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Internship Report
On
NATIONAL BANK OF
PAKISTAN Ali Pur Chattha Branch.
P resented B y:
Shazeb Mehmood B.Com (Accounting)
Roll # BC06016 Session: 2006 – 2010
Banking sector owes a pivotal importance in the economy of any country through its vibrant functions. This is the deep seated motivator that geared up me to join any bank for internship. Moreover, the practice and familiarity learned during this tenure would also attest very helpful and alleviating in the awaiting proficient life.
In section 1 I have given the complete information about the banking sector that what is a commercial bank and what are its types and also the relationship between a banker and the customers.
In Section 2 I have given the complete information about the history of banking in Pakistan, efforts towards Islamic Banking in Pakistan and also the complete history of National Bank of Pakistan.
In section 3 I have given the information about the management hierarchy such as Board of Directors and what are they doing, Senior Management, Organizational Chart Organizational Structure and the Financial Highlights of the Year 2006.
In section 4 I have given the detailed information about the NBP Branches & its types, and Divisions of NBP.
In section 5 I have given the detailed information about the NBP products and services and also the process of getting those products and services.
In section 6 I have given the complete information about field of activities of National Bank of Pakistan and its Departments.
In section 7, I have given the information about the major functions of NBP its departments, types of deposits, types of checks collected, Securities & Advances and their types, and also some other services offered by NBP.
In section 8, I have given the information about the work done by me during my 6 weeks internship at National Bank of Pakistan main branch Ali Pur Chattha.
In section 9, I have conducted the SWOT analysis and on the basis of that I have given the information about the Strengths, Weaknesses, Opportunities, and Threats towards NBP.
In section 10, I have given some recommendations and conclusions on the basis of SWOT analysis and in the last Bibliography.
The report is simple and quite easy to understand by even a person having bit knowledge about the organization or any other organization of the same category.I also produced this report because it was also mandatory from our precious institute not only to get our Master degree but also making us able to tackle the challenges in upcoming professional life with honor and proud. I also want to show to my teachers that I will the true picture of our leaders and will become the ambassador of my institute with honor and pride. Thank you sir
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In The Name Of Allah, The Most Beneficial,
The Most Merciful.
All praise is For Allah, The Lord Of The Universe,
The Most Beneficial, The Most Merciful.
The Master Of The Day Of Judgment.
(Al-Fatiha; verse:1-4 )
3
This project is
dedicated to my
parents who always
wished to see me
as a successful man
in every field of my
life.
May they live long, praying for me.
DEDICATION
4
(Aamin)
Page #
1. Preface … … … … … … … … … … …
… 10
2. Acknowledgement … … … … … … ... … … 12
Section 1: INTRODUCTION TO BANKING
SYSTEM
3. What is Commercial Bank? … … … … … … … …
14
4. Types of Banks … … … … … … … … … … … … …
14
5
5. Banker and Customer Relationship … … … … … …
16
Section 2: HISTORY OF BANKING & NBP
6. History of Banking in Pakistan … … … … …
20
7. Efforts towards Islamic Banking in Pakistan … …
22
8. National Bank of Pakistan … … … … ... … … 25
Section 3: ORGANIZATIONAL STRUCTURE
9. Management and Organization of a Commercial
Bank … … … … … … … … … … … … …
34
10. Board of Directors … … … … … … … … …
…35
11. Senior Management … … … … … … … … … 37
12. What are They Doing … … … … … … … …
… 38
6
13. Organizational Chart of NBP … … … … … … …
38
14. Organizational Structure … … … … … … … …
… 40
15. Financial Highlights of 2006 … … … … … … … …
…42
Section 4: Types of Branches of NBP
16. Domestic Branches … … … … … … … … …
…45
17. ATM Linked Branches … … … … … … … …
…46
18. Overseas Branches … … … … … … … … …
…47
19. NBP Swift Local Branches … … … … … … … 47
20. NBP Swift International Branches … … … … … …
48
21. Division of NBP … … … … … … … … …
49
21.1 Credit Division … … … … … … … 49
7
21.2 Corporate Division … … … … … … … … …
49
21.3 Recovery & Litigation Division … … … … … 49
Section 5: NBP Products & Services
22. NBP Products … … … … … … … … … … … …
54
a. NBP Premium Aamdani… … … … … … … … … 54
c. NBP Saibaan … … … … … … … … … … ….
55
d. NBP Premium Saver … … … … … … … …
… … 57
e. Karobar-President’s Rozgar Scheme… … … … …
58
f. NBP Investor Advantage … … … … … … … …
59
g. NBP Advance Salary … … … … … … … … …
61
h. NBP Cash Cards … … … … … … … … … … …
62
8
i. NBP Kisan Dost … … … … … … … … … … …
63
j. NBP Cash on Gold … … … … … … … … … … 64
k. NBP Pak Remit … … … … … … … … … … …
65
l. NBP online-Aasan Banking … … … … … … …
66
m. NBP Protection Shield … … … … … … … …
68
23. NBP Services … … … … … … … … … … … …
71
a. Demand Draft … … … … …. .. … … .… … …
….. 71
b. Swift Systems … … … … … … … … … … …
71
c. Letter of Credit … … … …. .. … … .… … … …..
71
d. Pay Order … … … …. .. … … .… … … ….. … … 72
e. Mail Order … … … …. .. … … .… … … ….. … …
72
9
Section 6: NBP Fields of Activities
24. NBP General Banking … … … … … … … … … …
77
25. NBP Account Department … … … … … … … … …
78
26. NBP Remittances Department … … … … … … … …
81
27. NBP Advance Department … … … … … … … … …
82
Section 7: MAJOR FUNCTIONS OF NBP
28. Cash Department … … … … … … … … … …
… 85
29. Deposit Department … … … … … … … … … … … …
86
30. Ledgers of Deposit Department … … … … … … … … …
89
31. Types of Checks Collected ….. ….. ….. ….. …. …. … … …
90 31.1 Transfer Cheques … … … … … … …
90
10
31.2 Clearing Cheques … … … … … …
… 90
31.3 Collection Cheques … … … … … … …
90
32. Advances and Credit Department … … … … …
90
33. Securities … … … … … … … … … … … …
91
33.1 Lien … … … … … … … … … 91
33.2 Guarantees … … … … … … … …
… 91
33.3 Mortgage … … … … … … … … … … 92
33.4 Hypothecation … … … … … … … … … 92
33.5 Pledge … … … … … … … … …
… 92
34. Types of Advances … … … … … … … … …
93
34.1 Demand Finance (Ordinary Loans) … … …
93
34.2 Running Finance (Overdraft) … … … … …
93
11
34.3 Cash Finance … … … … … … … … … 94
34.4 Small Finance … … … … … … … … … 94
34.5 Finance against Bills … … … … … … … 94
34.6 Agriculture Loans … … … … … … … …
95
35. Other Services … … … … … … … … … … … 95
35.1 Utility Bills Collection … … … … … … … 95
35.2 NBP Pak Rupee Traveler Cheque … … …
95
35.3 Foreign Currency Accounts … … … … …
95
Section 8: Area of Internship
36. Work performed during internship… … … … … … …
97
a. General Banking … … … … … … … … …
97
b. Cheque at Counter … … … … … … … … …
97
c. Cheque Payment procedure … … … … … …
98
12
d. Issuance of Demand Draft … … … … … …
98
e. Bills Collections Department … … … … …
98
f. Bill Remittance Department … … … … …
98
g. Deposit Department … … … … … … … … … …
99
37. financial Analysis
103 h. Ratio Analysis
104 I. Horizontal Analysis …
119 J. Vertical Analysis … … …
134
Section 9: SWOT ANALYSIS
38. Strengths … … … … … … … … … … … …
153
39. Weaknesses … … … … … … … … … … …
155
40. Opportunities … … … … … … … … … … …
157
13
41. Threats … … … … … … … … … … … …
159
Section 10: RECOMMENDATIONS &
CONCLUSIONS
42. Recommendations … … … … … … … … …
161
43. Conclusions … … … .. … … … … … … … … … … … …
163
44. Bibliography165
45.Glossary 166
46. Annexure 169
Banking sector owes a pivotal importance in the economy of any country through its
vibrant functions. This is the deep seated motivator that geared up me to join any bank
for internship. Moreover, the practice and familiarity learned during this tenure would
also attest very helpful and alleviating in the awaiting proficient life.
14
This report is an upshot of my six weeks internship in National Bank of Pakistan, Main
Branch, Ali Pur Chattha. National Bank of Pakistan posses an imperative and historical
importance in the banking sector of Pakistan. It always remains the center of hustles in
business activities. It always endows with great covenant of rally round in terms of
funds and services at all epochs of its dynamism.
Although, a derisory period of six weeks is not enough to learn the complex operations
of National Bank of Pakistan yet I made industrious efforts to converse them
comprehensively in this report. Particularly, I have remunerated more accents on study
of distinguishing features and services of National Bank of Pakistan. I have made
maximum venture to elaborate this report with the material read, listened and observed.
I have strong belief that this report will guide and ease the readers to understand the
operations of banking system and more prominently have good knowledge about
National Bank of Pakistan, one of the most trusty and leading banks in Pakistan.
Dear readers, I hope that you will appreciate my report and sense that reading my report
is not like to waste the time in any respect because of the four principal reasons as
under:
1 ... ... A conscientious attempt is made to provide 100 % realistic
knowledge of the real world organization, National Bank of
Pakistan.
2 ... ... Almost all the terms are first explained themselves in a simple and
comprehensive way used in this organization before bringing them
into play in different dealings so the reader may soundly familiar to
the operations performed in the banks.
3 ... ... No Gup is made from beginning to end in the report not even of a
single word.
4 ... ... Although, it is not a titanic sized report but the material provided is
not a bogus. Also, this report is wholly up to date, equipping the
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information about currently prevailing functioning and services of
the Banking System of National Bank of Pakistan.
If any reader likes my report and he want to get a soft copy of the report, so
don’t worry. You can get the soft copy of my report very easily. What you have to do to
get a soft copy of the report? You have to do only one thing for this cause. Please
address me your request in my email and I will send a soft copy of my report to the
calling ID or otherwise mentioned. I check my email account after 10 days. My email
address is as under:
Shazeb Mehmood
B.com (Accounting)
Roll # BC06016
Session: 2006-2010.
I am very gratifying to Almighty Allah who permitted me to
be trained in a real world organization, NBP, as well as to
complete this report in a very limited time.
My thanks are also due to the young, dynamic, congenial,
and qualified staff of NBP who never let me alone in different
16
situations related to my internship. Without their humble help, it
was not easy.
I cannot forget to pay my special thanks to Mr. Akhtar
Hussain Malik, Manager and In charge of NBP main branch Ali
Pur Chattha, who managed the internship permission for me
from the Sub Head Office of NBP D.G. Khan to depute my
internship in NBP Branch, Ali Pur Chattha.
Shazeb Mehmood
Section
1
17
In this section two topics are discussed. They are as
under:
Types of Banks
Commercial bankSavings bankMerchant banksMortgage banksConsumer bankInvestment bankCentral bank
Banker and Customer Relationship
A bank is a financial institution which deals with money and credit. It accepts
deposits from individuals, firms, and companies at a lower rate of interest and gives at a
higher rate of interest to those who apply for loan. The difference between the terms at
which it borrows and those at which it lends from the source of its profit. A bank, thus,
18
is a profit earning institute. Any bank that performs this functioning is called the
commercial bank.
According to Crowther:“A bank is a firm which collects money from those who have it spare. It lends
money to those who require it.”
According to Banking Ordinance 1962:According to Section 5(b) of Banking Ordinance 1962, meaning of banking is
as under:
“ Banking company is a company which transacts the business of banking in
Pakistan, mainly of accepting, for the purpose of lending and investments of deposits of
money from the public, repayable on demand or otherwise and withdraw able by
cheque, draft, order, or otherwise ”
Types of BanksTypes of Banks
Merchant Banks:Merchant banks are those, which have been mainly financing the domestic and international trade. During the late 18th and early 19th centuries the trade between countries was financed by bill of exchange by well-reputed merchant’s houses for which they would charges a commission for their services
Savings Banks:The basic purpose of these banks is to inculcate the habit of saving in the people.The savings banks deposits are not repayable upon only the written order of depositor but the depositor of his agent has to appear personally at the saving banks to make withdrawal and for this purpose he must present a pass book a certificate of deposit or some similar documents to prove his right to receive his payments. Post office savings banks and savings accounts at national saving organizations are well known national saving banks in Pakistan.
Mortgage Banks:
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These banks mainly deal in loans for acquisition or construction of real estate against the securities of mortgage.
Consumer Banks:These banks providing finance for purchasing consumption goods for the use of Brewers
Investment Banks:These banks assists business houses and governmental bodies to raise money through the sale of stocks and bond for usually long term purposes these banks perform the usual functions of raising deposits of idle money from the public and finance the business houses other bodies.
Central Banks:Central banks occupy the unique position in banking structure of a country because they have been interested with the responsibility of controlling the money supply, interest rate, and financial market of a country for the purpose of economic development.
The relationship between the banker and the customer are of utmost importance. Both
serve the society and the economy to expand. Before we discuss the relationships
between the banker and the customer, it seems necessary that the two terms banker and
customer are made clear.
* Banker *
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A banker is a dealer in capital or more properly a dealer in money. He is an
intermediate party between the lender and the borrower and charges a definite amount
of money which is the profit of his.
* Customer *A customer is a person who maintains a regular account with the bank, without
taking into consideration the duration and frequency of operation of his account.
The relations between the banker and the customer are generally studied as
under:
*Debtor and Creditor*The general relationship between banker and customer is primarily that of a
debtor and creditor. When customer deposits money with a bank, the bank then is the
debtor and the customer is the creditor. The customer expects from the bank that (I) his
money will be kept safe by the bank, (II) it will be returned on demand within business
hours. The position is reverse if the customer is advanced loan i.e. the banker becomes
the creditor and the customer is the debtor.
*Bailer and Bailment
Relationship*A bailment is the delivery of goods in trust. A banker may accept the valuables
of his customers such as jewellery, documents, securities etc. for safe custody. In such a
case the customer is the bailer and the bank is the bailee. It charges a very small amount
of money as service charges for safe custody of valuables.
21
*Pledger and Pledgee*When a customer pledges goods and documents with the bank as security for an
advance, he then becomes the pledger and the bank becomes the pledgee. The pledged
goods are to be returned intact to the pledger after the debt is repaid by him.
*Mortgager and Mortgagee*Mortgage is the transfer of an interest in specific immoveable property for the
purpose of securing the payment of money advanced or to be advanced by way of loan.
When a customer pledges specific immoveable property with the bank as security for
an advance, the customer becomes the mortgager and the bank becomes the mortgagee.
*Bank as a Trustee*The bank acts as a trustee for his customers in those cases where he accepts
other valuables for safe custody. In such case, the customer continues to be the owner
of the valuables deposited with the bank.
*Executor, Attorney, Guarantor*The bank also acts as executor, attorney, and generator for his customers.
Banking is the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. Four types of banks specialize in
22
offering these basic banking services: commercial banks, savings and loan associations, savings banks, and credit unions.
A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers. This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts.
Section 22
23
In this section three topics are discussed.
The major topic of this section is:
History of Banking in PakistanEfforts towards Islamic Banking in PakistanNational Bank of Pakistan
The partition plan was announced on June 3, 1947 and August 15, 1949 was
fixed as the date on which independence was to take effect. It was decided that the
Reserve bank of India should continue to function in the dominion of Pakistan until
September 30, 1948 due to administrative and technical difficulties involved in
immediately establishing and operating a Central Bank.
24
At the time of partition, total number of banks in Pakistan were 38 out of these
the commercial banks in Pakistan were 2, which were Habib Bank Limited and
Australia Bank of India. The total deposits in Pakistani banks stood at Rs.880 million
whereas the advances were Rs.198 million. The Governor General of Pakistan,
Muhammad Ali Jinnah issued the order for the establishment of State Bank of Pakistan
on 1st of July 1948.
In 1949, National Bank of Pakistan was established. It started with six offices in
former East Pakistan. There were 14 Pakistani scheduled commercial banks operating
in the country on December 1973, the name of these were:
1. National Bank of Pakistan
2. Habib Bank Limited
3. Habib Bank (Overseas) Limited
4. United Bank Limited
5. Muslim Commercial Bank Limited
6. Commerce Bank Limited
7. Australia Bank Limited
8. Standard Bank Limited
9. Bank of Bahawalpur Limited
10. Premier Bank Limited
11. Pak Bank Limited
12. Lahore Commercial Bank Limited
13. Sarhad Bank Limited
14. Punjab Provincial Co-operative Bank Limited
25
The Pakistan Banking Council prepared banks amalgamation schemes in 1974
for amalgamation of smaller banks with the five bigger banks of the country. These five
banks are as under:
1. National Bank of Pakistan
2. Habib Bank Limited
3. United Bank Limited
4. Muslim Commercial Bank Limited
5. Allied Bank Limited
So, through the Nationalization of Bank Act 1974, the State Bank of Pakistan,
all the commercial banks incorporated in Pakistan and carrying on business in or
outside the country were brought under the government ownership with effect from
Jan. 1, 1974. The ownership, management, and control of all banks in Pakistan stood
transferred to and vested in the Federal Government. The Finance Minister announced
plans to start Islamic Banking system in Pakistan in the budget speech on June 26,
1980, but it could not be possible till August, 2007.
Pakistan was created in the name of Islam on august 14, 1947. But since then, the
interest is paying the cardinal role in resource allocation of the economy. The banking
26
system in Pakistan based on interest divergences with Islamic ideology and is forbidden
by Almighty Allah and His Prophet Muhammad (S.A.W).
Any government till now in the country except President Zia-ul-Haq did not dare to
change the well-digged system based on interest in banking in Pakistan.
The only step taken under this direction is starting of PLS Deposits from January 1,
1982. Only PLS saving account and PLS term deposits shall be accepted on profit and
loss sharing basis. The banks were allowed to meet the working capital requirements of
their clients on the basis of Musharika, and Leasing, and Hire Purchase. Beside it,
different efforts are made time by time in this respect but could not be acted upon at all.
