INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

CITY BRANCH MANSEHRA (1372)

Submitted by
Asfand Yar Bakht

Roll# F-15/B-13

Supervised by
Ikram-Ul-Haq

Government College of Management

Sciences Mansehra
SESSION

i
 2015-2019

INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

CITY BRANCH MANSEHRA (1372)

Submitted by
Asfand Yar Bakht

Roll# F-15/B-13

Supervised by
Ikram-Ul-Haq
This internship report is submitted in partial fulfillment of the
requirements for the degree of Bachelors of Business
Administration awarded by the Hazara University

Government College of Management

Sciences Mansehra

ii
SESSION
2015-2019

iii
 Government College of Management Sciences
Mansehra

APPROVAL SHEET

Approval Committee

1. External Examiner

Mr. Signature______________________

2. Supervisor
Ikram-Ul-Haq Signature______________________

3. Head of department

Prof. Signature_____________________
Designation Principal GCMS Mansehra

iv
 DEDICATION

All the efforts in compiling this report are

Dedicated to

My Lovely Parents, My Family Members

&

My Honorable Faculty Members

Of Management Sciences Department of College

Who Motivated and Supported me at Every Stage of My Life

& who helped me in this Achievement.

v
 ABSTRACT

The methodology for data collection that was available resources by the organization, like
website, annual reports, books, articles publicly available data, etc. also, interviews with
some employees and observation methods were used. In the first chapter introduction to the
report, background of study, scope of the study, merits, limitation, and scheme of the study
are given. The report covers the history of NBP bank, introduction of NBP, its background,
role and functions, its core values, and miscellaneous topics related to Finance department of
NBP Bank

Ultimately whole argument comes down to this: the bank is functioning in a proper &
systematic manner, but need more competitive strategies, long term debts, & outside
creditors, creditors should provide the funds to meet the SBP policies to have the maximum
branches.

In this report, I also included the financial analysis that helps to know that where the NBP is
strong and where it needs improvements. NBP offers new products and services day by day
for improving its performance, but there are many hurdles in the way of success of NBP, all
the recommendations are given in the report and there solutions as well as that can be helpful
in the success of NBP in future.

vi
 TABLE OF CONTENTS

Abstract ........................................................................................................................................v
Acknowledgements.........................................................................................................................x
List of abbreviations.......................................................................................................................xi
Executive summary.......................................................................................................................xii
Chapter 1........................................................................................................................................1
Introduction of Study......................................................................................................................1
1.1 Background of Study.................................................................................................................1
1.2 Objectives of study...................................................................................................................1
1.3 Scope of Study..........................................................................................................................2
1.4 Limitations of the work.............................................................................................................2
1.5 Benefits of the Study................................................................................................................2
1.6 Research methodology.............................................................................................................2
1.6.1 The major sources for Primary data includes.................................................................3

1.6.2 The major sources for Secondary data includes.............................................................3

Chapter 2........................................................................................................................................4
Introduction to organization (NBP).................................................................................................4
2.1 They aim to be an organization that is founded on…................................................................5
2.1.1 They aim to be People who............................................................................................5

2.1.2 They have confidence that tomorrow they will be…......................................................5

2.1.3 Evaluation of Banking / Industry in Pakistan..................................................................5

2.2 History of NBP.........................................................................................................................7

2.3 Nature of National Bank of Pakistan.......................................................................................13
2.3.1 Board of Directors........................................................................................................14

2.4 Senior Management...............................................................................................................15

2.4.1 Senior Management for Overseas Operation...............................................................18

2.5 Vision and Mission Statements...............................................................................................18

2.5.1 Mission........................................................................................................................18

2.6 Objectives of National Bank of Pakistan..................................................................................18

2.7 Core Values.............................................................................................................................19
2.8Number of Employees of National Bank of Pakistan................................................................19
2.9 Product Lines..........................................................................................................................20
chapter 3 ......................................................................................................................................38
ANALYSIS of NBP...........................................................................................................................38
3.1 Financial Analysis....................................................................................................................38
3.1.1 Vertical analysis............................................................................................................38

3.1.1.3 Horizontal Analysis of NBP`s Balance interpretation...............................................41

3.2 Horizontal Analysis of Income Statement...............................................................................43

Interpatition..................................................................................................................................44
3.3Vertical Analysis of Income Statement.....................................................................................46
Interpatition..................................................................................................................................46
vii
3.4 Ratio Analysis..........................................................................................................................47
3.4.1Current ratio.................................................................................................................47

3.4.2 Net Working Capital.....................................................................................................48

3.4.3Debt to Equity Ratio......................................................................................................50

3.4.4Debt Ratio.....................................................................................................................51

3.4.5 Equity Ratio..................................................................................................................52

3.4.6 Net Interest Margin:.....................................................................................................53

3.4.7 Earning Asset to total assets........................................................................................54

3.4.8 Return on Earning Assets.............................................................................................55

3.4.10 Equity to Total Assets.................................................................................................55

3.4.11 Non Performing Loan to Total Loan............................................................................56

Chapter 4......................................................................................................................................58
Conclusion and recommendations...............................................................................................58
4.1 Conclusion..............................................................................................................................58
4.2 Recommendations..................................................................................................................58
4.3 Future prospects of National Bank of Pakistan.......................................................................61
References....................................................................................................................................64

viii
ix
 LIST OF TABLES

Table 1 Board of directors........................................................................................................14

Table 2 Verical analysis of balance sheet.................................................................................38
Table 3 Horizontal analysis of balance sheet...........................................................................42
Table 4 horizontal analysis of income statement.....................................................................43
Table 5 vertical analysis of income statement..........................................................................46

x
 ACKNOWLEDGEMENTS

With the name of ALLAH the Most Beneficial and Merciful. I completed my internship in
National Bank of Pakistan City Branch Mansehra. I am really pleased to have a professional
learning experience in one of leading organizations of country. In these 8 weeks I worked in
different departments and I am truly thankful to all officers and staff who entirely give
assistance to me. I am also grateful to my honorable supervisor Ikram-Ul-Haq and all other
teachers who motivated me to work hard and taught me techniques to learn work. The
account of acknowledgement will remain incomplete if I do not express my sincere
appreciation, indebtedness and gratitude to my parents and siblings. They have always been a
source of encouragement for me.

And last but not the least I would like to express my gratitude to all the staff of NBP City
Branch Mansehra.

Asfand Yar Bakht

xi
 LIST OF ABBREVIATIONS

BOD Board of Directors

D.D Demand Draft

EBIT Earning Before Income Tax

EPS Earning per share

EVP Executive vice president

I.T Information technology

L/C letter of credit

M/T Mail Transfer

MIS Management Information system

NBP National Bank of Pakistan

PLS Profit and loss saving

SBP State bank of Pakistan

SEVP Senior executive vice president

SVP Senior vice president

SWOT Strength Weaknesses Opportunities Threat

SS Specimen signature

VP Vice president

xii
 EXECUTIVE SUMMARY

This internship report is related to national bank of Pakistan, being a government bank it is
operating in almost every part of the country that is why it is the largest bank of Pakistan.
Furthermore, NBP has its network outside national boundaries of Pakistan. To know about
the functions and procedure of any organization it is very important to work there for
minimum six months than you may able to understand this thing. The intense competition,
among banks, the privatization of the financial institution and financial liberalization in
general are gradually and continuously making the banking sector effective and efficient.

The basic purpose of this report is to describe and define different functions and products of
the bank, to identify weak areas of the bank, to analyze the performance of the management
and to make a financial analysis of it and suggest recommendations. It is also our degree
requirement to do an internship in any company so the basic purpose of this report is to fulfill
the Master degree requirement

The report actually gives the following information, which I have divided in different
chapters. First chapter is about introduction to the report, background of study, scope of the
study, merits, limitations, and scheme of the study. The second chapter is related to history of
banking, banking in Pakistan, introduction to the organization, its historical background, role,
and functions of organization, its core values, and collection of topics related to banking.

Third chapter covers the organizational structure of NBP, different departments working at
NBP and different financial products of NBP. The fourth chapter of this report is related to
the analysis and the findings, which have been observed. It includes the financial analysis;
Analysis no doubt acts as a mirror for the management. In addition, management should
develop plans to avail any opportunities which is been created by the environment because it
is very important in this competitive world. At the end of this report there is
recommendations based on the analysis.

xiii
 CHAPTER 1
INTRODUCTION OF STUDY

Starting with the name of Allah, I am going to write my internship report as

part of the academic requirement for the completion of 4 year’s study in
BBA Hons. Therefore, we the students of BBA Hons are required to
undergo an internship program for the period of 8 weeks as an internee in
an organization. This internship helps me to gain the practical knowledge of
working environment of the banking sector of Pakistan.

1.1 Background of Study

NBP established in 1949, National bank of Pakistan has grown to become
the largest commercial bank in the country, maintaining its position as
Pakistan’s premier bank determined to set higher standards of
achievements. The bank came in to existence by the order promulgated by
governor general and started functioning from Nov 20, 1949. NBP is the
major business partner for the government of Pakistan with special
emphasis on developing Pakistan’s economic growth through aggressive
and balanced lending policies, technologically oriented products and
services offered through its large network of more than 1504 branches
locally, 21 branches internationally and 4 regional offices
Source: (Annual report NBP, 2018).

1.2 Objectives of study

As part of the academic requirement for completing BBA Hons students
are required to undergo eight Weeks of internship with an organization. The
internship is to serve the purpose of acquainting the students with the
practice of knowledge of the discipline of banking administration.
 To understand the various operations of the bank and work in
different departments.

1
  To analyses the financial and operational performance of NBP.
 To study the organizational management structure.
 To make possible recommendation in the light of analyses.

1.3 Scope of Study

The time duration of two months is insufficient for conducting complete
study and observation of a large bank. Being a student specializing in
finance, the focus of this study is on its financial aspects including the
financial health of the bank and its comparison with previous year’s
performance.
1.4 Limitations of the work
There are some limitations which internee had to face during the internship
program, which are described as under:
 The period of two months was too short to properly understand and
analyze all the operations of bank.
 Some of the data was confidential and that was not made available to me.

1.5 Benefits of the Study

An internship grooms a person personally, academically and professionally.
At the end of internship, one gets a certificate, which acknowledges his
work for that specific company. This adds to his experience, an internship is
a great opportunity to improve interpersonal skills. Practical also provides
the opportunity to gain self-confidence. Moreover, it Figure out what one’s
strengths are and also a good time to identify one’s weakness so that he can
improve them.

1.6 Research methodology

National bank of Pakistan is one of the leading and establishes banks of the
country. It has a large setup of departments and a big organizational
structure. While working in a City Branch Mansehra of the bank, it is not
possible to thoroughly cover all the areas of the bank, as it requires more

2
time and two months are in no way sufficient to do so. Different tools and
techniques were used to gather relevant information for writing the report.
Secondly, journals from regional head quarter and staff college was also
reviewed which gave very useful information about the functioning of the
bank.

