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INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

MANDIAN BRANCH ABBOTTABAD (1348)

Submitted by: Aamer Ishaq

Roll # 36

Supervised by: Sardar Ejaz Ahmed

Government College of Management Sciences Abbottabad


SESSION

2018-2019

i
INTERNSHIP REPORT ON

NATIONAL BANK OF PAKISTAN

MANDIAN BRANCH ABBOTTABAD (1348)

Submitted by: Aamer Ishaq

Roll # 36

Supervised by: Sardar Ejaz Ahmed


This internship report is submitted in partial fulfillment of the
requirements for the degree of Master of Commerce awarded by
the Abbottabad University of Science and Technology

Government College of Management Sciences Abbottabad


SESSION
2018-2019

ii
Government College of Management Sciences
Abbottabad

APPROVAL SHEET

Approval Committee

1. External Examiner

Mr.______________________ Signature______________________

2. Supervisor
Sardar Ejaz Ahmed Signature______________________
Designation Associate Professor

GCMS Abbottabad

3. Head of department

Prof. Syed Arif Zahid Signature_____________________


Designation Principal GCMS Abbottabad

iii
DEDICATION

Me Aamer would like to dedicate this internship report to my family


who supported me at every step of my life and stay with me in every
good and bad time . I got my things from them .

iv
ABSTRACT
Banks play very important and vital role for the economic growth and sustainability of
economy. The bank deals in money, such institution are also required to fulfill other financial
needs such as provision of place to deposit money, serving for the utilities and advancing
money in order to facilitate the needs of householders and the businesses. In this report the
financial position of NBP has been studied and analyzed.

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.

v
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...................................................................................................3
1.6.1 The major sources for Primary data includes......................................................3
1.6.2 The major sources for Secondary data includes..................................................3
1.7 Scheme of the report......................................................................................................4

Chapter 2............................................................................................................................5
Introduction to organization (NBP).................................................................................5
2.1 They aim to be an organization that is founded on…....................................................6
2.1.1 They aim to be People who.................................................................................6
2.1.2 They have confidence that tomorrow they will be…..........................................7
2.1.3 Evaluation of Banking / Industry in Pakistan......................................................7
2.2 Historical Introduction to the organization (National Bank of Pakistan)....................9
2.2.1 History of NBP....................................................................................................9
2.2.2 Credit Rating.....................................................................................................11
2.2.3 Present status.....................................................................................................11
2.3 Organizational structure of NBP..................................................................................12
2.3.1 Board of Directors.............................................................................................13
2.4 Senior Management.....................................................................................................14
2.4.1 Senior Management for Overseas Operation....................................................16
2.5 Vision and Mission Statements....................................................................................16
2.5.1 Mission..............................................................................................................16
2.6 Objectives of National Bank of Pakistan.....................................................................16
2.7 Core Values..................................................................................................................17
2.7.1 Shall work to.....................................................................................................17
2.7.2 We aim to be people who…..............................................................................17
2.7.3 We have confidence that tomorrow we will be….............................................17
2.8 Internal Structure of Bank Branch...............................................................................18
2.8.1 location..............................................................................................................19

Chapter 3..........................................................................................................................20
Product and services........................................................................................................20
3.1 Deposit Department.....................................................................................................20
3.1.1 Account opening................................................................................................20
3.1.2 Procedure of Account Opening.........................................................................20
3.1.3 Documents Required.........................................................................................21
3.1.4 Issuance of Cheque Book..................................................................................21
vi
3.1.5 Cheque Cancellation.........................................................................................21
3.2 TYPES of Accounts.....................................................................................................21
3.2.1 Current Account................................................................................................21
3.2.2 Profit & Loss Sharing Saving Account.............................................................22
3.3 Problems in personal account....................................................................................26
3.3.1 Lunacy of customers.........................................................................................26
3.3.2 Death of customer.............................................................................................26
3.4 Advances department...........................................................................................26
3.5 Types of financing................................................................................................27
3.5.1 Long term finance;............................................................................................27
3.5.2 Short term finance.............................................................................................27
3.5.2.1 Gold finance...................................................................................................27
3.5.2.2 Running finance.............................................................................................28
3.5.2.3 Long term finance..........................................................................................29
3.5.2.4 Advance salary...............................................................................................29
3.6 Western union..............................................................................................................29
3.7 Clearing department.....................................................................................................29
3.7.1 Clearing house...................................................................................................29
3.7.2 NIFT (National institutional facilitation technology).......................................29
3.8 Foreign exchange department......................................................................................30
3.9 Types of Cheque..........................................................................................................31
3.9.1 Bearer Cheque...................................................................................................31
3.9.2 Order cheque.....................................................................................................31
3.9.3 Crossed Cheque.................................................................................................31
3.9.4 Payment of Cheque...........................................................................................31
3.10 Remittance department..............................................................................................32
3.11 Demand draft (Dd).....................................................................................................32
3.11.1 Charges for Issuance of DD............................................................................32
3.12 Telegraphic transfer (TT)...........................................................................................32
3.13 computer department.................................................................................................33
3.14 Establishment department..........................................................................................33

CHAPTER 4.....................................................................................................................34
FINANCIAL ANALYSIS................................................................................................34
4.1 Financial Analysis........................................................................................................34
4.1.1 Common size analysis.......................................................................................34
4.1.1.1 Vertical Analysis of NBP................................................................................34
4.1.1.3 Horizontal Analysis of NBP`s Balance interpretation....................................37
4.2 Horizontal Analysis of Income Statement...................................................................39
4.4 Ratio Analysis..............................................................................................................42
4.4.1Current ratio.......................................................................................................42
4.4.2 Net Working Capital..........................................................................................44
4.4.3Debt to Equity Ratio...........................................................................................45
4.4.4Debt Ratio..........................................................................................................45
4.4.5 Equity Ratio.......................................................................................................46
4.4.6 Return on Assets Ratio - ROA..........................................................................47
4.4.7 Net Interest Margin:..........................................................................................48
4.4.8 Earning Asset to total assets..............................................................................49
4.4.9 Return on Earning Assets..................................................................................49
vii
4.4.10 Equity to Total Assets......................................................................................50
4.4.11 Non Performing Loan to Total Loan...............................................................50