Recently in June 2002, the Shariah Applet Bench of Pakistan issued an order to all the
banks in Pakistan to change the interest-based banking system to Islamic Modes but the
lawyer from the government of Pakistan challenged it by saying that if any affair is in
the favor of the public of the country and is also admired by the public then it cannot be
abandoned by the government. So this issue is still not resolved.
STEPS TO RESTORE NORMAL BANKING FACILITIES:
The Government of Pakistan was quite aware of the serious banking caused by
withdrawal of deposits and wholesale migration of banking staff to India. It took up
challenge and started reorganizing the crippled banking structure.
The steps below were taken to rehabilitate commercial banking immediately after
partition:
In order to create confidence and sense of security among the Hindus bank and
the non-Muslims banking staff, the Government of Pakistan declared that all
bank properties of non-Muslims who wished to continue banking functions
would not be treated as an evacuee property.
The banks would be free to secure protection of police.
A moratorium of 3 months ease also allowed to banks that had financial
difficulty due to sudden withdrawal of deposits.
27
In addition to above, the following arrangements were made for facilitating
settlement of claims by the Government:
Each bank was to declare one of its offices both in India and Pakistan as a
clearing house for transfer of accounts.
Each bank was to open at least one central office in Pakistan where it could
consolidate work of all its branches and start paying out to depositors.
The Government took some effective measures far providing banking facilities
to Muslims.
There were some complaints that Hindus banks are not honoring the cheques of
Pakistani nationals and are also refusing to give securities kept in their custody.
The Government issued an ordinance, which empowered it to investigate all
such complaints, and if satisfied of their bonafides, the payments should be
released. In case the bank insists to non-payments, the Government should
realize the assets of the banks, which are sufficient to discharge such liabilities.
The Government of Pakistan also allowed the removal of valuables kept in safe
deposits and lockers by submitting an application and getting necessary
approval from the custodian of Evacuee Property.
INTER-DOMINION AGREEMENT ON BANKING:
The Government of Pakistan tried to provide all kinds of facilities with sincerity
to the non-Muslims bankers for restoring normal banking facilities in the
country but the response was discouraging. An International Dominion
Agreement was reached between India and Pakistan in April, 1949.
The provisions of the agreement were as under:
The accounts of all the Muslims depositors residing in the East Punjab states will be
transferred to their respective branches in West Pakistan. If a Muslim depositor
wishes to retain the account or does not submit an application for the transfer of
funds, his deposits will not to be transferred. The banks were advertise all the
proposed transfers in the newspapers so that the depositors could make objections if
they so desire.
If the accounts of Muslims depositors are in the banks, which have no offices in
West Pakistan, the amounts will be released on the application from the depositors.
28
If the banks functioning in both the countries have transferred Muslim deposits
from Pakistan to India on its own accord, the deposits are to be transferred to the
original branches in West Pakistan.
The Muslims who were residing in other parts of India (excluding East Punjab and
East Punjab States) and had migrated to Pakistan were allowed to get their deposits
transferred to Pakistan.
The banks wishing to close down their business were allowed to do so provided
they keep an amount equal to their outstanding liabilities in bank situated in
Pakistan. The banks withdrawing from Pakistan were however permitted to remit
surplus funds in India.
Banks were allowed certain facilities by Government for speedily disposal of stock
pledge with them.
The co-operative institutions in East Pakistan had deposited securities valuing
Rs.104.66lac with the Punjab Provincial co-operative Bank. The amount was
allowed to be transferred to Reserve Bank of India. The CO-operative banks in East
Punjab were given permission to transfer the funds to the depositors who had
migrated from the provinces.
The Inter Dominions Agreement could not fully implement. India delayed
the transfer of Muslim deposits to Pakistan. The non-devaluation decision of Pakistan
further led to the supervision remittance facilities through normal banking channels.
Due to panic withdrawal of deposits, some banks went into liquidation and the payment
could not be made to the depositors.
In 1949 (September) U.K. devalued its currency, India followed suit but Pakistan did
not. India said we had contravened the agreement of keeping both currencies at par. We
29
said we had not done that, India had done it arbitrarily without consulting us. On
October 3, 1949 the two central banks were to announce the new par value of both
currencies but India denied a day earlier. India also froze our trade - balance surplus
that is still an unsettled dispute. India also withdraws the Marwari merchants who were
employed annually for movement of jute crop by financing it. There being no jute
industry, prices fell sharply, foreign banks and foreign merchants stood aside and an
agrarian unrest was threatening
Two Ordinances were, therefore, issued
1. Jute Board Establishment Ordinance &
2. NBP Ordinance dated 08.11.1949
National Bank of Pakistan was established on November 9, 1949 under the National
Bank of Pakistan Ordinance 1949 in order to cope with the crisis conditions which
were developed after trade deadlock with India and devaluation of Indian Rupee in
1949. Initially the Bank was established with the objective to extend credit to the
agriculture sector. The normal procedure of establishing a banking company under the
Companies Law was set aside and the Bank was established through the promulgation
of an Ordinance due to the crisis situation that had developed with regard to financing
of JUTE trade. The Bank commenced its operations from November 20, 1949 at six
important jute centers in the East Pakistan and directed its resources in financing of
jute crop. The Bank’s Karachi and Lahore offices were subsequently opened in
December 1949. The nature of responsibilities of the Bank is different and unique from
other banks/financial institutions. The Bank act as the agent to the State Bank of
Pakistan for handling Provincial/Federal Government Receipts and Payments on their
behalf.
Mr.Ghulam Farooq was chairman Jute Board and Mr. Mumtaz Hassan was chairman
NBP. Until June, 1950, NBP remained exclusively in jute operations, thereafter-other
commodities were also taken-up. After that Mr. Zahid Hussain, Governor SBP assumed
30
additional charge also as chairman NBP's Board of Directors, and Mr.M.A.Muhajir
became its first M.D.
In 1952 NBP replaced Imperial Bank of India. This arrangement was negotiated by Mr.
Mumtaz Hassan as Acting Governor of SBP.
In 1962 when Mr. Mumtaz Hassan became MD (He had already served NBP for
10 years as its Chairman of government Director), the number of branches had
increased from 6 to 239 and deposits from Rs.5 crore (50 million) to 106 crore (one bn
& 60 mln), profit from 3 million (3 Lac) to 21 million (2.1. crore) and the staff
increased from 380 to 7091, as compared to 1949-50. In Dec. 1966 its 600th branch
was opened raising the deposits to 2.31 bn. and staff to 14, 963. Up to 1965, the
shareholders had received 225% of their original investment. Now it has more than
21549 employees 1537 branches and Rs.208283 million deposits.
The Bank has also played an important role in financing the country’s growing
trade, which has expended through the years as diversification took place. Today the
Bank finances import/export business to the tune of Rs.62.17billion, whereas in 1960
financing under this head was only Rs.1.54billion.
The field is being de-layered to improve customer services and enable faster
decision making. As a result of this de-layering zones have been eliminated and the
numbers of regions have been increased. Organizational hierarchy at the regional level
has been restructured and operational and business activities have been completely
separated. This separation will improve communication, decision making and promote
teamwork.
For the third consecutive year, the Bank is recognized as the best Bank in Pakistan for
the year 2006 by the prestigious periodical. “The Banker” UK (a subsidiary of
Financial Times Group)
31
“We’re expanding horizons, reaching out,
being there and bringing something for everyone.
After all, we are The Nation’s Bank”.
32
To be the pre-eminent financial institution in Pakistan and
Achieve market recognition both in the quality and delivery
Of service as well as the range of product offering.
33
To be recognized in the market place by Institutionalizing a
Merit & performance culture, Creating a powerful &
Distinctive brand identity, achieving top-tier financial
Performance, and Adopting & living out our core values.
VALUES
NBP aim to be an organization that is founded on…
a. Growth through creation of sustainable relationships with our customers.
b. Prudence to guide our business conduct.
34
c. A national presence with a history of contribution to our communities.
NBP shall work to…
Meet expectations through Market-based solutions and products.
Reward entrepreneurial efforts.
Create value for all stakeholders.
NBP aim to be peopling who…
Care about relationships.
Lead through the strength of our commitment and willingness to excel.
Practice integrity, honesty and hard work. We believe that these are measures of
true success.
NBP have confidence that tomorrow we will be…
Leaders in our industry.
An organization maintaining the trust of stakeholders.
An innovative, creative and dynamic institution responding to the changing
needs of the internal and external environment
35
OBJECTIVES
Strong emphasis has been laid upon training of branch officers to
better equip them for marketing of retail banking products. Initiatives
on similar lines are being launched for the SME sector. In future NBP
is going to introduce modern banking services to keep pace with the
competition and more important our customer needs. These are as
follows:
Debit cards
Internet banking
Call centers
Mobile banking
36
MILESTONES
“Best Emerging Market Bank from Pakistan” for the year 2005
‘Global Finance’ USA, May 2005
NBP is one of the “Top 100 Banks of Asia” ‘Euro money’ UK,
March 2005
Bank of the year 2001, 2003&2004 for Pakistan ‘The Banker’
financial times Group UK.
Best Foreign Exchange Bank in Pakistan ‘global Finance’ USA,
March 2004
Amongst Top 1000 Banks in the world and Number 1 in
Pakistan ‘the Banker’ Financial Times Group UK, July 2005
Section 2 37
In this section five topics are discussed. The major topics
of this section are:
Management and Organization of a
Commercial Bank
Board of Directors
Senior Management
What are they doing?
Organizational Chart of NBP
Organizational Structure
Five Year Performance
38
The ownership, management, and control of all the
commercial banks were taken over by the Government
of Pakistan on January 1 st , 1974.
A banking council was formed under the
Nationalization Act 1974. The banking council was
set up for making policy recommendations to the
Federal Government, formulating policy guidelines for
the banks and their reorganization.
The management and organizational structure of
the nationalized banks have uniformity. This
management and organizational structure is briefly
described as under:
39
Board of Directors
Mr. S Ali Raza Chairman & President
Dr. Waqar Masood Khan Mr. Sikandar Hayat Jamali Mr. Azam Faruque Director Director Director
Mian Kausar Hameed Mr. Ibrar A. Mumtaz
Director Director
40
Ekhlaq AhmedSecretary Board of Directors
Audit Committee
Syed Shafqat Ali Shah Jamote
(Chairman)
M. Zubair Motiwala
Muhammad Khalid Malik
Auditors
Taseer Hadi Khalid&Co.
Chartered Accountants
Ford Rhodes Sidat Hayer&Co.
Chartered Accountants
Legal Advisors
Mandviwala & Zafar
Advocates & Legal
Consultants
Registered &Head OfficeRegistered &Head Office
NBP BuildingNBP Building
I.I.Chundrigar Road, Karachi, Pakistan
Registrar’s & Share Registration Office
THK Associates (Pvt.)
Shares Department, Ground,
Floor,
Modern Motors House,
41
Beaumont Road, Karachi,
Pakistan
Senior Management
Masood Karim Shaikh SEVP & Group Chief, Corporate & Investment Banking Group
Shahid Anwar Khan SEVP & Group Chief, Credit Management Group
Dr. Asif A. Brohi SEVP & Group Chief, Operations Group
Imam Bakhsh Baloch SEVP & Group Chief, Audit & Inspection Group
Ziaullah KhanSEVP & Group Chief, Compliance Group
Dr. Mirza Abrar BaigSEVP & Group Chief, Human Resources Management & Administration Group
Amer Siddiqui SEVP & Group Chief, Commercial & Retail Banking Group
Muhammad Nusrat Vohra SEVP & Group Chief, Treasury Management Group
Amim Akhtar EVP & PSO to the President
Ekhlaq Ahmed EVP & Secretary Board of Directors
Tajammal Hussain Bokharee EVP/Divisional Head, Special Assets Management Group
Mrs. Khurshid Maqsood AliEVP & Divisional Head Employee Benefits, Disbursements & Trustee Division
Tahir YaqoobEVP & Group Chief, Overseas Coordination & Management Group
Anwar Ahmed Meenai EVP & Divisional Head, Islamic Banking
Aamir Sattar Financial Controller & Divisional Head, Financial Control Division
Atif Hassan Khan Group Chief (A), Information Technology Group
42
ORGANIZATION STRUCTURE OF NBP
The structure of National Bank of Pakistan is shown in the organizational chart. As the
chart shows the top governing body of National Bank of Pakistan is the board of
directors. The board of directors elects a president who then heads the executive board
of directors, which comprises of provincial chiefs and division heads etc.
BOARD OF DIRECTORS
The board of directors is the supreme governing body of National Bank of Pakistan. It
comprises of a government representative, Pakistan Banking Council Nominee,
Nominee of corporate sector and three directors from National Bank of Pakistan.
EXECUTIVE BOARD OF DIRECTORS
The Executive Board of Directors comprises of the four provincial chiefs, the three
directors from Board of Directors, and the division heads. These people run the
organization. They are answerable to the president and the president is answerable to
the Board of Directors.
43
STRUCTURE OF A PROVINCIAL HEAD OFFICE
A provincial head office is headed by a provincial chief. As the organizational chart
shows that under a provincial head office there are regional offices. In Punjab there are
about nine regional offices. Under each regional office there are two or three zonal
offices and under each office there are fifteen to twenty branches.
ORGANIZATION CHART OF NATIONAL BANK OF PAKISTAN
DESIGNATIONS FO HIGHER LEVEL OFFICE
PRESIDENT
SENIOR EXECUTIVE VICE PRESIDENT
GRADE 22
EXECUTIVE VICE PRESIDENT
GRADE 21
VICE PRESIDENT
GRADE 20
ASSISTANT VICE PRESIDENT
GRADE 19
GRADE I OFFICER
GRADE 18
44
GRADE II OFFICER
GRADE 17
GRADE III OFFICER
(GRADE 16)
ORGANIZATIONAL STRUCTURE
45
FINANCIAL HIGHLIGHTS-2008FINANCIAL HIGHLIGHTS-2008
Manager CreditProcessing
Manager Credit Operation
Chief Operation Manager (CRA)
Chief Manager
Manager FEX* Manager JB* Manager Admin
ManagerCompliance
FEXExportImportRemittanceF/C A/C
InquiryDepositsBillsClearingUtilitiesAccountsCash/ChestGovt. Collection
ReconciliationDispatchDead StockSecurityStaff Welfare
Audit /InspectionTo sign all Br. Returns Money laundering .etc
[Sections] [Sections] [Sections]
*FEX Foreign Exchange*JB Journal Banking
46
FUTURE OUT LOOK
47
The 2004 results depict the success of the bank’s restructuring initiatives that were
aimed at
streamlining of domestic operations and empowerment of the field to facilitate decision
making, teamwork and communication. NBP now feel better positioned to pursue its
drive for diversification of revenue base to preserve its margins and ensure optimum
returns for its stakeholders. These results have been possible due to the commitment
and dedication of its staff. NBP express its appreciation to the bank’s valued customers
and the regulators for their confidence as NBP consolidate its position as the “Nation’s
Bank”.
Section 3
48
In this section five topics are discussed. The major topics
of this section are:
Types of BranchesDomestic Branches
Over Seas Branches
Atm Linked Branches
NBP Swift Local Branches
NBP Swift International Branches
Divisions of NBPCredit Division
Corporate Credit Division
Recovery and Litigation Division etc
There are a lot of different branches of National Bank of Pakistan. We explain them
one by one.
There are main branches in every city. In one city there is only one main
branch, it is directly under the zonal office.
49
Then there are commercial branches. These are the ordinary branches and are
in the commercial areas such as the Mall Road Branch.
The Industrial Branches are exclusively in industrial zones.
There are also Residential Branches. These are exclusively in residential
colonies.
Another type is the Mixed Branch such as civil secretariat branch. Every kind
of work is done.
There are also Project Branches created for specific purposes i-e the project
and are at the site.
Another unique type is the Model Branch. No other bank in Pakistan has these.
In these branches all the work is done by the officers. Even the officers sit on
the counters. Model Branches are in Karachi, Lahore and Islamabad.
There is one special type known as Drive in Branch. There is one in Karachi
known as Kahkashan branch. People go to the bank in the car, hand over the
check and get the money sitting in the car.
NBP Branch Network
PUNJABBahawalpur
D.G. Khan/ RYKhanFaisalabadGujranwala
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Sialkot/ Narowal Islamabad
JhangJhelum/ Gujrat/ Chakwal
LahoreMultan/ Baha'nagar
Murree/ Attock/ GilgitRawalpindi
SahiwalSargodha/ Sheikhupura
NWFPAbbottabad/ Mansehra
Bannu/ D.I. KhanKohat / Mingora
MardanPeshawar
SINDDadu/ Sanghar
HyderabadJacobabad/ Shikarpur
KarachiLarkana
Mirpurkhas/ Badin Nawabshah/ N' Feroze
Sukkur/ KhairpurTharparkar
BALUCHISTANQuetta
SibiKachiZhob
LasbellaGwadar
Kalat
AZAD KISHMIRMuzaffarabad
Mirpur
ATM Finder
NBP AND 1 LINK ATM NETWORK
NBP has joined 1 Link ATM Network, linking it to the endless ATM Banking
opportunities. “1Link is the ATM Network that works for you”. Today marks the
formation of a formidable banking technology network - 1 Link. Eleven banking
powers bring NBP to the largest nation wide ATM Network that provides reliable
24-Hours access to cash. ATM Network supports transactions of following banks:
Bank Alfalah, Union Bank, Allied Bank Limited, Askari Bank, Habib Bank, ABN
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Amro, Soneri Bank, Bank Al Habib, UBL, PICIC commercial Bank at the
following places:
BurewalaFaisalabad
Gujar Khan
Gujranwala
GujratHyderabadIslamabad
KarachiLahoreMirpur
MultanMuzaffaraba
dPeshawar
QuettaRawalpindi
SheikhupuraSialkotTaxila
Wah Cantt.