1.6.1 The major sources for Primary data includes

 Personal observation
Personal observations during the internship period
 Interviews of management
Short interviews of the bank’s management

1.6.2 The major sources for Secondary data includes

 Annual reports of Bank
Annual reports of the last three years
 Books
Relevant course books

3
 CHAPTER 2
INTRODUCTION TO ORGANIZATION (NBP)

NBP contains 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.
At the time of independence in 1947, Pakistan’s commercial banking
facilities were almost jammed according to a plan in the whole sub
continent especially in the Muslim majority areas. Pakistan’s banking and
Industrial sectors were in very poor conditions. Banks largely depend for
their growth and development on industrial sector but at the time of
independence, Pakistan had patriotically on industry except a few textile
mills and only product food grains and agricultural raw materials, most of
the industries were situate in Hindu majority area now called India.
A number of banks closed their branches with the result that only 81
branches remained open on 30th June 1948 out of 487. The head offices
were in India and most of their employees were Hindu, and they fled to
India. Imperial Bank of India, Which was conducting government receipts
and payments, closed down most of its branches thus blocking the funds
needed by the government?

In view of the above mentioned circumstances and in order to

rehabilitee the banking in Pakistan without further delay, on the
recommendations of an committee it was decided to establish as early as
possible a central bank to control the banning and currency in Pakistan.
Accordingly state bank of Pakistan was Pakistan was inaugurated by
Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948.

4
2.1 They 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.
They shall work to…
 Meet expectations through Market-based solutions and products.
 Reward entrepreneurial efforts.
 Create value for all stakeholders.

2.1.1 They aim to be People who

 Care about relationships.
 Lead through the strength of our commitment and willingness to
excel.
2.1.2 They have confidence that tomorrow they will be…
 Leaders in industry.
 An organization will take the trust of S&h.

2.1.3 Evaluation of Banking / Industry in Pakistan

At the time of independence in 1947, Pakistan’s commercial banking
facilities were almost jammed according to a plan in the whole sub
continent especially in the Muslim majority areas. Pakistan’s banking and
Industrial sectors were in very poor conditions. Banks largely depend for
their growth and development on industrial sector but at the time of
independence, Pakistan had patriotically on industry except a few textile
mills and only product food grains and agricultural raw materials, most of
the industries were situate in Hindu majority area now called India.
The country was in trouble and needed most of the general commercial
banking and credit facilities. This need was a little bit satisfied with the
transferring of the head offer of the HBL. To Karachi on 7 th, August 1947.
This bank playing a great role in the next year in the economic

5
development of Pakistan as the Habib Bank was also new in the new
country it was asked to open more branches at new place this was a
difficult time foe H.B.L to open their branches in different places.
In view of the above mentioned circumstances and in order to
rehabilitee the banking in Pakistan without further delay, on the
recommendations of an committee it was decided to establish as early as
possible a central bank to control the banning and currency in Pakistan.
Accordingly state bank of Pakistan was Pakistan was inaugurated by
Quaid-e-Azam Muhammad Ali Jinnah on 1st July 1948. This bank lost on
time in meeting the national requirements of banking, currency and took
following remedial measures. Requested Government of state a new bank
of nation wide services accordingly National Bank of Pakistan was formed
in 1949 which opened many branches and in 1952 took over the emperor
Bank of India.
The bank schedule commercial bank and its principally engaged in the
business of banking as defined in the banking company's ordinance 1962.
National Bank of Pakistan was basically established for reducing the
difficulties of east Pakistan farmers engaged in jute and patens” after mass
migration of community from east and west Pakistan in India. The bank
commenced its operation in November 20.1949 at six centers of jute in the
then East Pakistan. Lahore and Karachi officers were opened subsequently
in December 1949. Before restructuring in 2002, national Bank of Pakistan
with its head office at Karachi operates through 9 regional headquarters at
Lahore, Karachi Hyderabad, Quetta, Peshawar, Multan, Muzaferabad,
Fasilabad and Islamabad.
The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the

6
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.
2.2 History of NBP
The history of National Bank of Pakistan is part of Pakistan’s struggle for
economic independence. National Bank of Pakistan was established on
November 9, 1949 under the National Bank of Pakistan Ordinance, 1949 in
order to cope with the crisis conditions which were developed after trade
deadlock with India and devaluation of Indian Rupee in 1949. Initially the
Bank was established with the objective to extend credit to the agriculture
sector. The normal procedure of establishing a banking company under the
Companies Law was set aside and the Bank was established through the
promulgation of an Ordinance, due to the crisis situation that had developed
with regard to financing of jute trade. The Bank commenced its operations
from November 20, 1949 at six important jute centers in the then, East
Pakistan and directed its resources in financing of jute crop. The Bank’s
Karachi and Lahore offices were subsequently opened in December 1949.
The National Bank of Pakistan came forward to establish its offices in the
Cotton growing areas and extended credit facilities liberally in order to
restore stability to the market. In 1951, the country was once again faced
with a crisis in the cotton trade when prices was crashed and touched the
lowest level since independence following the cessation of hostilities in
Korea. The bank in collaboration with the cotton board provided the
necessary Credit facilities to the trade and the crisis was tided over. The
nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The Bank acts as the agent to the State Bank of
Pakistan for handling Provincial/Federal Government Receipts and
Payments on their behalf. The Bank has also played an important role in
financing the country’s growing trade, which has expanded through the
years as diversification took place.i

The National Bank of Pakistan has its headquarters in Karachi, Pakistan.

The bank operates 1249(2008) branches in Pakistan and 22(2008) overseas
branches. Under a trust Deed, the bank also provides services as trustee to

7
National Investment Trust (NIT) including safe custody of securities on
behalf of NIT. The National Bank of Pakistan has assets worth Rupees
737976.44 million on September 30, 2008.ii

National Bank of Pakistan is today a progressive, efficient, and customer

focused institution. It has developed a wide range of consumer products, to
enhance business and cater to the different segments of society. Some
schemes have been specifically designed for the low to middle income
segments of the population. These include NBP Karobar, NBP Advance
Salary, NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold.

The National Bank of Pakistan has implemented special credit schemes like
small finance for agriculture, business and industries, administrator to
Qarz-e-Hasna loans to students, self employment scheme for unemployed
persons, public transport scheme. The Bank has expanded its range of
products and services to include Shariah Compliant Islamic Banking
products. For the promotion of literature, NBP recently initiated the Annual
Awards for Excellence in Literature. NBP will confer annual awards to the
best books in Urdu and in all prominent regional languages published
during the defined period. Patronage from NBP would help creative work
in the field of literature. The Bank is also the largest sponsor of sports in
Pakistan. It has provided generously to philanthropic causes whenever the
need arose.

It has taken various measures to facilitate overseas Pakistanis to send their

remittances in a convenient and efficient manner. In 2002 the Bank signed
an agreement with Western Union for expanding the base for documented
remittances. More recently it has started Electronic Home Remittances
Project. This project introduces technology based system to handle inward
remittances efficiently, by ensuring that the Bank's branches keep a track of
the remittance received from abroad till its final receipt.

A number of initiatives have been taken, in terms of institutional

restructuring, changes in the field structure, in policies and procedures, in

8
internal control systems with special emphasis on corporate governance,
adoption of Capital Adequacy Standards under Basel II framework, in the
up gradation of the IT infrastructure and developing the human resources.

National Bank has earned recognition and numerous awards internationally.

It has been the recipient of The Bank of the Year 2001, 2002, 2004 and
2005 Award by The Banker Magazine, the Best Foreign Exchange Bank ––
Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging
Market Bank from Pakistan for the year 2005, Global Finance, Kisan Time
Awards – 2005 for NBP's services in the agriculture field. It is listed
amongst the Region's largest banks and also amongst the largest banks in
South Asia 2005, The Asian Banker. It has also been presented a
Recognition Award –– 2004 for having a Gender Sensitive Management by
WEBCOP AASHA besides other awards.
The bank was incorporated with authorized capital of 60 millions .in 960
this amount was redacted to the 30 millions banks issued 15 millions of
which 25% was subscribed by the government and the balance was offered
to the general public .shears to the public where issued in 1950 and where
quickly taken up. In 190 banks ordinance was amended so that it take
ordinarily commercial banking business. On janvery-01-1974 national bank
along with thirteen others commotional banks where nationalized under the
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.
The period 1990’s witnessed financial referees and the national bank also in
cooperated the change in its working and offered new services and products
to its clients .at present the bank is playing very important role in financing
the trade .commerce ,agricultural and important concerns and contributing
the best to word making the country prosperous. The improve its costumer
focus redacted decision making layers restructured its entire command and
control system in business and operational spheres zones and audit offices
in the year 2002 and eliminated the total numbers of regions in hands from
9 to 29 across the country .anew matrix structure has been introduced with

9
the objective to separate the office and the bank offices .to improve the
good governance and enhance the internal control.
 Operation group
 corporate and investment banking group
 special assets management group
National Bank of Pakistan is known as the premier commercial institution
of Pakistan provide the large diversified customer base of 9.009 millions,
which is the biggest figure, in the country and conduct the business
function of state bank of Pakistan in addition to provision of other financial
and allied services such as deposit banking financing and credit remittance
facilities collection government receipts and payments.
National Bank of Pakistan is today a progressive, efficient, and customer
focused institution. It has developed a wide range of consumer products, to
enhance business and cater to the different segments of society. Some
schemes have been specifically designed for the low to middle income
segments of the population. These include NBP Karobar, NBP Advance
Salary, NBP Saibaan, NBP Kisan Dost, and NBP Cash n Gold.

The National Bank of Pakistan has implemented special credit schemes like
small finance for agriculture, business and industries, administrator to
Qarz-e-Hasna loans to students, self employment scheme for unemployed
persons, public transport scheme. The Bank has expanded its range of
products and services to include Shariah Compliant Islamic Banking
products. For the promotion of literature, NBP recently initiated the Annual
Awards for Excellence in Literature. NBP will confer annual awards to the
best books in Urdu and in all prominent regional languages published
during the defined period. Patronage from NBP would help creative work
in the field of literature. The Bank is also the largest sponsor of sports in
Pakistan. It has provided generously to philanthropic causes whenever the
need arose.

It has taken various measures to facilitate overseas Pakistanis to send their

remittances in a convenient and efficient manner. In 2002 the Bank signed

10
an agreement with Western Union for expanding the base for documented
remittances. More recently it has started Electronic Home Remittances
Project. This project introduces technology based system to handle inward
remittances efficiently, by ensuring that the Bank's branches keep a track of
the remittance received from abroad till its final receipt.