CHAPTER -5...................................................................................................................52
SWOT ANALYSIS...........................................................................................................52
5.1 strengths.......................................................................................................................52
5.2 Weaknesses..................................................................................................................53
5.3 Opportunities of NBP..................................................................................................54
5.4 Threats.........................................................................................................................54

Chapter 6..........................................................................................................................56
Conclusion and recommendations.................................................................................56
6.1 Conclusion...................................................................................................................56
6.2 Recommendations........................................................................................................56
References..........................................................................................................................61

viii
LIST OF TABLES

Table 1 Board of directors........................................................................................................13


Table 2 Verical analysis of balance sheet.................................................................................35
Table 3 Horizontal analysis of balance sheet...........................................................................37
Table 4 horizontal analysis of income statement.....................................................................39
Table 5 vertical analysis of income statement..........................................................................41

ix
ACKNOWLEDGEMENTS

With the name of ALLAH the Most Beneficial and Merciful. I completed my internship in
National Bank of Pakistan Mandian Branch Abbottabad. 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 Sardar Ejaz Ahmed
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 Mandian
Branch Abbottabad.

Aamer Ishaq

x
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

xi
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.

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.
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 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.
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

xii
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.

This internship report is divided into five chapters, which are:


Chapter 1 includes background, purpose of study, Scope of study, some limitations, merits,
and scheme of this Report.
Chapter 2 includes background and history of banking in Pakistan as well as Introduction to
NBP, Mandian Branch Abbottabad.
Chapter 3 includes the financial statement, Products, and services offered by NBP to its
valued customers.
Chapter 4 includes the SWOT and ratio analysis and their interpretation.
Chapter 5 includes some of the conclusion and some of the recommendations.

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 Two year’s study in
M.Com. Therefore, we the students of Management Sciences are required
to undergo an internship program for the period of 6 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 1400 branches
locally, 25 branches internationally and 11 regional offices
Source: (Annual report NBP, 2018).

1.2 Objectives of study


As part of the academic requirement for completing M.Com 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.
 To analyses the financial and operational performance of NBP.

1
 To study the organizational management structure.
 To make possible recommendation in the light of analyses.
 To study the working environment of the organization.
 To apply the knowledge gained in practical field.

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. Some of the problems faced by the bank have been identified
and some recommendations have been suggested to overcome these
problems and to improve the prevailing financial condition of the bank.

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.
 Staff members avoided to give all information due to the matter of
secrecy. So it was very difficult to collect the relevant information and to
learn accordingly.
 Manager and other staff members have busy schedule due to this reason it
was a great problem for them to spend time with internee, so it is not easy
to learn or to gain knowledge from them.
 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

2
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 Mandian Branch Abbottabad of the bank, it is
not possible to thoroughly cover all the areas of the bank, as it requires
more 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. I also visited the national bank of Pakistan’s official web site,
which gave very useful information about the services provided by 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
 Discussion with staff members

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
 Internet

3
Official web site of NBP and some other relevant sites mentioned in the
references
1.7 Scheme of the report
This internship report is divided into five chapters, which are:
Chapter 1 includes background, purpose of study, Scope of study, some
limitations, merits, and scheme of this Report.
Chapter 2 includes background and history of banking in Pakistan as well
as Introduction to NBP, Mandian Branch Abbottabad.
Chapter 3 includes the financial statement, Products, and services offered
by NBP to its valued customers.
Chapter 4 includes the SWOT and ratio analysis and their interpretation.
Chapter 5 includes some of the conclusion and some of the
recommendations.

4
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 remain ed 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?
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 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.

5
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. It will draw Indian Currency notes of Rs: 125 crore from
General Circulation and send these for recovery to reserve Bank of India.

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.
 Practice integrity, honesty and hard work. We believe that these are
measures of true success.

6
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.
A number of banks closed their branches with the result that only 81
branches remain ed 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?
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 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

7
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. It will draw Indian Currency notes of Rs: 125 crore from
General Circulation and send these for recovery to reserve Bank of India.
National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general
public. It works as agent of sent real bank because the SBP dose not has its
own branches.
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
promulgation of “nationalization” act 1974 and the shears not held by the
government where required after compensation them.

8
2.2 Historical Introduction to the organization (National Bank
of Pakistan)
National Bank of Pakistan main tains 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 nation wide branches.

2.2.1 History of NBP


National bank was establish in November 09, 1949 under NBP ,ordinance
1949, in order to handle the crises condition which was develop after
Deadlock with India and the devaluation of Indian Rupee in 1949. The
bank proved all type of banking services to the government in general
public. It works as agent of sent real bank because the SBP dose not has its
own branches.
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

9
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
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
 commercial and retail banking group
 audit and inspection group
 overseas Coordination and Management Group
 Risk 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. sale and purchase
of government securities, Bands and other certificates, Foreign exchange
business, Safe custody, Safe deposited services and safe deposit, Lockers,

10
Hajji facilities Utility bills, Investment advice and other services, Special
deposits products / Schemes, pak rupee travelers choose, New product.

2.2.2 Credit Rating


NBP enjoys the highest rating of ‘AAA’ in the industry assigned by M/s
JCR-VIS Credit Rating Company. The ratings assigned to NBP are
primarily driven by the bank’s role in the national economy as an agent of
the State Bank of Pakistan and as a bank to the Government of Pakistan.
Additionally, ratings also derive strength from the bank’s consistently high
capitalization levels, and nationwide access that has enabled it to secure a
cost effective and diversified deposit base.

