Name: ROLL # Class



Holy Prophet Muhammad (P.B.U.H) The greatest social reformer TO My Beloved Mother and Father Who taught us? The first word to speak The first alphabet to write

First step to talk……

All those from whom I learnt Who always remains? In our heart Through out the whole span of our life and are Nearest, dearest and deepest To us

INTRODUCTION TO NATIONAL BANK………………….1 MISSION STATEMENT……………………………………..2 SERVICES OFFERED BY NATIONAL BANK…………….3 FEATURES…………………………………………………...4 BRANCH LEVEL HEIRACHCY…………………………….5 OPERATIONS MANAGEMENT…………………………….6 FOREIGN EXCHANGE DEPARTMENT………………........7 OTHER RETAIL FUNCTIONS………………………………8 DOCUMENTARY CREDIT………………………………….. SENIOR MANAGEMENT……………………………………. DIRECTOR’S REPORT………………………………………… FINANCIAL HIGHLIGHS…………………………………….. CORPORATE INFORMATION……………………………….. SWOT ANALYSIS……………………………………………. CREDIT DEPARTMENT……………………………………… GUIDE LINE OF CREDIT POLICY…………………………. CREDIT CYCLE……………………………………………… ATM FINDER…………………………………………………. NBP PRODUCTS………………………………………………. COLLECTION POLICY……………………………………….. TECHNOLOGY………………………………………………… NOTICE OF 55TH ANNUAL GENERAL MEETING…………. BALANCE SHEET……………………………………………… PROFIT & LOSS STATEMENT………………………………… CASH FLOW STATEMENT………………………………………


To be recognized in the market place by Institutionalizing a merit & performance culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial performance, and Adopting & living out our core values.


To be the pre-eminent financial institution in Pakistan and achieve market recognition both in the quality and delivery of service as well as the range of product offering

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

We aim to be an organization that is founded on…
• • •

Growth through creation of sustainable relationships with our customers. Prudence to guide our business conduct. A national presence with a history of contribution to our communities.

We shall work to…
• • •

Meet expectations through Market-based solutions and products. Reward entrepreneurial efforts. Create value for all stakeholders.

We aim to be peopling who…
• • • Care

about relationships. Lead through the strength of our commitment and willingness to excel. Practice integrity, honesty and hard work. We believe that these are measures of true success.

We have confidence that tomorrow we will be…
• • •

Leaders in our industry. An organization maintaining the trust of stakeholders. An innovative, creative and dynamic institution responding to the changing needs of the internal and external environment


National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is :• •

To effectively manage NBP’s exposure to foreign and domestic correspondence Manage the monetary aspect of NBP’s relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the bank’s profitability Generation of incremental trade-finance business and revenues

NBP offers:
• •

The lowest rates on exports and other international banking products Access to different local commercial banks in international banking

If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch

Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market.

NBP provides another reason to transfer your money using our facilities. Our pay orders are a secure and easy way to move your money from one place to another. And, as usual, our charges for this service are extremely competitive.

Pak Rupees Traveler’s Cheques are a negotiable instrument Validity: Negotiability: Availability: Encashment: Limitation: Safety:

There is no restriction validity At 700 branches of NB country At all 400 branches of No limit on purchase NBP Traveler’s Cheq way to carry our mone

NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.

Let us help make your dreams become a reality Our dedicated team of professionals truly understands the needs of professionals, agriculturists, large and small business and other segments of the economy. They are the customer’s best resource in making NBP’s products and services work for them.

To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:
• •

Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of remittances to the beneficiaries

PakRemit™ Remit funds from USA to Pakistan

New Features: The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.
• •

Zero Tariffs: NBP is providing home remittance services without any charges. Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances to the beneficiaries.

The SWIFT system (Society for Worldwide Inter bank NBP Financial Telecommunication) has been introduced for SWIFT speedy services in the area of home remittances. The Network system has built-in features of computerized test keys, Click here which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-PKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.

NBP now offers excellent rates of profit on all its short term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide.

NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market. NBP is involved in the following: • • Investment into the capital market Introduction of capital market accounts (under process)

National Income Daily Account The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country. MODE OF CALCULATION: AVERAGE BALANCE DURING A CALENDAR MONTH

NBP’s involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders


National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group. The role of the Financial Institution Wing is :• •

To effectively manage NBP’s exposure to foreign and domestic correspondence Manage the monetary aspect of NBP’s relationship with the correspondents to support trade, treasury and other key business areas, thereby contributing to the bank’s profitability Generation of incremental trade-finance business and revenues

NBP offers:
• •

The lowest rates on exports and other international banking products Access to different local commercial banks in international banking

If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch

Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market.

NBP provides another reason to transfer your money using our facilities. Our pay orders are a secure and easy way to move your money from one place to another. And, as usual, our charges for this service are extremely competitive.


NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World.

CORPORATE FINANCE Working Capital and Short Term Loans:
NBP specializes in providing Project Finance – Export Refinance to exporters – Preshipment and Post-shipment financing to exporters – Running finance – Cash Finance – Small Finance – Discounting & Bills Purchased – Export Bills Purchased / Pre-shipment / Post Shipment Agricultural Production Loans

Agricultural Finance Services:
“I Feed the World” program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production.

Medium term loans and Capital Expenditure Financing:
NBP provides financing for its clients’ capital expenditure and other long-term investment needs. By sharing the risk associated with such long-term investments, NBP expedites clients’ attempt to upgrade and expand their operation thereby making possible the fulfillment of our clients’ vision. This type of long term financing proves the bank’s belief in its client's capabilities, and its commitment to the country.

Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:•

Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better production Provide farmers an integrated package of credit with supplies of essential inputs, technical knowledge, and supervision of farming.

Loan Structuring and Syndication:

Agricultural (Medium Term):


National Bank’s leadership in loan

• • • • • • • •

Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy Equipment for sprinklers

syndicating stems from ability to Forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners’ asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength and by industry teams, who bring specialized knowledge to the structure of a transaction.

Farm Credit:
NBP also provides the following subsidized with ranges of 3 months to 1 year on a renewal basis.
• • •

Operating loans Land improvement loans Equipment loans for purchase of tractors, farm implements or any other equipment Livestock loans for the purchase, care, and feeding of livestock

Cash Management Services:
With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately.

Production Loans:
Production loans are meant for basic inputs of the farm and are short term in nature. Seeds, fertilizers, sprayers, etc are all covered under this scheme. If you require any further information, please do not hesitate to e-mail us.

National Bank of Pakistan is an established bank. It has some special features with the help of those it is growing rapidly.

Outstanding Work Environment
As the work environment plays a great role in this competition age, so the bank has good work environment. All the people work with co-operation; managers are so kind that each problem can be discussed with them.

Employees at National Bank of Pakistan are quite efficient. They work more the working hours and it is all according to their will. It also shows their loyalty, commitment to organization.

Customer Services
All the customers are entertained individually. Same kind of behavior and attentions is given to all customers.

Complaint Box
Getting ideas for improvement from the customer side is a new idea and that is working

Employee Benefits
Employees are given the benefits like bonus, gratuity funds, increments, house rents, medical and conveyance allowances.

Computerized working Environment
In the bank, all the work is done remotely. All the entries are made using the systems which are internally and externally integrated. This increase efficiency of the bank.


Operations department of the National Bank of Pakistan is responsible for the overall operations of the bank. Operations department has following segments. a) Cash b) Clearing c) Remittance d) Account opening e) Accounts department The details of those departments that are controlled under operation department are as under. a) Account opening b) Cash department c) Clearing d) Remittances

Account opening department
It is the most important department of bank. Following procedure is adopted for this purpose.

Procedure of Account Opening
It is very simple and quick procedure. A person who wants to open an account must have the introduction of bank’s staff or an already existing account holder of bank. The customer is required to fill an account opening form. Then signatures of the Introduce are verified from S.S. Card before opening account. They also have to give identity letter  CNIC copies  Passport size photograph

Following Factors Prior To Opening of Account Should Be Consider
1. The suitability of the perspective customers. 2. Verification of customer credentials. 3. The perspective possibility of profitability of the relationship. 4. The proposed relationship does not violate: A. SBP rules and regulations B. Applicable local laws C. The bank’s internal policies

Current Account
1. No limitation on frequency or amount transaction 2. No profit payable

Saving Account
1. Profit is payable 2. No of withdraw restricted 3. Large amount of withdraws requires 10 days.