A number of initiatives have been taken, in terms of institutional

restructuring, changes in the field structure, in policies and procedures, in
internal control systems with special emphasis on corporate governance,
adoption of Capital Adequacy Standards under Basel II framework, in the
up gradation of the IT infrastructure and developing the human resources.

National Bank has earned recognition and numerous awards internationally.

It has been the recipient of The Bank of the Year 2001, 2002, 2004 and
2005 Award by The Banker Magazine, the Best Foreign Exchange Bank ––
Pakistan for 2004, 2005, 2006 and 2007, Global Finance, Best Emerging
Market Bank from Pakistan for the year 2005, Global Finance, Kisan Time
Awards – 2005 for NBP's services in the agriculture field. It is listed
amongst the Region's largest banks and also amongst the largest banks in
South Asia 2005, The Asian Banker. It has also been presented a
Recognition Award –– 2004 for having a Gender Sensitive Management by
WEBCOP AASHA besides other awards.iii

The precise summary of National Bank of Pakistan regarding its

countrywide and overseas operations is as fallows:

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

National Bank of Pakistan Ordinance 1949 and was 100% govt.-
owned. NBP acted as an agent of the Central Bank wherever the
State Bank did not have its own Branch. It also undertook
Government Treasury operations. Its first branches were in jute
growing areas in East Pakistan. Offices in Karachi and Lahore
followed.
1950 NBP established a branch in Jeddah, Saudi Arabia.

11
 The Bank in 1950 had one subsidiary ‘The Bank of Bahawalpur’ on
December4, 1947 by the former Bahawalpur State
1955 By this time NBP had branches in London and Calcutta.
1957 NBP established a branch in Baghdad, Iraq.
1962 NBP established a branch in Dar-es-Salaam, Tanganyika.
1964 The Iraqi government nationalized NBP's Baghdad branch.
1965 The Indian government seized the Calcutta branch on the
outbreak of hostilities between India and Pakistan.
1967 The Tanzanian government nationalized the Dar-Es-Salaam
branch.
1971 NBP acquired Bank of China's two branches, one in Karachi
and one at Chittagong. At separation of East Pakistan NBP lost its
branches there. NBP merged with Eastern Mercantile Bank and
with Eastern Bank Corporation.
1974 The government of Pakistan nationalized NBP. As part of the
concomitant consolidation of the banking sector, NBP acquired
Bank of Bahawalpur (est. 1947).
1977 NBP opened an offshore brain Cairo.
1994 NBP amalgamated Mehran Bank (est. 1991).
1997 NBP's branch in Ashgabat, Turkmenistan commenced
operations.
2000 NBP opened a representative office in Almaty, Kazakhstan.
2001 State Bank of Pakistan and Bank of England agree to allow
only 2 Pakistani banks to operate in the UK. NBP and United Bank
agreed to merge their operations to form Pakistan International
Bank, of which NBP would own 45% and United Bank 55%.
2003 NBP received permission to open a branch in Afghanistan.
2005 NBP closed its offshore branch in Cairo.

Source: www.nbp.gov.pk/about

12
2.3 Nature of National Bank of Pakistan
National Bank of Pakistan was incorporated in Pakistan under the National
Bank of Pakistan Ordinance, 1949 and is listed on all the stock exchanges
in Pakistan. The bank is engaged in providing commercial banking and
related services in Pakistan and overseas. The bank operates 1,249
(2007:1,232) branches in Pakistan and 22 (2007:18) overseas branches
(including the Export Processing Zone branch, Karachi). Under a Trust
Deed, the bank also provides services as trustee to National investment
Trust (NIT) including safe custody of securities on behalf of NIT.iv

The nature of responsibilities of the Bank is different and unique from other
banks/financial institutions. The bank also handles treasury transactions for
the Government of Pakistan as an agent to the State Bank of Pakistan for
handling provincial/Federal Government receipts and payments on their
behalf. The National Bank of Pakistan has also played an important role in
financing the country’s growing trade, which has expanded through the
years as diversification took place. The bank is providing all banking
services of mercantile and commercial banking permissible in the country,
which include:

Accepting of deposits of money on current, fixed, saving, term

deposit and profit and loss sharing accounts.
Borrowing money and arranging finance from other banks.
Advancing and lending money to its clients.
Financing of projects, including technical assistance, project
appraisal through long term/ short term loans, term finance and
musharika certificates, etc.
Buying, selling, dealing, including entering into forward contracts
of foreign exchange.
Financing of seasonal crops like cotton, wheat, rice, sugar cane,
tobacco, etc.
Receiving of bonds, valuables, etc. for safe custody.

13
 Carrying on agency business for any description other than
managing agent, on behalf of clients including Government and
local authorities.
Generating, undertaking, promoting, etc. of issue of shares and,
bonds etc.
Transacting guarantee and indemnity business.
Undertaking and executing trusts.
Joint venturing with foreign dealers, agents and companies for its
representation abroad.
Participating in “World Bank” and “Asian Development Bank’s”
lines of credit.
Providing personalized Hajj services to intending Hajjis.

2.3.1 Board of Directors

Table 1 Board of directors

Mr. Muneer Kamal

Chairman

Mr. Syed Ahmed Iqbal Ashraf

President

Mr. Farrakh Qayyum

Director

Mr. Tariq Kirmani

Director

Mr. Iftikhar A. Allawala

Director

Mr. Muhammad Naeem

Director

Mr. Mir Balakh Sher Marri

Director

14
Mr. A. Akbar Sharifzada
Director

Mr. Syed Muhammad Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

2.4 Senior Management

Syed Ahmed Iqbal Ashraf

President, NBP

Nausherwan Adil
SEVP & Group Chief Operations Group/Corporate Communication
Division

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

Nusrat Vohra
SEVP & Group Chief, Treasury Management Group

Tariq Jamali
SEVP & Group Chief, Logistics Support, Security & Engineering
Group

Kausar Iqbal Malik

SEVP & Group Chief, Compliance Group

Masood Karim Shaikh

SEVP & Group Chief, Overseas Banking Group/Global Home
Remittance Management Group

Asif Hassan
SEVP & Group Chief, Audit & Inspection Group

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

Aamir Sattar 

15
SEVP & CFO, Financial Control Division

Sultana Naheed
SEVP & Group Chief, Risk Management Group

Zahid Mahmood Chaudhry

SEVP & Group Chief, Human Resources Management &
Administration Group

Akbar Hasan Khan

EVP & Head, Corporate & Investment Banking Group

Sahibzada Rafat Raoof Ali Khan

EVP & Head, Assets Recovery Group

Khawaja Muhammad Aminul Azam

EVP & Head, Islamic Banking Group

Ovais Asad Khan

EVP - Divisional Head, Strategic Marketing Division

Mahmood Siddique 
EVP, Divisional Head & CIO, IT Division

Shaharyar Qaiserani 
EVP & Divisional Head, Agriculture & Business Development
Division

S.M. Ali Zamin

EVP, Secretary Board of Directors & Secretary Credit Committees

Mufti Ehsan Waquar Ahmad

Shariah Advisor

Mirza Babur Baig

EVP & Principal Staff Officer(PSO) to the President
Riffat Sultana Mughal
SVP - Head, Legal Division

16
2.4.1 Senior Management for Overseas Operation
Zubair Ahmed 
SEVP & Regional Chief Executive, Middle East, Africa & South
Asia Region
M. Rafiq Bengali 
SEVP & Regional Chief Executive, Americas Region
Khawar Saeed 

EVP & Regional Chief Executive, Cationentral Asian Republics

Region
Muhammad Hanif Khan 
SVP & Coordinator, Afghan Operations

Source: www.nbp.gov.pk/BOD

2.5 Vision and Mission Statements

To be recognized as a leader and a brand synonymous with trust, highest
standards of service quality, international best practices and social
responsibility.

2.5.1 Mission
NBP will aspire to the values that make NBP truly the Nation's Bank by:
 Institutionalizing a merit and performance culture.
 Creating a distinctive brand identity by providing the highest standards
of services.
 Adopting the best international management practices.
 Maximizing stake holder’s value.

2.6 Objectives of National Bank of Pakistan

 Prime objectives of National Bank of Pakistan are tainting
distinguishing brand identity, attaining quality financial

17
 performance, achieving acknowledgment in the market in terms of
quality and performance.
 National Bank of Pakistan also aims at providing assistance to
farmers, so that they can utilize their funds effectively to get the
best result.
 By charging interest on loans provided to the private sector and
business community.

2.7 Core Values

We aim to be an organization that is founded on
 Growth through creation of sustainable relationships with our
customers.
 Prudence to guide our business conduct.
 A national presence with a history of contribution to our
communities.

2.8Number of Employees of National Bank of Pakistan

Permanent       13237
Temporary/ On Contractual basis   842
Bank's own staff strength at the end of the year 14079
Outsourced       2350
Total Staff Strength     16429

An employee may be defined as: "A person in the service of another under
any contract of hire, express or implied, oral or written, where the employer
has the power or right to control and direct the employee in the material
details of how the work is to be performed." vAn employee contributes
labor and expertise to an endeavor. Employees perform the discrete activity
of economic production. Of the three factors of production, employees
usually provide the labour. Specifically, an employee is any person hired by
an employer to do a specific "job". In most modern economies, the term
employee refers to a specific defined relationship between an individual

18
and a corporation, which differs from those of customer, or client. The
relationship between National Bank of Pakistan and its employees is
usually handled through the Human Resource Management &
Administration Group & Employees benefit disbursement & trustee
division. These groups handle the incorporation of new hires, and the
disbursement of any benefits which the employee may be entitled, or any
grievances that employee may have.

There are differing classifications of workers within National Bank of

Pakistan, these are:

Permanent
Temporary / On Contractual
Outsourced

The Employees of National Bank of Pakistan are organizing into trade

unions, which represent most of the available work force in National Bank
of Pakistan. These trade Unions utilize their representative power to
collectively bargain with the management of bank in order to advance
concerns and demands of their membership.

2.9 Product Lines

The most precise definition of product is anything capable of satisfying
needs, including tangible items, services and ideas. In marketing, a product
is anything that can be offered to a market that might satisfy a want or
need.vi Since 1575, the word "product" has referred to anything produced.
Since 1695, the word has referred to "thing or things produced”. The
economic or commercial meaning of product was first used by political
economist Adam Smith. In general usage, product may refer to a single
item or unit, a group of equivalent products, a grouping of goods or
services, or an industrial classification for the goods or services. The
consumer banking products include personal accounts, credit cards, loans,
investment products, treasury products and many more. The National Bank
of Pakistan offering for sale several related products individually, which is

19
commonly known as product lining. A product line is defined as “A group
of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through same
types of outlets, or fall within the given price ranges”. vii The followings are
the main consumer banking products of NBP.