1 Link ATM Network
NBP Overseas Branches
America and Europe RegionUSA
CanadaGermanyFrance
Far East RegionHong Kong
JapanSouth Korea
China
Middle East, Africa & South Asia Region
BahrainEgypt
Bangladesh
Central Asian RepublicsAfghanistan
TurkmenistanKyrgyz Republic
Kazakhstan
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EPZ UzbekistanAzerbaijan
NBP SWIFT Local Centers
S.No. City BIC code Branch name
1 FAISALABAD NBPAPKKA02F
2 GUJRANWALA NBPAPKKA02G
3 HYDERABAD NBPAPKKA02H
4 ISLAMABAD NBPAPKKA02I
5 LAHORE NBPAPKKA02L
6 MULTAN NBPAPKKA02M
7 PESHAWAR NBPAPKKA02P
8 QUETTA NBPAPKKA02Q
9 RAWALPINDI NBPAPKKA02R
10 SIALKOT NBPAPKKA02S (DISTRICT COURT BRANCH)
11 MIRPUR NBPAPKKA02U (MAIN BRANCH/CORPORATE BRANCH)
12 MUZAFFARABAD NBPAPKKA02Z
13 KARACHI NBPAPKKAITD (HEAD OFFICE)
14 KARACHI NBPAPKKAMBR (MAIN BRANCH)
15 KARACHI NBPAPKKANEC(OVERSEAS BANKING OPERATIONS-HEAD OFFICE KARACHI)
16 KARACHI NBPAPKKAXXX (HEAD OFFICE)
NBP SWIFT International Centers
S.No. City BIC code Branch name
1 FRANKFURTNBPA DEFF XXX
NATIONAL BANK OF PAKISTAN, FRANKFURT
2 PARIS NBPA FRPP XXX
NATIONAL BANK OF PAKISTAN, FRANCE
3 HONG KONG NBPA HKHH XXX
NATIONAL BANK OF PAKISTAN, HONG KONG
4 TOKYO NBPA JPJT XXX
NATIONAL BANK OF PAKISTAN, TOKYO JAPAN
53
5 BISHKEK NBPA KG22 XXX
NATIONAL BANK OF PAKISTAN, BISHKEK BRANCH
6 SEOUL NBPA KRSI XXX
NATIONAL BANK OF PAKISTAN, SEOUL BRANCH KOREA
7 ASHKHABAD NBPA TM22 XXX
NATIONAL BANK OF PAKISTAN,
8 NEW YORKNBPA US33 XXX
NATIONAL BANK OF PAKISTAN, USA
9 MANAMANBPA BHBM XXX
NATIONAL BANK OF PAKISTAN, BAHRAIN
10 KABULNBPA AFKA XXX
NATIONAL BANK OF PAKISTAN, KABUL
In order to perform all the functions, the National Bank of Pakistan has made some
divisions, which perform some specific functions. Following are the divisions:
54
CREDIT DIVISION
The main function of this division is to make the credit policies, and also to do credit
ceiling which means the maximum amount of credit that can be given to a certain
client. This division also looks for the agricultural and small loans. It also considers the
cases of right off i.e. bad debts.
CORPORATE CREDIT DIVISION
The major function of this division is to handle the big loans and industrial
financing, I.B.R.D. It also does the evaluation of credit ceiling policy devised by the
credit division.
INTERNATIONAL DIVISION
This division has to look after the administration of National Bank of Pakistan
outside Pakistan. It takes care of all the affairs about the advances given outside, the
management of the branches of the bank outside Pakistan, the posting of employees
outside Pakistan etc.
RECOVERY AND LITIGATION DIVISION
This division comes into operation when recovery of advances given becomes
difficult or impossible. It is the job of this division to decide whether to go court against
the client or not.
AUDIT AND INSPECTION DIVISION
The major function of this division is to carry out the inspection of rules and
policies. It also inspects the books of accounts, whether they are kept rightly or not.
ADMINISTRATION DIVISION
This division consists of two wings the personnel wing and establishment wing.
The personnel wing concerns with employee welfare and administration. It looks after
things like rules relating to the administration of employees, the medical bills etc. There
is also a disciplinary cell, which is for punishments if an employee does something
wrong. The establishment wing has a main function of controlling the debt stock i.e.
55
furniture, transport facility, stationary, sports portfolio, security arrangements, and staff
welfare.
RESEARCH CORPORATE PLANNING AND HUMAN RESOURCE
DEVELOPMENT DIVISION
Their main job is to do human resource management. For this purpose there are
staff collages in Pakistan. There are four of them. They give training to employees
outside organization and also outside the country. In 1998 National Bank of Pakistan
staff collages have trained about 7992 employees out of which 321 were executives
5553 officers and 1878 other staff. Outside National Bank of Pakistan they trained 128
executives, 113 officers and 2 other staff. They have their own staff and also engage
faculty from Punjab University and LUMS.
ENGINEERING AND MAINTENANCE DIVISION
The job of this division is maintenance of buildings, construction of projects,
project designing. The head of this division is an engineer who has designation of
executive vice president.
FINANCE AND INVESTMENT DIVISION
It looks after the accounts, investment in resources and decides where to allocate
the surplus funds.
CUSTOMER SERVICES DIVISION
The main job of this division is to manage the opening and closing of branches,
Islamization policy, then there is a complaint cell where the customer makes the
complaints if they are not treated well. This division also accepts Hajj applications.
This division is very important as it directly concern the customers who are the ones to
make the deposits, which the bank invests.
BUSINESS PROMOTION AND MARKETING DIVISION
It concerns the marketing and selling of the policies and interest rates of National
Bank of Pakistan through advertisements on television or in the papers etc.
LAW DIVISION
56
This division consists of an executives committee and an evaluation committee.
Their job is documents evaluation and they give legal opinion to recovery and litigation
division also.
COMPUTER DIVISION
This division does data processing through computers and develops control
systems. All these divisions perform their functions through the branches and they are
located at the head office in Karachi.
TREASURY DIVISION
NBP boosts the banking sector’s largest treasury operation by virtue of being the
principal bank for handling the exchequer’s business. Facing the current competitive
interest rate environment, the bank has felt the need to enhance its asset yield through
the use of derivative products. The bank recently executed a Quanta Interest Rate Swap
aimed at providing cross currency interest rate hedge for one of its prime clients. This is
a watershed, being the first such transaction to have been successfully launched in
Pakistan and will serve as the foundation stone for the promotion of derivative
products.
INFORMATION TECHNOLOGY
NBP has undergone a paradigm shift by synchronizing the adoption of technology
with product development as they view it as a tool for optimizing customer satisfaction.
Round the clock payment of utility bills in important cities is now in place and
branches covering 85% of the bank’s business will be fully automated on a real time
basis. While the “One-Link” ATM switch sharing arrangement will serve to enhance
the 24 hour banking facility available to our customers, NBP is expanding its owned
ATM base as well. NBP is also inviting local and international software solution
providers for the supply, implementation and maintenance of the Core Banking
Application software for its domestic and overseas branch banking operations. In
addition to the Core Banking Application it is essential to understand the role of NBP
as a major collection agent for the Government of Pakistan with over 34 different types
of receipts and disbursements done through 1189plus branches of the bank. On an
average the bank has approximately 1.5 million transactions per day for approximately
57
ten million customer accounts across Pakistan. The Project includes computerization of
Trade Finance, Retail, General Ledger / Finance, Investment Banking, Corporate
Banking, National Investment Trust System, Litigation Monitoring, Credit and Risk
Management System and Card Services.
COMPLIANCE DIVISION
NBP continually strive to adopt the best corporate governance practices to
safeguard the interests of our depositors, customers and shareholders. They have
substantially intensified the scope as well as frequency of our internal audit operation
while employees are encouraged and rewarded for compliance with the high ethical
standards that are been set.
Section 4
58
In this section two topics are discussed. The major topics of
this section are:
NBP ProductsNBP Premium Aamdani
NBP Saibaan
NBP Premium Saver
Karobar-President’s Rozgar Scheme
NBP Investor Advantage
NBP Advance Salary
NBP Cash Cards
NBP Kisan Dost
NBP cash & Gold
NBP Pak Remit
NBP Online-Aasan Banking
NBP Protection Shield
NBP ServicesDemand Draft
Swift Systems
Letter of Credit
Pay Order
Mail Transfers
NBP Premium Aamdani
Monthly Income SchemeAmount of investment required from Rs. 50,000/- to Rs. 5,000,000
59
Investment period is 5 yearsFree Demand Draft, Pay Order and NBP Online Aasan Banking*Free Cheque Book / NBP Cash Card (ATM + Debit)
Profit paid every month as follows:
Period Profit Rates**1 year 7.50%2 years 8.50%3 years 9.50%4 years 10.50%5 years 11%
Financing facility available upto 90% of the deposit valuePremature encashment will attract penaltiesZakat and withholding tax will be deducted as per rules
NBP Saibaan
60
Product ItemsHome Finance Home RenovationHome Construction Purchase of Land + ConstructionBalance Transfer Facility (BTF)
Home Construction * - Product DetailFinancing Amount Upto 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 85:15 (Maximum)
Home Renovation * - Product DetailFinancing Amount Upto 15 MillionFinancing Period 3 to 15 YearsDebt to Equity 70:30 (Maximum)
Purchase of Land and for Construction thereon * - Product DetailFinancing Amount Upto 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 70:30 (Maximum)
Re-Financing (Balance Transfer Facility (BTF)) - Product DetailIf you have a Home Finance Facility outstanding with another bank you can have it transferred to NBP through a hassle-free process. All home financing facilities below Rs. 15 M Debt to Equity Ratio will be 85:15 & for Rs. 15 M and above Debt to Equity Ratio will be 80:20.*50% of the loan will be disbursed at the time of land purchase and rest of the 50% for its construction will be disbursed in 4 trenches.
Home Purchase (House or Apartment) * - Product DetailFinancing Amount Upto 35 MillionFinancing Period 3 to 20 YearsDebt to Equity 85:15 (Maximum)
61
NBP Premium Saver
PLS Saving Account
Minimum saving balance of Rs. 20,000 and a maximum balance of Rs. 300,000*Free NBP Cash Card (ATM + Debit)Two debit withdrawals allowed in a month and no limit on number of deposit transactionsProfit calculated monthly and paid on half yearly basis
Earn upto 7.25% p.a.†
62
†Profit rates are expected*Certain conditions apply**Premature encashment will result in lower rates of return***Expected rates are for the given yearFor further details and application forms, visit NBP branches nationwide or call 0800-80080 from 8:30 am to 10:00 pm or log on to www.nbp.com.pk. Added convenience of NBP Online Aasan Banking available in 30 cities.
Karobar - President's Rozgar Scheme
Another step towards your prosperity
63
President's Rozgar Scheme,if you are aged between 18 and
45years, you could be eligible for
easy financing for self employment
inthe categories below:
NBP Karobar Utility Store
NBP Karobar Mobile Utility Store
NBP Karobar Mobile General Store
NBP Karobar Transport
NBP Karobar PCO
NBP Karobar Tele-Centre
Investor Advantage
64
Financing Facility for Retail Investors
Features
Comfortable and secure environment for trading NBP financing at very easy terms requiring minimum documentation Minimum turn around time No security requirement from the customer except for the customer's equity Customer's equity freely available for investment.
Equity acceptable in cash or approved share.
Eligibility
Pakistani National with valid computerized national ID Card
Over 21 years of age An account with NBP designated
Branch Equity in the form of cash or NBP
approved shares
No default with any financial institution
Application Procedures Obtain facility application form the
NBP Marginal Desk at designated branches
Fill in the application form and submit it to the branch
On application approval, deposit equity as cash in the margin financing account at the bank. Alternatively NBP approved shares can also be deposited in the NBP CDC Account (CDC A/c No. 2345)
Start trading through comfortable & friendly trading centers establishment for you (In collaboration with Taurus Security Limited a subsidiary of NBP)
Trading limit available for the amount of equity + bank financing.
Product Information
Financing Amount: Rs.50,000/ - To Rs.10,000,000/-
Equity Requirement: In the Form of Cash or Shares or Both (Currently
65
Minimum Rs. 215,000/- @ 30%)
Shares:As per NBP Approved List Available. Shares In Physical Form Not Acceptable.
Trading:Allowed Only Through Trading Centers Created by NBP and Operated by Taurus Securities Limited (A Subsidiary of NBP)
Pricing
Fixed Price At The Time of Facility Sanction, Currently 6 Month Karobar + 3% (Per Annum)
Other Charges
On Time Application Processing Fee of 0.5% of the loan amount or Rs.5,000/- (Whichever is lower)
Brokerage Charges/ Fees/ Taxes/ etc. Charged At Actual On Brokerage Invoices
Documentation Fee Would Be Charged On Actual
Requirements
Photograph of Applicant NBP Account - Current or PLS Marginal Financing Application
Form Copy of CNIC Copy of CNIC of Two (2)
References Borrower Basic Fact Sheet Duly Filled In Statement of Assets
& Liabilities
List of Shares, Given as Margin (Optional)
NBP Advance Salary
66
Take upto 20 advance salaries(currently for NBP account holders of govt. or related organization employees).
National Bank of Pakistan (NBP)
In January-2003, National Bank of Pakistan has launched a unique product, ‘NBP-Advance Salary’. Currently this product is for fixed-income permanent employees of Federal & Provincial Government, Semi-Government, Autonomous, Semi-autonomous, local bodies and other Government organizations. The product is purely cash flow based and offers its holder to avail 20 (twenty) net salaries in one go to be repaid in up to 60 (sixty) months. With no collateral, insurance or requirements, Advance Salary provides rapid disbursement in a short turnaround time.
NBP Cash Card
67
Shop to your heart's desire!
NBP Cash Card is a 24-hour direct access ATM/Debit card to your bank account, which lets you pay directly from your account as an alternative payment method to cash. The transaction is authorized and processed by entering PIN. The NBP Cash Card holders are able to transact at any of the 4000 + Merchants where Orix logo is displayed and can withdraw cash from NBP, 1-Link & M-NET ATM’s across the country.
Advantages You won't need to carry a
lot of cash with you every time you go out.
Secure and Safe transaction.
Account Information on tips (like: Mini Statement, Balance Inquiry, Utility Bill Payment etc.)
Enable To Withdraw Cash From 1-Link ATMs / MNET ATMs.
Enable to Make Purchases from Around 4000 POS (Merchants) Countrywide including 2500+ POS in Karachi.
No Card Issuance Fee for first 12 Months
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NBP Kisan Dost
NBP KISAN DOST
NBP Cash n Gold
69
Get extra benefit from your gold
With NBP's Cash n Gold, you can meet your need for ready cash against your idle gold jewelry.
Rate of mark-up 13% p.a.
Facility of Rs. 7,000 against each 10 gms of net contents of gold
No maximum limits of cash
Repayment after one year
Roll over facility
Only gold ornaments acceptable
Weight and quality of gold to be determined by NBP's appointed scruffs
No penalty for early repayment
70
Meet your need for ready cash against your idle gold jewelry with no minimum limits
71
NBP Pak Remit
NBP's Internet Based Home Remittance Service
Log in here for Secure Remittance- > https://www.pakremit.com
Product Information:
Pakremit is an internet based Home Remittance Service. This service is available to U.S. residents for sending money to their family and friends in Pakistan. One must have a valid US Dollar account with a U.S. bank or a US Dollar credit or debit card in order to remit funds through this channel.
Remitters in USA can log on to our user friendly website, www.pakremit.com and easily remit funds to Pakistan from the comfort of their homes, in a matter of minutes.
The service is fully secure with advance encryption application and is available for use 24 hours a day, 7 days a week. Fees and exchange rate have been set at competitive levels and the remitters have the ability to track delivery of funds as well.
Process: Remitters log on to www.pakremit.com and after completing the registration
process, are able to remit funds. The whole process takes a few minutes. Funds in Pak Rupees can be sent to beneficiaries, having an account with
any bank in Pakistan, including NBP. While funds are credited directly to beneficiaries maintaining accounts with NBP, a pay order or demand draft is couriered to other banks for their customers. Pay order or demand draft can also be couriered directly to the beneficiary’s office or home, if requested by the remitter.
Funds in US Dollars can be sent only to a Beneficiary maintaining a US Dollar account with one of NBP’s Foreign Exchange Branches. Click here for details of NBP Foreign Exchange Branches.
USPs ( Unique Selling Propositions)
1. Convenient and Fast2. Reliable and Secure3. Available 24 x 7
Contact Details:
E mail: [email protected]: +1 (212)- 344-2239Address: 100 Wall Street, New York, NY 10005Contact Person: Musa Raza Rizvi.
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NBP Online - Aasan Banking
"NBP Online" offers following services:
Balance Enquiry
Statement of Account
Stop payment
Cash withdrawal through Cheque
KNITTING LINKS
You can avail the services from our Online Branches located in 30 cities:
Karachi Burewala D.G. Khan
Islamabad Multan D.I. Khan
Rawalpindi Muzaffarabad Jhang
Gujar Khan Faisalabad Larkana
Sailkot Peshawar Mardan
Gujranwala Kohat Sahiwal
Sheikhupura Mirpur (AJK) Sargodha
Hyderabad Gujrat Sukkur
Quetta Abbottabad Jhelum
Lahore Bahawalpur Wah Cantt
73
Cash deposit to own and third party account
Transfer of funds to own and third party account
NBP Help Line
74
Call Now - 0800 - 80080
NBP CALL CENTER-WEBSITE INFORMATION
In an era of heightened customer demands and increased competition, Call Centers have become a crucially important mechanism to cost-effectively serve customers and sell products. National Bank of Pakistan realized that it needed not only to establish its Call Center by providing a one-stop service for all customer enquiries related to the bank's products & reengineer its delivery processes, but also to ensure that it provides the same level of out-standing service across channels to give a consistent customer experience. To meet this objective, the bank launched a Customer Relationship Management system (CRM) following a proper intensified path & Turn around Time nationwide for resolving Customer Complaints with solutions deployed at all its Regional Head Quarter in the country that are being used by millions of users that use self-service applications in addition to the live agent services.
NBP has taken a step towards improving customer services by establishing a state of the art Call Center with a Help Line Toll Fee Number 0800-80080 working in two shifts from 8:30 am till 10:30 pm to provide instant service to all the existing & prospective customers on all the NBP products being offered by the bank specially NBP Karobar. Presently, the Call Center is receiving more than 1500 calls per day for resolving customer based product enquiries and complaints.
NBP Protection Shield
75
Product Information:
Insurance Coverage In case of Accidental Death (Including death due to *Riots, *Strikes, *Civil commotion, *Acts of Terrorism and Natural Calamities like Flood, Earth Quake, Cyclones etc).