General Principles
1. No account will be opened on fictitious name. 2. All documents necessary required for opening account must be taken after verification from original. 3. No operation of account should be allowed & check book must not be issued until all formalities are confirmed. 4. Genuineness of introduction should be properly ensured. 5. All information of AOF should be filled at front of concerned officer.

The bank deals in different accounts opening; 1. Individual Account 2. Joint Account 3. Business Account 4. Partnership Account

These types of accounts only can establish after approval of system and operation division head office:o Trust Account o Account of executors/ administrators o Account of liquidators o Accounts of local authorities/ municipals.

When the Account is opened, then the customer is given a cheque book to sign upon and withdraw money.

Cash Department
Cash department of National Bank of Pakistan works under the operation department. This department is given the complete responsibility of cash, as result of transaction in touch local and foreign currencies. It is also responsibility for the book keeping of these transactions and the safe custody of cash. Out of five counters of cash department one counter is fixing for senior citizens and females. All counters are dealing at the same time in deposits, withdraw and online transaction processes. This department performs the main function. a) Cash receipts b) Cash payments

Clearing Department
Before discussing it is necessary to know what is “Clearing”. “The process by which cheques exchanged between the collecting and paying bank and the ensuing financial settlement is called “Clearing”. This facility is provided by the state bank of Pakistan for offsetting of cross obligations between the different banks. Clearing is of two types: 1) Inward clearing 2) Outward clearing

Accounts Department
Account department is the most important department of the bank. Because it is concerned with: ♦ ♦ ♦ ♦ Revenue Expenses Assets Liabilities

These are the pillars of any business. In this department, all the vouchers that are posted during one day are sent to the account department next day. These vouchers are already posted to computer by the concerned department.

Types of Account
♦ ♦ ♦ ♦ Current Account Saving Account Notice Deposit Term Deposit

Remittance department
The need of remittance is commonly felt in today’s business. A major function of any bank is to “transfer of funds from one place to another place” National Bank of Pakistan Uses the following modes of transfer of funds. • Demand Draft • Telegraphic Transfer • Pay Order • Call Deposit • Pay Slip • Money transfer

All the cheques under collection are called cheques under collection in National Bank of Pakistan. There are two types of bills for collection:  Outward Bills for Collection  Inward Bills for Collection

“The transfer of credits to a foreign country to settle debts or account between resident of home country and those of the foreign country” or “the Foreign bills currencies etc used to settle such accounts”. Foreign Exchange department deals within exports imports and Money transfer. National Bank of Pakistan acts as importer bank as well as exporter bank for different parties who are interested in the business of export & import.

All goods and services brought into a country that were purchased from organizations located in other countries.

All goods and services sent from one country to another country.

Documents required for Export
The person who is exporting goods to the foreign countries requiring the following documents. • National tax number • Registration with export promotion Bureau • Sales tax registration • Commercial Invoices • Bill of Lading • Packing List • Bill of exchange • Promissory Note • E-Form • Letter of Credit • Certificate of origin • Beneficiary certificate After compiling the entire task by resident country that is exporting goods in favor of foreign importer now it will be his turn to make payment.

Importer bank issues a document on request stating that it will pay the exporter when exporter fulfill the terms of letter of credit. Letter of credit is of two types:

1. At Usance L/C 2. At Sight L/C

Requires the importer / importing bank to pay as soon as it receives the clean documents from exporter.

It extends time period (30days, 60days, 90days, 120days, 150days, & 180days).to importing bank for payment. After specified time period importer have to pay. Letter of guarantee gives in behalf of person that I will pay in case of default.

SWIFT (Standard world wide inter financial transaction)
It is the only network. No institute involved among it.

This certificate shows that goods are from Pakistan.

If in covering schedule, it is given that “Please remit proceed to our Karachi office account # 574348812 with (Standard Chartered Bank) USA for onward credit to National Bank of Pakistan.

If L/C requires some information as proof of anything from exporter then exporter has to present beneficiary certificate for that proof.

E-form has four copies:     One for custom officer One for exporter Triplicate copy for SBP Duplicate copy for bank

Bank reporting or duplicate and triplicate is done by bank. Custom officer should clear product. (Date is given on the foot form).

It is the choice of importer to open L/C from any bank and the bank from which L/C is opened can also refer to some other bank for payment. So bill of exchange is sent to refer bank and other documents are sent to L/C opening bank.

L/C is opened by the importer. There are two types of L/C: a) Revocable L/C b) Irrevocable L/C

If place of issue and port of loading is different on bill of lading, then along with the stamp of shipment on board, vessel name and port of shipment is written. A. Issue date of bill of lading – shipment on board. B. There should not be cutting on bill of lading without authentication. C. Bill of lading should show capacity of agent. If bill of lading can be taken by the agent of Importer Company, then his name should be mentioned on bill of lading. D. Original GSP should be presented. E. If TT reimbursement is not acceptable, it means bill of lading is necessary. F. When documents are received for export, do enter into lodgment register.

I. II. III. IV. V. VI. VII. VIII. IX. X. Performa invoice signed by importer category pass book copy attested by any bank L/C opening application filled in by the customer Importer registration with export promotion bureau Annexure Verification of signature by S.S. Card L/C issued on basis of L/C application form Insurance if covered by buyer Insurance cover note Insurance policy

National Bank of Pakistan has his full fledged trade service department. As a credit instrument and as a means of making as a payment the documentary credit is an essential instrument for conducting word trade today. A documentary credit represents a commitment bank to pay the seller of goods or services a certain amount provided present stipulated documents evidencing the shipment of the goods with prescribed period of time. For the cases of imports or exports first the parties have to do upon a sale contract regarding the term and condition of sale. One method of payment is by L/C which is secured and now a day mostly uses the business. Letter of credit is under taking by opening bank that it will make payment if documents are as per terms of LC.

Four parties are involved in Letter of Credit
1. Applicant Importer 2. Beneficiary Exporter 3. Issuing Bank Bank of importer 4. Advising bank Bank of importer According to import policy, no import is valid without import license which is issued by the chief controller of import and export or we can say export promotion bureau. If a person desires to take up import trade must get his name, his firm or his limited company, registered with EPB. On being granted registration certificate, he will be eligible to import goods according to import policy. There is no special condition of eligibility for registration. They only requirement is that he should be a Pakistani and must be registered with income tax department.

When the importer obtained import license, then bank will open letter of credit. “A letter of credit is undertaking by LC opening bank to put an agreed sum of money to seller’s bank of behalf of the buyer of the goods under clearly defined terms and conditions”. Pakistani banks open only irrevocable LC. An essential feature of the irrevocable LC is that it can not be modified, altered, amended, or canceled without the prior consent of all the parties. Party comes to the bank and fills the form which is provided on the payment of Rs.100. This form is filled by the party and is return to the bank, it includes details like.  Name of company  Address

   

Country of origin Branch name Quantity Shipment to

 Insurance company  Shipment from

One thing should also be submit which is INDENT. If the foreign party has any agent they will issue the indent with following details: o To Messer o Importers, etc

When the bank opens L/C, it requires following documents: a) Valid import license b) Performa invoice c) Importer should be Pakistani d) Letter of undertaking from importer e) Insurance cover. An important point which the bank will consider before opening of LC is that sufficient funds be available in the LC opener’s accounts. At the time of establishment the LC the opening bank generally retains a maximum margin to safe guard its own commitment. The margin may vary from nil to 100% according to the nature of commodities and it also depends upon the party. At the item of establishing the LC opening bank charges bank commission, postage and other charges from the LC opener account. Another main important point is that value of LC should not increase the value of import license. After all the documents are being checked and signs are verified by the bank. A sanction slip is attached with each form so that the approval can be gained from the manager of the bank. After the approval is made four copies are prepared and the entries are made on the computer and the printout is taken the margin amount is checked from the importer account and if the amount is not found then L/C is not opened and the party is informed about the situation. On the deposit of the margin then L/C is opened LC limit if set by the bank are also checked. After the LC is opened following entries are made: A. LC opening register B. Margin / Liability Account Register.