Deposits
The National Bank of Pakistan offers to their clients a variety of Deposit
Schemes with personalized services at competitive rates of interest. Any
Pakistani citizen can open his/her account for any deposit scheme at any of
its Branches strategically located throughout Pakistan. The Bank with its
huge network of 1243 branches garners savings from both the rich and the
poor in urban as well as rural areas. Even a poor farmer in a remote village,
with his meager annual income, feels secure to safe keep his minuscule
savings in National Bank of Pakistan, Because National Bank of Pakistan
has a long heritage of trust and professional commitment.

a) Current Deposits
These are payable to the customer when ever they are demanded. When a
banker accepts a demand deposit, he incurs the obligation of paying all
cheques etc, drawn against him to the extent of the balance in the account.
Because of their nature, these deposits are treated as current liabilities by
the banks. Bankers in Pakistan do not allow nay profit on these deposits,
and customers are required to maintain a minimum balance, failing which
incidental charges are deducted from such accounts. This is because
Current Deposits may be withdrawn by the depositors at any time, and as
such the bank is not entirely free to employ such deposits. viii Current
Accounts/ Basic Banking accounts are opened, on proper introduction and
submission of required documents along with initial deposit prescribed
from time to time. Basic banking accounts are opened for an individuals
(single or joint) only whereas current accounts are opened for individuals
(single or joint) Charitable institution, provident and other funds of
benevolent nature of local bodies, autonomous corporations, companies,

20
associations, educational institutions, firms etc. and in all other cases where
the accounts are to opened under the order of a competent court of law. No
profit is paid on the balances of current/basic banking accounts. The bank is
authorized to deduct service charges (incidental charges) on current
accounts levied through its half yearly schedule of charges, in case the
average balance falls below the minimum balance as prescribed by the
bank. No balance maintenance condition is applied on basic banking
account.

b) PLS Saving Deposits

In Pakistan a Savings Deposits Account can be opened with a very small
amount of money, and the depositor is issued a cheque book for
withdrawals. Profit is paid at a flexible rate calculated on six monthly basis
under the Interest Free Banking System. There is no restriction on the
withdrawals from the deposit accounts but the amount of money withdraw
is deleted from the amount to be taken for calculation of products for
assessment of profit to be paid to the account holder. It discourages
unnecessary withdrawals from the deposits. In order to popularize the
scheme the SBP has allowed the Savings Scheme for school and college
students and industrial labour also. The purpose of these accounts is to
inculcate the habit of savings in the constituents. As such, the initial
deposits required for opening these accounts are very nominal.ixNBP charge
Rs.500 for opening of PLS Savings deposits.

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

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

joint name. The PLS savings account can also be opened for
provident fund or other benevolent funds of companies, firms,
organizations, NGO’s and educational institutions.
2. PLS saving account can be opened with a minimum amount of
Rs.500/- only

21
 3. To share in the profit a minimum balance of Rs.500/- must be
maintained in the account. The minimum balance on sixth and last
of month will qualify for the profits. The profits will be calculated
on the basis of monthly minimum balance for the periods of six
months i.e. from January to June and July to December
4. The head office of NBP determines the profit or loss on PLS saving
deposits and advice its branches the rate and time of distribution of
these profits.
5. There shall be no restrictions on maintaining the maximum balance
in PLS saving account.
6. On the first day of Ramzan each year the Zakat at the rate of 2.5%
will be deducted from these deposits on the balance of that day. But
if depositors affix an affidavit of Zakat deduction along with
account opening form or he is a non-Muslim, no Zakat will be
deducted from his account.

c) Fixed Deposit Account (Time Deposits)

The deposits that can be withdrawn after a specified period of time are
referred to as Fixed or Term Deposits. The period for which these deposits
are kept by the bank ordinarily varies from three months to five years in
accordance with the agreement made between the customer and the banker.
Profit/Return is paid to the depositors on all fixed or Time deposits, and the
rate of profit/Return varies with the duration for which the amount is kept
with the banker. By lending out or investing these funds, the bank earns
more than the Profit/Return that it has to pay on them to the depositors. x
By giving an advance notice to the bank the deposit can be withdraw from
the bank before the expiry of the period. Fixed deposit accounts have
higher rate of interest as compare to other accounts. The rate of interest
rises with the length of period and the amount of deposit. The bank grants
to the depositor a fix deposit (FDR) which is not transferable to any other
person. The silent features of fixed deposit account of NBP are as fallows

22
 1. The PLS term deposit are opened for individuals in their own single
or joint names, companies firms and other organizations.
2. The PLS term deposit receipt are issued for any amount. There is
minimum or maximum limit or deposits in a single term deposit
account.
3. PLS term depositors may be allowed some facilities against the
security of these receipt credits, after making “Lien” on the relevant
receipt and subject to recovery of service charges.
4. Under term deposit scheme the depositors not cease to earn the
profit immediately, after the respective maturity date.

d) Foreign Currency Account

Government of Pakistan has introduced many important reforms in Foreign
Exchange Control in the country since February, 1990, for the purpose of
strengthening the Foreign Exchange Reserves. One of these reforms relates
to foreign currency accounts, which can be opened in United States Dollars,
Pound Sterling, Euro and Japanese Yen in any of the authorized branches of
commercial banks throughout the country.xi Foreign currency accounts are
opened, on proper introduction and submission of required documents
along with an initial deposit prescribed from time to time. Rates of return
on foreign currency deposits are subject to fluctuation as determined in
accordance with State Bank of Pakistan directives and will be paid on six
monthly basis whereas the return on term deposit/SNTD will be paid on
maturity or as prescribed by SBP. The bank shall have no responsibility for
or liability to the account holders for any diminution due to taxes imposed
or depreciation in the value of funds credited to the account whether due to
devaluation or fluctuation in the exchange rate or other wise.

e) NBP Premium Aamdani

NBP Premium aamdani is a retail product of the bank. The amount of
investment required for this account is Rs. 20,000/-to Rs. 5,000,000.The
investment period is 5 years. Zakat and withholding tax will be deducted as
per rules. In NBP premium aamdani, the account holders have benefit of

23
free demand draft, pay order; free cheque book and NBP cash card
(ATM+Debit). The Financing facility is available up to 90% of the deposit
value.xii Profit paid every period as follows:

Period Profit
Rates
1st year 7.50%
2nd years 8.50%
3rd years 9.50%
4th years 10.50%
5th years 11%
f) NBP Premium Saver

NBP Premium saver is a retail product of the bank. The minimum saving
balance of Rs. 20,001 and a maximum balance of Rs. 300,000 are required
for opening a premium saver account. Two debit withdrawals allowed in a
month and no limit on number of deposit transactions. The profit is
calculated monthly and Paid on half yearly basis. Free NBP Cash Card
(ATM + Debit) facility is available to account holder.xiii

g) National Income Daily Account (NIDA)

The scheme of National income daily account was launched in December
1995 to attract corporate customers. It is a current account scheme and is
part of the profit and loss system of accounts in operation throughout the
country. Deposits in the NIDA accepted on the condition that the depositor
shall always maintain a minimum balance as prescribed by the bank in his
account. In the event however, that any depositor wishes to withdraw the
amount and the balance in his account is less than the required amount, the
account will be converted to the ordinary PLS SB account for the purpose
of calculating profit. An example of how the NIDA accounts are maintained
is shown on the next page.

Rates on National income daily account

From Rs 2/- million to Rs 50/- the rate is 1.4%.

From Rs50/- million but less than Rs 500/-million, the rate is 1.5%.

24
 From Rs 500/- million but below Rs 1000/- the rate is 1.6%.

From Rs 1000/- and above the rate is 1.75%.

Salient Features

Rs 2-million is required to open an account and there is no

maximum limit.

Profit is paid on half yearly basis on monthly balances.

The rates of profit vary according to the slabs of deposit. On

Deposits of Rs.2 million to 2,000 million, the rate fluctuates from
1.4 to 1.75

It is a checking account and there is no limit of withdrawals.

Advances
National Bank of Pakistan plays a pivotal role in translating the
government's development plans in terms of growth in industrial,
commercial and agricultural sectors in Pakistan. Accordingly the Bank has
formulated its Credit Policy under the guidelines of SBP-the Central Bank
of Pakistan.

a) NBP Saibaan
The NBP Saibaan is retail product of the bank. It has different product
items which are home purchase, home construction, home renovation and
purchase of land plus construction. If anyone has a Home Finance Facility
outstanding with another bank he can have it transferred to NBP through a
hassle-free process. xiv A brief description of these products is as fallows

TYPE OF     Financing Financing Debt to

ADVANCE Amount Period equity
Ratio
Home Purchase (House or Rs. 35 Million 3 to 20 years 85:15
Apartment) (maximum)
Home     Rs. 35 Million 3 to 20 years 85:15

25
 Construction (maximum)
Home Rs. 15 Million 3 to 15 years 80:20
Renovation (maximum)
Purchase of land Plus Rs.35 Million 3 to 20 years 80:20
Construction (maximum)

b) NBP Advance Salary

The NBP Advance salary has been the flag-ship product for NBP. NBP
Advance Salary, the leading personal loan product of the country, is
maintaining its inimitability ever since it was launched. This was only
possible due to its swift growth and remarkable loan disbursement of over
118 billion.xv You can avail up to 20 net take home salaries with easy
repayment installments. Its hassle free acquisition with no prior formalities
and easy availability in a short turn around time is attributed as the most
distinguishing features of the product. The product is offered countrywide.
The terms and conditions of NBP Advance salary is shown on next page:

Terms & Conditions

Eligibility Permanent Employees of Govt., Semi-

Govt., Autonomous, Semi Autonomous,
Local & other bodies who are maintaining
their Salary A/Cs at NBP.
Repayment Direct deduction from Salary A/C
Maximum Loan Rs. 490,000/-
Amount
Security Employer will provide undertaking that
borrower’s Salary and end of service
benefits will route through his/her Salary
A/C maintained at NBP during the tenure of
the loan and his/her end of service benefits
are at least equal to the amount of Advance
Salary required.

Hypothecation of Consumer durables owned

by the borrower.