2.2.3 Present status


National Bank of Pakistan has a network of more than 1400
domestic branch and 19,204 employees for subsidiaries, 23. Oversea
branches, 4 reparative offices, 1 joint venture and subsidiary (overseas) all
the world the local branches are controlled through 29 regional offices and
overseas are managed through 4 overseas regional offices. It is the largest
contributory agent of government requirement. NBP provide wide range of
services and including collection of taxes and deliveries of salaries, person
to public sector employees. It has lowest rate on exports and other
borrowings.
National bank of Pakistan, overseas operation comprises 18
overseas branches, 5 representative offices, one international subsidiary
bank of NBP in Amatory and one joint venture with the United Kingdom.
NBP with its commitment to invest in development of the bank’s I.T
infrastructure have now developed on line branches with modern by highly
professional bankers. NBP has launched an ambitious business
reprocessing programmed to make the bank more attractive with the
eventual aim of privatization. The largest bank in the country with a
customer base 9.00 billion in poised for take off.
Source: www.nbp.gov.pk/about

11
2.3 Organizational structure of NBP

President and chairman

President Secretariat

Board of Director

Corporate and investment banking Group

Commercial and retail Banking Group

Operations Group

Audit & inspection group

Compliance group

Financial control division

Employees benefit, Disbursements and trustee

Special assist Management group

Organization development and training group

Overseas coordination and management group

Information technology group

Risk management group

Human resources
Treasurymanagement
managementand Admin Group
group

Source: Annual Report 2018

12
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

Mr. A. Akbar Sharifzada


Director

Mr. Syed Muhammad Ali Zamin


EVP, Secretary Board of Directors & Secretary Credit Committees

2.4 Senior Management

13
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 
SEVP & CFO, Financial Control Division

Sultana Naheed
SEVP & Group Chief, Risk Management Group

Zahid Mahmood Chaudhry


SEVP & Group Chief, Human Resources Management &
Administration Group

14
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

15
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

16
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.

2.7.1 Shall work to


 Meet expectations through Market-based solutions and products.
 Reward entrepreneurial efforts.

2.7.2 We aim to be people who…


 Care about relationships.
 Lead through the strength of our commitment and willingness to
excel.

2.7.3 We have confidence that tomorrow we will be…


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

17
2.8 Internal Structure of Bank Branch
CHART

RRMC RBC ROC RCC

Cad. Manager Operating


Complain
Officer Manager Officer

Deposit Sector Remittance

Govt. Section Accountant

Foreign Exchange Credit Deptt:

Source: www.nbp.go.pk/about
Chief Cashier

18
2.8.1 location
The Location of the Bank Branch is Near Pajpeer Mazar, Abbottabad City.

2.8.2 Overview
The building of NBP Mandian Branch Abbottabad gives a pleasant look as
it is a well furnished and decorated by fresh flowers both inside and outside
the bank. There is separate parking place for staff members and also for
general public which is helpful in reducing traffic on road unlike other
banks. Inside the bank there is a hall and on one side is the manager’s
office. In the hall there is separate seating facility for males and females
customers. In the hall all the officers of different departments has their
tables. The seating arrangement of all officers is same despite their
designation. Only cash department and government section is separated.
The facility of generator is also provided to the branch.

2.8.3 Number of Employees


In NBP Mandian Branch Abbottabad the employees are very experienced.
They are very loyal and committed to their jobs. They are also very much
cooperative with their colleges if anyone of them face any problem in his
work they never hesitate to help him. Number of Employees currently
working there is 35

19
CHAPTER 3
PRODUCT AND SERVICES

Dividing an organization into different parts according to the functions is


called departmentalization. NBP can be divided into the following main
departments.

3.1 Deposit Department


It controls the following activities:
 A/C opening.
 Issuance of cheque book.
 Current a/c
 Saving a/c
 Cheque cancellation

3.1.1 Account opening


An account is relationship between account holder and Banker. OR
Account is an agreement between customer and banker. Preliminary
investigation is necessary because of the following reasons.
 Avoid frauds.
 Negligence.
 Inquiries about clients.

3.1.2 Procedure of Account Opening


Accounts are opened after approval of manager. Customer has to fill in
prescribed application form properly particularly complete details of next
of kin. Customer has to sign terms and conditions of account opening.
Accounts are opened with cash. In case of issuance of check book at the
time of opening of an account Manager has to give justification that
customer is personally known to him. Details of account are entered into

20
computer system. Included non-deduction of zakat and services charges
who’s applicable.

3.1.3 Documents Required


 Copy of CNIC.
 Copy of driving license in case CNIC is without photograph.
 Applicant photograph and CNIC copy attested by gazetted officer in
case of CNIC without photograph.
 Copy of service card/evidence of employment in case of salaried
person.
 Photograph in case of illiterate person.
 Zakat exemption declaration/certificate.

3.1.4 Issuance of Cheque Book


Requisition slips to verify that cheque books have been issued to the
account holder. Cheque book are issued after receipt of acknowledgement
of letter of thanks or with the remarks of managers or operation managers
giving justification for issuance of cheque book before receiving of
acknowledgment of letter of thanks. Cheque book series are recorded in
register. Charges for issuance of cheque books are recorded.

3.1.5 Cheque Cancellation


 This department can cancel a cheque on the basis of;
 Post dated cheque
 Stale cheque
 Warn out cheque
 Wrong sign etc

21
3.2 TYPES of Accounts
3.2.1 Current Account
It is also known as running account because it is always in
operations.Current accounts are opened on proper introduction and
submission of required documents along with an initial deposit prescribed
from time to time. The money can be deposited and withdrawal at any time
during the banking hours by the customers. Therefore the banks do not pay
interests on current deposits. The bank is authorized to deduct services
charges on current account levied through its half yearly schedule of
charges, in case the average balance falls below the minimum balance as
prescribed by the bank. Minimum balance required to open this account is
Rs 5000/-

3.2.2 Profit & Loss Sharing Saving Account


PLS saving accounts are opened on proper introduction and submission of
required documents along with an initial deposit prescribed from time to
time. PLS saving accounts are opened for individual (single/joint)
charitable institution, autonomous corporation, companies, associations,
educational institutions, firms etc. Interest is paid on six-monthly basis. The
amount withdrawn before 6months is deleted from assessment of profit.