The negotiating bank upon receiving the documents from the seller checks the documents according to terms and conditions of credit upon satisfying it self of this the negotiating bank makes payment to the seller if sight credit. It then forwards the documents to the opening bank and reimburses it self through the opening banks account with itself.

Importer bank or opening bank receives the following documents from the exporter’s bank or negotiating bank. I. Bill of exchange II. Invoices III. Bill of lading IV. Certificate of origin V. Packing list VI. Insurance

OTHER RETAIL FUNCTIONS OF National Bank of Pakistan • National Bank offering Advance salary benefits
We all are aware that NBP advance salary is the market leader in Personal Loan category and is considered the largest Personal Loan Product of the country with loan disbursement of over Rs.80 Billion. One of the foremost reasons for this astonishing success is the fact that NBP kept on modifying the product parameters as and when required by keeping an eye on the changing market conditions and varying competition. The Bank has decided to make following changes in the product parameters to further improve the operational efficiency and Turn around Time (TAT) and to increase the disbursement pace.

1. Borrower must be employee of the Federal /Provincial Government / Semi Government / Autonomous body / NBP. 2. CNIC copies of the borrower 3. Salary Slip indicating detail of salary of the borrower 4. Attested copies of CNIC by gazetted officer 5. Branch has obtained CIB Report of the borrower 6. Branch has obtained duly signed and stamped BBFS. 7. Customer written declaration giving details of all financial institutions. 8. DDO is signature has been verified 9. Loan will be approved after receipt of at least one salary in account. 10. The sanctioned amount of Advance Salary Finance doesn’t exceed 20 times. 11. The expiry of the NBP Advance salary is at least 6-months before retirement. 12. The repayment period does not exceed 60 months. 13. Three undated cross cheques in favor of NBP covering full amount of Finance have been obtained as security. 14. All documents have been obtained as per the requirement of NBP Advance salary scheme including undertaking as per scheme. 15. Documents have been recorded in Document Execution Register/ MISC security Register. 16. NBP offers mark-up 15% on principal amount at fixed rate. 17. There are bi variable rates offered by NBP for this service.

• • • • • • • • • • • • • • • • • • • • • • • • • • Application form (in original). CNIC copies of the applicant. Two references CNIC copies. Photographs of the applicant(06) Employment card copy. Appointment letter. Service Letter / Certificate. Salary cum service certificate. Last three Months salary Certificates. Branch Account’s statement last six months. Last Three Month Utility Bills Approved Map Original property Documents. Aks Sajra. Fard Malkiat Naqal Intiqal Khasra Verification report National Evaluation Company’s report. PT-I Sale Deed/ Registry. Processing Fee pay order for Rs.500/= Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case of Purchase Rs.3000/= Processing Fee pay for legal opinion order for Rs.1000/= Borrower Basic Facts Sheet Confidential Report ALICO DECLARATION FORM.

o o o o o o o o o o o o o o o o o o o o o o o o o o Application form (in original). CNIC copies of the applicant. Two references CNIC copies. Photographs of the applicant(06) Business Related Documents. Last three years Business Record. Branch Accounts statement last one year. Last three month Utility Bills. ICIL- Department Verification ( Income Estimation) Approved Map Registry / Sale Agreement Aks Sajra. Fard Malkiat Naqal Intiqal Khasra Verification report NOC National Evaluation Company’s report. PT-I Sale Deed/ Registry. Processing Fee pay order for Rs.1000/=financing below Rs. 1 Million. Fee for Evaluator pay order Rs.3000/=financing between Rs. 1 to Rs. 4 Million. Processing Fee pay for legal opinion order for Rs.6000/= financing above Rs.4 Million. Fee for Evaluator pay order ( in case of construction Rs.2000/= (in case of Purchase Rs.3000/= Borrower Basic Facts Sheet Confidential Report ALICO DECLARATION FORM.


Amer Siddiqui Dr. Asif A. Brohi Imam Bakhsh Baloch Masood Karim Shaikh Dr. Mirza Abrar Baig Muhammad Nusrat Vohra Shahid Anwar Khan Ziaullah Khan Amim Akhtar Ekhlaq Ahmed

SEVP & Group Chief, Retail Banking Group SEVP & Group Chief, Operations Group SEVP & Group Chief, Audit & Inspection Group SEVP & Group Chief, Corporate & Investment Banking Group SEVP & Group Chief, Human Resources Management & Administration Group SEVP & Group Chief, Treasury Management Group SEVP & Group Chief, Commercial Banking Group SEVP & Group Chief, Compliance Group EVP & PSO to the President EVP & Secretary Board of Directors

Mrs. Khurshid Maqsood EVP & Divisional Head Employee Benefits, Ali Disbursements & Trustee Division Nadeem Anwar Ilyas Syed Farhan Ahmed Tahira Raza Tahir Yaqoob Atif Hassan Khan

EVP/Divisional Head, Special Assets Management Division EVP / CFO, Financial Control Divisional EVP & Group Chief, (A) Risk Management Group EVP & Group Chief, Overseas Coordination & Management Group SVP & Group Chief (A), Information Technology Group

S Ali Raza Chairman & President

Dr. Waqar Masood Khan Director

Iftikhar Ali Malik Director

Syed Shafqat Ali Shah Jamote Director

M. Zubair Motiwala Director

Sikandar Hayat Jamali Director

Azam Faruque Director

Ekhlaq Ahmed Secretary Board of Directors

On behalf of the Board of Directors it gives me great pleasure to present the annual accounts for year ended December 31, 2002. National Bank made many strides during 2002 in positioning for the future both operationally and structurally. To improve customer focus, reduce decision-making layers and promote teamwork. The bank has substantially restructured its business. An entire layer of controlling offices i.e. zones has been eliminated and total number of regions enhanced from 9 to 29. A new matrix structure is now in place, which separates the front and back office with special emphasis on corporate governance and enhanced internal controls. This process, which was commenced in late 2001, is now fully functional and demonstrating positive results. The rationalization program for staff reduction and branch closures was successfully completed in 2002. Going forward the objective would be to ensure optimum efficiency in staff levels while balancing the benefits of technology with the branch network. To meet the challenges of position of NBP as a market leader, training is seen as a critical success factor. Training has been restructured to make it more need based and aligned with the corporate vision of inculcating customer focus and developing core competencies under a program “Gearing up for Excellence “. A strategic training management plan was developed keeping in view the stakeholders’ expectation. We are glad to say that while training is a process of continuous improvement, we have achieved significant results thus far. To position the bank for capitalizing on the requirements of the relatively lower banked sectors, a dedicated Commercial and Retail banking group was created. Within a short span of time a number of retail products have been launched and the customer response to these schemes has been very encouraging. New retail products will be offered to cater the large diversified customer base of over 9 million, the largest in the country. The success of retail banking is critical to maintaining interest revenue and enhanced fee income. We are confident that with our large customer base and delivery capabilities, NBP will emerge as a market leader in the retail/ consumer business in the very near future. Corporate banking as a dedicated business is being very well received by the corporate sector. The bank was mandated as a lead manager in significant capital market transactions. Through a combination of a large direct equity portfolio as well as a 25% holding in NIT,

Pakistan’s largest mutual fund, NBP has one of the largest equity portfolios in the country. Given the strong stock market performance in 2002 attractive trading gains were realized. This area will continue to be one of our key income contributors as the capital market gains depth. NBP continues to be the principal bank for handling the government treasury business. We have also re-activated our subsidiaries catering to non- banking financial activities. We are also planning to open stand-alone Islamic Banking branches. Thus, in combination with our very large and diversified banking base we are truly a universal bank in Pakistan, in a position to offer the entire range of banking and financial products. We regard this as our key competitive edge. NBP is committed to invest in the development of the bank's Information Technology infrastructure. Several initiatives have been undertaken in this regard. New on line branches were added. The ATM network is being expanded across the country at convenient locations and an ATM switch sharing arrangement is being placed. During the year, the bank signed an agreement with Western Union for expanding the base for documented remittances. We are also developing a strategic plan for Information Technology that synchronizes our future growth with product development. For overseas operations our focus continues to be on trade financing activity to take advantage of the bank's presence in most countries (16 countries, 20 branches/offices) which are Pakistan's major trading partners. During 2002 we established a wholly owned subsidiary in Almaty. Currently we are present in four of Central Asian countries and our unique representation should provide us with a major competitive edge in the coming years as the Central Asian countries realize their economic potential.

