehra needs two or more data entry persons. Government department is
also short of data entry person so management should hire data feeding person.

Need Training to Employees

Although few person in NBP main branch Mansehra are very talented still it contain old person
who even do not know how to operate the computer, so computer training program for The
Employee Should Conduct.

System of Measuring Performance Should Improve

Method of measuring the performance of employee is not well. Management generally checks
the performance of employee. Modern tools of measuring the performance are not applied.
Management should adopt the performance appraisal methods to measure the performance of
employees.

Building Of NBP Should Freshen the Paint

There is long time to go to paint the building of the NBP main branch Mansehra. The condition
of furnishing is not update form, so management should spend money to on the paint.
 79

Repair or Purchase New Generators

Although NBP Mansehra has a generator but this generator requires a repair because NBP
main branch Mansehra is a busy organization, so in case of familiar of electricity generator are
used and due to fault in generator work of customer suffer delay.

Marketing Efforts Should Enhance

Currently many competitors of NBP is opening branches in Mansehra, like Bank Al Falah ltd,
Habib Bank of Pakistan, Muslim Commercial Bank, and many Islamic financing banks are also
opening in Mansehra. These banks adopt different marketing strategies and marketing channel
such as newspaper, personal contact, and etc. hence NBP main branch Mansehra should also
do spend some money on the marketing in get attraction of the customers and survive in the
competitive environment.

Deal With Customer Complaints

For the successful organization it is necessary that it should consider the suggestion and
complain of the customers. In NBP main branch Mansehra there is no complaint box.
Management should introduce good system to well come suggestions and complains from the
customers.

Time For Clearing Credits Should Minimize

NBP main branch Mansehra takes so much time in clearing the credits. Even fulfill the
document for credits due to hesitation and laziness.

One Person Should Guide For Parking

Although NBP main branch Mansehra has enough space for parking but the customer who
arrive first, incorrectly park their vehicles due to this customer who arrive later suffers
difficultly. Some class four should guide the customer for parking.
80