Professional Documents
Culture Documents
Aamer NBP
Aamer NBP
Roll # 36
2018-2019
i
INTERNSHIP REPORT ON
Roll # 36
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
iii
DEDICATION
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.
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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
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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
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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
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LIST OF TABLES
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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
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
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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.
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CHAPTER 1
INTRODUCTION OF STUDY
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.
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.
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)
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.
6
2.1.2 They have confidence that tomorrow they will be…
Leaders in industry.
An organization will take the trust of S&h.
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.
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
10
Hajji facilities Utility bills, Investment advice and other services, Special
deposits products / Schemes, pak rupee travelers choose, New product.
11
2.3 Organizational structure of NBP
President Secretariat
Board of Director
Operations Group
Compliance group
Human resources
Treasurymanagement
managementand Admin Group
group
12
2.3.1 Board of Directors
Table 1 Board of directors
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
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
14
Akbar Hasan Khan
EVP & Head, Corporate & Investment Banking Group
Mahmood Siddique
EVP, Divisional Head & CIO, IT Division
Shaharyar Qaiserani
EVP & Divisional Head, Agriculture & Business Development
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
Source: www.nbp.gov.pk/BOD
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.
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.
17
2.8 Internal Structure of Bank Branch
CHART
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.
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CHAPTER 3
PRODUCT AND SERVICES
20
computer system. Included non-deduction of zakat and services charges
who’s applicable.
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/-
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%
23
Deposits in the NIDA accepted on the conditions that the depositor shall
always maintain minimum balance as prescribed by bank in his account.
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%
25
into contract. Therefore in bank, contract with minor is avoided. There are
two types of minor’s account.
26
legal heirs of the deceased account holders along with the remaining
account holders.
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.
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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
29
members of clearing house daily gather 2 times in a day and exchange the
checks for clearance with each other.
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.
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
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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
33
CHAPTER 4
FINANCIAL ANALYSIS
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
Interpretation
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.
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
Interpretation
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.
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
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.
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.
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.
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uses his discretion when choosing a particular timeline; however, the
decision is often based on the investing time horizon under consideration.
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.
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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.
4.4.1Current ratio
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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 =
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
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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.
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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).
4.4.4Debt Ratio
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YEARS TOTAL LIABILITIES/ TOTAL RESULT
ASSETS
Interpretation
Debt ratio slightly decreased in 2018 as compare to 2017 it was 0.8 % in
2017 it decline to 9 %
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
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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.
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
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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
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.
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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.
Interpretation
Return on earning assets is decreases in 2017 as compared to previous year,
due to good management of NBP showing favorable trend.
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.
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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
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CHAPTER -5
SWOT ANALYSIS
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.
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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.
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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.
5.4 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
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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
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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
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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.
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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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