Financial Performance
In 2002, NBP increased its pre-tax profit to Rs. 6,045 million from Rs. 3,016 million in 2001, an increase of over 100%. The improved profitability was achieved due to a combination of higher interest revenue, enhanced fee income and run off of the amortization of the 1997 Golden Handshake Scheme. Prudent addition to loan loss reserves was made which continues to improve the cash coverage for nonperforming loans. All key financial and operating ratios demonstrated improvement. Cost/ income ratio was 0.44 (excluding one off provision of Rs. 832 million for benevolent fund and Rs. 513 million for charge for special separation package) as against 0.52 of the last year. Pre-tax return on equity was 45.27% as compared to 25.85% of the current year and is impressive by any yardstick. Pre-tax return on assets improved to 1.43% as against 0.77% of last year. Capital adequacy ratio of the bank is 14.5%, which is 38% higher as compared to 10.52% of last year. Deposits of the bank increased by Rs. 12 billion. While there was increase in private sector loans due to adjustment / repayment of loans by large public sector entities and substantially lower commodity operations borrowings, advances decreased by Rs. 30 billion.

Market Recognition
For the second consecutive year, NBP was recognized as the best bank in Pakistan by the prestigious periodical, “The Banker" UK (a subsidiary of Financial Times Group). Furthermore M/s JCR-VIS Credit Rating Company Limited maintained its rating of AAA, while the standalone rating was raised by one notch to AA-, which is one of the highest in the banking sector.

Future Outlook
going in 2003, the reduction in the interest rate environment will overall have a negative impact on the financial sector's profitability in the short term. To meet these challenges we will focus on building our loan portfolio, both on corporate and retail side. On the retail side focus will be on additional fee business while maintaining stringent controls over cost. Longer term we will be focusing on those sectors in the country, which have traditionally received less attention from the financial sector, i.e. agriculture, small and medium enterprises and of the entire range of retail products. Our key strength remains our customer base of over 9 million and we are confident that we are positioned to capitalize on the opportunities.

National Bank of Pakistan “KAROBAR” Under “President’s Rozgar Scheme” OBJECTIVE
To launch SUSTAINABLE financial products that are COMMERCIALLY VIABLE for NBP and the target market i.e. young and unemployed citizens of Pakistan enabling these citizens to earn at least the minimum wage on a fast track, prudent and transparent basis.

The scheme is offered to: 1. Eligible young citizens of Pakistan falling within an age group of 18-40 years. 2. Unemployed Applicant. 3. Applicant to be residing in the same area/ city for at least 2 years 4. Applicant having CNIC

Finance application approval process can’t be initiated until the satisfactory completion of following steps: a) Completion & checking of documents. b) Conformity with eligibility criteria c) Availability of References/ Guarantors d) Satisfactory credit report i.e. e-CIB e) Satisfactory CNIC verification from NADRA f) Satisfactory telephonic & physical verification.

National Bank of Pakistan’s product details are given below:

Authorized Capital Paid-up Capital Shareholders' Equity and Reserves Deposits

Rs. In million

5,000 3,730 23,936 362,866

Advances-net Investments-net Total Assets

140,547 143,525 432,803

Pre-Tax Profit After-Tax Profit



No. of Branches

Branch Network


No. of Employees


Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking Group and CFO Shahid Anwar Khan Dr. Asif A. Brohi Muhammad Sardar Khawaja S. M. Rafique SEVP & Group Chief, Commercial & Retail Banking Group SEVP & Group Chief, Operations Group SEVP & Group Chief, Audit & Inspection Group SEVP & Secretary Board of Directors

Imam Bakhsh Baloch SEVP & Group Chief, Compliance Group Derick Cyprian Amim Akhtar Javed Mehmood Muhammad Nusrat Vohra Nadeem A. Dogar Dr. Mirza Abrar Baig Uzma Bashir SEVP & Group Chief, Special Assets Management Group EVP & PSO to the President EVP & Group Chief, Risk Management Group EVP & Group Chief, Treasury Management Group EVP & Group Chief, Information Technology Group Group Chief, Human Resources Management & Administration Group Group Chief, Organization Development & Training Group


Ekhlaq Ahmad

Muhammad Arshad Chaudary Syed shafqat Ali Shah Jam M. Zubair Motiwala

M. Yousaf Adil Saleem & Com Chartered Accountants Taseer Khalik & com Chartered Accountants

NBP Building I.I Chandrigarh Road Karachi

Mandiwala & zafar Advocates & Legal Consultants

During the internship of eight weeks of mine in National Bank of Pakistan, near khechary chowk Multan, I am going for SWOT Analysis.

• • • • • Bank is believed on customer service. In first week of internship, I worked in Credit Department where I learnt how to manage the corporate clients. National Bank of Pakistan provides the facility of debit card at minimum rate all over the Pakistan. National Bank of Pakistan enjoying the large market share in Home financing. Home financing and agriculture loans are introduced recently by National Bank of Pakistan. Branch manager and Chief Manager having good co-ordination with staff to make the environment friendly.

• • • • National Bank of Pakistan main branch, Multan all time overcrowded. Customers are not properly guided to get the benefits of National Bank of Pakistan’s facility. Online services are changing compare to other competitive banks. National Bank of Pakistan main branch Multan still having the shortage of cash and deposits counters.

• • • • • Banking industry is one of the most growing sectors in Pakistan. So National Bank of Pakistan should be continually expanding its network of branches. Muslims are consciously differentiating the Islamic-base banking from interest-base banking. That is why there is large caution of expansion Mobile banking should be started to compete in market. Establishing foreign branches. All products of Consumer Financing that include home financing, and other products should be introduce to all the braches in the cities of Pakistan.

• • National Bank of Pakistan having large networks of hundred branches that play and important role in banking business. National Bank of Pakistan compares its working to other key players in banking industry. Many other banks are now involving themselves in consumer financing at competitive rate. This is one of the biggest threats for National Bank of Pakistan consumer financing products.

Credit means belief or trust. “The quality of being credible or trustworthy”. Other words we can use for credit as “trust in one’s integrity in money matters and ones ability to meet payment when due”. The earning of National Bank of Pakistan is chiefly derived from interest charge and discounts. This department is the revenue generating department. Credit department basically has three segments: 1. Credit marketing department 2. Credit administration department 3. Trade finance department Advance department deals with extending loans to customers. State Bank of Pakistan (SBP) has prescribed regulations which are called “PRUDENTIAL REGULATIONS”. Every bank has to follow these regulations. If any bank violates the regulations it should be liable for penalties under the core spirit of SBP The National Bank of Pakistan limited the credit is extended on the basis of these rules and regulations. These regulations tells the terms and conditions under which you can extend loans to the borrower and to what extend.

At National Bank of Pakistan two types of credit facilities are available 1) Funded facilities 2) Non funded facilities

These are the facilities in which there is direct involvement of cash fund. Following are the funded facilities. 1) 2) 3) 4) 5) 6) 7) Current Finance (CF ) Term Finance ( TF ) Finance against foreign bills “FAFB” Finance against packing and credit “FAPC” Finance against imported merchandise “FIM” Finance against trust receipt “FATR” Payment against document “PAD”



The facilities where there is no direct involvement of banks fund. Following are the non-funded facilities. 1) Letter of credit L/C 2) Letter of guarantee L/G

 Total outstanding financing facilities by banking company to single person shall not at any point of time exceed 30% of bank’s unimpaired capital.  No banking company shall make loans or advances against the security of its own shares.  No banking company shall grant unsecured loans/advances on the guarantee of • Any of its directors. • Family member of director • Any private company in which banking company is interested.  In arriving at exposure per person weight age of 50% shall be given to • Documentary credit opened by bank. • Guarantees/bonds other than repayment guarantees.  In arriving at per party exposure 90% of • • • Deposits of party with bank under lien. Face value of FIBs lodged by the party as collateral. Pak rupee equivalent of face value of special US Dollar bonds converted at official rate, FIBs lodged by the party as collateral shall be deducted.