Coverage of Rs. 200,000/- for Rs. 20/- per month
Definitions: *provided the insured is not directly involved in these activities
"Accident” means unintentional, unfortunate or a harmful event by chance or apparent cause.
“Accidental Death” means death due to accidental injuries, but not illness.
“Insured Person” means a National Bank of Pakistan PLS account holder, aged between 18 years and above, and whose premium is deducted & details are reported to the selected insurance company by NBP.
“Policy” means Group Personal Accident Policy dated 26/09/05 executed between NBP and Insurer.
“Principal Sum” means the amount stated in the Policy’s Schedule of Benefits as respects each Insured Person.
Product Details Eligibility
No Medical Required No Documentation Fixed Auto Premium Deduction
Facility (after customers consent)
Choice of Deactivation
NBP PLS account holders
18 years and above
Termination of Coverage The date the policy executed by NBP with ALICO is terminated. The date the Insured Person is no longer eligible within the Classification of
Insured Person(s). If the required premium is not paid/deducted for the particular month. The date the benefits are paid to the extent of the Principal Sum in respect of any
Insured Person.
The date the Insured Person cancels coverage under this policy.
General Terms
Insurer ALICO (American Life Insurance Company (Pakistan) Limited or such other insurance company as NBP may nominate from
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time to time.
Maximum Amount Maximum Sum Assured PKR 1,000,000 (this limit is for multiple accounts of an insured)
Joint Account Coverage amount will be distributed proportionately at the time of claim
Term Available Monthly deduction
Claim Payment Within 10 working days upon completion of all documentation / formalities
Claim Requirements Claimant & Physician statement, original death certificate, hospital death certificate, original NIC, FIR, newspaper clippings (if any) & statement of account.
Disclaimer The NBP Protection Shield is underwritten by ALICO (American Life Insurance
Company (Pakistan) Limited) or such other insurance company as NBP may select from time to time.
NBP will not be responsible in any manner if your claim is rejected or not entertained.
NBP does not offer insurance advice or underwrite or issue insurance policies. Purchase of insurance/banc assurance product does not represent an investment
and does not accumulate a cash value.
The information available here is intended for the customer intimation and understanding only, and is subject to the policy documentation between NBP and ALICO, as may be applicable from time to time.
Please note that in making deduction from the customer's account for the purpose of coverage under the policy the bank is solely acting as the authorized nominee/agent of the customer, provided sufficient funds are available in the relevant PLS Account.
Exclusions
The insurance policy does not cover the following and no claim payment shall be made in respect to:
1. intentionally self-inflicted Injury, suicide or any attempt threat while sane or insane; 2. war, invasion, act of foreign enemy, hostilities or warlike operations (whether war
be declared or not), mutiny, civil war, rebellion, revolution, insurrections, conspiracy, military or usurped power, martial law, or state of siege; assault and murder;, shelling, sniping, ambushes, and all acts of similar nature; or any period a Insured Person is serving in the Armed Forces of any country or international authority, whether in peace or war. Riots, strikes, civil commotion and terrorism acts if the insured person is actively involved in any of these activities;
3. any loss sustained or contracted in consequence of a Insured Person being intoxicated or under the influence of any alcohol, narcotic or drug unless administered on the advice of a Physician;
4. any loss of which a contributing cause was the Insured Person’s attempted commission of, or willful participation in an illegal act any violation or attempted violation of the law or resistance to arrest by the Insured Person;
5. any loss sustained while flying in any aircraft or device for aerial navigation except as a fare paying passenger (not as an operator or crew member) on a commercial airline operated by properly certified pilot, flying between duly established and
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maintained airports; 6. congenital anomalies and conditions arising out of or resulting there from; 7. Pre-Existing Conditions; 8. driving or riding as a passenger in or on (a) any vehicle engaged in any race,
speed test or endurance test or (b) any vehicle being used for acrobatic or stunt driving;
9. any loss occurring while the Insured Person is participating in competitions, races, contests, matches in land air or sea; mountaineering, rock climbing, pot holing; paragliding, bungee jumping, parachuting or scuba diving;
10. any claim caused by opportunistic infection or malignant neoplasm, or any other sickness condition, if, at the time of the claim, the Insured Person had been diagnosed as having AIDS (Acquired Immune Deficiency Syndrome), ARC (AIDS Related Complex) or having an antibody positive blood test to HIV (Human Immune Virus).
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DEMAND DRAFTS
If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch.If you are looking for a safe, speedy and reliable way to transfer money, you can now purchase NBP’s Demand Drafts at very reasonable rates. Any person whether an account holder of the bank or not, can purchase a Demand Draft from a bank branch.
SWIFT SYSTEM
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. The system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances. The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT. Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.
LETTERS OF CREDIT
NBP is committed to offering its business customers the widest range of options in the area of money transfer. If you are a commercial enterprise then our Letter of Credit service is just what you are looking for. With competitive rates, security, and ease of transaction, NBP Letters of Credit are the best way to do your business transactions.
TRAVELER'S CHEQUE
Negotiability:Pak Rupees Traveler’s Cheques are a negotiable instrument
Validity: There is no restriction on the period of validity Availability: At 700 branches of NBP all over the country Encashment: At all 400 branches of NBP Limitation: No limit on purchase
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Safety: NBP Traveler’s Cheques are the safest way to carry our money
PAY ORDER
NBP provides another reason to transfer your money using our facilities. Our pay orders are a secure and easy way to move your money from one place to another. And, as usual, our charges for this service are extremely competitive.
MAIL TRANSFERS
Move your money safely and quickly using NBP Mail Transfer service. And we also offer the most competitive rates in the market.
FOREIGN REMITTANCES
To facilitate its customers in the area of Home Remittances, National Bank of Pakistan has taken a number of measures to:
Increase home remittances through the banking system Meet the SBP directives/instructions for timely and prompt delivery of
remittances to the beneficiaries
New Features:
The existing system of home remittances has been revised/significantly improved and well-trained field functionaries are posted to provide efficient and reliable home remittance services to nonresident Pakistanis at 15 overseas branches of the Bank besides Pakistan International Bank (UK) Ltd., and Bank Al-Jazira, Saudi Arabia.
Zero Tariffs: NBP is providing home remittance services without any charges. Strict monitoring of the system is done to ensure the highest possible security. Special courier services are hired for expeditious delivery of home remittances
to the beneficiaries.
SHORT TERM INVESTMENTS
NBP now offers excellent rates of profit on all its short term investment accounts. Whether you are looking to invest for 3 months or 1 year, NBP’s rates of profit are extremely attractive, along with the security and service only NBP can provide.
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NATIONAL INCOME DAILY ACCOUNT (NIDA)
The scheme was launched in December 1995 to attract corporate customers. It is a current account scheme and is part of the profit and loss system of accounts in operation throughout the country.
Effective 23rd December 2004National Income Daily Account (NIDA)
SlabRate
Rs. 2 Million & above but below Rs. 25 Million 1.00 %
Rs.25 Million & above but below Rs .50 Million 1.10 %
Rs.50 Million & above but below Rs.100 Million 1.30 %
Rs.100 Million & above but below Rs. 250 Million 1.50 %
Rs.250 Million & above but below Rs. 500 Million 1.75 %
Rs.500 Million & above but below Rs. 1000 Million 2.00 %
Rs.1000 Million & above but below Rs. 2000 Million 2.25 %
Rs.2000 Million & above but below Rs. 5000 Million 2.50 %
Rs.5000 Million & above 2.75 %
EQUITY INVESTMENTS
NBP has accelerated its activities in the stock market to improve its economic base and restore investor confidence. The bank is now regarded as the most active and dominant player in the development of the stock market.
NBP is involved in the following:
Investment into the capital market Introduction of capital market accounts (under process)
NBP’s involvement in capital markets is expected to increase its earnings, which would result in better returns offered to account holders
AGRICULTURAL FINANCE
NBP provides Agricultural Finance to solidify faith, commitment and pride of farmers who produce some of the best agricultural products in the World.
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Agricultural Finance Services:
“I Feed the World” program, a new product, is introduced by NBP with the aim to help farmers maximize the per acre production with minimum of required input. Select farms will be made role models for other farms and farmers to follow, thus helping farmers across Pakistan to increase production.
Agricultural Credit:
The agricultural financing strategy of NBP is aimed at three main objectives:-
Providing reliable infrastructure for agricultural customers Help farmers utilize funds efficiently to further develop and achieve better
production Provide farmers an integrated package of credit with supplies of essential
inputs, technical knowledge, and supervision of farming.
Agricultural Credit (Medium Term):
Production and development Watercourse improvement Wells Farm power Development loans for tea plantation Fencing Solar energy
Farm Credit Production Loans Working Capital and Short Term Loans Medium term loans and Capital Expenditure Financing
LOAN STRUCTURING AND SYNDICATION:
National Bank’s leadership in loan syndicating stems from ability to forge strong relationships not only with borrowers but also with bank investors. Because we understand our syndicate partners’ asset criteria, we help borrowers meet substantial financing needs by enabling them to reach the banks most interested in lending to their particular industry, geographic location and structure through syndicated debt offerings. Our syndication capabilities are complemented by our own capital strength
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and by industry teams, who bring specialized knowledge to the structure of a transaction.
CASH MANAGEMENT SERVICES:
With National Bank’s Cash Management Services (in process of being set up), the customer’s sales collection will be channeled through vast network of NBP branched spread across the country. This will enable the customer to manage their company’s total financial position right from your desktop computer. They will also be able to take advantage of our outstanding range of payment, ejection, liquidity and investment services. In fact, with NBP, you’ll be provided everything, which takes to manage your cash flow more accurately.
INTERNATIONAL BANKING
National Bank of Pakistan is at the forefront of international banking in Pakistan which is proven by the fact that NBP has its branches in all of the major financial capitals of the world. Additionally, we have recently set up the Financial Institution Wing, which is placed under the Risk Management Group.
The role of the Financial Institution Wing is:- To effectively manage NBP’s exposure to foreign and domestic correspondence Manage the monetary aspect of NBP’s relationship with the correspondents to
support trade, treasury and other key business areas, thereby contributing to the bank’s profitability
Generation of incremental trade-finance business and revenues
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Section 5
General Banking
Account Department
Remittances Department
Advances Department
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The Departments functioning at NBP as briefed by its concerned officers during the
internship are:
1. General Banking Department
2. Account Department.
3. Remittance Department.
4. Advances Department.
GENERAL BANKING
General banking section consists of following sub sections:
Inquiry section
Inland Remittances
Deposits
Cash Department
Utility Bills
INQUIRY SECTION
Account opening
Issuing Cheque Book
Term Deposits
Travelers Cheque (TC)
ACCOUNT OPENING
Opening of a new account is like a contract between the bank, NBP and customer
which is guided by the people under Inquiry section. The preliminary function of
this section is to open various types of accounts, by allotting them their Account
numbers.
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TYPES OF ACCOUNTS
Following types of accounts are opened
PLS ACCOUNT / PLS SAVING ACCOUNT
These accounts are opened mainly by those customers whose banking
transactions are not frequent and numerous. Lower and middle income groups,
small traders, professionals, farmers and other salaried classes usually make such
deposits. Funds can be deposited frequently through cash, cheques, demand drafts,
pay orders, telegraphic transfers and other such instruments.
The objective of the Bank is to keep such deposits and earn maximum profit by
investing the proceeds of the deposits, to help small savers, to fulfill their business
needs and to provide assistance in uplifting the economy.
CURRENT ACCOUNT
These are running accounts opened by the individuals .They deposits and
withdrawals frequently cheques, demand drafts, pay orders, etc drawn on the
branch. Depositors deposit their money and the Bank by accepting these
deposits incurs the obligation of paying all types of orders to the extent of the
credit balance in the depositor’s account. These deposits represent current
liabilities of the Bank. So the bank has to keep sufficient funds in its hand to
meet the requirements of the depositors of these deposits.
SALIENT FEATURES
1. The minimum requirement for opening the account is Rs. 5000.
2. There is no limit for maximum deposit.
3. No limit of deposits and withdrawals is definite.
4. The deposits can be lodged in both local as well as foreign currencies.
5. The deposits can be made by:
Individuals
Sole proprietary concern
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Partnership firm
Societies and clubs
Institutions
6. The bank collects cheques, demand drafts, etc. and pay all the bills, cheques,
pay orders, etc., on the behalf of its depositors.
7. The bank will not pay any sort of profit to the account holder.
8. After time of opening the account in the name of an individual. The bank will
record the name and address of the next of the kin of the account holder as
disclosed by him, who can be contacted in the event if account remains
inactive for more than three years.
9. The bank would not require any prior permission from the account holder for
debiting his/her account for charging expenses, fees, commission, mark-up etc
arising out of any dealing or services with the branch.
10. The account holder is expected to maintain a minimum balance of Rs. 500 in
his account or whatever the minimum amount is prescribed for the purpose.
11. The banks now a day also provide the ATM card to account holder for 24 hour
cash services at annual charges.
12. Account statements are provided to the depositors mostly at monthly/quarterly
intervals or whenever is required by him.
BASIC REQUIREMENT OF OPENING AN ACCOUNT
The following are the basic requirements for opening an account:
1. Account Opening Form is filled by the customer as per instructions
specified on the form. This form records the complete name and address
of the account holder.
2. CNIC Copy is attaché with account opening form.
3. Passport size photographs are required .
4. Introducer is a person who provides the reference of the individual who
wants to open an account .Introducer must be of the same bank that he
must have an account maintained in that bank. He is in a way providing
guaranty to the bank that he will not default. His signatures, name and
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complete address are also taken along with that person on the account
opening form.
5. Signature specimen Card is also attached with Account opening form
with signatures of that individual that will be used later for verification
when he /she will come for encashment of their cheques.
CHEQUE BOOK ISSUANCE
After fulfillment of all requirements for opening an account letter of thanks are
issued to both individual and introducer. Cheque book is issued at the time
when individual came along with that letter. Account number that is also
mentioned in the letter is then get stamped on each and every flip of the cheque
book.
TERM DEPOSITS
DSC and SSC are the certificates which are issued by the bank under the
condition that they will not be payable on demand, but will be payable on a
fixed or predetermined future time or date so they are commonly known as term
deposits.
TRAVELERS CHEQUE
Travelers cheque is an instrument that is acceptable against money
internationally .TC can be encashed anywhere where we have bank account and
later those TCs are presented again for clearing on which branch of national
bank they are drawn. At NBP Travelers’ cheque are issued in denominations of
5000, 10000, 50000 and 100000.At the time of issuing TC, a purchase
agreement is signed between depositor and bank.
DEPOSIT SECTION
This section is responsible for collecting cheques which are to paid within city or
outside of city for the purpose of clearing .This clearing process get completed
with in 3 days
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CASH DEPARTMENT
Cash department is responsible for daily cash receipts and cash payments of cash
to general public and other services like:
1. Cash Payments
a. C/A
b. PLS(Saving)
2. Prize Bond Payments
3. Demand Notice Collection
4. Cash Receipts
UTILITY BILLS SECTION
With the aim of extending this service to the wider range of customers, the number
of NBP branches collecting utility bills (gas, electricity, telephone) has been
increased to a large number of cities. So that the pubic would have easily access
without getting much trouble.
REMITTANCE DEPARTMENT
Function of this department is to help in transferring of funds from one place to
another. Transfer of funds from foreign country to Pakistan .i.e. all the payments send
from outside country to Pakistan or Transfer of funds from Pakistan to foreign country
i.e. all the payments send to outside country Pakistan through NBP.
Remittance department here consists of two major sections:
Local Remittance
Foreign Remittance
Local Remittance
The term inland remittance means transfer of funds from one branch to another
with in the country though following banking instruments:
Demand Draft
Telegraph transfer
Mail transfer
Pay Order
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Inland Bills
Agency agreement from other banks.
Foreign Remittance
The bank provides the facilities of foreign remittance to the domestic residential
and foreigners to send money from one country to another.
Types of payments
Commercial Payments
Private payment/Family Remittances
ADVANCES DEPARTMENT
Advances Department is lending loans to individuals Companies, Corporations etc. for
different purposes. It provides loans for agricultural and industrial development. Its
provides these types of finances:
Running Finance.
Demand Finance.
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Section 6
In this section a number of topics are discussed. The major topics of
this section are:
Functions of National Bank of Pakistan
Cash Department
Deposit Department
Different Types Deposit Department
Clearing Department
Advances and Credit Department
Securities Types of Advances
Other Services
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National Bank of Pakistan is a commercial bank, in modern time it plays a very vital
role and its functions are manifold. The main functions are as under:
(1) Accepting various types of deposits.
(2) Granting loans and advances.
(3) Undertaking of agency services and also general utility functions, few of
these are as under:-
a ... ... Collecting cheques and bills of exchange for the customers.
b ... ... Collecting interest due, dividend, pensions, and other sum due to
customers.
c ... ... Providing safe custody and facilities to keep jewellery,
documents, and securities etc.
d ... ... Transfer of money from place to place.
e ... ... Acting an executor, trustee or attorney for the customers.
f ... ... Issuing of travelers’ cheques and letters of credit to give credit
facilities to travel.
g ... ... Accepting bills of exchange on behalf of customers.
h ... ... Purchasing shares for the customers.
i ... ... Undertaking foreign exchange business.
j ... ... Furnishing trade information and tendering advice to customers.
For proper functioning of all these activities, the bank has divided its operations
into different departments that would be discussed next. These departments are as
under:
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(1) Cash Department
(2) Deposit Department
(3) Clearing Department
(4) Advances and Credit Department
(5) Remittance Department
(6) Foreign Exchange Department
The following books are maintained in the cash department:-
1 ... ... Receiving Cashier Books
2 ... ... Token Book
3 ... ... Paying Cashier Book
4 ... ... Scroll Books
5 ... ... Cash Balance Book
When cash is received in counter, it is entered in the Scroll Book and Receiving
Cashier Book. At the close of the day, these are balanced with each other. When the
cheque or any negotiable instrument is presented at counter for payment, it is entered in
the Token Book and Token is issued to the customer. The Token and the cashier make
entry in the Payment Book and the payment is made to payee. At the close of the day,
the Token Book and paying Cashier Book is balanced. The consolidated figure of
receipt and payment of cash is entered in the Balance Book and drawn closing balance
of cash.