Three (3) Undated Cheques

Max. 5 years (60 months)
Repayment

26
Period
Advance in Up to 20 net take home salaries
terms of # of net
take home
salaries
Markup Rate 15 %
(Based on diminishing balance method)
Processing Fee 1% of Loan Amount
Verification Rs 500/-
Charges
Life Insurance No Insurance of any kind.
Documentation at actual
Charges
Contact Your Salary disbursing NBP Branch.
Remaining At the time of approval and disbursement the
Service Age applicant’s remaining service age should be 6
months after maturity of the loan
Debt Burden 50%
Minimum net no minimum take home requirement
take home salary

27
 c) NBP Cash & Gold
With NBP’s Cash & Gold, the customers meet their need for ready cash
against their idle gold jewelry. The rate of mark up is 13% p.a. This product
has following featuresxvi

Facility of Rs. 7,000 against each 10 grams of net contents of gold

No maximum limits of cash
Repayment after one year
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBP's appointed
schroffs
No penalty for early repayment

d) Students Loan Scheme

Pursuant to the announcement made by the Federal Finance Minister in his
2001-2002 budget speech, a Student Loan Scheme (SLS) for Education
was launched by the Government of Pakistan in collaboration with major
commercial banks of Pakistan (NBP, HBL, UBL, MCB and ABL). Under
the Scheme, financial assistance is provided by way of Interest Free Loans
to the meritorious students who have financial constraints for pursuing their
studies in Scientific, Technical and Professional education within Pakistan.
The Scheme is being administered by a high powered committee
comprising Deputy Governor, State Bank of Pakistan, Presidents of the
commercial banks and representative of Ministry of Finance, Government
of Pakistan. xvii

e) NBP Karobar- President’s Rozgar Scheme

The solution of Pakistan’s major socio-economic problems primarily lies in
the development and growth of small & micro businesses. These will not
only provide employment opportunities to ever-growing population
demand but will also become the catalyst for breaking the vicious circle of
poverty. In this regard, NBP has developed a full range of Products under
the President’s Rozgar Scheme with a brand name of “NBP KAROBAR”.
The scheme will be offered to eligible young and literate citizens of

28
Pakistan, falling within an age group of 18-40 years having a minimum
qualification of Matriculation (except for females in the PCO/Tele-center
product). The eligible borrowers will be required to make a down payment
of 15%. Asset and Life & Disability insurances will be mandatory under
this scheme. The 15% down payment will include 1st year’s asset insurance
premium. However, the cost of life and disability insurance will be borne
by GOP. The mark-up rate for the 1st year will be 12% and for the
subsequent years it will be 1 year KIBOR + 2%. Fifty percent (50%) of this
rate will be paid by the customer i.e. 6% and the balance of 6% will be
borne by GOP. Additionally, first 10% of the losses under the scheme will
be taken-up by GOP. Initially, under the President’s Rozgar scheme, NBP
will offer following products:

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

Corporation)
b) NBP Karobar Mobile General Store (without USC Franchise)
c) NBP Karobar Transport
d) NBP Karobar PCO
e) NBP Karobar Tele-center

a) NBP Karobar Utility Store

The product has been designed in collaboration with “UTILITY STORES
CORPORATION OF PAKISTAN (USC)” to provide financing facility of
an average amount of Rs.100, 000/- for a maximum period of five years
with grace period of three months. This is available to all eligible citizens
of Pakistan for setting-up small-scale Retail Outlet or Mobile Utility Store.
The USC will give its franchise to qualifying Pakistani citizens. Following
two financing options are available under this product:

1. NBP KAROBAR Utility Store (Shop)

The Financing facility is available to set-up a small scale Retail Outlet

(Utility Store in a shop) for purchase of furniture & fixtures. This is also

29
applicable on payment of security deposit / advance rent under franchise
from the USC. However, stocks will be purchased by the customer.

2. NBP KAROBAR Mobile Utility Store

Financing facility available to purchase a 2/3 wheeler, 4 stroke

Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) with
attached Loader body (Thehla type) under franchise from the USC to carry
utility goods for retail sale ideally in areas where accessibility to
conventional utility stores is difficult.

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

This financing program has been designed on the similar pattern of Mobile
Utility Store. The only difference is that the borrower will have the liberty
of procuring stock/supplies/grocery items from open market. Under this
product the average loan size of Rs.100, 000/- will be given for a maximum
period of five years with a grace period of three months.

c) NBP Karobar Transport

The NBP Karobar Transport is designed to finance 2/3 wheeler, 4 stroke
Petrol/CNG/LPG Vehicle (Auto Scooter / Motorcycle Rickshaw) to the
eligible citizens of Pakistan for providing less expensive environment
friendly transport facility. Under this product average loan size of Rs.100,
000/- will be provided for a maximum period of five years with a grace
period of three months.

d) NBP Karobar PCO

This product is designed to finance setting-up a PCO. NBP will be
providing financing for the purchase of Mobile/Wireless Telephone Set
with connection, Credit Balance. The average amount of financing under
this product will be Rs.5, 000/- for a maximum period of two years with a
grace period of three months.

30
 e) NBP Karobar Tele-center
This product is specially designed to finance setting-up a Tele-center. NBP
will be providing financing for the purchase of Mobile/Wireless Telephone
Set with connection, Computer, Printer and Fax machine cum Photocopier
etc. to establish tele-center on a rented shop or owned premises. The
average amount of financing under this product will be Rs.50, 000/- for a
maximum period of two years with a grace period of three months.

Corporate Advances
a) Cash Finance
This is a very common form of borrowing by commercial and industrial
concerns and is made available either against pledge or hypothecation of
goods, produce or merchandise. In cash finance, a borrower is allowed to
borrow money from the banker up to a certain limit, either at once or as and
when required. The borrower prefers this form of lending due to the facility
of paying markup/services charges only on the amount he actually utilizes.
If the borrower does not utilize the full limit, the banker has to lose return
on the un-utilized amount. In order to offset this loss, the banker may
provide for a suitable clause in the cash finance agreement, according to
which the borrower has to pay markup/service charges on at least on self or
one quarter of the amount of cash finance limit allowed to him even when
he does not utilize that amount.

b) Running Finance/ Overdraft

This is the most common form of bank lending. When a borrower requires
temporary accommodation his banker allows withdrawals on his account in
excess of the balance which the borrowing customer has in credit, and an
overdraft thus occurs. This accommodation is generally allowed against
collateral securities. When it is against collateral securities it is called
“Secured Overdraft” and when the borrowing customer cannot offer any
collateral security except his personal security, the accommodation is called
a “Clean Overdraft”. The borrowing customer is in an advantageous
position in an overdraft, because he has to pay service charges only on the

31
balance outstanding against him. The main difference between a cash
finance and overdraft lies in the fact that cash finance is a bank finance
used for long term by commercial and industrial concern on regular basis,
while an overdraft is a temporary accommodation occasionally resorted to.

c) Demand Finance
When a customer borrows from a banker a fixed amount repayable either in
periodic installments or in lump sum at a fixed future time, it is called a
“loan”. When bankers allow loans to their customers against collateral
securities they are called “secured loans” and when no collateral security is
taken they are called “clean loans”.

The amount of loan is placed at the borrower’s disposal in lump sum for the
period agreed upon, and the borrowing customer has to pay interest on the
entire amount. Thus the borrower gets a fixed amount of money for his use,
while the banker feels satisfied in lending money in fixed amounts for
definite short periods against a satisfactory security.

Remittances
a) Demand Drafts
Drafts drawn by one branch on another branch or on the Head Office of
same bank or vice versa, are not cheques or bills, as these have no distinct
drawer and drawee. Section 85-A reads:

“ Where any draft, that is, an order to pay money, drawn by one office of
bank upon another office of the same bank for a sum of money payable to
order on demand, purports to be issued by or on behalf of the payee, the
bank is discharged by payment in due course”.

Banker’s drafts payable to order on demand are within the protection of

Sections 10 and 131-A of the Negotiable Instruments Act. However, if a
demand draft drawn on a bank by its own branch bears a forged
endorsement, the person in possession of it cannot compel that bank to pay

32
 it. As far as possible the banker’s draft should be crossed and it should
never be drawn payable to bearer.

When a person requires a draft he should be asked to complete the

prescribed application form in which he should state the amount of the
draft, the name of the payee, and the place of payment. This application
form should be signed by the purchaser or by those persons who have been
duly authorized to act on his behalf. When a customer requests his banker
to provide him with a banker’s draft, the amount of which is to be debited
to his account, he should enclose with his written request a cheque covering
the amount of the required draft and other charges etc. payable to banker.xviii

The National Bank of Pakistan provides demand drafts at very reasonable

rates with safety, speedy and reliable way to transfer money. Any person
whether an account holder of the bank or not, can purchase a Demand Draft
form a bank.

b) Travelers Cheques
They are generally issued for the convenience of person travelling abroad,
but some Pakistani banks issue them in Pakistan currency also for use
within the country as well. Before issuing, the bankers receive an amount
equal to the face value of the cheques, and also charge a small commission.
The travelers’ cheques are for fixed amount and are treated as Order
cheques payable only to the purchaser whose specimen signature appears
on each traveler’s cheque itself. Foreign currency travelers cheques are
issued and encashed in accordance with the provisions of the Exchange
Control Regulation Act, 1947. While making payment, the paying banker
must insist that the holder signs in his presence.xix

The National Bank of Pakistan provides their services for traveler’s cheque
at very reasonable and competitive rates. It has following features

Negotiability Pak Rupees Traveler’s Cheques are a negotiable  

33
 instrument
Validity   There is no restriction on the period of validity    
Availability At 700 branches of NBP all over the country    
Encashment At all 400 branches of NBP  
Limitation No limit on purchase        
Safety NBP Traveler’s Cheques are the safest way to carry our money

c) Letter Of Credit
Letters of credit are very useful instruments in facilitating commercial
relations between businessmen at various places. Letter of credit state the
limit of the credit and the time during which it is held at the disposal of the
grantee, but they are neither negotiable nor transferable. Letter of credit
may be revocable. There are many kinds of letter of credit such as
Revolving credit, Back to Back credit, Claused credit etc. xx 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.

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

Increase home remittances through the banking system.

Meet the SBP directives/instructions for timely and prompt delivery
of remittances to the beneficiaries.