 Aggregate exposure of bank against all its clean facility shall not at any point exceed the amount of bank’s capital and general reserve.  Advances given to the employees of bank in accordance with their accommodation availed by any borrower from banks / financial institution does not exceed 10 times of capital and reserve of the borrower.  A borrower who is prepared to inject fresh equity irrespective of the fact that its equity is negative is eligible to obtain finance from bank to the extend of 10 times fresh injected equity.  No banking company allow financing facilities whether fund based / non funded against the shares of companies which are not in central depository system.








Credit cycle start with request letter. When customer gives a request letter to bank that he want that much amount of credit from bank.

When bank receive the request letter form customer. The officer of credit marketing department make credit line proposal of client. It is essential that the proposal define clearly the purpose of facility, the source of repayment, the agreed repayment. Schedule, the value of security and customer relationship consideration implicit in credit division. The security to be accepted as collateral for the facility and all the documentation relating to the security of facility must be in the approved from all the procedures and required documentation must be completed all these things all feed in CLP. CLP is basically a medium to present proposal for seeking approval of credit line in client. In CLP they feed complete data of the client that include:           Credit Limit Legal status of company History of relationship / introduction with bank Line of Business Background of proprietor / owner / partner Purpose of facility Security Along with it they include borrower basic fact sheet CCA Prudential checklist

After the processing of information, credit officer decided whether to give credit to that person or not. They also check whether its security has any market value or not. Decision is taken by the branch credit committee (BCC ). If the proposal is within the discretionary powers of committee the proposal may approve after revaluation of credit risk. It CLP beyond discretionary power of branch credit committee the CLP is sent to credit division at head office along with supporting documents and recommendation of branch credit committee.

When decision is made now credit officer offer that we will give you loan up till that limit not more than that. Up till now credit marketing officer does all the process. After that credit administration officer’s work start. Credit administration department basic function is to fulfill the requirement of documents as a security for credit. Different types of documents are required for pledging, mortgage and hypothecation.

Documents required for C.F. Hypothecation
Legal stamp documents required:
     Promissory note Letter of hypothecation Letter of guarantee Letter of continuity Agreement of finance

Letters without stamp:
    Letter of arrangement Letter of disbursement Letter of authority SBP regulation undertaking

Documents required for C. F. Pledge
Legal stamp documents required:
      Agreement of finance Promissory note Letter of guarantee Memorandum of deposit of title deed Letter of hypothecation Letter of continuity

Letters without stamp:
    Letter of arrangement Letter of disbursement Letter of authority SBP regulation undertaking

Property Documents for Mortgage
           Legal advice about property documents Title deeds ( Original documents of property ) Aux sajra ( Location site map ) NEC ( Non-Encompass Certificate ) PT 1 in favor of borrower PT 1 in favor of bank Mo TD ( Mortgage of title deeds ) Agreement to create mortgage Letters submit to ETOS & register Irrevocable general power of authority ( IGPA ) Valuation report

Here documents are checked security is properly checked by the value. Value tells the security. Here following characteristic of security are checked.       Market value Consistency Salable Storable Transferable Transportation

On completion of legal documents and security arrangements and receipt of completion certificate from recognized legal counsel, the bank according to the approved schedule prepared by bank after obtaining confirmation of other payments have been funds from sponsors other source viz, equity fund from sponsors release of fund by other co financiers etc. after the valuation of security the loan is disbursed to customer.

Responsibility lies to branch manager to monitor the overall profit and risk aspect of credit portfolio in accordance with criteria setout in bank’s credit policy. After the disbursement credit administration officer monitor the performance of customer whether he is fulfilling the requirement or not. He is paying markup or not for which purpose he has taken the loan whether he is utilizing loan for that purpose or not.

After specific time period credit officer see what customer want whether he wants to renew / revise or writ off it. If he wants to renew it he said to officer to renew it with same limit.

NBP ATM Network

Burewala Faisalabad Gujar Khan Gujranwala Gujrat Hyderabad Islamabad Karachi Lahore Mirpur

Multan Muzaffarabad Peshawar Quetta Rawalpindi Sheikhupura Sialkot Taxila Wah Cantt.

Unprecedented Safety - Unprecedented Return Premium Aamdani Home Page

Unprecedented Safety - Unprecedented Return Premium Saver Home Page

President's Rozgar Scheme - Easy financing for self employment Karobar Home Page Affordable, Flexible & Convenient home financing for all Saibaan Home Page

Take upto 20 Advance Salaries - Affordable Installations from 1 - 60 months Advance Salary Home Page

One Card does it all - ATM plus Debit Card in one Cash Card Home Page

Invest with Confidence - Marginal Finance Facility Investor Advantage Home Page

Meet your need for ready cash against your idle gold jewelry with no minimum limits Cash n Gold Home Page

NBP KISAN Taqat Kisan Taqat Home Page

NBP's affordable agricultural program offers you a wide range of financing Kisan Dost Home Page

Knitting Links - AASAN Banking Online Home Page

NBP Helpline 0800-80080 from 8:30 am to 10:00 pm

The loan officer will be responsible for the collection of finance installments for initial 60 days from the date of default. After that, the case will be handed over to the collection officer provided by the Outsourced Collection Agency.

Collection Structure
The country collections Head will manage overall collections. Under the country Head there will be Regional collections Managers (RCM). The collection officer will directly report to the RCM and indirectly report to the Branch Manager. The collection process is to be divided into following four categories:  Front End  Mid Range  Hard Core  Repossession

Selling Skills
The New Model of Selling
 Selling has changed dramatically over the last few decades, primarily because customers have changed  Customers are far more knowledgeable about products and services available today then ever before.  Competition today is far more stronger than has ever been  There are far more products and services available to satisfy customers needs then ever before

 Customers are more sophisticated and demanding then they have ever been, for even the smallest products  Acceptance- satisfaction a deep subconscious need of every person  Acceptance must be established first  You express your acceptance with unconditional positive regards, no judgment!  Smile be glad to see him or her  Agreeability- one of the most desirable qualities in human relation  Never tell him he’s wrong in his general opinion  If the issue is unimportant, just let it pass  If the issue is important, use third party question to avoid appearing argumentative.

     Positive Mental Attitude- the degree to which you are a “Cheerful Person” Always look for the good in every person and situation Always interpret things positively to yourself Smile, relax, be friendly with every one you meet Courtesy- the degree to which you are polite and correct in your interaction with others

 Be polite to everyone you meet  Admiration raises the self esteem of others and builds better relations  Compliment people on their possessions at home and work

 Compliment people on their accomplishments- their degrees, awards or other form of recognition.  Appreciation-a powerful way to build high quality relationships  Develop an attitude of gratitude in every thing you do  Thank everyone you meet for every thing they do for you  Always say “thank you for your time” to your prospect and your customers  Send “thank you” notes, cards and gift regularly

For technology, existing CAMS systems bas been enhanced / modified in the light of the proposed scheme. The system is centralized and its database is to be maintained at Head Officer level the I.T system (CAMS) will be lived at all National Bank of Pakistan online branches IT platform with specific automation and MIS generation capabilities for the scheme, as under: o Product type sales i.e. CNG auto Rickshaw, Utility Store & PCO etc. o Geographical distribution of loans o Processing Turn Around Time o Performance evaluation reports on Turn Around Time o By Classification of applicant o Loan limits o Loan tenure o Mark-up rate wise o Govt. mark-up share collection and loss sharing reports Etc.