OPENING BALANCE + RECEIPT – PAYMENT =
CLOSING BALANCE
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This is very important department because cash is the most liquid asset and
mostly frauds are made in this department, therefore, extra care sis taken in this
department and no body is allowed to enter or leave the area freely. Mostly, cash area is
grilled and its door is under the supervision of head of that department. Officer checks
the books maintained in this department.
IMPORTANCEBank deals in money and they are merely mobilizing funds within the economy.
They borrow from one person and lend to another, the difference between the rates
borrowed and lend from their spread or gross profit. Therefore, we can rightly state that
deposits are the blood of the banks which cause the body of an institution to get to
work. These deposits are liability of the bank so from the viewpoint of bank we can
refer to them as liabilities.
TYPES OF DEPOSITSTYPES OF DEPOSITSDeposits can be segregated on two bases, one is the duration in which these
funds are expected to be with the bank, and second is the cost of getting these funds. So
we can divide deposits into two classes according to duration:
1 ... ... Time Deposits
2 ... ... Demand Deposits
And on the basis of the cost of acquire these funds, a deposit can be classified as
any one of the following four:
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a ... ... High Cost
b ... ... Medium Cost
c ... ... Low Cost
d ... ... No Cost
Bank has different kind of deposit schemes in order to induce deposits. These
schemes are a mixture of the above mentioned two types of deposits with and addition
of different services and requirements, mode of transactions, basis for calculation of
profit, deduction, additional benefits, and eligibility for different groups. In the similar
fashion, national Bank of Pakistan has large variety of deposit schemes and some of
these are as follows:
(1) CURRENT ACCOUNTIn this type of accounts, the client is allowed to deposit or withdraw money as and
when he likes, but there is requirement of maintaining the minimum balance of
Rs.5000/- other wise Rs.50/- will be deducted every month. Usually the businessmen
open this type of account and the bank pays no profit on it. These types of deposits are
also exempt from compulsory deduction of Zakat.
(2) PLS SAVING BANK ACCOUNT
This type of account is for those persons who want to make small savings. This type
of account is opened with a minimum deposit if Rs.200/- If the balance in the account
falls below the minimum requirement then a flat charge of Rs.150/- is made in the
account once in a half year. Zakat and other withholding taxes are deducted as per rules
of the government.
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(3) FIXED DEPOSITSIn this type of account a certain amount is deposited for a certain period such as six
months, one year, two year or longer. A fixed deposit receipt is issued in the name of
the depositor. The receipt is signed by the officer in charge and the bank manager. A
notice is given to the depositor on a prescribed from two weeks before the Fixed
Deposit Receipt (FDR) falls due, requesting the depositor to withdraw his money or to
renew his deposits. The interest is allowed on fixed deposit varies with the period for
which the deposit is made.
(4) SHORT NOTICE TERM DEPOSIT
This kind of deposit is for a short period as the name indicates. The depositor may
withdraw his deposit at any time by giving seven days notice to the banker. This type of
deposit facilitates the trader to withdraw his amount with interest of the deposited
period.
(5) CALL DEPOSITCall Deposits are the sorts of deposits, which are deposited with the banker against
any tender. This is with out interest deposit, this may be with interest provided with the
depositor has agreed to keep this amount with the banker for some fixed period.
(6) CUMULATIVE DEPOSIT
CERTIFICATEThis is just like of fixed deposit. In this kind of deposit, the rate of interest is higher
as compared to other kind of deposits, which are mentioned previously. The rate of
interest rises gradually as the period extends. Its period ranges from three month to
twenty years.
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(7) MONTHLY INCOME SCHEME
National Bank of Pakistan has also introduced Monthly Income Scheme for the
benefits of its customers. An individual or institution, company, corporation etc. can
take the advantage of this scheme.
The following types of ledgers are concerned with deposit department:
1 ... ... Saving Ledgers
2 ... ... Current Ledgers
3 ... ... Profit and Loss Sharing Ledgers
4 ... ... Fixed Deposit Register
5 ... ... Cumulative Deposit Certificate Register
6 ... ... Cash Book
7 ... ... Daily Profit and Loss Summary Book
8 ... ... Voucher Register
Every banker acts both as a paying as well as a collecting banker. It is however
an important function of crossed cheques. A large part of this work is carried out
through the bankers clearing house. A clearing house is a place where representatives
of all the banks of a city get together and settle the receipts and payments of cheques
drawn on each other bank. As the collecting banker runs the certain risks in receipt of
their ownership, the law has provided certain protections to the banks.
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(1) TRANSFER CHEQUESTransfer cheques are those cheques which are collected and paid by two
different branches of the same bank situated in the same city.
(2) CLEARING CHEQUESClearing Cheques are those cheques which are drawn on the branches of some
other bank of the same city or of the same area which covers a particular clearing
house.
(3) COLLECTION CHEQUESCollection Cheques are those cheques which are drawn on the branches of either
the same bank or of another bank, but branches are not in the same city or they are not
the members of clearing house.
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The function of Advances and Credit Department is to lend money in the form
of clean advances, against the promissory note, as well as secured advances against
tangible and marketable securities. The bankers prefer such securities, which do not run
the risk of general depreciation due to market fluctuations. Common securities for the
banker’s advances are as under:
* SECURITIES* SECURITIES **
(1) BANKERS’ LIEN
(Moveable property possessed to the lender cannot be sold in
case of default)
Lien is the bankers’ right to hold the property until the claim on the property
is paid. The bankers look at their lien as a protection against loss on loan or
overdraft or any other credit facility. In ordinary lien, the borrower remains the
owner if the property, but the actual or constructive possession remains with the
creditors, though he has no right to sell it.
(2) GUARANTEESWhen an application for an advance can offer any tangible security, the
banker may rely on personal guarantees to protect himself against loss on advances
or overdraft to the applicant.
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(3) MORTGAGE (Immoveable property possessed to the lender can be sold in case of default)
A mortgage is the transfer of an interest in specific immoveable property for
the purpose of securing the payment of money advanced or to be advanced by way
of loan, and existing of future debt, or the performance of an engagement, which
may rise to a particular liability. The person in whose interest the property is
transfer is called mortgagee.
(4) HYPOTHICATION
(Immoveable property possessed to the borrower can be sold in case of
default)
When property in the shape of goods is charged as security for a loan from
the bank, the ownership and possession is with the borrower, the goods are said to
be hypothecated. The essence of hypothecation is that neither the property in goods
nor the possession of them passes to the lender, but the security is granted by means
of letter of hypothecation which usually provides for a banker’s charge on the
hypothecated goods.
(5) PLEDGE(Moveable property possessed to the lender can be sold in case of default)
In a pledge, the ownership remains with pledger (borrower), but the pledgee
has the possession of property until the advance is repaid in full. While in case of
defaulter, the pledge has the right of sale after giving due notice.
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*TYPES OF ADVANCES*TYPES OF ADVANCES **1 ... ... Demand Finance(Ordinary Loans)
2 ... ... Running Finance(Overdraft)
3 ... ... Cash Finance
4 ... ... Small Finance
5 ... ... Finance against Bills
6 ... ... Agriculture Loans
(1) DEMAND FINANCE (ORDINARY
LOANS)These are those advances which are allowed in lump sum for a fixed period and are
repayable in lump sum or gradually in installments.
(2) RUNNING FINANCE Running finance are advances, which are gradually given to meet temporary
requirements of the customers. A good customer uses the banks running finance limit,
as a mean of protecting his credit in the market and as a line of second defense to meet
his commitments. There are two types of running finance:
1) UN-SECURED
Under this type of overdraft, the bank relies upon the personal security of the
customer or customer’s account.
2) SECURED
Under this type of overdraft, the bank allows his customer to withdraw more than his
deposit after giving security against the amount overdrawn. The securities against
which they are given are as under:
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a ... ... Share Certificates
b ... ... Savings Certificates
c ... ... Deposits
d ... ... Mortgage Property
e ... ... Guarantee of a person
(3) CASH FINANCEThese types of loans are given against the following:
1 ... ... Against locally manufactured goods
2 ... ... Cash finance against rice and paddy
3 ... ... Against pledge
4 ... ... Against commodities
5 ... ... Besides advances against the above commodities bank may be
approached by parties for advances against other commodities like
tobacco, oil, etc.
6 ... ... Against Trust Receipts
(4) SMALL LOANSLoans are allowed to contractors’ clearing and forwarding agents. These loans are
repayable within a year.
(5) FINANCE AGAINST BILLSThe advances are allowed both on local and foreign bills such as:
a ... ... Bill of Exchange and Invoices
b ... ... Bill of Landing
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(6) AGRICULTURE LOANSAgriculture loans are given to the farmers with holding up to 25 acres for meeting
their short medium and long term production requirements such as:
a ... ... Agriculture inputs
b ... ... Tractors instruments
c ... ... Tube wells
d ... ... Live stock farming
e ... ... Land Improvements
(7)(7) OTHER SERVICESOTHER SERVICES
* UTILITY BILLS COLLECTION For the convenience of the customer, National Bank of Pakistan also collects
different kinds of utility bills such as:
Electricity Bills, Sui-Gas Bills, Telephone Bills etc.
* NBP PAK RUPEE TRAVELER
CHEQUENBP Pak Rupee traveler Cheque is better than cash, because you get the power
to purchase as well as your money can be refunded in case you would loss your
cheque. It is a safe and convenient way of purchase.
* FOREIGN CURRENCY ACCOUNTSLaunched to attract deposits in foreign currencies like US Dollars, Pound
Sterling, Dutch Mark, and Japanese Yen. Whether you are a resident or a non-
resident of Pakistan, NBP invites all to operate in a foreign currency account.
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Section 7
In this section topic discussed is as under:
Work performed during internship
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* WORK PERFORMED* WORK PERFORMED
DURING INTERNSHIP *DURING INTERNSHIP *I joined National Bank of Pakistan, Branch Ali Pur Chattha on 12 July, 2010. First day,
the manager introduced me about the functioning of the branch and the staff. The
manager told me that counter is the most important place of the bank. During the six
weeks of my internship, I worked in different sections of the branch and did the
maximum practice of banking system details of which is as under:
GENERAL BANKING GENERAL BANKING First of all, I was asked to work in different sections of general banking. I was
attached to Counter with Mr.Aslam Sial manager operations that has good command on
this section. Here we dealt with new customer who wanted to get information and to
deal with the branch. This is a very interesting department because here we met people
of different types and deal with them accordingly. In this section, I observed the
following functions:
CHEQUE AT COUNTER A cheque to withdraw the amount is presented on the counter with the following
requisites:
1 ... ... Name of the Account Holder
2 ... ... Current or previous date
3 ... ... Amount in figures
4 ... ... Amount in wording
5 ... ... One signature of the account holder in the right bottom corner of the
cheque and two signature of the bearer on the back
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6 ... ... Branch Stamp in front of the cheque
7 ... ... If the Account Holder uses thumb instead of signature then the Pass
Book or attested copy of CNIC is necessary with the cheque.
Operation’s officer checks and verifies all these requisites. If it fulfills all the
requisites, it is forwarded for payment after a certain procedure.
CHEQUE PAYMENT PROCEDURE After all the requisites are verified and then the excessive balance is checked and
prescribed amount is deducted narrated on the cheque, then SIGNATURE VERIFIED
stamp (in case of signature only) on the signature and a PAY CASH stamp are fixed
and a Token is given to the cheque bearer after writing Token No. on the specified
cheque. Then the Officer G-II verified the cheque and forwarded it to the cashier where
the cheque bearer receives the amount from the account.
ISSUANCE OF DEMAND DRAFT A Demand Draft is provided to the client in which he has to specify that bank it
is drawn. The amount both in words and figures is written on Demand Draft.
BILLS COLLECTIONS DEPARTMENT I spent second week of my training in bills collection department. Mr.
Muhammad Rasheed who is the in charge of this section. Here we collected utility bills
like electricity bills, gas bills, and telephone bills.
BILL REMITTANCE DEPARTMENT This is very important and interesting department. This section deals with the
transfer of money from one branch to another branch. Nearly four drafts are issued
daily from this department. Here I know how the amount is transferred and what the
procedure is. This department also deals with TT transfer of money. I worked nearly
two weeks in this department.
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DEPOSIT DEPARTMENT DEPOSIT DEPARTMENT Deposit department deals with Current, Savings, and Fixed Accounts. In current
account the bank does not give any interest and you can deposit the whole amount in
lump sum in business hours.
However in PLS savings account we can only withdraw up to Rs.25000/-
without any notice otherwise a prior notification of a weak is required to the bank if the
amount to be withdrawn is more than Rs.25000/-
Old ages are interested in Fixed Account usually. The rate of interest is higher
more than that of in Current and PLS savings Account but the amount cannot be
withdrawn before a specific time fixed by the client.
To open the account customer have to fulfill an application form and submit to
the concerning authority. In Current and PLS saving Account, a Cheque Book is issued
to the client and he becomes the Account Holder of NBP. I worked in this department
for one and a half week.
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Balance SheetRupees in Millions
ASSETS 2005 2007 2008 2008 2009Cash and balances with treasury banks 94,446,552 71,196,956 78,625,227 94,873,249 106,503,756 Balances with other banks 49,784,884 31,019,330 40,641,679 37,472,832 38,344,608Lending’s to financial institutions 10,511,322 16,282,942 23,012,732 21,464,600 17,128,032Investments 149,350,096 156,985,686 139,946,995 210,787,868 170,822,491Advances 220,794,075 268,838,779 316,110,406 340,677,100 412,986,865Other assets 19,141,569 23,941,056 27,113,698 30,994,965 44,550,347Operating fixed assets 9,202,969 9,454,365 9,681,974 25,922,979 24,217,655Deferred tax assets _ _ _ _ 3,204,572
553,231,467 577,719,114 635,132,711 762,193,593 817,758,326
LIABILITIESBills payable 7,214,671 1,741,156 10,605,663 7,061,902 10,219,061Borrowings from financial institutions 11,084,790 8,756,847 11,704,079 10,886,063 40,458,926Deposits and other accounts 465,571,717 463,426,602 501,872,243 591,907,435 624,939,016Sub-ordinated loans _ _ _ _ _ Liabilities against assets subject to finance lease 17,058 16,629 13,235 33,554 25,274Other liabilities 23,068,314 24,974,450 26,596,300 30,869,154 39,656,831Deferred tax liabilities net 29,185 4,462,718 2,387,073 5,097,831 _
506,985,735
503,378,402
553,178,593
645,855,939
715,299,108
NET ASSETS 46,245,73
2 74,340,71
2 81,954,11
8 116,337,65
4 102,459,21
8
REPRESENTED BYShare capital 4,924,106 5,908,927 7,090,712 8,154,319 8,969,751Reserves 10,813,914 13,536,041 13,879,260 15,772,124 19,941,047Unappropriated Profit 9,161,747 16,713,506 32,074,677 45,344,188 52,456,204
24,899,767 36,158,474 53,044,649 69,270,631 81,367,002
Surplus 21,345,965 38,182,238 28,909,469 47,067,023 21,092,216 46,245,73
2 74,340,71
2 81,954,11
8 116,337,65
4 102,459,21
8
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Income StatementIncome StatementRupees in Millions
2005 2007 2008 2008 2009Markup/return/interest earned 20,947,333 33,692,665 44,100,934 50,569,481 60,942,798Markup/return/interest expensed 6,559,398 10,321,768 13,947,218 16,940,011 23,884,768Net markup/interest income 14,387,935 23,370,897 30,153,716 33,629,470 37,058,030Provisions against non-performing advances 1,515,354 2,446,739 3,075,723 4,723,084 10,593,565provision for/(reversal of) diminution in the value of investments 185,707 -245,881 -709,461 -40,248 373,249provision against off balance sheet obligations 14,297 Nil Nil Nil 4,000bad debts written off directly 32,807 23,069 5,284 39,899 Nil
1,748,165 2,223,927 2,371,546 4,722,735 10,970,814Net markup/interest income after provisions 12,639,770 21,146,970 27,782,170 28,906,735 26,087,216NON MARKUP/ INTEREST INCOMEFee, Commission & brokerage income 5,099,195 4,926,604 6,144,628 6,781,683 7,925,370Dividend income 1,273,863 1,718,478 2,891,755 3,263,246 2,878,932Income form dealing in foreign currencies 1,008,988 1,205,638 1,333,840 1,042,827 3,969,057Gain on sale & redemption of securities-net 47,557 1,365,771 1,169,515 2,341,690 395,427Investments classified as held for trading Nil -1,979 -4,464 -31,964 1,707Other income 875,113 177,839 627,618 147,363 1,245,369Total non-markup/ Interest income 8,304,716 9,392,351 12,162,892 13,544,845 16,415,862
Total income ( Interest + non-Interest) 20,944,486 30,539,321 39,945,062 42,451,580 42,503,078NON MARKUP/ INTERSET EXPENSESAdministration expenses 8,878,801 11,221,789 13,443,441 14,205,911 18,171,198Other provisions written off 32,243 198,298 -17,283 168,027 747,521Other charges 8,284 63,206 208,327 17,141 583,361Total non markup/ Interest expenses 8,919,328 11,483,293 13,634,485 14,391,079 19,502,080PROFIT BEFORE TAXATION 11,977,601 19,056,028 26,310,577 28,060,501 23,000,998Taxation Current 4,950,000 7,154,002 8,695,598 8,311,500 11,762,650
Prior years 847,958 -1,098,709 530,652 391,497 NilDeferred -15,729 291,291 61,981 323,731 -4,220,242
5,782,229 6,346,584 9,288,231 9,026,728 7,542,408PROFIT AFTER TAXATION 6,195,372 12,709,444 17,022,346 19,033,773 15,458,590Unappropriated Profit brought forward 5,892,902 9,161,747 19,372,523 32,074,677 45,344,188Transfer from surplus on revaluation of fixed assets on account of incremental depreciation 45,496 43,221 41,060 39,007 130,456Profit available for appropriation 12,133,770 21,914,412 36,435,929 51,147,457 60,933,234
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Financial Statements AnalysisFinancial Statements AnalysisFinancial analysis is a process which involves reclassification and summarization of
information through the establishment of ratios and trends. Financial statement analysis
is the process of examining relationships among financial statement elements and
making comparisons with relevant information. It is a valuable tool used by investors
and creditors, financial analysts, and others in their decision-making processes related
to stocks, bonds, and other financial instruments. The goal in analyzing financial
statements is to assess past performance and current financial position and to make
predictions about the future performance of a company. Investors who buy stock are
primarily interested in a company's profitability and their prospects for earning a return
on their investment by receiving dividends and/or increasing the market value of their
stock holdings. Creditors and investors who buy debt securities, such as bonds, are
more interested in liquidity and solvency: the company's short-and long-run ability to
pay its debts. Financial analysts, who frequently specialize in following certain
industries, routinely assess the profitability, liquidity, and solvency of companies in
order to make recommendations about the purchase or sale of securities, such as stocks
and bonds.