The new features of NBP foreign remittances include:

The existing system of home remittances has been

revised/significantly improved and well-trained field functionaries
are posted to provide efficient and reliable home remittance services
to nonresident Pakistanis at 15 overseas branches of the Bank

34
 besides United National Bank (the joint venture between NBP and
UBL in UK)., and Bank Al-Jazira, Saudi Arabia.
Zero Tariffs: NBP is providing home remittance services without
any charges.
Strict monitoring of the system is done to ensure the highest
possible security.
Special courier services are hired for expeditious delivery of home
remittances to the beneficiaries.

e) Swift System
The SWIFT system (Society for Worldwide Inter bank Financial
Telecommunication) has been introduced for speedy services in the area of
home remittances. The system has built-in features of computerized test
keys, 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, we can safely and speedily transfer money for our
business and personal needs.

f) Mail Transfer
A Mail Transfer is a form of remittance in which the amount remitted by a
customer or a non-customer is directly credited to the account of the
beneficiary with another branch. Move your money safely and quickly
using NBP Mail Transfer service.  And NBP also offer the most competitive
rates in the market. They charges Rs 50/- exchange rate and RS 75/-
postage charges on issuing mail transfer. When the money is not required
immediately, the remittances can also be made by mail transfer (MT). Here
the selling office of the bank sends instructions in writing by mail to the
paying bank for the payment of a specified amount of money. Debiting to
the buyer’s account at the selling office and crediting to the recipient’s
account at the paying bank make the payment under this transfer. NBP

35
taxes mail charges from the applicant where no excise duty is charged.
Postage charges on mail transfer are actual minimum Rs. 40/- if sent by
registered post locally Rs.40/- if sent by registered post inland on party’s
request.

g) Telegraphic Transfer
Telegraphic Transfer is a form of remittance, which is advised by telegram,
telex or fax machines. The fundamental principles of such transfer are
otherwise identical with the Mail Transfer. It is the message, which is sent
from one branch to another on the order of payer to payee through wire. It
is one of the quickest means to transfer fund through the use of
telex/fax/internet or cable. Payment to the beneficiary is affected directly
by the drawee office upon identification or through credit into beneficiary’s
bank account. As such remitting office is not required to issue any
instrument payment to the remitter for delivery to the beneficiary.

h) Pay Order
NBP provides another reason to transfer your money using our facilities. 
NBP pay orders are a secure and easy way to move your money from one
place to another.  And, as usual, NBP charges for this service are extremely
competitive. The charges of NBP are very low all over the Pakistan. It
charges Rs 50/- for NBP account holders on issuing one payment order, and
charges Rs 100/- for NBP non-account holders on issuing one payment
order. It charges Rs 25/- for students on payment of fees of educational
institutions. If some one want a duplicate of payment order they charges Rs
100/- for NBP account holders and Rs 150/- for non account holders.

36
 CHAPTER 3
ANALYSIS OF NBP

3.1 Financial Analysis

Financial analysis (also referred to as financial statement analysis or
accounting analysis or Analysis of finance) refers to an assessment of the
viability, stability and profitability of a business, sub-business or project.

Typically, financial analysis is used to analyze whether an entity is stable,

solvent, liquid, or profitable enough to be invested in. When looking at a
specific company, the financial analyst will often focus on the income
statement, balance sheet, and cash flow statement.

3.1.1 Vertical analysis

Common size analysis expresses comparisons in percentages. It includes
vertical analysis and horizontal analysis .Vertical analysis compares each
amount with a base amount elected from the same year. Horizontal analysis
compares each amount with a base amount for a selected base year.

2018
  2018 % 2017 2017%
Assets        
Cash and Balances with
treasury bank 247917421 8.8% 160405083 6.4%
Cash and Balances with
other bank 13049725 0.5% 26992279 1.1%
Lending to financial
Institution 106391667 3.8% 26916113 1.1%
128497450 129653706
Investments 6 45.8% 4 51.6%
Advances 926339789 33.0% 740344934 29.5%
Fixed Assets 54338676 1.9% 32671800 1.3%
Intangable Assets 856900 0.05% 1150437 0.08%
Defferd tax Assets   0.05% 7342482 0.37%
other Assets 170017572 6.1% 219091687 8.7%

37
 280388625 100.0 251145187
  6 % 9 100.0%
Liabilities   0.0%   0.0%
Bills Payable 9944178 0.4% 13195055 0.5%
Borrowings 392739396 14.0% 360105674 14.3%
201131262 172705924
Deposits & Other Accounts 5 71.7% 6 68.8%
Liabilities against asset
subject to F.lease 121077 0.03% 56799 0.03%
Deferred tax liabilities 6945767 0.2%   0.0%
other liabilities 171761918 6.1% 231359391 9.2%
259282496 233177616
  1 92.5% 5 92.8%
Net Assets 211061295 7.5% 179675714 7.2%
     
Represented by    
Share Capital 21275131 0.8% 21275131 0.8%
Reserves 53442643 1.9% 49887328 2.0%
Surplus on revaluation of
assets 59262177 2.1% 49632435 2.0%
Unappropriated profit 76239599 2.7% 58069393 2.3%
  210219550 7.5% 178864287 7.1%
Non-controling interest 841745 0.03% 811427 0.04%
  211061295 7.5% 179675714 7.2%
Table 2 Verical analysis of balance sheet

Interpretation

Vertical analysis is the proportional analysis of a financial statement, where

each line item on a financial statement is listed as a percentage of another
item. Typically, this means that every line item on an income statement is
stated as a percentage of gross sales, while every line item on a balance
sheet is stated as a percentage of total assets.

The most common use of vertical analysis is within a financial statement

for a single time period, so that one can see the relative proportions of

38
account balances. Vertical analysis is also useful for timeline analysis, to
see relative changes in accounts over time, such as on a comparative basis
over a five-year period. For example, if the cost of goods sold has a history
of being 40% of sales in each of the past four years, then a new percentage
of 48% would be a cause for alarm.

The major components in the balance sheet of banks are deposits, advances
and investments.

Cash and Balances with treasury bank increased 8.8% than the previous
year while in 2017 it was 6.4%. Cash and Balances with other bank
Decreased 0.5% than the previous year while in 2017 it was 1.1%. Lending
to financial Institution increased 3.8% than the previous year while in 2017
it was 1.1%.
Investments Decreased 45.8% than the previous year while in 2017 it was
51.6%. Advances increased 33.0% than the previous year while in 2017 it
was 29.5%. Fixed Assets increased 1.9% than the previous year while in
2017 it was 1.3%. Intangible Assets Decreased 0.05% than the previous
year while in 2017 it was 0.08%. Defferd tax Assets Decreased 0.05% than
the previous year while in 2017 it was 0.37% other Assets Decreased 6.1%
than the previous year.
While in 2017 it was 8.7% .Bills Payable Decreased 0.4% than the previous
year while in 2017 it was 0.5%. Borrowings Decreased 14.0% than the
previous year while in 2017 it was 14.3%. Deposits & Other Accounts
increased 71.7% than the previous year while in 2017 it was 68.8%.
Liabilities against asset subject to F.lease Did not increased 0.03% than the
previous year while in 2017 it was 0.03%. Deferred tax liabilities increased
0.2% than the previous year while in 2017 it was 0.0%. Other liabilities
Decreased 6.1% than the previous year while in 2017 it was 9.2%.
 Total Liabilities Decreased 92.5% than the previous year while in 2017 it
was 92.8%. Net Assets increased 7.5% than the previous year While in
2017 it was 7.2%. Share Capital Did not increased 0.8% than the previous
year While in 2017 it was 0.8%. Reserves Decreased 1.9% than the

39
previous year While in 2017 it was 2.0%. Surplus on revaluation of assets
increased 2.1% than the previous year. While in 2017 it was 2.0%
Unappropriated profit increased 2.7% than the previous year While in 2017
it was 2.3% .Non-controling interest Decreased 0.03% than the previous
year While in 2017 it was 0.04%.  Equity increased 7.5% than the previous
year While in 2017 it was 7.2%
3.1.1.3 Horizontal Analysis of NBP`s Balance interpretation

2017 Vs
  2018 2017 2018%
Assets
Cash and Balances with treasury
bank 247917421 160405083 54.6%

Cash and Balances with other bank 13049725 26992279 -51.7%

Lending to financial Institution 106391667 26916113 295.3%

128497450 129653706
Investments 6 4 -0.9%

Advances 926339789 740344934 25.1%

Fixed Assets 54338676 32671800 66.3%

Intangable Assets 856900 1150437 -25.5%

Defferd tax Assets   7342482 -100.0%

other Assets 170017572 219091687 -22.4%

280388625 251145187
  6 9 11.6%

Liabilities      

Bills Payable 9944178 13195055 -24.6%

40
 Borrowings 392739396 360105674 9.1%
201131262 172705924
Deposits & Other Accounts 5 6 16.5%
Liabilities against asset subject to
F.lease 121077 56799 113.2%

Deferred tax liabilities 6945767    

other liabilities 171761918 231359391 -25.8%

259282496 233177616
  1 5 11.2%

Net Assets 211061295 179675714 17.5%

       
Represented by      

Share Capital 21275131 21275131 0.0%

Reserves 53442643 49887328 7.1%

Surplus on revaluation of assets 59262177 49632435 19.4%

Unappropriated profit 76239599 58069393 31.3%

  210219550 178864287 17.5%

Non-controling interest 841745 811427 3.7%

  211061295 179675714 17.5%
Table 3 Horizontal analysis of balance sheet

Interpretation

Horizontal analysis of the balance sheet is also usually in a two-year

format, such as the one shown below, with a variance showing the
difference between the two years for each line item. An alternative format
is to add as many years as will fit on the page, without showing a variance,

41
so that you can see general changes by account over multiple years. A less-
used format is to include a vertical analysis of each year in the report, so
that each year shows each line item as a percentage of the total assets in
that year.

Financial statement analysis is an evaluative method of determining the

past, current and projected performance of a company. Several techniques
are commonly used as part of financial statement analysis
including horizontal analysis, which compares two or more years of
financial data in both dollar and percentage form; vertical analysis, where
each category of accounts on the balance sheet is shown as a percentage of
the total account; and ratio analysis, which calculates statistical
relationships between data.

The horizontal analysis shows that in the year 2018 Cash and Balances with
treasury bank increased 54.6%. Cash and Balances with other bank
decreased 51.7%. Lending to financial Institution increased 295.3%.
Investments decreased 0.9%. Advances increased 25.1%. Fixed Assets
increased 66.3%. Intangable Assets decreased 25.5%. Defferd tax Assets
decreased 100.0%. other Assets decreased 22.4%.  Total Assets increased
11.6%.
Bills Payable decreased 24.6%. Borrowings increased 9.1%. Deposits &
Other Accounts increased 16.5%. Liabilities against asset subject to F.lease
increased 113.2%. Deferred tax liabilities other liabilities Decreased
-25.8%.  Total liabilities increased 11.2%.
Net Assets increased 17.5%. Share Capital increased 0.06%. Reserves
increased 7.1%. Surplus on revaluation of assets increased 19.4%.
Unappropriated profit increased 31.3%. Non-controling interest increased
3.7%.  Equity increased 17.5%.

3.2 Horizontal Analysis of Income Statement

2018 2017 2017 vs

42
 2018
Profit After Taxaion 20015122 23027987 -14%
Exchange gain on Translation 915995 909953 0%
Movement in surplus (Revaluation
investment) (9695113) (7968020) 36%
(8779118) (7058067) 46%
remeasurement Gain 155785 (2755579) -94%
Movement in Surplus (revaluation F.A) 20261759 ---
Movement in surplus (Revaluation Non-
Banking Assets) (167094) 1047510 -84%
20250450 (1708069) 1086%
Total Comprehensive Income 31486454 14261851 102%
Table 4 horizontal analysis of income statement

Interpatition
Horizontal analysis of financial statements involves comparison of a
financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behavior of revenues, expenses, and other line
items of financial statements over the course of time.

Accounting periods can be two or more than two periods. Accounting

period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration.