S Branch No. Qasim Road 1 Branch 2 Main Branch 3

Location Qasim Road, Multan Cantt. Main Branch, Chowk Hussain Agahi

Telephone 061 9200529 9200892 9210139 9200872


Gulgasht Gulgasht Colony Multan Colony Branch Chowk Nawan Chowk Nawan Shaher, 4 Shaher Multan

Notice is hereby given that the 55th Annual General Meeting of National Bank of Pakistan, will, Insha - Allah, be held on Friday, the 30th April, 2004, at 3:00 P.M. (PST) in Crystal Ball Room, Karachi Marriott Hotel, Abdullah Haroon Road, Karachi. The following business will be transacted in the meeting:

Ordinary business: 1. To receive and adopt the Audited Accounts of the Bank for the year ended 31st December,

2003, together with the Directors’ & Auditors’ Reports thereon. 2. To appoint auditors for the year ending 31st December, 2004 and fix their remuneration. 3. To consider and approve Cash Dividend @ Rs. 1.25 per share i.e., 12.5% and 20% Bonus Shares (thereby increasing Paid-up Capital of the Bank from Rs. 4,103,421,850/- to

Rs.4,924,106,220/-) as recommended by the Board of Directors for the year ended 31st December, 2003 (subject to GoP / Regulatory approvals).

Special Business: 4. To approve / ratify the following donations aggregating Rs. 15,651,148.50, recommended /

approved by the Bank’s Management / Board:

Approval for :


Donation of the sale proceeds of 1414 fractional Bonus shares of 2002 to any charitable trust: Donation to Prime Minister’s Flood Relief Fund-2003

Ratification for :

ii) iii)

One time Grant / Donation to Dr. Muhammad Uzair, an ex-employee of former NDFC (merged into NBP): iv) Donation to Special Olympics Pakistan : 15,569,000.00 Total Rs. 15,651,148.50



Rs. 15,009,000.00 Rs. Rs. 500,000.00 60,000.00

(Statement under Section 160 of The Companies

Ordinance,1984 is enclosed). To transact any other business with the permission of the Chairman. By Order of the Board Karachi. Dated: April 08, 2004 (S. Ali Raza) President

Note: i) The Share Transfer Books of the Bank shall remain closed from 21-04-2004 to 30-04-2004 (both days inclusive). Transfers received at Messrs THK Associates (Pvt.) Ltd., Ground Floor, Sheikh Sultan Trust Building No. 2, Beaumont Road, Karachi, the Bank’s Registrar and Share Transfer Agent, at the close of the business on 20-04-2004 will be treated in time for purpose of the entitlement of Cash Dividend / Bonus Shares. A member entitled to attend and vote at the Annual General Meeting is entitled to appoint another member as a proxy to attend and vote on his / her behalf. The Government of Pakistan and State Bank of Pakistan and any Corporation(s), being member of the Bank, may nominate any person as its representative to attend the Annual General Meeting under authority of a Power of Attorney or a Board of Directors’ Resolution. Proxies or nominations, in order to be effective and valid, must be received at the office of the Bank’s Registrar / Transfer Agent, Messrs THK Associates (Pvt.) Limited, Ground Floor, Sheikh Sultan Trust Building No.2, Beaumont Road, Karachi, not less than 48 hours before the time of holding the Annual General Meeting.The CDC Account Holders and Sub-Account Holders, whose Registration details are available in the Share Book Detail Report shall be required to produce their respective Original National Identity Cards (NICs) or original Passports at the time of attending the Annual General Meeting to facilitate identification. Such Account Holders and Sub-Account Holders should also bring / know their respective participant I.D. No. and the CDC Account Number. In case of proxy, he/she must enclose an attested copy of his / her NIC or Passport. Representative(s) of corporate member(s) should bring usual documents required for such purpose.



Members are requested to timely notify any change in their addresses to the Bank’s Registrar / Transfer Agent, Messrs THK Associates (Pvt.) Limited.

Statement Under Section 160 of The Companies Ordinance, 1984
This statement sets out the material facts concerning the Special Business, given in agenda item No. 4 of the Notice, to be transacted at the 55th Annual General Meeting of National Bank of Pakistan. i) Donation of net sale proceeds amounting to Rs. 82,148.50 of 1414 fractional bonus shares-2002 to a charitable trust :

On the basis of operating results for the year ended December 31, 2002, the Board in its meeting held on April 07, 2003, recommended payment of 12.5% cash dividend and 10% Bonus Shares to the Bank’s shareholders, which was also approved by the Bank’s shareholders in 54th AGM held on May 13, 2003.Accordingly, Dividend Warrants and Bonus Shares were issued to the shareholders as per their entitlement. In this connection, 1414 Bonus Shares, being fractional shares, could not be distributed to the shareholders. For disposal of these fractional 1414 Bonus Shares a consolidated Share Certificate No. 052348 in the name of “Secretary (Board), NBP”, was issued which was sold through a member of KSE, Messrs A. Sattar Motiwalla Securities (Pvt.) Ltd., against net sale proceeds of Rs.82,148.50 . On account of high cost of computer printing, post printing, distribution / postage and handling charges of the fractional coupons, the NBP Board in its meeting held on March 26, 2004 recommended that the sale proceeds of the fractional Bonus Shares, be donated to a Charitable Trust.In this connection, approval of shareholders is now being solicited for donating the net sale proceeds amounting to Rs. 82,148.50 of 1414 fractional Bonus Shares – 2002, to a charitable trust, name of which will be approved by the President (NBP). ii) Donation of Rs. 15.009 million to Prime Minister’s Flood Relief Fund-2003: Prime Minister’s Flood Relief Fund-2003 was established under the directives of SBP to help the flood affected citizens of Pakistan. An appeal was made by GoP to all Pakistan nationals and institutions to contribute generously towards this fund.NBP has been contributing towards such funds in the past and in response to the aforesaid call made a donation of Rs.15.009 million, with the approval of the Bank’s Operations Committee which was subsequently ratified by the Board of Directors in its meeting held on September 13, 2003. The cheque was handed over by the President (NBP) to the Prime Minister to help the flood affected citizens of the country. The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD Circular No. 4 dated February 02, 2000. iii) One time grant / donation of Rs. 500,000/- to Dr. Muhammad Uzair, an ex-employee of former NDFC (merged into NBP):

Dr. Muhammad Uzair is a renowned scholar who served in various public sector / autonomous organizations for about 30 years. He unfortunately could not earn regular pension. He is over 70 years of age and is in dire need of financial assistance.

In recognition of his meritorious services and contributions in the fields of academics, research and economic management, the Prime Minister of Pakistan on the recommendations of Finance Minister sanctioned a one time pensionary grant of Rs.500,000/-. As Dr. Uzair has spent nearly 10 years in the former NDFC (merged into NBP), the Finance Minister requested NBP through GoP, Economic Affairs Division’s letter dated September 15, 2003, to make a matching one time pensionary grant / donation of Rs.500,000/- to Dr. Muhammad Uzair. Accordingly, an amount of Rs.500,000/- was paid to Dr. Muhammad Uzair with the approval of the Bank’s Operations Committee which was subsequently ratified by the Board in its meeting held on October 17, 2003. The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD Circular No. 4 dated February 02, 2000. iv) Donation of Rs. 60,000/- To Special Olympics Pakistan : Special Olympics Pakistan is an international organization dedicated to improving individuals with mental disabilities. The organization arranges programmes for children and adults with mental retardation for developing improved physical fitness, greater self-confidence and positive self-image. They organized a fund raising programme which was held on December 31, 2003 and requested NBP for participation in the programme.National Bank of Pakistan made a donation of Rs.60,000/- for the aforesaid annual fund raising function with the approval of the Operations Committee which was subsequently ratified by the Board of Directors in its meeting held on January 22, 2004. The matter is now being placed before the shareholders for ratification in terms of SBP, BPRD Circular No. 4 dated February 02, 2000.