3.2.3 Profit & Loss Sharing Term Account


Fixed accounts or term deposits are those deposits which are repayable
after certain period of time which may vary from 3months to 5years. In this
account no cheque book is issued to the customers. At the time of opening
account TDR is issued showing the amount of money deposited, period and
rate of interest payable. The rate of interest on fixed deposits is greater than
saving accounts which also varies with the length of period and amount
deposited. The longer the period of deposit, higher will be the rate of
interest. The shorter the period of deposit, lower will be the rate of interest.
PLS term deposit account can be opened by all who are allowed to open
current, PLS saving accounts.

22
3.2.4 Rates on term Deposit
3months 5.30%
6months 5.60%
1year 5.80%
2year 6.10%
3year 6.40%
4year 6.70%
5year 7.10%
Above 5 7.80%

3.2.5Foreign currency account


Foreign Currency Accounts are opened on proper introduction and
submission of required documents along with an initial deposit
prescribed from time to time. It can be operated singly or jointly by
individuals, partnerships, corporation, companies etc.Pakistani,
foreigners, Muslims, non Muslims can open this account in foreign
currency Dollars, Pounds sterling and Euro. In Pakistan only foreign
currency saving account is running. Minimum balance required for
foreign currency saving account is 500 Dollars.If balance is less than
required then Bank makes deductions.

3.2.6 National income daily accounts (NIDA)


NIDA are opened on proper introduction and submission of required
documents along with an initial deposit prescribed from time to time. NIDA
are opened for individual (single/joint) charitable institution, autonomous
corporation, companies, associations, educational institutions, firms etc.

23
Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.

3.2.7 Rates or profit on NIDA


2million to 25million=1.50%
25m to 50m =2%
50m to 100m =2.30%
100m to 2.50m =2.60%
2.50m to 500m =2.80%
500m to 1000m =3.10%
1000m to 2000m =3.30%
2000m to 5000m =3.50%
5000m & above =3.75%

3.2.8 Premium saver account


Premium saver accounts are opened on proper introduction and submission
of required documents along with an initial deposit prescribed from time to
time. Premium saver accounts are opened for individuals (single or joint)
only. In case where prescribed minimum balance in Premium saver account
is not maintained no profit for the month will be paid to the account holder.
In case of Premium saver account a higher rate of profit as per bank
discretion will be paid to depositor maintaining deposit below the mark of
Rs 300,000/- as compared to depositor maintaining higher deposits in their
Premium saver account.

3.2.9 Premium Amdani account


Premium Amdani products account can be opened by all who are allowed
to open current, PLS saving account. The bank reserves the right of
refusing to accept deposit from any person in premium Amdani account
without assigning any reason. Premium Amdani deposits are accepted by
the bank with minimum sums prescribed by the bank from time to time. In

24
case of premium Amdani additional amount in the lots of 25000/- will be
accepted. Premium Amdani Certificates will only be issued for period of 5
year. Loan will be given 85% of face value of certificate. Loan will be
sanctioned for one year and lump sum payment will be made.

3.2.10 Rates
1 year 7.50%
2year 8.50%
3year 9.50%
4year 10.50%
5year 11%

3.2.11 Account of blind person


Blind person (both literate & illiterate) can open an account to be operated
jointly with a visually literate person on completion of all documents and
formalities as prescribed by the bank. Operations in the joint account will
not be subject to ‘’either or Survival’’. In the event of death of blind
account holder the entire credit balance will be paid to the legal heirs of the
deceased blind account. In the event of death of joint visually account
holder the entire credit balance will be payable to the surviving blind
account holder.

3.2.12 Dormant & inoperative account


All current accounts, which have not been operated upon for six months or
all saving accounts which have not been operated upon for one year shall
classify as ‘’Dormant account’’. All current account s, which have not been
operated upon for two years or all saving accounts, which have not been
operated upon for three year shall classify as ‘’Inoperative account’’.

3.2.13 Minor’s accounts


That person who has not up till attained the age of 18years is considered as
minor. Under section 11 of contract act, 1872 minor is incompetent to enter

25
into contract. Therefore in bank, contract with minor is avoided. There are
two types of minor’s account.

3.2.13.1 According to will of guardian


Bankers in Pakistan allow minor to open to an account but on the request of
his guardian. Title of account remain s on the name of both guardian &
minor Until age of 18 year minor cant made transaction, after 18 year both
can do transactions.

3.2.13.2 after death of guardian


In case of death of account holder the credit balance in his account will be
payable to his legal heirs. They have to prove themselves through court.
Bank will present the details of his account in court. If any one of them is
minor then he will not be given balance. His account will be opened in the
Bank according to orders of court and Senior Civil Judge will be guardian
of account until he attained the age of majority. After that he can withdraw
money from the account.

3.3 Problems in personal account

3.3.1 Lunacy of customers


A customer who is incapable of understanding, is of unsound mind
cannot enter into contract with the banker as a customer.

3.3.2 Death of customer


In the event of death of an account holder, the credit balance, in any
account, in the name of an individual will be payable to the legal heirs of
the deceased individual account holder If the account is in the name of two
or more persons operated jointly the credit balance will be payable to the

26
legal heirs of the deceased account holders along with the remaining
account holders.

3.4 Advances department


The objective of Advances Department is”. To facilitate people by giving
short term and long term loans on easy terms and conditions”. The main
function of this Department is to take surplus money from the people at low
rates and lend this money to borrowers at high rates to earn profit. This
section is back born of bank. 50% of earning of bank comes from advance
department. Profitability depends on advances

3.5 Types of financing


There are two types of financing .

3.5.1 Long term finance;


 Which are for 5years or more than 5 Years.
 House building finance
 NBP advance salary
 Motor car loan
 Agriculture development loan
 Project financing
 Staff loan

3.5.2 Short term finance


 Which are for one year.
 Gold finance
 Cash finance
 Running finance

3.5.2.1 Gold finance


 Facility of Rs 1000 against 1 gm of gold.