Profit After Taxaion decreased 14%. Exchange gain on Translation is same

0%. Movement in surplus (Revaluation investment) increased 36%.
remeasurement Gain decreased 94%. Movement in surplus (Revaluation
Non-Banking Assets) decreased 84%. Total Comprehensive Income
increased 102%. Shareholders of the Bank increased 103%. Non-
Controlling interest decreased 26%.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

43
An income statement is a financial statement that reports a
company's financial performance over a specific accounting period.
Financial performance is assessed by giving a summary of how the
business incurs its revenues and expenses through both operating and non-
operating activities. It also shows the net profit or loss incurred over a
specific accounting period.

The income statement is divided into two parts: operating and non-
operating. The operating portion of the income statement discloses
information about revenues and expenses that are a direct result of regular
business operations. For example, if a business creates sports equipment, it
should make money through the sale and/or production of sports
equipment. The non-operating section discloses revenue and expense
information about activities that are not directly tied to a company's regular
operations. Continuing with the same example, if the sports company sells
real estate and investment securities, the gain from the sale is listed in the
non-operating items section.

A horizontal analysis, or trend analysis, is a procedure in fundamental

analysis in which an analyst compares ratios or line items in a
company's financial statements over a certain period of time. The analyst
uses his discretion when choosing a particular timeline; however, the
decision is often based on the investing time horizon under consideration.

44
3.3Vertical Analysis of Income Statement
2018 2017
Profit After Taxaion 20015122 100% 23027987 100%
Exchange gain on Translation 915995 8% 909953 7%
Movement in surplus (Revaluation (9695113 (7968020
investment) ) 52% ) 33%
(8779118 (7058067
) 44% ) 26%
(2755579
remeasurement Gain 155785 1% ) 12%
Movement in Surplus (revaluation
F.A) 20261759 101% --- 0%
Movement in surplus (Revaluation
Non-Banking Assets) (167094) 1% 1047510 4%
(1708069
20250450 101% ) 7%
Total Comprehensive Income 31486454 157% 14261851 67%
Table 5 vertical analysis of income statement

Interpatition
Horizontal analysis of financial statements involves comparison of a
financial ratio, a benchmark, or a line item over a number of accounting
periods. This method of analysis is also known as trend analysis. Horizontal
analysis allows the assessment of relative changes in different items over
time. It also indicates the behavior of revenues, expenses, and other line
items of financial statements over the course of time.

Accounting periods can be two or more than two periods. Accounting

period can be a month, a quarter or a year. It will depend on the analyst’s
discretion when choosing an appropriate number of accounting periods.
During the investment appraisal, the number of accounting periods for
analysis is based on the time horizon under consideration.

Horizontal analysis of financial statements can be performed on any of the

item in the income statement, balance sheet and statement of cash flows

45
An income statement or profit and loss account  statement of profit or
loss, revenue statement, statement of financial performance, earnings
statement, operating statement, or statement of operations) is one of
the financial statements of a company and shows the
company’s revenues and expenses during a particular period. It indicates
how the revenues (money received from the sale of products and services
before expenses are taken out, also known as the “top line”) are
transformed into the net income (the result after all revenues and expenses
have been accounted for, also known as “net profit” or the “bottom line”).
The purpose of the income statement is to show managers and investors
whether the company made or lost money during the period being reported.
One important thing to remember about an income statement is that it
represents a period of time like the cash flow statement. This contrasts with
the balance sheet, which represents a single moment in time.

3.4 Ratio Analysis

Ratio analysis is the most commonly used analysis to judge the financial
strength of a company. It is a quantitative relation between two magnitudes
of the same kind. This comparison allows the firm to detect major operating
differences. the main categories of ratios are.

3.4.1Current ratio

The current ratio is a liquidity and efficiency ratio that measures a firm's

ability to pay off its short-term liabilities with its current assets. The current
ratio is an important measure of liquidity because short-term liabilities are
due within the next year.
This means that a company has a limited amount of time in order to raise
the funds to pay for these liabilities. Current assets like cash, cash
equivalents, and marketable securities can easily be converted into cash in
the short term. This means that companies with larger amounts of current
assets will more easily be able to pay off current liabilities when they
become due without having to sell off long-term, revenue generating assets.

46
Current Ratio
Assets 2017=
160085598+14395805+121709399=296190802
Current Libalities 2017=
10187250+44863930+1657132405=1712183585
Assets 2018=
16080735+26992279+26916113=213989127
Current Liabilities 2018=
13195055+360105674+1727059246=2100359975
Current Ratio = CURRENT ASSET/CURRENT LIABILITIES
CURRENT ASSET/CURRENT
YEARS LIABILITIES RESULT
2018 213989127/2100359975 0.10

2017 296190802/1712183585 0.17

Interpretation
Current ratio showed a huge decrease in the year 2018 to 0.10% from the
last year’s 0.17% which is a good sign for the organization

2017

2018

0 0.02 0.04 0.06 0.08 0.1 0.12 0.14 0.16 0.18

3.4.2 Net Working Capital

Net working capital is a liquidity calculation that measures a company’s

ability to pay off its current liabilities with current assets. This
measurement is important to management, vendors, and general creditors

47
because it shows the firm’s short-term liquidity as well as management’s
ability to use its assets efficiently.
Much like the working capital ratio, the net working capital formula
focuses on current liabilities like trade debts, accounts payable, and vendor
notes that must be repaid in the current year. It only makes sense the
vendors and creditors would like to see how much current assets, assets that
are expected to be converted into cash in the current year, are available to
pay for the liabilities that will become due in the coming 12 months.
If a company can’t meet its current obligations with current assets, it will
be forced to use its long-term assets, or income producing assets, to pay off
its current obligations. This can lead decreased operations, sales, and May
even be an indicator of more severe organizational and financial problems.

The net working capital formula is calculated by subtracting the current

liabilities from the current assets. Here is what the basic equation looks
like.

Assets 2017=
160085598+14395805+121709399=296190802
Current Liabilities 2017=
10187250+44863930+1657132405=1712183585
Assets 2018=
16080735+26992279+26916113=213989127
Current Liabilities 2018=
13195055+360105674+1727059246=2100359975

NET WORKING CAPITAL =

CURRENT ASSETS –CURRENT LIABILITIES
YEARS CURRENT ASSETS –CURRENT RESULT
LIABILITIES
2018 213989127-2100359975 188637084
2017 296190802-1712183585 1415992783

Interpretation

48
The calculation of this ratio show that net working capital in 2018 was Rs.
188637084 while in 2017 it is Rs. 141599783
3.4.3Debt to Equity Ratio
The debt to equity ratio is a financial, liquidity ratio that compares a
company's total debt to total equity. The debt to equity ratio shows the
percentage of company financing that comes from creditors and investors.
A higher debt to equity ratio indicates that more creditor financing (bank
loans) is used than investor financing (shareholders).

The debt to equity ratio is calculated by dividing total liabilities by total

equity. The debt to equity ratio is considered a balance sheet ratio because
all of the elements are reported on the balance sheet.
DER = TOTAL LIABITIES/TOTAL EQUITY

YEARS TOTAL LIABITIES/TOTAL RESULT

EQUITY
2018 2196340695/179675714 12.2
2017 1801277896/180138666 9.9
Interpretation
Debt to equity ratio for the year 2018 is 12.2% while it increased in the
current year 2017 to 9.9, due to increase in the liabilities

2017

2018

0 2 4 6 8 10 12 14

49
3.4.4Debt Ratio

Debt ratio is a solvency ratio that measures a firm's total liabilities as a

percentage of its total assets. In a sense, the debt ratio shows a company's
ability to pay off its liabilities with its assets. In other words, this shows
how many assets the company must sell in order to pay off all of its
liabilities.
This ratio measures the financial leverage of a company. Companies with
higher levels of liabilities compared with assets are considered highly
leveraged and more risky for lenders.
The debt ratio is calculated by dividing total liabilities by total assets. Both
of these numbers can easily be found the balance sheet. Here is the
calculation:

DEBT RATIO = TOTAL LIABILITIES/ TOTAL ASSETS

YEARS TOTAL LIABILITIES/ TOTAL RESULT
ASSETS

2018 2196340695/2376016409 0.8

2017 1801277896/1981416562 0.9

Interpretation
Debt ratio slightly decreased in 2018 as compare to 2017 it was 0.8 % in
2017 it decline to 9 %.

2017

2018

0.74 0.76 0.78 0.8 0.82 0.84 0.86 0.88 0.9 0.92

50
3.4.5 Equity Ratio
The equity ratio is an investment leverage or solvency ratio that measures
the amount of assets that are financed by owners' investments by
comparing the total equity in the company to the total assets.
The equity ratio highlights two important financial concepts of a solvent
and sustainable business. The first component shows how much of the total
company assets are owned outright by the investors. In other words, after
all of the liabilities are paid off, the investors will end up with the
remaining assets.
The second component inversely shows how leveraged the company is with
debt. The equity ratio measures how much of a firm's assets were financed
by investors. In other words, this is the investors' stake in the company.
This is what they are on the hook for. The inverse of this calculation shows
the amount of assets that were financed by debt. Companies with higher
equity ratios show new investors and creditors that investors believe in the
company and are willing to finance it with their investments.

The equity ratio is calculated by dividing total equity by total assets. Both
of these numbers truly include all of the accounts in that category. In other
words, all of the assets and equity reported on the balance sheet are
included in the equity ratio calculation.
EQUITY RATIO = TOTAL EQUITY/TOTAL ASSETS

YEARS TOTAL EQUITY/TOTAL ASSETS RESULT

2018 179675714/2376016409 0.07
2017 180138666/1981416562 0.09

Interpretation
Equity ratio for the year 2018 is 0.07% and in 2017 it is 0.09% which means it
slightly decreased than the year 2018 in current year which is a good sign.

51
 2017

2018

0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.1

3.4.6 Net Interest Margin:

Net interest margin (NIM) is a measure of the difference between the
interest income generated by banks or other financial institutions and the
amount of interest paid out to their lenders, relative to the amount of their
assets. It is similar to the gross margin of non-financial companies
NIM = Interest Expenses / Interest Income

Interest Expenses / Interest

Years Income

2018 68820000/54253000 1.26

2017 59578000/54824000 1.0

Interpretation
This ratio examines how successful a firm's investment decisions are
compared to its debt situations. The interest margin ratio in 2017 is
decreased as compared to 2018 good sing for the bank, because investment
decisions are well planned.

52
 2017

2018

0 0.2 0.4 0.6 0.8 1 1.2 1.4

3.4.7 Earning Asset to total assets

An asset that produces money for a company without any work needing to
be done. Earning assets include such things as loan, Lease, stocks, bonds,
certificates of deposit, and generally anything that earns interest or
dividends.
Earning assets include loan, Lease, investment securities and money market
assets. This ratio show that the contribution of these assets to total assets.
Earning assets = Interest Earned/Total Assets
Interest Earned/Total
Years Assets
2018 123073000/2376016409 0.06
2017 1144403000/1981416562 0.05

Interpretation
The ratio of earning to total assets in 2017 is 0.05 and in 2018 it is 0.06
which is almost increase could be favorable for the bank.