The analysis of financial statement refers to the examination of the statements for the
purpose of acquiring additional information regarding the activities of the business. The
users of the financial information often find analysis desirable for the interpretation of
the firm’s activities.
The overall objective of financial statement analysis is the examination of a firm’s
financial position and returns in relation to risk. This must be done with a view to
forecasting the firm’s future prospective.
Analysts can obtain useful information by comparing a company's most recent financial
statements with its results in previous years and with the results of other companies in
the same industry. Three primary types of financial statement analysis are commonly
known as horizontal analysis, vertical analysis, and ratio analysis.
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Ratio AnalysisRatio Analysis
Ratio analysis enables the analyst to compare items on a single financial statement or to
examine the relationships between items on two financial statements. After calculating
ratios for each year's financial data, the analyst can then examine trends for the
company across years. Since ratios adjust for size, using this analytical tool facilitates
intercompany as well as intercompany comparisons. Ratios are often classified using
the following terms: profitability ratios (also known as operating ratios), liquidity
ratios, and solvency ratios. Profitability ratios are gauges of the company's operating
success for a given period of time. Liquidity ratios are measures of the short-term
ability of the company to pay its debts when they come due and to meet unexpected
needs for cash. Solvency ratios indicate the ability of the company to meet its long-term
obligations on a continuing basis and thus to survive over a long period of time.
Financial ratios allow for comparison:
Between companies
Between industries
Between different time periods for one company
Between a single company and its industry average
a) Profitability Ratios
The continued viability of any bank depends on its ability to earn an appropriate return
on its assets and capital. Good earnings performance enables a bank to fund its
operations, remain competitive in the market and increase or decrease in market funds.
Profitability ratios relate profit to sales and investments. These ratios indicate the firm’s
overall effectiveness of operations and give us idea how well firm utilized its resources
in generating profit and shareholder value.
Gross Profit Margin Ratio
Gross profit margin ratio is used to assess the profitability of a Bank's core activities.
Gross profit margin indicates the relationship between gross profit and interest earned.
A high gross profit margin indicates that a Bank can make a reasonable profit.
Formula = Gross Profit / Interest earned (Revenue)
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Analysis
The Year 2007 has been an outstanding year with the bank recording the highest profit
in its history i.e.., 59.65 %.The National Bank of Pakistan’s wide range of product
offering, large branch network and committed workforce are some of fundamental
strengths that enabled NBP to achieve exceptional in a very competitive market. The
gross profit is 37.74% in 2009. The lowest percentage among all years.
Net Profit Margin Ratio
Net profit margin measures the percentage of revenue remaining after all cost and
expenses, including interest and taxes have been deducted.
Formula = Net Profit after Taxes / Interest earned
Year 2005 2006 2007 2008 2009
Ratio % 29.57 37.72 38.59 37.63 25.36
Year 2005 2006 2007 2008 2009
Ratio % 57.17 56.55 59.65 55.48 37.74
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Analysis
Net profit margin shows positive trend till 2007 and was the highest in the same year as
it was 38.59%, the percentage is decreased in 2008 as it was 37.63%. The net profit
margin is on its lowest level at the end of 2009 as it indicates a percentage of 25.63%.
The primary reason of this decline is current global economic conditions and current
political crisis in Pakistan.
Assets Turnover
This ratio is useful to determine the amount of revenue that is generated from each
Rupee of assets. The Banks with low profit margins tend to have high asset turnover,
those with high profit margins have low asset turnover.
Formula = Revenue/ Total Assets
Year 2005 2006 2007 2008 2009
Ratio 0.03 0.05 0.06 0.05 0.05
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Analysis
The year 2005 represents a ratio of 0.03, lowest among all years. The years 2005, 2008
and 2009 indicates almost same percentage of 0.05% on account of bank’s assets
turnover. The National Bank of Pakistan’s assets turnover in 2007 is 0.06, peak ratio
among all years.
Return on Capital Fund
This ratio relates the net profits to the amount of capital funds that have been employed
in making that profit.
Formula = Net markup received / Capital Funds
Year 2005 2006 2007 2008 2009
Ratio 2.92 3.95 4.25 4.12 4.13
Analysis
The above given ratios suggest that the profitability of the bank has a mixed trend
during five years. The first three years 2005 (2.92), 2005 (3.95), 2007 (4.95) shows an
increasing trend, indicating more profitable operations of the bank. It was decreased in
the year 2008 (4.12) and has increased in 2009 as the ratio was 4.13.
Return on Investment
This ratio indicates the profit earned by the bank on the resources employed.
Formula = Net income after taxes / Total Assets
Year 2005 2006 2007 2008 2009
Ratio 0.011 0.021 0.026 0.024 0.018
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Analysis
There was an increase in the utilization of the resources till 2007 i.e.., 0.011(2005),
0.021 (2005) and 0.026 (2008). The ratio was decreased to 0.024 (2008) and 0.018
(2009).
Return on Deposits
This ratio indicates to what extent deposits which represent funds mobilization on the
part of the bank contribute towards income generation.
Formula = Net income before taxes / Total Deposits
Year 2005 2006 2007 2008 2009
Ratio 0.025 0.041 0.052 0.047 0.036
Analysis
During all five years the return on deposits ratio of National Bank of Pakistan shows a
mix trend. The year 2007 (0.052) was the best year for bank in terms of its funds
mobilization. Although the ratio was decreasing in 2009 (0.036), indicating Bank is
more keen to kept deposits and a change in policy of the Bank regarding its funds
mobilization.
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Effective Tax Rate
This ratio is a measurement of a company's tax rate, which is calculated by comparing
its income tax expense to its pretax income. This amount will often differ from the
company's stated jurisdictional rate due to many accounting factors, including foreign
exchange provisions. This effective tax rate gives a good understanding of the tax rate
the company faces.
Formula = Income Tax expense/ Pretax Income
Year 2005 2006 2007 2008 2009
Ratio % 0.48 0.33 0.35 0.32 0.32
Analysis
The effective tax rate of National Bank of Pakistan was highest in the year 2005
(0.48%). However bank is able to reduce its tax burden because the Bank is able to
adopt Tax management techniques to lessen the tax burden. A relatively stable effective
tax rate percentage, and resulting net profit margin, would seem to indicate that the
Bank's operational managers are more responsible for a company's profitability than the
company's tax accountants.
b) Liquidity Ratios
The liquidity position of a bank is like a reservoir. It may be adequate, although nearly
depleted, just before the start of the rainy season. Or it may be inadequate, although
three quarters full just before the summer drought.
Liquidity can be defined as:
“The bank’s ability not only to meet possible deposit withdrawals but also to provide
for the legitimate needs of the economy as well”
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Current Ratio
Current ratio is a measure of the current adequacy of company's current assets to meet
its current obligations. It must be greater than 1. If it is less than 1, liabilities exceed
current assets. For every Rs.1 of liabilities, the company has a ratio amount of current
assets available. The concept behind this ratio is to ascertain whether a company's
short-term assets (cash, cash equivalents, marketable securities, receivables and
inventory) are readily available to pay off its short-term liabilities (notes payable,
current portion of term debt, payables, accrued expenses and taxes). In theory, the
higher the current ratio, the better.
Formula = Current Assets / Current Liabilities
Year 2005 2006 2007 2008 2009Ratio 0.83 0.96 1.02 1.00 1.12
Analysis
The year 2005 (0.83) and 2005 (0.96) were not satisfied for bank as current assets are
less than current liabilities. However, in 2007 (1.02) the management of National Bank
of Pakistan is able to overcome this problem. The year 2008 (1.00) is also good for
bank as per standards of this ratio. Again in the year 2009 (1.12) the management of
bank is able to increase its current ratio.
Cash Ratio
This ratio shows that the cash is enough for payment of current liabilities or not. This
ratio is obtained by dividing cash by current liabilities. For a bank this is the cash held
by the bank as a proportion of deposits in the bank.
Formula = Cash / Current Liabilities
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Year 2005 2006 2007 2008 2009
Ratio 4.09 2.85 2.96 3.07 2.69
Analysis
The cash ratio of National Bank of Pakistan shows a mixed trend during five years of
operations. During all years, the ratio is satisfactory as per standards of this ratio. The
year 2005 (4.09), representing highest and 2005 (2.85) & 2009 (2.69), representing
lowest ratio in all five years.
Advances to Deposit Ratio
It demonstrate the degree to which bank has already used up its available resources to
accommodate the credit needs of its customers.
Formula = Advances / Total Deposits
Year 2005 2006 2007 2008 2009
Ratio% 47.42 58.01 62.99 57.56 66.08
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Analysis
This ratio, a comparison of funds generation and its funds mobilization, indicates the
total loans sanctioned by the bank in relation to total amount of money deposited with
the bank, stands highest in 2009 ( 66.08%) as compared with the previous year figures.
This shows that the bank has greater potential to advance additional loans. During all
other years the ratio is quiet satisfactory representing National Bank of Pakistan’s credit
management decisions.
Due from Banks to Total Assets
It is an indication of Bank’s funds management policies.
Formula = Due from banks / Total Assets
Year 2005 2006 2007 2008 2009
Ratio 0.019 0.028 0.036 0.028 0.021
Analysis
The National Bank of Pakistan’s due from banks to total assets ratio is fluctuating and
indicates a mixed trend during all years. The ratio is 0.019 in 2005 and 0.028 in the
year 2005. The year 2007 represents highest ratio of 0.036 among all years. There was
a decrease in ratio at the end of financial year 2008 that is 0.028. The year 2009
represents a decrease in ratio (0.021) on account of due from banks to total assets.
Due from Banks to Due to Banks
It shows the relationship between what the bank owes from other banks and what is due
to it.
Formula = Due from banks / Due to banks
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Year 2005 2006 2007 2008 2009
Ratio% 94.83 185.95 196.62 197.18 42.33
Analysis
The ratio indicates an increasing trend till 2008 that is 94.83 (2005), 185.95 (2005),
196.62 (2007) and 197.18 in 2008. The year 2009 represents the lowest percentage of
42.33 on account of due from banks to due to banks.
Due to Banks to Total Deposits
This ratio is an indicative of the proportion of the lending from the financial institutions
in relation to the total funds raised by the bank in the form of deposits.
Formula = Due to banks / Total Deposits
Year 2005 2006 2007 2008 2009
Ratio 0.024 0.019 0.023 0.018 0.065
Analysis
The due to banks to total deposits ratio of National Bank of Pakistan is fluctuating and
indicates a mixed trend during all years. The ratio is 0.024 in 2005 and decreased to
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0.019 in 2005. The ratio is increased in 2007 as the ratio is 0.023. The year 2008
represents the lowest percentage of 0.018 and the year 2009 represents the peak
percentage of 0.065.
c) Debt Ratios
These ratios give users a general idea of the company's overall debt load as well as its
mix of equity and debt. Debt ratios can be used to determine the overall level of
financial risk a company and its shareholders face. In general, the greater the amount of
debt held by a company the greater the financial risk of bankruptcy.
The Debt to Equity Ratio
The debt-equity ratio compares a company's total liabilities to its total shareholders'
equity. This is a measurement of how much suppliers, lenders, creditors and obligors
have committed to the company versus what the shareholders have committed.
To a large degree, the debt-equity ratio provides another vantage point on a company's
leverage position, in this case, comparing total liabilities to shareholders' equity, as
opposed to total assets in the debt ratio. Similar to the debt ratio, a lower the percentage
means that a company is using less leverage and has a stronger equity position.
Formula = Total Liabilities/ Total Shareholder’s equity
Year 2005 2006 2007 2008 2009
Ratio 112.35 97.77 89.57 93.47 91.17
Analysis
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The debt to equity ratio of National Bank of Pakistan shows a ratio of 112.35 % in
2005. The ratio is decreased to 97.77% in the year 2005. The ratio is further decreased
in 2007 as it shows a percentage of 89.57%. There was an increase in the ratio as it
shows a percentage of 93.47%. The year 2009 represents the ratio of 91.17% .
Interest Coverage Ratio
It shows whether the bank is earning enough profit before mark up charges to be paid to
the financiers and the taxation obligations due to the government in order to remain
solvent. The interest coverage ratio is used to determine how easily a company can pay
interest expenses on outstanding debt. The ratio is calculated by dividing a company's
earnings before interest and taxes (EBIT) by the company's interest expenses for the
same period. The lower the ratio, the more the company is burdened by debt expense.
When a company's interest coverage ratio is only 1.5 or lower, its ability to meet
interest expenses may be questionable.
Formula = Earnings before interest & Taxes / Interest expense
Year 2005 2006 2007 2008 2009
Ratio 1.83 times
1.85times
1.89times
1.66times
0.97times
Analysis
The amount of interest a Bank pays in relation to its revenue and earnings is
tremendously important. The National Bank of Pakistan’s interest coverage ratio is 1.83
times in the year 2005. The ratio was increased in the years 2005 and 2007 as it was
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1.85 times & 1.89 times respectively. There sudden decrease of 1.66 times is observed
in 2008. The ratio is further decrease to 0.97 times in 2009, representing the lowest
ratio among all years.
Loan Loss Coverage Ratio
Banks use the loan-loss coverage ratio to define the quality of its assets and how well it
protects itself from losses caused by problematic loans. The higher this ratio is, the
better the bank is handling itself in regards to loans.
Formula = Provision against non-performance loans & advances/ Profit or loss before
taxation
Year 2005 2006 2007 2008 2009
Ratio 0.13 0.13 0.12 0.17 0.47
Analysis
The loan loss coverage ratio of National Bank of Pakistan is almost same in the years
2005 and 2005 as it was 0.13 in both years. There was a slight decrease in this ratio as
it was 0.12 in 2007. The year 2007 shows an increase in loan loss coverage ratio as it
was 0.17. The year 2009 represents highest ratio of 0.47 on account of loan loss
coverage, as compare to all years.
d) Capital Adequacy Ratios
Capital Funds to Total Assets
This ratio indicates the extent of the funds employed by the bank in the total resources
as shown in the balance sheet.
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Formula = Capital Funds / Total Assets
Year 2005 2006 2007 2008 2009
Ratio% 0.89 1.02 1.10 1.07 1.09
Analysis
The National Bank of Pakistan’s Capital funds to Total Assets ratio is increased during
all years. The ratio is 0.89 in 2005, representing lowest ratio in all years. The ratio is
increased in 2005, 2007 and 2008 as the graph shows ratios of 1.02, 1.10 & 1.07
respectively. The ratio is keeping its trend and also increases in the year 2009 as it was
1.09.
e) Operating Performance Ratios
Each of these ratios have differing inputs and measure different segments of a
company's overall operational performance, but the ratios do give users insight into the
company's performance and management during the period being measured.
These ratios look at how well a company turns its assets into revenue as well as how
efficiently a company converts its sales into cash. Basically, these ratios look at how
efficiently and effectively a company is using its resources to generate sales and
increase shareholder value. In general, the better these ratios are, the better it is for
shareholders.
In this section, we'll look at the fixed-asset turnover ratio and the sales/revenue per
employee ratio, which look at how well the company uses its fixed assets and
employees to generate sales.
Fixed Assets Turnover
This ratio is a rough measure of the productivity of a company's fixed assets (property,
plant and equipment etc) with respect to generating revenue. For most companies, their
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investment in fixed assets represents the single largest component of their total assets.
This annual turnover ratio is designed to reflect a company's efficiency in managing
these significant assets.
Formula = Revenue/ Operating Fixed Assets
Year 2005 2006 2007 2008 2009
Ratio % 2.28 3.23 4.13 1.64 1.76
Analysis
The fixed assets turnover ratio of National Bank of Pakistan has an increasing trend till
2007. The ratio increases 2.28 (2005) to 3.23 (2005). The year 2007 represents highest
fixed assets turnover ratio for National Bank of Pakistan i.e.., 4.13. The bank’s
efficiency to utilize these assets has been decreased to 1.64 in the year 2008 however it
was increased in 2009 as the ratio is 1.76.
Sales or Revenue Per Employee
As a gauge of personnel productivity, this indicator simply measures the amount of
Rupees sales or revenue, generated per employee. The higher the Rupee figures the
better.
Formula = Revenue/ Number of Employees
Year 2005 2006 2007 2008 2009
Ratio 1274.85 1858.87 2431.38 2583.94 2587.08
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Analysis
The ratio has been showing an increasing trend till 2008 i.e.., 1274.85 (2005), 1858.87
(2005), 2431.38 (2007) and 2583.94 (2008). There was a marginal increase in the year
in the year 2009 i.e.., 2587.08, representing the peak percentage in all years.
Horizontal AnalysisHorizontal Analysis
This technique is also known as comparative analysis. It is conducted by setting
consecutive balance sheet, income statement or statement of cash flow side-by-side and
reviewing changes in individual categories on a year-to-year or multiyear basis. The
most important item revealed by comparative financial statement analysis is trend. A
comparison of statements over several years reveals direction, speed and extent of a
trend(s). The horizontal financial statements analysis is done by restating amount of
each item or group of items as a percentage. Such percentages are calculated by
selecting a base year and assign a weight of 100 to the amount of each item in the base
year statement. Thereafter, the amounts of similar items or groups of items in prior or
subsequent financial statements are expressed as a percentage of the base year amount.
The resulting figures are called index numbers or trend ratios.
Formula = Current Year amount / Base Year amount * 100
Horizontal analysis, whilst simple to execute and useful to a certain extent, has its
limitations. These limitations include:
Being highly dependent on the selection of base year and the period under
examination in the financial model.
Horizontal analysis provides little insight into why the trend occurred in a
financial model.