27
 No maximum limit of cash.
 Mark-up 15.5% per annum.
 Repayable after one year. (Lump sum).
 Loan is given on net weight.
 Minimum on 12 g loan is sanctioned.
 If after one year no capacity to repay then loan can be rescheduled
by paying mark-up for one more year.
 One person cannot take additional loan on other grams of gold with
same name.
 If after one year payment is not made to bank. Bank send 3 notice to
borrower
 Again if he doesn’t reply to notice. Case will be sent to the court.
Court will give gold to bank and will order the borrower to pay
mark-up.

ii) Cash finance


It is a very common form of borrowing by business concern, commercial
concern, and industrial concern. A borrower is granted an advance up to a
certain limit against securities such as pledge of goods and mortgage
securities. Borrower pay markup only on the amount which is actually
utilized. It is granted on long term basis. Cash Finance is not available in
Abbottabad , only in big cities Bank has its own lock on warehouses.
Industries can’t reduce stock without the permission of bank. If he wants to
use the stock, the bank person will visit along with him. When stock
reduces he will pay the loan. Loan is sanction for one year. After one year it
can be renewed. Markup is paid in quarterly.

3.5.2.2 Running finance


 In running finance property is kept as mortgage or any security.
(certificate)
 The 85% loan is given because more liquid as property in the name
of bank.

28
 Running finance is given for one year.
 In running finance multi transaction are allowed.
 He is given a check book.
 In one year he can with draw & deposit amount several time but
cant exceed the loan limit.
3.5.2.3 Long term finance
3.5.2.4 Advance salary
 20 months salaries in advance.
 Minimum documentation.
 Repayable in 5 Year (60 months).
 Mark up 20% markup is paid monthly.
 Before 18%, The new ratio is applied on loan taken after
01/07/2010
 Loan sanction authority to different grade officers is
 Grade 1 : 2 lacks
 Grade 2 : 1 lack 50 thousand

3.6 Western union


It is private not govt. (a kind of Hundi).On the spot cash payment is
made.No compulsion of account.10 Digits MTCN (Money transfer control
number) is allotted. On which payment is done.It can be taken any where in
Pakistan by showing the number.Receiver has to show any one of following
in order to receive money.Original I.D. card.Original Driving
license.Original Passport.Duplicate or photo state is not accepted.

3.7 Clearing department

3.7.1 Clearing house


From many years there was clearing house in national bank of
Pakistan Mandian Branch Abbottabad . The agents of banks who were

29
members of clearing house daily gather 2 times in a day and exchange the
checks for clearance with each other.

3.7.2 NIFT (National institutional facilitation technology)


Now NIFT private ltd company is performing clearing functions for
banks.There office is at Abbott Abad. In this case the banks are in loss.
Before banks cut charges from parties account. But now they can’t do so.
NIFT charges 8 Rs per instrument from bank, which bank can not deduct
from party’s account. Now it is advantage for party.
Procedure
The agent of NIFT visits 3times a day.In morning he brings cheque
which is drawn on NBP Mandian Branch Abbottabad .After 2- hours he
visits again to take back if any cheque, draft or Government receipt is to be
returned with objection.In eve he visits to take cheque for next day
clearance from other banks. Which he will present to them in next
morning.All cheque of other banks are kept in a bag which is sealed with a
specific seal no.

3.7.2.1 In-Word Clearing Books


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

3.7.2.2 Out-Word Clearing Book


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

3.8 Foreign exchange department


In foreign exchange customer can open account in 3 currencies.US
Dollar code 40.Uk Pound code 30.Euro code 51.Three Banks which
deal NBP transactions of F.C are.NBP New York deals the transactions of

30
dollar..United National Bank London (UNB) deal Pound.Same procedure
of opening account like in Pakistan Rs.Here minimum balance required is
1000$.If less then monthly $3 as services charges will be deducted.If
account is opened in any other foreign currency then amount will be
converted in $ to deduct charges.

3.9 Types of Cheque


Bankers in Pakistan deal with three types of cheque

3.9.1 Bearer Cheque


Bearer cheque is cashable at the counter of the bank. These can
also be collected through clearing.

3.9.2 Order cheque


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

3.9.3 Crossed Cheque


These cheque are not payable in cash at the counters of a banker. It
can only be credited to the payee’s account. If there are two persons having
accounts at the same bank, one of the account holder issues a cross-cheque
in favor of the other account holder. Then the cheque will be credited to the
account of the person to whom the cheque was issued and debited from the
account of the person who has actually issued the cheque.

3.9.4 Payment of Cheque


It is a banker’s primary contract to repay money received for his
customer’s account usually by honoring his cheques. It is a contractual

31
obligation of a banker to honor his customer’s cheques if the following
essentials are fulfilled.
 Cheques should be in a proper form:
 Cheque should not be crossed:
 Cheque should be drawn on the particular bank:
 Cheque should not mutilated:
 Funds must be sufficient and available:
3.10 Remittance department
Remittance means a sum of money sent in payment for something.
This department deals with either the transfer of money from one bank to
other bank or from one branch to another branch for their customers. NBP
offers the following forms of remittances.
 Demand Draft
 Telegraphic Transfer
 Pay Order
 Mail Transfer

3.11 Demand draft (Dd)


It is the safe mode to transfer money. Customer has to fill in DD slip
in which following items are written in favors of which one wants to
make the draft, Amount, exchange and total amount. Then he has to
write his address and put signature on it. Customer will deposit
amount then draft will be prepared and given to him.

3.11.1 Charges for Issuance of DD


Up to Rs.100, 000/- 0.10% Minimum Rs.50/-
Up to Rs.1, 000,000/- 0.05% Minimum Rs.100/-
Over Rs.1, 000,000/- 0.04% Minimum Rs.400/-
paying bank for the payment of a specified amount of money. Account
holder and non account holder both can send MT. MT can only be issued to
NBP branches.

32
3.12 Telegraphic transfer (TT)
Telegraphic transfer is the quickest method of making remittances.
Telegraphic transfer is an order by telegram to a bank to pay a specified
sum of money to the specified person. TT can be sent only to NBP
branches. The receiver must have an account in the bank where TT is sent.
If account is not in branch where TT has sent then the responding branch
will prepare TT payment order and will send to the address of the receiver
but it will take time and benefits of TT will not be availed

3.13 computer department


The objective of this Department is to facilitate customers in payment of
their cheques”. The main functions performed by this department are:
 Checking balance.
 Deduction from balance on clearing cheque.
 Issuing bank statements.
 Dealing Western Union.