In this respect the following resolution is proposed to be passed, as an Ordinary Resolution: “RESOLVED THAT the donation of Rs.82,148.50, being the net sale proceeds of 1414 fractional Bonus Shares – 2002 to a charitable trust, name of which will be approved by the President (NBP), be and is hereby approved.” “FURTHER RESOLVED THAT the decisions taken by the Management / Board towards approving donations aggregating Rs.15.569 Million, as mentioned below, be and are hereby ratified: i) ii) iii) Donation to Prime Minister’s Flood Relief Fund-2003 One time grant / donation to Dr. Muhammad Uzair an ex-employee of former NDFC (merged into NBP) Donation to Special Olympics Pakistan : Total: Rs. Rs. Rs. Rs. 15.009 Million 0.500 0.060 Million Million

15.569 Million

Auditors’ Review Report to the Members on Statement of Compliance with best Practices of the Code of Corporate Governance

We have reviewed the Statement of Compliance with the best practices (the Statement) contained in the Code of Corporate Governance (the Code) prepared by the Board of Directors of National Bank of Pakistan to comply with the Prudential Regulation No. XXIX, responsibilities of Board of Directors vide BSD Circular No. 15, dated June 13, 2002, Listing Regulation No. 37 of the Karachi Stock Exchange, and Chapter XIII of the Lahore Stock Exchange and Chapter XI of the Islamabad Stock Exchange where the Company is listed.

The responsibility for compliance with the Code is that of the Board of Directors of the Bank. Our responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement reflects the status of the Bank’s compliance with the provisions of the Code and report if it does not. A review is limited primarily to inquiries of the Bank personnel and review of various documents prepared by the Bank to comply with the Code.

As part of our audit of the financial statements we are required to obtain an understanding of the accounting and internal control systems sufficient to plan the audit and develop an effective audit approach. We have not carried out any special review of the internal control system to enable us to express an opinion as to whether the Board’s statement on internal control covers all controls and the effectiveness of such internal controls. Based on our review, nothing has come to our attention which causes us to believe that the Statement does not appropriately reflect the Bank’s compliance, in all material respects, with the best practices contained in the Code as applicable to the Bank for the year ended December 31, 2003. M. Yousuf Adil Saleem & Co. Chartered Accountants Karachi Taseer Hadi Khalid & Co. Chartered Accountants Karachi

BALANCE SHE E T as at December 31, 2003

2002 US dollars

2003 in 000

2003 Note

2002 in ' 000

ASSETS 966,294 624,309 377,891 2,497,455 2,445,642 478,332 141,210 1,033,967 420,301 525,738 2,891,943 2,801,365 381,892 155,554 Cash and balances with treasury banks Balances with other banks Lendings to financial institutions Investments Advances Other assets Operating fixed assets Deferred tax assets 7,531,133 8,210,760 LIABILITIES 58,567 174,568 6,314,166 95,647 287,001 6,883,222 Bills payable Borrowings from financial institutions Deposits and other accounts Sub-ordinated loans 1,289 516,506 49,526 7,114,622 416,511 715 453,821 10,369 7,730,775 479,985 NET ASSETS REPRESENTED BY Share capital Reserves Unappropriated profit Surplus on revaluation of assets 20 Liabilities against assets subject to finance lease Other liabilities Deferred tax liabilities 17 18 13 41,117 26,080,400 595,864 74,051 29,682,837 2,846,186 14 15 16 5,496,738 16,493,514 3,365,744 10,032,135 6 7 8 9 10 11 12 59,420,502 55,531,453 24,154,070 35,878,101 30,213,352 21,716,802 166,195,619 143,524,971 160,990,265 140,547,374 21,946,846 27,489,021 8,939,483 8,115,131 471,860,137 432,802,853

395,568,490 362,865,637

444,276,123 408,866,590 27,584,014 23,936,263 3,730,384

64,912 124,317 59,243 248,472 168,039 416,511

71,403 141,526 102,616 315,545 164,440 479,985


4,103,422 8,133,312 5,897,163 18,133,897 9,450,117 27,584,014

7,144,326 3,404,593 14,279,303 9,656,960 23,936,263

Contingencies and commitments


PROFIT AND LOSS ACCOUNT for the year ended December 31, 2003
2002 2003 US dollars in '000 2003 Note Rupeesin '000 2002

472,030 255,766 216,264 31,707 366 1,813 2,824 36,710 179,554 54,587 15,957 11,471 185 8,443 90,643 270,197

338,487 117,205 221,282 29,317 7,996 8,261 45,574 175,708 56,742 19,606 12,367 2 37,408 126,125 301,833

Mark-up/return/interest earned Mark-up/return/interest expensed Net mark-up/interest income Provision against non-performing advances Provision for diminution in the value of investments Provision against off balance sheet obligations Bad debts written off directly Net mark-up/interest income after provisions NON MARK-UP/INTEREST INCOME Fee, commission and brokerage income Dividend income Income from dealing in foreign currencies Share of profit of joint venture Other income Total non mark-up/interest income NON MARK-UP/INTEREST EXPENSES Administrative expenses Salaries and allowances Charge for defined benefit plans Provision for voluntary handshake scheme Other administrative expenses Other provisions/write offs Other charges Total non mark-up/interest expenses Staff Welfare Fund Extra ordinary items Profit before tax Taxation - Current - Prior year(s) - Deferred Profit after tax Unappropriated profit brought forward Transfer from surplus on revaluation of fixed assets: Prior year(s) Current year

22 23 10.3 9.10 18.1 10.5.1

19,452,317 6,735,579 12,716,738 1,684,777 459,523 474,743 2,619,043 10,097,695 3,260,863 1,126,742 710,726 108 2,149,800 7,248,239 17,345,934

27,126,839 14,698,507 12,428,332 1,822,154 21,031 104,217 162,276 2,109,678 10,318,654 3,137,007 917,020 659,247 10,609 485,209 5,209,092 15,527,746

24 9.5 25

79,406 28,354 8,928 42,318 159,006 55 415 159,476 110,721 5,536 105,185 46,112 17,401 2,461 65,974 39,211 13,089 24,592 877 38,558 77,769 (3,921) (6,491) (8,114) (18,526) 59,243 0.09

82,852 4,883 5,109 42,999 135,843 582 398 136,823 165,010 8,250 156,760 80,914 25,048 (22,252) 83,710 73,050 59,243

26 27

4,761,408 280,632 293,612 2,471,083 7,806,735 33,454 22,894 7,863,083 9,482,851 474,143 9,008,708 4,650,000 1,439,444 (1,278,839) 4,810,605 4,198,103 3,404,593

4,563,326 1,629,445 513,073 2,431,935 9,137,779 3,134 23,874 9,164,787 6,362,959 318,148 6,044,811 2,650,000 1,000,000 141,426 3,791,426 2,253,385 752,226 1,413,246 50,411 2,215,883 4,469,268 (225,339) (373,038) (466,298) (1,064,675) 3,404,593 5.49


833 60,076 133,126 (7,305) (14,280) (8,925) (30,510) 102,616 0.18

Profit available for appropriation Appropriations Transfer To: Statutory reserve Capital reserve Revenue reserve Reserve for issue of bonus shares @ 20% (2002: 10%) Proposed cash dividend Rs. 1.25 per share (2002: Rs 1.25 per share) Unappropriated profit carried forward Basic/diluted earnings per share (Rupees) 30

47,890 3,452,483 7,650,586 (419,811) (820,684) (512,928) (1,753,423) 5,897,163 10.23

CASH FLOW STATEMENT for the year ended December 31, 2003
2002 US dollars in '000 2003 Note 2003 2002 Rupees in '000

CASH FLOW FROM OPERATING ACTIVITIES 105,185 156,759 Profit before taxation 15,957 19,606 Less: Dividend income 89,228 137,153 Adjustments for non-cash charges 8,557 6,728 Depreciation 31,707 29,317 Provision against non-performing advances 366 7,996 Provision for diminution in the value of investments 1,813 8,261 Provision against off balance sheet obligations 8,928 5,109 Provision for voluntary handshake scheme (84) (132) (Gain) on sale of fixed assets 162 219 Financial charges on leased assets 55 582 Other provisions/ write off (185) (2) Share of (profit) of Joint Venture 51,318 58,078 140,546 195,231 (Increase)/decrease in operating assets Lendings to financial institutions Held-for-trading securities Advances Other assets Increase/(decrease) in operating liabilities Bills payable Borrowings from financial institutions Deposits Other liabilities Income tax (paid)/received Special separation package cost paid Financial charges paid Net cash flows from operating activities CASH FLOW FROM INVESTING ACTIVITIES Net investments in available-for-sale securities Net investments in held-to-maturity securities Dividend received Investments in operating fixed assets Investments in subsidiaries, associates and joint venture Sale proceeds of property and equipment disposed off Net cash (used) in investing activities