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Horizontal analysis does not provide insight into whether the trend in the
financial model results was superior/inferior to some benchmark.
Horizontal analysis does not address the challenge of negative numbers.
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Horizontal Analysis of Balance SheetHorizontal Analysis of Balance Sheet
Horizontal Analysis (%)
ASSETS 2005 2006 2007 2008 2009Cash 100 75 83 100 113
Balances with other banks 100 62 82 75 77
Lending’s to fin. institutions 100 155 219 204 163
Investments 100 105 94 141 114
Advances 100 122 143 154 187
Operating fixed assets 100 103 105 282 263
Other assets 100 125 194 162 233Total Assets 100 104 117 138 148
LIABILITIES 2005 2006 2007 2008 2009Share Capital 100 120 144 166 182
Reserves 100 125 128 146 184
Unappropriated profit 100 182 350 495 573
Surplus On Reval. of assets 100 179 135 221 99
Bills payable 100 24 147 98 142
Borrowings 100 79 106 98 365
Deposits and other accounts 100 100 108 127 134
Liabilities against assets 100 97 78 197 148
subject to finance lease
Deferred tax liabilities net 100 15291 8179 17467 Nil
Other liabilities 100 108 115 134 172
Total Liabilities 100 104 117 138 133
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Analysis
The National Bank of Pakistan’s Cash & balance with treasury banks shows a mixed
trend during all years. It was decreased by 25% in 2005 and 17% in 2007. There was a
marginal increase in the year 2008. In 2009 the percentage is increased by 13% as
compare to base year.
Analysis
The Balances of National Bank of Pakistan with other banks shows a decreasing trend
as compare to base year. The year 2005 represents lower percentage (38%), while the
year 2007 represents highest percentage of 18%.
Analysis
The lending’s to financial institutions by National Bank of Pakistan fluctuates during
all years. The lending’s increased 55 % in 2005. The year 2007 represents highest
percentage of 119 % among all years on account of lending’s to financial institutions.
The year 2008 also shows an increase of 104 % as compare to base year. The year 2009
129
indicates an increase of 63% as compare to base year but lending’s decreased by 41 %
in 2009 as compare to the year 2008.
Analysis
The investments made by National Bank of Pakistan fluctuate during all years. There
was an increase of 5 % in 2005. The year 2007 indicates a decrease of 6% in
investments. The year 2008 represents an increase of 41 %, highest among all years.
The investments are increased 14 % in 2009 as compare to base year; however
investments are decreased 27 % as compare to the year 2008.
Analysis
The advances made by National Bank of Pakistan shows an increasing trend in all years
as compare to base year. This implies that National Bank of Pakistan is keener to
advance money to lenders. The advances were increased 22 % in the year 2005 and 43
% in 2007 as compare to base year. The year 2008 represents an increase of 54 % and
2009 represents highest percentage among all years that is 87 % as compare to base
year.
130
Analysis
The operating fixed assets of National Bank of Pakistan shows a mixed trend during all
years. There was an increase of 3 % in 2005 & 5 % in 2007. There was a very sharp
increase in operating fixed assets in the year 2008 of 182 % as compare to base year.
There was an increase of 163% in 2009 as compare to base year but the same was
decreased by 19% as compare to 2008.
Analysis
The other assets of National Bank of Pakistan are fluctuating during all years. The other
assets are increased 25 % in 2005 and 94 % in 2007. The year 2008 indicates an
increase of 62% as compare to base year. The other assets of National Bank of Pakistan
are on their peak percentage of 133 % in 2009 as compare with base year.
Analysis
The Share capital refers to the portion of a Bank's equity that has been obtained by
trading stock to a shareholder for cash or an equivalent item of capital value. The share
capital of National Bank of Pakistan shows an increasing trend in all years as compare
131
to base year. The increase in share capital during all years indicates share holder’s
concern toward National Bank of Pakistan and efficient bank’s Management policies.
Analysis
The Banks’ reserves are banks' holdings of deposits in accounts with their central bank
plus currency that is physically held in bank vaults (vault cash). The reserves of
National Bank of Pakistan fluctuate during all years as they show an increasing trend.
The reserves are increased 25 %, 28 % & 46 % in the years 2005, 2007 & 2008
respectively. The year 2009 represents highest increasing percentage of 84% as
compare to base and previous years.
Analysis
The Unappropriated profit are Earnings of National Bank of Pakistan not paid out as
dividends but instead reinvested in the core business or used to pay off debt.
Unappropriated profit is part of shareholder equity. The bank’s Unappropriated profit is
increasing very sharply during all years as compare to base year, indicated bank’s strict
dividend payout policy and concern towards reinvestment options.
132
Analysis
The National Bank of Pakistan’s surplus on revaluation of assets fluctuates and shows a
mixed trend during all years. It was increased 79% in 2005 and 35% in 2007. The year
2008 represents highest percentage of 121%. The percentage is decreased by 1% in
2009 as compare to base year and 122% as compare to 2008.
Analysis
The National Bank of Pakistan’s bills payable is showing a mix trend during all years.
The year 2005 is best for bank in terms of reduction in bills payable. The year 2007
represents a higher percentage of bank’s liability as it increase 47% as compare to base
year. The year 2009 also shows an increase in bank’s bills payable as it increases to
42% as compare to base year.
133
Analysis
The National Bank of Pakistan’s borrowings fluctuates during all years and shows a
mixed trend. The borrowings were decreased 21 % in 2005; however same are
increased 6 % in 2007 as compare to base year. There was a marginal decrease of 2% in
bank’s borrowings in the year 2008. The year 2009 represents highest percentage of
borrowings as these were increased to 265 % comparing with base year and are
increased 267 % as compare to 2008.
Analysis
The deposits and other accounts of National Bank of Pakistan show a mixed trend
during all years. In the year 2005, the deposits were increased very marginally, with the
year 2007 represents an increase of 8%. The deposits are increased 27% & 34% in the
years 2008 and 2009 respectively
134
Analysis
The National Bank of Pakistan’s Liabilities against assets subject to finance lease were
fluctuate during all years, with the year 2005 (3% decrease) and 2007 (22% decrease)
shows a decreasing trend and the year 2008 (97% increase) & 2009 (48 % increase)
shows an increasing trend as compare to base year.
Analysis
The other liabilities of National Bank of Pakistan are fluctuating during all years and
show an increasing trend. The year 2005 indicates an increase of 8 % and 2007
indicates an increase of 15%. The other liabilities in the year 2008 represent an increase
of 34%. There was a sharp increase in 2009 as it indicates a percentage of 72%, highest
among all years.
Horizontal Analysis of Income StatementHorizontal Analysis of Income StatementRupees in Millions
2005 2006 2007 2008 2009Markup/return/interest earned 100 161 211 241 291Markup/return/interest expensed 100 157 213 258 364
135
Net markup/interest income 100 162 210 234 258Provisions against non-performing advances 100 161 203 312 699provision for/(reversal of) diminution in the value of investments 100 -132 -382 -22 201provision against off balance sheet obligations 100 Nil Nil Nil 28bad debts written off directly 100 70 16 122 Nil
100 127 136 270 628Net markup/interest income after provisions 100 167 220 229 206NON MARKUP/ INTEREST INCOMEFee, Commission & brokerage income 100 97 121 133 155Dividend income 100 135 227 256 226Income form dealing in foreign currencies 100 119 132 103 393Gain on sale & redemption of securities-net 100 2,872 2,459 4,924 831Investments classified as held for trading Nil Nil Nil Nil NilOther income 100 20 72 17 142Total non-markup/ Interest income 100 113 146 163 198
Total income ( Interest + non-Interest) 100 146 191 203 203NON MARKUP/ INTERSET EXPENSESAdministration expenses 100 126 151 160 205Other provisions written off 100 615 -54 521 2,318Other charges 100 763 2,515 207 7,042Total non markup/ Interest expenses 100 129 153 161 219PROFIT BEFORE TAXATION 100 159 220 234 192Taxation Current 100 145 176 168 238
Prior years 100 -130 63 46 NilDeferred 100 -1,852 -394 -2,058 26,831
100 110 161 156 130PROFIT AFTER TAXATION 100 205 275 307 250Unappropriated Profit brought forward 100 155 329 544 769Transfer from surplus on revaluation of fixed assets on account of incremental depreciation 100 95 90 86 287Profit available for appropriation 100 181 300 422 502
136
Analysis
The interest earned by National Bank of Pakistan fluctuates during all years, as it was
increased during all years as compare to base year. The interest earned is increased 61%
in 2005 and 111% in 2007. The year 2008 represents second highest percentage on
account of interest earned as it was increase 141 %. The year 2009 represents peak
percentage of 191 % as compare to all years.
Analysis
The interest expense of National Bank of Pakistan shows an increasing trend in all
years, as it was increased 57 % (2005) and 113 % (2007). The year 2008 represents
second highest percentage on account of interest expensed as it was increases to 158%
as compare to base year. The year 2009 shows an increase of 264 %, highest among all
years.
137
Analysis
The net markup/ Interest income of National Bank of Pakistan fluctuates during all
years as it shows an increasing trend. It was increased 62 % in 2005 and 110% in 2007
as compare to base year. The year 2008 represents second highest percentage on
account of Net markup/ Interest income as it was increased to 134%, comparing with
base year. The percentage is increased 158 % in 2009, highest among all years.
Analysis
The net markup/ interest income after provisions fluctuates and shows a mixed trend
during all years. It was increased 67% (2005), 120% (2007) and 129% in 2008. The
income is increased 106 % as compare to base year but the same was decreased by 23%
as compare to 2008.
138
Analysis
The Fee, Commission and brokerage income of National Bank of Pakistan fluctuates
during all years. It was decreased 3% in the year 2005 and increases 21 % in the year
2007. The year 2008 represents an increase of 33%. The year 2009 represents peak
percentage of 55%.
Analysis
The dividend income of National Bank of Pakistan fluctuates during all years, as it
shows a mixed trend during all years. The dividend income is increasing 35 % in the
year 2005 and 127 % in 2007. It was increased 156% in 2008, represents higher
percentage among all years. The year 2009 represents an increase of 126 % as compare
to base year and a decrease of 30% as compare to 2008.
139
Analysis
The National Bank of Pakistan’s income from dealing in foreign securities fluctuates
during all years as it shows an increasing trend. It was increased 19 % in 2005 and 32
% in 2007. The income has its lowest percentage in 2008 as it was increased 3 %. The
year 2009 represents highest percentage on account of bank’s income from dealing in
foreign securities as it was increased 293 % as compare to base year and 290% as
compare to the year 2008.
Analysis
The other income of National Bank of Pakistan fluctuates during all years as it shows a
mixed trend. It was decreased 80 % in 2005 and 28% in 2007 as compare to base year.
The year 2008 represents the lowest decreasing trend of 83%. There was a sharp
increase in National Bank of Pakistan’s other income as it was increased to 42% as
compare to base year and increased 125% as compare to 2008. to 63%, comparing with
base year. The percentage is increased 52 % in 2009 as compare to base year, but it was
decreased 11% as compare to 2008.
140
Analysis
The Total non- markup/ Interest income of National Bank of Pakistan shows an
increasing trend during all years. It was increased 13% in 2005 and 46% in 2007. The
income is increased 63 % in 2008, second highest among all years. There was an
increase of 98% in 2009, highest among all years.
Vertical AnalysisVertical Analysis
When using vertical analysis, the analyst calculates each item on a single financial
statement as a percentage of a total. The term vertical analysis applies because each
year's figures are listed vertically on a financial statement. The total used by the analyst
on the income statement is net sales revenue, while on the balance sheet it is total
assets. This approach to financial statement analysis, also known as component
percentages, produces common-size financial statements. Common-size balance sheets
and income statements can be more easily compared, whether across the years for a
single company or across different companies.
Vertical analysis is a technique for identifying relationship between items in the same
financial statement by expressing all amounts as the percentage of the total amount
taken as 100. In a balance sheet, for example, cash and other assets are shown as a
percentage of the total assets and, in an income statement, each expense is shown as a
percentage of the sales revenue.
In Vertical analysis, various components of the financial statements are standardized by
expressing them as a percentage of some bases.
Examples of common-sized statements include:
Components of the balance sheet expressed as a percentage of total assets
141
Components of the income statement expressed as a percentage of sales or
revenue
Vertical Analysis of Balance SheetVertical Analysis of Balance Sheet
Vertical Analysis (%) ASSETS 2005 2006 2007 2008 2009Cash 17.07 12.32 12.19 12.45 13.02
Balances with other banks 9.00 5.37 6.30 4.92 4.69
Lending’s to fin. institutions 1.90 2.82 3.57 2.82 2.09
Investments 27.00 27.17 21.69 27.66 20.88
Advances 39.91 46.53 49.00 44.70 50.50
Operating fixed assets 1.66 1.64 1.50 3.40 2.96
Other assets 3.46 4.14 5.75 4.07 5.45
Total 100 100 100 100 100
LIABILITIES 2005 2005 2007 2008 2009Share Capital 0.89 1.02 1.10 1.07 1.09
Reserves 1.95 2.34 2.15 2.07 2.43
Unappropriated profit 1.66 2.89 4.97 5.95 6.41
Surplus On Reval. of assets 3.86 6.61 4.48 6.18 2.57
Bills payable 1.30 0.30 1.64 0.93 1.25
Borrowings 2.00 1.52 1.81 1.43 4.94
Deposits and other accounts 84.15 80.22 77.79 77.66 76.42
Liabilities against assets 0.0031 0.0029 0.0021 0.0044 0.0030
subject to finance lease
Deferred tax liabilities net 0.01 0.77 0.37 0.67 Nil
Other liabilities 4.17 4.32 4.12 4.05 4.85
Total 100 100 100 100 100
142
Analysis
The cash balance of National Bank of Pakistan fluctuates during all years. The year
2005 representing highest percentage of cash balance among all years that is 17.07%.
The cash balance percentage is decreasing in 2005 (12.32 %) and 2007 (12.19%). There
was a slight increase in the year 2008 as compare to the years 2005 & 2007, of 12.45%.
The year 2009 indicates second highest level of National bank of Pakistan’s cash
balance as it was 13.02%.
Analysis
The National Bank of Pakistan’s balances with other banks has its peak percentage of
9% in the year 2005. The percentage is decreased to 5.37% in 2005 and has increased
slightly in 2007, indicates 6.3%. The percentage is again decreased in 2008 with a
percentage of 4.92 % and a percentage of 4.69% in 2009.
143
Analysis
The lending’s to financial institutions by National Bank of Pakistan shows a mixed
trend. In the year 2005 percentage is 1.90%. The year 2005 along with the year 2008
indicates the same percentage of 2.82%. The year 2007 represents peak percentage of
3.57% for National Bank of Pakistan regarding its lending’s to financial institutions.
The percentage is decreased in 2009 indicating a percentage of 2.09%, second lowest
among all years.
Analysis
The investments made by National Bank of Pakistan are fluctuating and showing a
mixed trend. The year 2005 shows a percentage of 27% and the year 2005 show
27.17%. The percentage is decreased to 21.69% in 2007; however it was increased in
2008 to 27.66 %, representing peak percentage among all years. The percentage is
again decreased to 20.88% in the year 2009.
144
Analysis
The advances made by National Bank of Pakistan are fluctuating and indicates mixed
trend in all years. The first three years of analysis shows an increasing trend that is
39.91% (2005), 46.53% (2005) and 49% in the year 2007. There was a decrease in
bank’s advances to 44.7% in 2008; however in 2009 the percentage is increased to
50.5%, representing peak rate among all previous years.
Analysis
The operating fixed assets of National Bank of Pakistan shows a percentage of 1.66%
in the year 2005. There was a slight decrease of 1.64% in 2005 and 1.50% in 2007. The
operating fixed assets are increased to 3.40% in 2008. The year 2009 indicates a
decrease in bank’s operating fixed assets as it reduces to 2.96%.
145
Analysis
The other assets of National Bank of Pakistan fluctuate during all years. The year 2005
has a percentage of 3.46%, which is increased till 2007 that is 4.14% (2005) and 5.75%
(2007). The percentage of other assets is decreased to 4.07% in the year 2008; however
it was increased to 5.45% in the year 2009.
Analysis
The share capital of National Bank of Pakistan shows a mixed trend in all years. It was
0.89% in 2005 and shows an increasing trend of 1.02% in 2005. The percentage of
share capital is further increased in 2007 and shows 1.10%. There was a slight decrease
in 2008 as percentage was 1.07%. The year 2009 represents highest percentage of
1.09% among all years.
146
Analysis
The reserves of National Bank of Pakistan fluctuate and indicate a mixed trend. The
above graph shows a percentage of 1.95% in 2005 with an increasing trend of 2.34% in
the year 2005. The reserves of the bank are decreasing in 2007 & 2008, shows a
percentage of 2.15% and 2.07% respectively. Despite the decreasing trend in previous
two years, the National Bank of Pakistan is being able opt achieve highest percentage
of reserves in 2009 as the percentage increased to 2.43%.
Analysis
The Unappropriated profit of National Bank of Pakistan is increased during all years. It
shows a percentage of 1.66% in 2005, 2.89% in 2005, 4.97% in 2007, 5.95% in 2008
and a peak percentage of 6.41% in 2009.
147
Analysis
The surplus on revaluation of assets is fluctuating and shows a mix trend. It shows a
percentage of 3.86% in 2005. The year 2005 represents highest percentage of 6.61%,
but it was decreased in 2007 as percentage is decline to 4.48%. There was a sharp
increase in 2008 of 6.18%, however surplus is again decline in 2009 and shows a
percentage of 2.57%, lowest among all years.
Analysis
The bills payable by National Bank of Pakistan indicates a percentage of 1.3% in 2005.
The percentage is decline in 2005 as it shows a decrease of 0.3%, lowest percentage in
all years. There was a sharp increase in 2007 of 1.64% with a decline of 0.93% in 2008.
The percentage is again increased in 2009 as it shows a percentage of 1.25%.
148
Analysis
The Borrowings of National Bank of Pakistan shows a mixed trend in all years. The
percentage is 2% in 2005 with a decline in 2005 shows a percentage of 1.52%. The
borrowings are increased in 2007 shows a percentage of 1.81%. The year 2008
represents lowest percentage of 1.43% of bank’s borrowing among all years. There was
a sharp increase in bank’s borrowing in the year 2009 as it shows a percentage of
4.94%.