3.14 Establishment department


This department mainly deals with the branch employees. The main
objective of this department is to” To regulate bank business”. Main
functions of this department are:
 Keeps the record of attendance of employees.
 Employee’s salaries distribution.
 Employee’s bonuses etc.

33
CHAPTER 4
FINANCIAL ANALYSIS

4.1 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.

4.1.1 Common size 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.

4.1.1.1 Vertical Analysis of NBP


Year 2018 2018% 2017 2017%

Rs in “000”
ASSETS
Cash and balance with treasury 160,080,735 3.8% 160085598 8.0%
bank
Balance with other banks 26,992,279 1.13% 14395805 0.7%
Lending to financial inst 26,916,113 1.13% 121709399 6.1%
Investments 1,296,537,064 54.5% 896280784 45.2%
Advances 740,344,934 31.1% 668883928 33.7%
Operating fixed assets 33,822,237 1.4% 34058289 1.7%
Defferred Tax Assets 7,342,482 3.3% 5172496 0.2%
Other assets 83,980,565 3.53% 80830263 4.0%
2,376,016,409 100% 1981416562 100%

34
LIABILITIES

Bills payables 13,195,055 0.6% 10187250 0.56%

Borrowings 360,105,674 16.3% 44863930 2.4%

Deposits and other accounts 1,727,059,246 78.6% 1657132405 91.9%


Finance lease 56,799 0.0% 83007 0.3%
Other Liabilities 95923921 4.3% 89011304 4.9%
Total liabilities 2,196,340,695 100% 1801277896 100%

Net assets 179,675,714 7.5% 180138666 9.0%

Share capital 21275131 0.9% 21275131 1.1%

Reserves 49887328 2.2% 46031075 2.5%

Unappropriated profit 58069393 2.6% 55795352 2.9%

129231852 5.8% 123101558 6.8%

Non-Controling interest 811427 0.03% 737972 0.04%

130043279 5.9% 123839530 6.8%

Surplus on revaluation of assets 49632435 2.2% 56299136 3.1%

179675714 7.5% 180138666 9.0%


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
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

35
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. Advances are 31.1% in 2018 and 33.7% 2017,
Investment increased from 45.2 % in 2017 to 54.5 % in 2018. Although it is
not comparable to previous years, that means it is no showing improvement
from 2018. This is due to low interest rates in 2018 and higher interest rate
in2017. Bankers are left with only option of investing in short-term
investment, to increase their profit margin. Investments, as being a non-
interest source of income are more promising than advances that are
becoming more profitable due to inclining interest rates. Bankers prefer to
give advances when the interest rate was high but then prefer to invest in
non-interest income in 2017.

Cash and balances with treasury banks result is 8.0% in 2017 which is
deccreased than 2018 result i.e 6.8% which is a good sign for the
organization. The second component in the balance sheet is Balances with
other banks in 2017 the analysis result for this item is 0.7% which
definitely increased than 2018’s 1.13%.Lending to financial institutions is
6.1% in 2017 while in 2018 it is 1.13% which means that it decreased than
the previous year. A investment is an account on the asset side of a
company's balance sheet that represents the company’s investments,
including stocks, bonds, real estate and cash, that it intends to hold for more
than a year. Bills payables increased to 0.6% in 2018 as compare to 0.56%
in 2017. Borrowings in 2018 are 16.3% and 2.4% in 2017.Deposits and
other accounts in 2018 are decreased to 78.6% from 91.9%. Finance lease
0.0% in 2018 and 0.3% in 2017. Other Liabilities are 4.3% in 2018 and
were 4.9% in 2017.

4.1.1.3 Horizontal Analysis of NBP`s Balance interpretation


Year 2018 2017 2018 vs
Rs in “000” Rs in “000” 2017%

36
ASSETS
Cash and balance with 160,080,735 160085598 -
treasury bank 0.003%
Balance with other banks 26,992,279 14395805 87%
Lending to financial inst 26,916,113 121709399 -77%
Investments 1,296,537,064 896280784 44%
Advances 740,344,934 668883928 10.6%
Operating fixed assets 33,822,237 34058289 -0.6%
Defferred Tax Assets 7,342,482 5172496 42%
Other assets 83,980,565 80830263 3.89%
2,376,016,409 1981416562 20%

LIABILITIES

Bills payables 13,195,055 10187250 29.5%

Borrowings 360,105,674 44863930 702%

Deposits and other accounts 1,727,059,246 1657132405 4.2%

Finance lease 56,799 83007 -31.5%

Other Liabilities 95,923,921 89011304 7.76%


Total liabilities 2,196,340,695 1801277896 22%

Net Assets 179,675,71 180138666 -90%

Share capital 21,275,131 21175131 0. 47%

Reserves 21,275,131 46031075 -53.7%

inappropriate profit 58,069,393 55795351 4.07%

Surplus on revaluation 49,632,435 56299137 -11.8%


179,675,714 180138666 -0. 2%

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,
so that you can see general changes by account over multiple years. A less-

37
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 balance with
treasury bank is decreased -0.003% Balance with other banks increase 87%
Lending to financial inst decrease -77% Investments also increase 44%
Advances decrease 10.6% Operating fixed assets decrease -0.6% Deferred
Tax Assets increase 42% Other assets decrease in this year 3.89% Bills
payables Increase 29.5% Borrowings also increase 702% Deposits and
other accounts decrease 4.2% Finance lease it also decrease -31.5% Other
Liabilities decrease in this year 7.76% Total liabilities increase then
previous year 22% Net Assets decrease -90% Share capital are both same
slightly increase then previous year 0. 47% Reserves decrease -53.7%
inappropriate profit increase 4.07% Surplus on revaluation decrease in this
year -11.8%.