53
 2017

2018

0.04 0.05 0.05 0.05 0.05 0.05 0.06 0.06 0.06 0.06

3.4.8 Return on Earning Assets.

An indicator of how profitable a company is relative to its earning
assets. ROEA gives an idea as to how efficient management is at using its
assets to generate earnings.
Years Net income/interest income

2018 23028000/54253000 0.42

2017 22752000/54824000 0.41
ROEA = Net income/interest income

Interpretation
Return on earning assets is decreases in 2017 as compared to previous year,
due to good management of NBP showing favorable trend.
3.4.10 Equity to Total Assets.
The equity to debt ratio show how much NBP have equity out of total
assets.
DEBT RATIO = EQUITY/TOTAL ASSETS
YEARS EQUITY/TOTAL ASSETS
2018 179675714/2376016409 0.10
2017 180138666/1981416562 0.09

Interpretation.

54
This ratio shows the ownership of the bank. In 2018 it is 0.10 and 2017 it is
0.09 which shows in 2018bank equity are increase.

2017

2018

0.08 0.09 0.09 0.09 0.09 0.09 0.1 0.1 0.1 0.1

3.4.11 Non Performing Loan to Total Loan

NPL, are loans that are no longer producing income for the bank that owns
them. Loans become nonperforming when borrowers stop making
payments and the loans enter default. The exact classification can vary
from institution to institution, but a loan is usually considered to be
nonperforming after it has been in default for three consecutive months.
Credit to Deposit ratio (CD ratio)
CD ratio = ADVANCES/ DEPOSITS

YEARS ADVANCES/ DEPOSITS

2018 740344934/1727059246 0.42
2017 668883928/1657132405 0.40
interpretation.
credit to deposit ratio shows how much bank uses deposit to advances. In
2018 bank use 0.42% deposit for advances and in 2017 bank use 0.40%
deposit for advances.

55
2017

2018

0.39 0.4 0.4 0.41 0.41 0.42 0.42 0.43

56
 CHAPTER 4
CONCLUSION AND RECOMMENDATIONS

4.1 Conclusion
It is Concluded that NBP has very strong network there are many
opportunities available for qualified persons, they can join it for long-term
career, and Overall working environment of NBP is very comfortable.
Furthermore, Management of City Branch Mansehra concentrates on its
employees and considers them as the Asset of bank. Behavior of branch
manager is very polite and the whole management focuses on the
individual’s career and their growth.I had made an honest effort to present
the working & operations of NBP, specifically to City Branch Mansehra in
simplest way. Moreover, I feel pleased that I have really learned a lot
during two months & enjoyed working with experienced cooperative &
intelligent staff.I found my internship at NBP to be a very knowledgeable
experience and training was very much beneficial for me, because it helped
me to be aware of a real life working environment, As far as my learning is
concerned; all the employees at branch were very much cooperative.
Related to this, management of this branch helped me to understand the
procedures of a bank to possible extent; their good behavior also gave me
more confidence to learn more about the banking operations and to ask if I
have found any query in my mind.

4.2 Recommendations
Recommendations are given in the following,
 Transfer is not properly carried out. Some of the employees are
continually serving at the same post. They are simply rotated at the
same branch.
 Therefore it is recommended that rotation of every employee should
take place in every three years in different branches of the bank.
 There should not be any abrupt polices by the upper management,
as this practice damage the customer confidence in the bank.

57
 Policies should be made in such a manner that any new government
could not alter it.
 National bank of Pakistan should start its operations in credit cards.
These cards are very helpful for the ordinary customer in general
and the business in particular.
 To make it more secure and to eliminate the misuse of it, the
management is required to keep proper security against the card.
 Valuator machine is used to count the currency notes and its
installation will help to eliminate the counting errors and will save
time as well.
 So for the purpose of saving time the installation of valuator is
compulsory.
 Efficient forecasting may increase the profitability of the any
organization. So Forecasting needs to be introduced at NBP. Before
taking any major decision it is necessary to judge decision, which
they are likely to take. Whether it has good or any bad impacts for
the bank and for the economy as a whole. It will also help in better
planning.
 In the City Branch Mansehra during the internship, it is observed
that there is lot of nepotism and favoritism.
 When some of the employees are transfer to other places, due to
there relations with top management they can cancel their transfer
in few weeks.
 So I suggest that in the organization there should be no favoritism,
nepotism and politics and their transfer and promotion should be
made on merit and provide favorable environment to all the
employees equally. They should be rewarded on their performance.
 It is observed during the internship that, there are number of
employees who are working on one seat since last two years. It can
affect the performance and motivation of the employees negatively.
Therefore there should be the interdepartmental transfer of the

58
 employees to make the jobs and the working environment
interesting. And this transfer should be for a reasonable time period.
 The branch should adopt various marketing strategy and promotion
strategy to promote the bank and its products. These marketing
strategies may be very helpful. For this purpose the bank should
conduct the seminars and conferences within and outside the bank.
 The NBP should adopt various prizing scheme just like allied bank
(kar –amed scheme) bank Alfalah (monthly income earning
scheme) and various others. Media and newspapers can be helpful
in this regard.
 There is no proper facility for the customers in the bank when they
enter the bank. The proper furniture is not available for the
customers. In the time of rush the people move here and there in the
bank which really create the disturbance.
 So in order to main tain the good working environment the
customer should be served properly so that they can feel that they
have taken the right.
 The staff members do not have the strong professional background.
They do not have modern techniques and knowledge regarding the
bank procedures.
 Although staff training colleges are working in all major cities but
they are not performing well. For this purpose these staff colleges
should be reorganized and their syllabus should be made in such a
way to help the employee understand the ever-changing economic
conditions.
 Banking council, of Pakistan should also initiate some programs to
equip the staff with much needed professional knowledge.
 To make the environment of the work place more cohesive proper
authority delegation is required in the bank. Staff members of the
bank should be given a task and authority and he or she should be
ask for their responsibility. In this way no one can put the blame of
their mistake on others.

59
  The manager should strictly monitor the performance of every staff
member. All of them should be awarded according to their
performance. Special bounces and incentives should be given to
motivate them.
 On the job training should be carried out by the management to
make their staff better concerning the global changing economic
environment. For these purpose seminars, conferences and debates
should be organized.
4.3 Future prospects of National Bank of Pakistan
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.
The forward-looking management of NBP is a firm believer in focusing on
niches where there is critical mass and to create products that meet that
demand.

National Bank of Pakistan is gearing up to the challenges faced by the

domestic banking industry due to innovations and advances in the
international banking world, which is the consequence of globalization. The
bank wishes to effectively utilize the financial assistance being extended by
the Government of Pakistan for banking sector reforms aimed at reducing
operating costs and improving profitability. National Bank of Pakistan is
distinct from other banks in that it has a nonprofit and service oriented
motive, which has manifested itself in the area of salary deposits of
government employees and payment of utility bills. The bank renders these
services across the country reaching as far as the remotest regions; from our
northern borders to the Arabian Sea. These services do not contribute
towards the earnings of the bank; rather they put pressure on bank’s
resources. Nevertheless, the bank is committed to serving small savers and

60
the general public of the country. National Bank of Pakistan is everyone’s
bank and does not only serve corporate customers. To extending and
targeting research to improve bank earnings, through customer focus of
bank’s commercial and corporate branches, and by enhanced efforts
towards the development of human capital, the bank shall very soon
transform from a bureaucratic organization to a fast paced, modern, and
competitive bank. In conclusion, the National Bank of Pakistan have the
vision, which will enable it to achieve even better results, safeguard the
interest of their customers and to assist them in their march towards
progress and prosperity in future.

The National Bank of Pakistan is 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

NBP’s current management has boarder vision. They have taken steps to
improve customer services, streamline internal procedure and creating a
delectating climate for technology initiative.

Reorganizing efforts going on in the NBP has open many opportunities for
NBP to grow. For instance to achieve objectives NBP have taken following
measures.

Setting of target for of making at least 300 branches country wide on

line.
Closing of all those branches, which are burden on NBP.
Management to offer specialized services to major corporate including
advisory and debt syndication introduces the concept of relationship
manager.
Comprehensive training programs has been develop to up grade the
core banking skills of the existing staff as well as integrate high quality
hiring.

61
 To improve the motivation of staff a merit-based culture is being
promoted. Through overhauling the manpower recruitment preservation
and performance appraisal system.
The actions taken by current management provide a great opportunity for
NBP for making it future prosper and can make NBP not less than any
modern commercialize bank in Pakistan.

The Management of NBP assess that the Internal Control environment is

showing signs of improvement as compared to previous years in all areas of
the bank. The bank is endeavoring to further refine its internal control
design and assessment process as per guidelines issued by the State Bank of
Pakistan Accordingly, Bank is making all possible effort to improve the
professional skills and competency level of the staff through need based
training programs and our valued customers for their support and continued
confidence in NBP.

62
 REFERENCES

1. NBP Annual report 2018

2. NBP Annual report 2017
3. https://www.nbp.com.pk/Islamic/DepositScheme.aspx
4. https://www.nbp.com.pk/CorporateBanking/index.aspx
5. https://www.nbp.com.pk/BankProfile/index.aspx
6. https://www.nbp.com.pk/Governance/BOD.aspx
7. https://www.nbp.com.pk/Governance/DirectorsReport.pdf
Gibson, Charles H, (2002); Financial Reporting & Analysis, 7 th Edition.
Prentice Hall International Corporation”.

63
i
http://www.nbp.com.pk/EcomomicBulletin/FS-Complete-31-12-2007.pdf
ii
NBP Quarterly Report September 2008
iii
http://www.nbp.com.pk/nbp/About_Us/About_US.jsp
iv
NBP Quarterly Report September 2008
v
Black's Law Dictionary page 471 (5th ed)
vi
Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed.
vii
Principles of marketing 8 ED by Kotler & Armstrong G7
viii
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 87
ix
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 91
x
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 88
xi
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed
xii
http://www.nbp.com.pk/Aamdani/index.htm
xiii
http://www.nbp.com.pk/Premium/index.htm
xiv
http://www.nbp.com.pk/Saibaan/index.htm
xv
http://www.nbp.com.pk/advancesalary/index.htm
xvi
http://www.nbp.com.pk/CashnGold/index.htm
xvii
http://www.nbp.com.pk/StudentLoan/index.htm
xviii
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 221
xix
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 228
xx
Practice & Law of Banking in Pakistan by Dr. Asrar H. Siddiqui 7th ed page no 228