Analysis
The deposits and other accounts of National Bank of Pakistan decreased during all
years. The year 2005 represents peak percentage of 84.15%. The deposits are decline to
80.22% in 2005, 77.79% in 2007, 77.66% in 2008 and 76.42 % in 2009.
149
Analysis
The other liabilities of National Bank of Pakistan fluctuate and show a mix trend in all
years. The percentage of other liabilities in 2005 is 4.17%. The year 2005 represents
percentage (4.32%) of bank’s other liabilities. The other liabilities were decline in 2007
and 2008 shows a percentage of 4.12% and 4.05% respectively. The National Bank of
Pakistan is not being able to reduce its other liabilities in 2009 as the graph shows a
percentage of 4.85%, highest percentage among all years.
Vertical Analysis of Income StatementVertical Analysis of Income Statement2005 2006 2007 2008 2009
Markup/return/interest earned 100 110 110 119 143Markup/return/interest expensed 31 34 35 40 56Net markup/interest income 69 77 75 79 87Provisions against non-performing advances 7 8 8 11 25
150
provision for/(reversal of) diminution in the value of investments 1 -1 -2 0 1provision against off balance sheet obligations 0 Nil Nil Nil 0bad debts written off directly 0 0 0 0 Nil
8 7 6 11 26Net markup/interest income after provisions 60 69 70 68 61NON MARKUP/ INTEREST INCOMEFee, Commission & brokerage income 24 16 15 16 19Dividend income 6 6 7 8 7Income form dealing in foreign currencies 5 4 3 2 9Gain on sale & redemption of securities-net 0 4 3 6 1Investments classified as held for trading Nil 0 0 0 0Other income 4 1 2 0 3Total non-markup/ Interest income 40 31 30 32 39
Total income ( Interest + non-Interest) 100 100 100 100 100NON MARKUP/ INTERSET EXPENSESAdministration expenses 42 37 34 33 43Other provisions written off 0 2 0 1 5Other charges 0 0 1 0 1Total non markup/ Interest expenses 43 38 34 34 46PROFIT BEFORE TAXATION 57 62 66 66 54Taxation Current 24 23 22 20 28
Prior years 4 -4 1 1 NilDeferred 0 1 0 1 -10
28 21 23 21 18PROFIT AFTER TAXATION 30 42 43 45 36Unappropriated Profit brought forward 28 30 48 76 107Transfer from surplus on revaluation of fixed assets on account of incremental depreciation 0 0 0 0 0Profit available for appropriation 58 72 91 120 143
151
Analysis
The interest earned by National Bank of Pakistan fluctuates and shows an increasing
trend during all years. The year 2009 is unique in terms of bank’s interest earned. The
bank earned 143% interest in this year. All other years shows an increasing trend that is
100% in 2005, 110% in 2005, 110% in 2007 and 119% in 2008.
Analysis
The interest expense of National Bank of Pakistan shows an increasing trend during all
years. In the year 2005, the interest expensed is 31%. The interest expense is increase in
2005 as it shows a percentage of 34%. There was a marginal increase in 2007, as
interest expanse shows a percentage of 35%. The year 2008 also shows an increase of
40%. The year 2009 represents a percentage of 56%, highest among all years.
152
Analysis
The net markup/ interest income of National Bank of Pakistan fluctuates and shows a
mixed trend during all years. The percentage is 69% in 2005 and shows an increasing
trend in 2005 as percentage is 77%. There was a slight decrease in net markup/ Interest
income as the percentage is 75%. There was an increase in income in 2008, as the
graph indicating a percentage of 79%. The year 2009 represents peak percentage of
87% of net markup/ Interest income.
Analysis
The net markup/ Interest income after provisions fluctuates and shows a mixed trend.
The percentage is 60% in 2005, lowest among all years. The year 2005 represents an
increasing trend as percentage is 69%. There was a marginal increase in 2007 as the
percentage is 70%. The banks income is decreasing in 2008 & 2009 as the percentage is
68% and 61% respectively.
153
Analysis
The Fee, Commission & brokerage income of National Bank of Pakistan fluctuate and
show a mixed trend during all years. The year 2005 represents highest percentage of
24% on account of fee, commission & brokerage income. The percentage is decreased
in 2005 & 2007 as percentage is 16% & 15% respectively. There was a slight increase
in 2008 & 2009 as percentage is 16% & 19% respectively.
Analysis
The dividend income of National Bank of Pakistan is showing a mixed trend during all
years. The year 2005 and 2007 indicates almost same percentage of 6%. The year 2007
& 2009 shows a percentage of 7% each. The year 2008 represents a peak percentage of
8% on account of dividend income.
154
Analysis
The National Bank of Pakistan’s income from dealing in foreign securities shows a
percentage of 5% in 2005. The percentage is decreased in 2005, 2007 and 2008 as the
percentage in these years is 4%, 3% and 2% respectively. The year 2009 represents
highest percentage of 9% on account of income from dealing in foreign securities.
Analysis
The Total non markup/ Interest income of National Bank of Pakistan fluctuates and
indicates a mixed trend during all years. The year 2005 represents highest percentage of
40% among all years. The percentage is decreased in 2005 as it was 31%. There was a
slight decrease in 2007 as percentage is 30%. The years 2008 and 2009 indicates an
increasing trend as percentage is 32% & 39% respectively.
155
Analysis
The administrative and operating expenses of National Bank of Pakistan are 42% in
2005, representing second highest percentage among all years. The expenses are
decreased in 2005 as percentage is 37%. The year 2007 and 2008 also shows a
decreasing trend as percentage is 34% & 33% respectively. The administrative and
operating expenses of bank are increased in the year 2009 as the percentage is 43%,
highest among all years.
Analysis
The total non markup/ Interest expenses of National Bank of Pakistan are 43% in 2005,
representing second highest percentage among all years. The expense is decreased in
2005 as percentage is 38%. The year 2007 and 2008 also shows a decreasing trend as
percentage is 34% in each year. The total interest expense of bank is increased in the
year 2009 as the percentage is 46%, highest among all years.
156
Analysis
The National Bank of Pakistan’s current taxation fluctuates and shows a mixed trend in
all years. The percentage is 23% in the year 2005. The years 2005, 2007 and 2008
shows a slight decrease in bank’s current taxation as percentage in these years is 23%,
22% and 20% respectively. The year 2009 represents peak percentage of 28% on
account of current taxation.
Analysis
The National Bank of Pakistan’s Profit before taxation is 57% in the year 2005.The
percentage is increased in 2005 as it shows a percentage of 62%. The year 2007 and
2008 shows almost same increasing trend as percentage is 66%. There was a decrease
in bank’s Profit before taxation as percentage is reduces to 54%, lowest among all
years.
157
Analysis
The National Bank of Pakistan’s Profit after taxation is 30% in the year 2005,
representing the lowest percentage among all years. The percentage is increased in
2005 as it shows a percentage of 42%. The year 2007 and 2008 shows a slight
increasing trend as percentage is 43% & 45% respectively. There was a decrease in
bank’s Profit before taxation as percentage is reduces to 36%.
158
Section 8
SWOT ANALYSIS
In this section four topics are discussed. They are as under:
Strengths
Weaknesses
Opportunities
Threats
159
* SWOT ANALYSIS *
STRENGTHS
National Bank the Nation’s BankState Bank of Pakistan is government owned bank that is why Pakistani nation
has a trust on the bank that their deposits are secured. Due to this reason the deposits of
the banks are increasing with the passage of time.
Agent of State Bank of PakistanNational Bank of Pakistan also works as an agent of State bank of Pakistan in
those cities where SBP branches are not working.
Agency ArrangementsNational Bank of Pakistan is enjoying with deposit of different Govt.
organization like Pakistan Railways, PIA, WAPDA, Sui-gas due to agency
arrangements.
DepositsNational bank of Pakistan is the largest commercial bank of the country and has
Total Deposits of Rs. 362.87 billion and becomes the first bank to cross the deposit of
Rs. 350 billion.
160
ProfitabilityThe pre-tax profits of NBP have gone up to Rs. 6.05 billion.
Corporate BranchesNational Bank of Pakistan is now the biggest financial institution with assets
totaling over Rs.310 billion with 1428 local and 23 foreign branches. The bank is the
higher financer in agriculture and commodity operation sector.
Collection of Cash from ShrinesCash collected from different shrines is also deposited in National Bank of
Pakistan.
Comprehensive Range of Financial ProductsIn order to facilitate the customers, NBP is offering the comprehensive range of
financial products which are as follows:
Credit Cards
Foreign Exchange Bearer Certificates
National Bank Daily Accounts
Travelers Cheques etc.
Investing in Capital MarketNBP has decided to diversify the fund base by investing in capital markets not only
in Pakistan but also in the foreign countries.
161
WEAKNESSES
Lack of Implementation of Rules and
RegulationsBecause NBP is a govt. owned organization so there is a lack of implementation
of rules and regulations.
Poor Working ConditionsDespite, cultural change program the working condition of the NBP is not up to
standard.
Recruitment PolicyIn NBP, employees are recruited on the basis of favoritism or through other tools of
corruption.
Incompetent StaffDue to wrong recruitment policy staff of NBP is not proficient in their work.
Irregularities in PromotionIn NBP there is no smooth and continuous promotion system. Unfair means are
used in order to get the promotion especially the promotion of the managers.
162
Individual DifferenceIn NBP the individual difference have strong impact on the organization’s
performance due to the wrong criteria of selection of the employee. So with the passage
of time individual differences are increasing which are undermining the good will of
the organization.
No Major Use of ComputerIn NBP there is no major use of computer for maintaining the records of
branches as compared to other banks of the country.
Strong UnionUnion has strong impact on performance of NBP. So the top management is
unable to punish the violators and shrieks.
Organizational StructureIn this organizational the organizational structure is bureaucratic which is a
barrier in rapid and effective decision making.
163
OPPRTUNITIES
Consumer Banking The basis need of the consumer such as housing, transportation and other durable goods
are not adequately financed by the banks. So by initiating these services, the bank can
enjoy with more funds.
Investing in the Foreign Capital MarketNBP can enjoy handsome return its funding base by investing in capital markets
in the foreign countries.
Investment BankingUntil recently the bank perceived as purely commercial banking entity so in
order to expand its business the bank may start investment banking by investing in the
portfolio of handsome return.
New BranchesNBP by establishing new branches in foreign countries can expand its business
and can enjoy with the profit.
Issuance of BondsTo enjoy with large amount, NBP can introduce a comprehensive range of
bonds.
164
Night BankingDespite of poor customer service of NBP, people still come to NBP because of
its Govt. ownership as they feel it secure therefore bank improve its deposit by giving
facility of night banking and also can compete its competitors with positive steps.
Advisory ServicesIt can establish advisory services in order to facilitate the customers in investing in the
securities.
165
THREATS
CompetitionThe no. of banks in Pakistan is increasing with the passage of time. So due to
poor working condition and poor customer service it may be possible NBP will lose its
market share in future.
InflationIn our country, the rate of inflation is increasing along with the unemployment.
So due to the increase in price of the products, the savings of the nation is decreasing
with the passage of time. So it is the threat for the banking sector. In the future, the
deposits of the bank will decrease.
Government PolicyOn NBP Govt. policies have strong impact. A slight change in Govt. policies
may affect the performance of the bank. The bank has to work with in the regulation
frame work.
166
Section 9
RECOMMENDATIONS
In this section two topics are discussed that are:
Recommendations
Conclusions
167
*RECOMMENDATIONSRECOMMENDATIONS*PROPER PLANNING Bank should make a plan to gear up its recovery efforts on war footing and
reorganize the recovery function of global bases. In addition, bank should tighten up
control on expenditure
USE OF COMPUTERS To save the time of the customers and other clients, bank should adopt
computerized system for book keeping and other filling systems. It will increase the
efficiency of the bank. I know that there are some branches which are computerized but
most of the branches in various cities of the country are not computerized. So the bank
should mechanize all its branches in the country.
168
ADOPTION OF ADVERTISING Bank should launch advertising campaigns through out the year to promote the
habits of savings in the people. Bank should open more branches in the remote areas of
the country to get deposits and idle resources. Bank should provide similar facilities to
all its branches in big cities. The standard of service and other facilities are far better as
compared to smaller cities.
PROPER GUIDANCE Bank should adopt such an induction plan that when a customer opens his
account with the bank, he should be supplied with a booklet which enables him to know
the procedure of filling the cheques and pay-in-slip etc. It will save a lot of time of the
bank staff afterward during of the conduct of the account of that customer.
DIVISION OF WORK The billing system of national bank of Pakistan must be improved to facilitate
the customers and workers. The work should be divided among the staff e.g. collection
of bills, countering of cash and then entry of these.
CHECK ON EXPENDITURES Expenditures must be controlled which are very high and unnecessary.
BORROWING AT LOW COST Deposits must be taken at a lower cost and given at higher interest rate.
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*CONCLUSIONSCONCLUSIONS*National Bank of Pakistan is government owned bank that is why Pakistani nation trust on the bank that their deposits are secured due to this the deposits of the bank are increasing day by day. In my point of and with respect to my all analysis National Bank is the leading bank because after all it’s our nation’s own bank. During my internship I personally learn very well which all application of my practical knowledge. All the services provided by the bank are according to standard which are internationally described. National bank of Pakistan is enjoying the deposits of Pakistan Railways, PIA, Wapda, and Sui Gas due to agency arrangements
I learn maximum during my internship. It the good effort of practical knowledge. But there is some deficiency with respect to their management because of lack of implementation of rules and regulations, if they can control over these deficiencies they can facilitate their clients.
After making the SWOT analysis, we have concluded that the bank’s strength is of that the bank is the government owned bank and people trust a lot. But the bank lacks of proper implementation of rules and regulations and the recruitment of the employees is mostly based on favoritism. Due to wrong recruitment policy the staff of NBP is not proficient in their work. NBP can enjoy handsome return its funding base by investing in capital markets in the foreign countries NBP can enjoy handsome. NBP by establishing new branches in foreign countries can expand its business and can enjoy with the profit. It can establish advisory services in order to facilitate the customers in investing in the securities. The no. of banks in Pakistan is increasing with the passage of time. So due to poor working condition and poor customer service it may be possible
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NBP will lose its market share in future. On NBP Govt. policies have strong impact. A slight change in Govt. policies may affect the performance of the bank. The bank has to work with in the regulation frame work.Bank should make a plan to gear up its recovery efforts on war footing. To save the time of the customers and other clients, bank should adopt computerized system for book keeping and other filling systems. It will increase the efficiency of the bank.. Bank should launch advertising campaigns through out the year to promote the habits of savings in the people. Bank should open more branches in the remote areas of the country to get deposits and idle resources. Bank should provide similar facilities to all its branches in big cities. The standard of service and other facilities are far better as compared to smaller cities.
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*BIBLIOGRAPHY* Introduction of National Bank of Pakistan http\\: www.nbp.com.pk
Lawrence J. Gitman (2004), Principles of Financial Management, Pearson Education (Dorling Kindersley (India) Pvt Ltd.) Page No# 281-305
James C. Van Horne (2004), Financial Management & Policy, Prentice-Hall India (2004) Page No# 369-387
History of National Bank of Pakistan \\: www.nbp.com.pk (Internet)
NBP Products & Services \\: www.nbp.com.pk (Internet)
Saif Malik, Work done by me (2010), National Bank of Pakistan Distt. Ali Pur Chattha.
Malik Aslam Sial, Work done by me (2010), National Bank of Pakistan Distt. Ali Pur Chattha.
Malik Ashraf Gorcha, Work done by me (2010), National Bank of Pakistan Distt. Ali Pur Chattha.
Amjad Hussain Shah, Work done by me (2010), National Bank of Pakistan Distt. Ali Pur Chattha.
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Bank:
Bank is an institution which receives deposits and advances loans and spread
between the deposits and advances is called the profit of the bank.
Bank Note:
A non-interest-bearing promissory note of a Federal Reserve Bank which is
payable to the bearer on demand and can be used as cash.
Bank reconciliation:
The process of adjusting an account balance reported by a bank to reflect
transactions that have occurred since the reporting date.
Banking:
Banking means the accepting fro the purpose of lending or investing of deposits
of money from the public repayable in demand or otherwise and withdraw able
by cheque, draft order or otherwise.
Barren money:
Money that is not currently earning interest.
Cash reserve:
Cash reserves simply means the cash that is held by bank at any particular
moment.
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Cheque:
A cheque (or check - USA) is a negotiable instrument [1] instructing a financial
institution to pay a specific amount of a specific currency from a specific
demand account held in the maker/depositor's name with that institution. Both
the maker and payee may be natural persons or legal entities.
Commercial Bank:
Commercial bank means any bank who takes the activities of banking to earn
the profit is called commercial bank.
Credit card:
Which is issued by the bank to customer to make the transactions on credit
basis.
Credit Union:
A non-profit financial institution that is owned and operated entirely by its
members. Credit unions provide financial services for their members, including
savings and lending.
Debit card:
It works just like as credit card but on cash basis. It means the card which is
issued by the bank to the client up to the amount which client has in the form of
cash in the bank account.
Demand loan:
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A loan which is repayable on demand (i.e. without prior notice), rather than on a
specific date.
E-Banking:
Banking through electronically / electronic Channels. Online and mobile is
possible due to E-Banking.
Finance:
All those activities which have to do with the provisions and management of
funds for the satisfactory conduct of business.”
Financial market:
financial market is a mechanism that allows people to easily buy and sell (trade)
financial securities (such as stocks and bonds), commodities (such as precious
metals or agricultural goods), and other fungible items of value at low
transaction costs and at prices that reflect the efficient market hypothesis.
Hypothecation:
When moveable property/ goods are charged with the amount of debt but
neither the ownership nor the possession is passed to the lender. It is said to be
hypothecated. By virtue of letter of hypothecation bank can take possession of
hypothecated goods in case of default of the borrower.
Insurance
A promise of compensation for specific potential future losses in exchange for a
periodic payment. Insurance is designed to protect the financial well-being of an
individual, company or other entity in the case of unexpected loss.
Letter of credit:
L/C. A binding document that a buyer can request from his bank in order to
guarantee that the payment for goods will be transferred to the seller.
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