9,008,708 1,126,742 7,881,966 386,662 1,684,777 459,523 474,743 293,612 (7,568) 12,584 33,454 (108) 3,337,679 11,219.645

6,044,811 917,020 5,127,791 491,764 1,822,154 21,031 104,217 513,073 (4,833) 9,361 3,134 (10,609) 2,949,292 8,077,083

(132,872) (182,649) 6,682 (1,762) 498,950 (385,040) 61,339 80,533 434,099 (488,918) 19,496 37,081 (25,280) 112,433 230,537 569,057 24,887 (74,115) 249,640 644,456 23,261 (90,736) (105,044) (5,172) (162) (219) (81,945) (96,127) 742,340 254,642 (1,078,416) (423,058) (55,963) (1,362) 15,957 19,606 (2,800) (10,172) (5,509) (4,539) 279 275 (1,126,452) (419,250)

(10,496,550) (101,263) (22,127,668) 4,628,100 (28,097,381) 2,130,994 6,461,379 32,702,853 (4,259,266) 37,035,960 (5,214,439) (297,239) (12,584) (5,524,262) 14,633,962

(7,635,970) 383,984 28,673,903 3,525,063 24,946,980 1,120,395 (1,452,828) 13,248,569 1,430,240 14,346,376 1,336,778 (6,036,703) (9,361) (4,709,286) 42,661,153

(24,312,528) (78,276) 1,126,742 (584,586) (260,876) 15,799 (24,093,725)

(61,974,971) (3,216,109) 917,020 (160,935) (316,597) 16,007 (64,735,585)

CASH FLOW FROM FINANCING ACTIVITIES (8,114) (8,071) Dividend paid (517) (573) Payments of lease obligations (8,631) (8,644) Net cash (used) in financing activities 2,696 2,115 Effects of exchange rate changes on cash and cash (390,047) (171,137) Decrease in cash and cash equivalents 2,031,182 1,641,135 Cash and cash equivalents at the beginning of the year 1,641,135 1,469,998 Cash and cash equivalents at the end of the year 31 (463,814) (32,934) (496,748) 121,529 (9,834,982) 94,313,554 84,478,572 (466,298) (29,715) (496,013) 154,959 (22,415,486) 116,729,040 94,313,554

STATEMENT OF CHANGES IN EQUITY for the year ended December 31, 2003
Share Capital Reserve Exchange Reserve for Statutory General Unappropriated Total Equalization issue of Reserve Bonus Shares

……………………....................................................................................................……… Rupees in '000 ……………………....................................................................................................……… Balance as at December 31, 2001 3,730,384 3,109,488 3,845,237 521,338 752,226 11,958,673

Profit after taxation for the year ended December 31, 2002 ---------------------------------------------------------------------------------------------------2,253,385 2,253,385 Transfer to statutory reserve (225,339) ------------------------------------------------------------------------------------------------------------------------Proposed cash dividend ------------------------------------------------------------------------------------------------------------(466,298) (466,298) Transferred to reserve for issue of bonus shares 373,038 (373,038) Exchange adjustments on revaluation of capital of foreign branches 243,396 243,396 Transfer from surplus on revaluation of fixed assets - incremental depreciation - prior year(s) -------------------------------------------------------------------------------------------------------------------------1,413,246

1,413,246 - current year - net of tax ----------------------------------------------------------------------------------------------------------50,411 50,411 Deferred tax liability recognized on exchange equalization reserve (1,173,510) (1,173,510) Balance as at December 31, 2002 3,730,384 2,179,374 373,038 4,070,576 521,338 3,404,593 14,279,303

Profit after taxation for the year ended December 31, 2003 -----------------------------------------------------------------------------------------------------4,198,103 Transfer to statutory reserve (419,811) -------------------------------------------------------------------------------------------------------------------------Issue of bonus shares 373,038 (373,038) -------------------------------------------Proposed cash dividend ------------------------------------------------------------------------------------------------------------(512,928) Transferred to reserve for issue of bonus shares 820,684 (820,684) Exchange adjustments on revaluation of capital of foreign branches 186,968 Transfer from surplus on revaluation of fixed assets- incremental depreciation --------------------------------------------------------------------------------------------------------------------------47,890 Deferred tax liability recognized on exchange equalization reserve Balance as at December 31, 2003

4,198,103 (512,928) -




(65,439) 2,300,903





(65,439) 18,133,897

1. STATUS AND NATURE OF BUSINESS National Bank of Pakistan (the bank) was established under the National Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges in Pakistan. Its registered and Head Office is situated at I.I. Chundrigar Road, Karachi. The bank is engaged in providing commercial banking and related services in Pakistan and overseas. The bank also handles treasury transactions for the Government of Pakistan (GoP) as an agent to the State Bank of Pakistan (SBP). The bank operates 1,183 (2002: 1,189) branches in Pakistan and 16 (2002: 15) overseas branches (including the Export Processing Zone branch, Karachi). Under a Trust Deed, the bank also provides services as trustee to National Investment Trust (NIT) including safe custody of securities on behalf of NIT .


BASIS OF PRESENTATION In accordance with the directives of the Federal Government regarding the shifting of the banking system to Islamic modes, SBP has issued various circulars from time to time. Permissible form of trade related mode of financing includes purchase of goods by the bank from their customers and immediate resale to them at appropriate mark-up in price on deferred payment basis. The purchases and sales arising under these arrangements are not reflected in these accounts as such but are restricted to the amount of facility actually utilized and the appropriate portion of mark-up thereon. US dollar equivalent The US dollar amounts shown on the balance sheet, profit and loss account and cash flow statement are stated as additional information solely for the convenience of readers. For the purpose of conversion to US Dollars, the rate of Rs 57.4685 to one US Dollar has been used for both 2003 and 2002 as it was prevalent rate as on December 31, 2003.


STATEMENT OF COMPLIANCE These financial statements are prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984 and the Banking Companies Ordinance, 1962. Approved accounting standards comprise of such International Accounting Standards as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP) differ with requirements of these standards the requirements of the Companies Ordinance, 1984, Banking Companies Ordinance, 1962 or the requirements of the said directives take precedence. The SECP has approved the adoption of International Accounting Standard 39, Financial Instruments: Recognition and Measurement and International Accounting Standard 40, Investment Property. The requirements of these standards have not been taken into account for the purpose of these financial statements as the implementation of the said standards have been deferred by SBP, vide BSD circular number 10 dated August 26, 2002, for banks in Pakistan till further instructions. However, investments have been classified in these financial statements in accordance with the format of financial statements for banks issued by SBP vide BSD circular No. 36 dated October 10, 2001. Consolidation

The bank accounts for its investments in associates and subsidiaries at cost, except for quoted associates which are valued at market rates prevailing at reporting date. The details of these investments are given in notes 9.4 and 9.6. The bank considers that the effect of consolidation of subsidiaries' financial statements will not have any material impact on bank's financial position or results and accordingly consolidated financial statements have not been prepared. The SECP has granted exemption to the bank from the requirements of sub section (1) of section 237 of the Companies Ordinance, 1984 vide its letter No. EMD/CO/233/627/2003-1164 dated August 5, 2003.


For technology, existing CAMS system has been enhanced / modified in the light of the proposed scheme. The system is centralized and its database is to be maintained at Head Office level. The I.T system (CAMS) will be lived at all NBP online branches. IT platform with specific automation and MIS generation capabilities for the scheme, as under:  Product type sales i.e. GNG auto Rickshaw, Utility Store & PCO etc.  Geographical distribution of loans  Processing Turn Around Time  Performance evaluation reports on Turn Around Time  By classification of applicant  Loan limits  Loan tenure  Mark-up rates wise  Govt. mark up share collection and loss sharing reports etc

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