38
4.2 Horizontal Analysis of Income Statement
2017 2018 2017 vs
2018%
Profit after taxation 23087260 23,345,862 1.12
Exchange loss (1446,496) 1553454
Items nott o be reclassified to (1851084) (2755579) -0.6
profit or loss
Other Comprehensive income (3297580) (1202125) -0.6

Comprehensive income 19789680 22,143,737 11.89


transferred to equity
Items to be re classified 5,358,227 (12,518,633) -133.6

Total comprehensive income 3,368,238 (7929436) 135.4


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. Cash and
balances with treasury banks Rs. 42568141 in 2017 which is increased 0.43
which is a good sign for the organization. The second component in the
balance sheet is Balances with other banks which is decreased -0.30 in
2017 than 2018’s .Lending to financial institutions is increased 7.41% than
2018.A investment is an account on the asset side of a company's balance

39
sheet that represents the company' investments, including stocks, bonds,
real estate and cash, that it intends to hold for more than a year. The next
item in the statement of financial position is Investments which is increased
0.10% increase in investment is very helpful for the growth of the
organization so it is a good sign for the bank. Advances are also increased
0.17% Operating fixed assets increased 0.18% A firm's assets that do not
include cash, securities, receivables, inventory and prepaid assets, and can
be convertible into cash within one business cycle, which is usually one
year.

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


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

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

40
uses his discretion when choosing a particular timeline; however, the
decision is often based on the investing time horizon under consideration.

4.3Vertical Analysis of Income Statement


2017 2017 2018 2018%
%
Profit after taxation 23087260 685 23,345,862 -2.5
Items to be 21,792,408 646 21,640,764 399
reclassified to profit or
loss
Comprehensive 19789680 587 22,143,737 -9.5
income transferred to
equity
Items to be re 5,358,227 159 (12,518,633) -82.7
classified
Total comprehensive 3,368,238 -7.1 (7929436) -8.1
income
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

41
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.

4.4 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.

4.4.1Current 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.

42
The current ratio is calculated by dividing current assets by current
liabilities. This ratio is stated in numeric format rather than in decimal
format. Here is the calculation:

Current Ratio
Current Assets =Cash+balances with other banks+Investments
Current Libalities= bill payable+borrowings+deposits+sub-ordinated
loan
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

4.4.2 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
because it shows the firm’s short-term liquidity as well as management’s
ability to use its assets efficiently.

43
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
The calculation of this ratio show that net working capital in 2018 was Rs.
188637084 while in 2017 it is Rs. 141599783
4.4.3Debt 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

44
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

4.4.4Debt 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.
This helps investors and creditors analysis the overall debt burden on the
company as well as the firm's ability to pay off the debt in future, uncertain
economic times.
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

45
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 %

4.4.5 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

46
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.

4.4.6 Return on Assets Ratio - ROA


The return on assets ratio, often called the return on total assets, is a
profitability ratio that measures the net income produced by total assets
during a period by comparing net income to the average total assets. In
other words, the return on assets ratio or ROA measures how efficiently a
company can manage its assets to produce profits during a period.
Since company assets' sole purpose is to generate revenues and produce
profits, this ratio helps both management and investors see how well the
company can convert its investments in assets into profits. You can look at
ROA as a return on investment for the company since capital assets are
often the biggest investment for most companies. In this case, the company
invests money into capital assets and the return is measured in profits.

In short, this ratio measures how profitable a company's assets are.

The return on assets ratio formula is calculated by dividing net income by


average total assets.
ROA = Average total assets = Current year assets + previous year Assets /
2
2376016409+1981416562/2=2178716485
YEARS NET INCOME / AVERAGE RESULT
TOTAL ASSETS
2018 22,143,737 /2178716485 5.4
2017 19,789,680 /2178716485 1.18

Interpretation
This ratio for both years 2018it is 5.4% 2017 is 1.18%. which is a good
sign for the firm it should always increase than the previous year

47
4.4.7 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.

4.4.8 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

48
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.

4.4.9 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.

4.4.10 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.
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.

49
4.4.11 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.

50
CHAPTER -5
SWOT ANALYSIS

The word “SWOT” stands for strengths, weakness, opportunities and


threats respectively. SWOT analysis is a tool with the help of which we can
measure the performance and the prevailing condition of an organization.
In SWOT analysis we can easily identified the problem facing by the
organization and its remedial actions.
The SWOT analysis is used to focus NBP’s business to enhance strengths
and eliminate weakness, take advantage of opportunities edge against
threats.

5.1 strengths
1 NBP is one of the oldest banks of Pakistan therefore people have
confidence on that bank. It is the largest commercial bank in
Pakistan with a network of over 1199 branches inside the country in
which there are 9 RHQ and 40 zonal offices and one subsidiary in
17 different countries.
2 It has a pleasant working environment as compare to other bank
branches in the area.
2 It provides many facilities to its employees. Like provide interest
free loans for different purposes.
3 It provides loan facilities to its general client against jewelry.(Gold)
4 Provision of different types of officers loan of 4% mark up lower
staff is given spend benefits. They are given loan to four lacks
without interest. Bank staff is also given three types of bonuses in
every year i.e. on Eid-ul-Fittar, Eid-ul-Azha and the last one is
given annually.
5 Highest profitability
6 It deals in almost all the affairs of the government.
7 In order to give loan to the farmers they provide special services
while rendering the loan.

51
8 NBP open different branches in rural areas in order to facilitate the
farmers.
9 It Provides loan named as NBP (SAIBBAN) for the construction of
houses to the salaried persons.
10 Provide 15 advance salary packages to the needy people.
11 Act as an agent of SBP.
12 Staff College is also the part of the national bank of Pakistan; it
helps the trainee to get some practical knowledge.
13 Not a tough competition, because it is nationalized bank.
14 Highest deposits.
15 Staff gives the importance to internees.
16 The attitude of the staff with internees and customers is very
cooperative.

5.2 Weaknesses
1 Complaint of the customer is not taken into consideration. It
hampers the image of the bank.
2 During the rush hours due to the lack of staff, clients wait for their
turn for long time.
2 Marketing efforts are not make to promote the bank.
3 Common people didn’t have the knowledge about the polices and
new packages of the national bank of Pakistan.
4 NBP is under the political pressure.
5 It is a nationalized bank, so the government influence is very much
in the management of national bank of Pakistan.
6 Favoritism and nepotism during appointment, transfer, promotion,
and increments.
7 No job rotation according to rules and regulation.
8 The number of branches of NBP is decreasing every year.
9 Poor quality counters service during the rush hours.
10 Lack of scheme and projects to invest the money.
11 Limited staffing and no adequate span of management.

52
12 Unequal distribution of work.
13 No much use of computer as it is required.
14 No library for internees as well as students to get the relevant
material.
15 Delay in decision making.
16 No note counting machine.
17 No online banking system.
18 Employee does not follow the basic rules and regulation of banking.

5.3 Opportunities of NBP


19 Location of the branch is very suitable place.
20 Near to all major business owners.
21 NBP is the only bank which is providing facilities of collecting
from 9.00am to 5.00pm.
22 Better management.
23 Provide many utility services.
24 Micro financing scheme for the farmers and NBP also provides
monthly income to the pensioners.
25 Introduction of new technology and electronic banking.
26 Introduction of new financial scheme with higher rate in order to
attract the customers.

5.4 Threats
1 National bank is the only Government bank so there is political
interference time to time and every political government wants to
impose its own policies.
2 The bank cannot introduce the various earning schemes like (Allied
Bank kar Amad scheme, Muhafiz travelers Cheque HBL etc).
3 In area there are also other bank present (like HBL, UBL) employee
and most of the employee are under graduate and graduate.
4 There is also an interest policy present in the bank.
5 Sanctions imposed against Pakistan will affect exchange business

53
where as the freezing of account by SBP have also caused problems
for NBP.
6 Rapidly growing business of other foreign banks and expansion of
their brands networks in the country.
7 Strike regulation by the government and credit facilities to the
customers as well as to meet the production regulators.
8 Lack of public confidence to open foreign currency account NBP
due to political instability due to tear of economic sanctions on the
country

54
CHAPTER 6
CONCLUSION AND RECOMMENDATIONS

6.1 Conclusion
I will briefly explain my internship in National Bank of Pakistan, Mandian
Branch Abbottabad. 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 Mandian Branch Abbottabad 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 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.
I had made an honest effort to present the working & operations of NBP,
specifically to Mandian Branch Abbottabad in simplest way. Moreover, I
feel pleased that I have really learned a lot during two months & enjoyed
working with experienced cooperative & intelligent staff.

6.2 Recommendations
National bank of Pakistan is an effectively operating and profit making
organization and carrying out its activities under a specified system of
procedures. These procedures and regulations changes with the passage of
time. The state bank of Pakistan, which is the main regulatory body,
provides all the procedures and information to ensure the effective
operations of the commercial banks. The man regulatory body is state

55
bank of Pakistan, which provide the policy guide lines and ensure that the
money market operate on sound professional bases. While the head offices
specifies the whole procedure of functions and operations.
Here some suggestions are recommended, which can increase the
efficiency of the workers and as well as the performance of the NBP.
Recommendations are given in the following,
 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.
 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.
 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.

56
 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.
Policies should be made in such a manner that any new government
could not alter it.
 Required qualified staff should be provided to branch in order to
improve the functioning of the branch. Especially a telephone
operator should be appointed. Number of people should also
increase in order to facilitate the work smoothly.
 Most of the work in Mandian Branch Abbottabad is carried out
manually. Therefore it is very time consuming and difficult task
 It is recommended that every department should keep their data in
computers; similarly advance department should also keep the
profile of the borrowers in computers which will make their job
easier while calculating different installments. Special computer
programs should be designed according to their needs, ensuring full
reliability and security.
 The banks are entitled to levy special charges on utility bills
(electrically, gas, telephones etc.) from consumer. It was fixed by
the government. These charges are so less that they are unable to
meet the cost of the bank. These charges should be increased to
Rs.10 per bill to enable the branch to cover there handling costs and
earn some profit.
 100 major branches of NBP should establish a direct link with the
head quarter in Karachi, through internet. This will make the
functions and decision making of the management easier and
convenient.
 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.

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 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.
 Overdraft is a short term credit facility provided by the bank to its
trustworthy customers free of interest. Only bank commission is
charge on the amount of credit availed. It is recommended that the
bank should charge small amount of mark-up on the overdraft,
which will help the bank to improve its revenue position.
 Clean loan or clean overdraft is the credit facility extended to the
customers without any security. These types of small term loans
should not be extend to any body, because some times these loans
are provided to blue-eyed people of the management and they
become a part of bad debts.
 In this mode of financing the amount of credit not utilized by the
borrower is remain ed tax free. It is recommended that a small
amount of interest should be charged on this mode of financing.
Because the bank does not utilize this amount anywhere.
 During the internship I observed that there was no proper
distribution of work in the bank, some of the employee work like
ants while others sat idle staring here and there. So this created a lot
of overwork situation for some employees.

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 In the Mandian Branch Abbottabad 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
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.

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REFERENCES
1. Gibson, Charles H, (2002); Financial Reporting & Analysis, 7th Edition.
Prentice Hall International Corporation”.
2. Lawrence J.Gitman, (2008); Principles of managerial Finance. 11th Edition,
San Diego State University”.
3. Siddiqi, Asrar H (2008); Practices and law Banking in Pakistan, (8th Ed),
Royal Book Company, Karachi.
4. NBP Annual report (2014), (2015 –National Bank of Pakistan
5. National bank of Pakistan 2015, executive committee, viewed 05 March,
2017, <http:// www.nbp.com.pk>
6. National bank of Pakistan 2015, publications, annual reports, accessed on
09 March 2017<http:// www.nbp.com.pk/Publications/index.aspx>
7. Business recorder 2015, highest rating, viewed 05 may,2017,
<http://www.brecorder.com/top-stories/0/1175012/>

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