national report bank of pakistan(TIP)

CHAPTER NO 1INTRODUCTION TO REPORT

1.1 OBJECTIVES OF STUDY

To apply knowledge in practically. Banking is important industry in the world, so my objective to draw its sketch

with focus on NBP. To know the policies of the Organization. To study the organizational Management structure. To solve the organizational problems. To study the work environment of the organizations. To judge the behavior of different employees. To study the status of organization in the industry. To suggests and recommend feasible steps needed to improve its

organizational performance.

1.2 SCOPE OF THE STUDY

Banking has a wide scope but the study is restricted to an overview of basic banking operations carried at NBP TIP branch Haripur. So the report does not include detailed description of all of the NBP operations, and include only those one which were carried at NBP TIP branch Haripur. However, the financial statements analysis and SWOT analyses have been carried out for NBP as a whole.

1.3 LIMITATION OF THE STUDY

During the study I tried to include only relevant material and avoid from irrelevant material. No matter how efficiently a study is conducted, it cannot be perfect in all respects. This study was conducted in accordance with the objectives of the study. The study may not include broad explanations of facts and figures due to the nature of the study.

Secondly, the limitation which affects the study is the restriction on mentioning every fact of the bank due to the problem of secrecy of the bank. Also the availability of required data was a problem as all the documents and files are kept strictly under lock and key due to their confidential nature. Thirdly, the problem of short time period also makes the analysis restricted as one cannot properly understand and thus analyze all the operations of a bank just in eight weeks.

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1.4 MERITS OF THE STUDY

The study done will benefit the finance students in particular and banking students in general because the financial analysis section of this report comprehensively encompasses all respects of financial analysis. Furthermore, NBP TIP branch Haripur may also be able to take the benefit from the recommendations made at the end of the report.

1.5 METHODOLOGY OF THE STUDY

There are two types of data collected for analysis and review (i.e. primary and secondary data). The methods used for collecting primary and secondary data are as follows:

Primary Data: - The information collected for the specific purpose at hand or data collected for first time is called Primary Data. Following methods of primary data is used;

Interviews with employees Interviews with customers Personal observation during work

Secondary Data: - Information that already exists somewhere or data collected earlier by someone else and which has gone through mathematical and statistical techniques after its collection, is called secondary data. Methods used to collect secondary data include:

NBP Annual Report 2006

NBP Broachers

Newspapers

Books

Internet.

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Chapter No 2

INTRODUCTION TO BANK

2.1) WHAT IS BANK?

Before going to start we must know that what is bank? Like many other subjects and social sciences no any precise definition can be given for the study of banking also. Different authors have defined and described this subject, keeping in view the particular functions of banking. Mr. Paget says “No one and no body corporate can be a banker who does not open:

a) Current Accountb) Pays cheques drawn upon himc) Collects cheques for the customers

Mr. Kinly says “Bank is an institution which receives deposits and advances loans”.The definition laid down in the Banking Companies Act 1962 is “Bankers means a person, transacting the business of accepting for the purpose of lending or investment, of deposits of money from public, repayable on demand or otherwise and withdraw able by cheques, drafts or orders or otherwise and includes any Post Office Saving Bank.”In view of the above definitions, in simple words a bank can be defined as an institution dealing in money, accepting deposits and advancing loans.

2.2) ORIGIN?

There are different opinions about the origin of the word “Bank”. According to some authors the word bank is derived from Latin word “Bancus” or “Banque” which means a bench. The explanation of this origin is attributed to the fact that the Jews in Lombardy transected the business of money exchange on benches in the market place. When the business failed, the people destroy the bench. Incidentally the word bankrupt is said to have been evolved from this practice.

The opponents of this opinion argue that if it was so, then how is it that the Italian moneychangers were never called Bunchier in the middle ages. Other authorities hold the opinion that Bank is derived from German word back which mean joint stock fund. Later on, when the German occupied major part of Italy, the Back was italicized into Bank.

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2.3) EARLY GROWTH AND DEVELOPMENT OF MODERN BANKING:

Despite the classical origin, banking in its modern form and structure started in Brittan when many of the Lombardy merchants came to England in the fourteen century and settled in the part of the London now called Lombard Street. They were so resourceful that even the kings had to depend on them for loans despite the fact that the church was firmly against usury. They dealt with not only keeping the money in safe custody but also changed money for the travelers or merchants engaged in foreign trade.

By the year 1700, the Bank of England was not only issuing Notes but also conducting accounts for customers. Being a joint stock bank by charter, its directors were conducting the business like that of limited companies. The Bank of England was the only joint stock company which was given the monopoly of issuing the Bank Notes. In 1708 the privilege to issue Notes in England was withdrawn from joint stock banks and confined to the private banks with not more then 6 partners. Up to 1813 or there about in England, the main profit of banks was derived from the circulation of notes and for many years after that, deposits were treated as very minor matters.

In subcontinent Indo Pak, foundations of modern banking were laid in eighteenth century in Calcutta when with the help of Europeans bankers’ first bank “Bank of India” was established. After that, Government of India founded “Bank of Bengal” also new opening at Madras and Bombay. Imperial Bank of India” was founded in 1921, whereas “Reserve Bank of India” was established in 1935 with all the powers as the central bank.

2.4) DEVELOPMENT OF BANKING IN PAKISTAN: -

Like many other institutions, at the time of freedom of Pakistan in 1947, it inherited a poor and weak system of banking. It was due to the fact, that most of the important sectors of the economy including Banking were controlled by Hindus nation. At the time of partitions, these non-Muslim bankers transferred the bank resource to India. Bank staff, mainly consists of non-Muslim also migrated to India. At the time of independence, there were only tow Pakistani bank, that is, Habib Bank Limited and Australasia Bank. At this stage, Pakistan had 631 branches of scheduled bank and 411 offices of non-scheduled banks.

It was not possible to set up the central bank immediately after independence; hence it was agreed to act Reserve Bank of India as Central Bank of Pakistan till 30 th

September, 1948. But it failed to safeguard the interest of Pakistan’s banking affairs. It was now felt that establishment of the country’s own central bank is the only solution for the removal of financial difficulties and for sound development of banking system in the country. As a result of this, State Bank of Pakistan, being the Central Bank of the Country was established in 1st July, 1948, inaugurated by the

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Quaid-i-Azam Muhammad Ali Jinnah, the first Governor General of Pakistan and father of the nation, and its Head Office in Karachi.

State Bank of Pakistan, in addition to its normal duties as Central Bank, played a very important role in the development, controlling and modernizing the banking system of the country. With the development, new commercial banks with country wide branches were established. Sooner they extended their branches to foreign countries. Moreover, specialized financial institutions like IDBP, ADBP (now ZTB), PICIC, NDFC, HBFC were also created to help and finance the particular sectors of the economy like industry, agriculture and housing.

All the commercial banks, incorporated in Pakistan and carrying on the bank business in the country or abroad, including State Bank of Pakistan were nationalized from 1st January, 1974.

After 1990, the banks are in the process of privatization like other units of economy as a mater of policy of the ruling govt. This step is taken in view of poor performance and other weakness in the banking services. A privatization commission was set up in January, 1991. Two banks namely Muslim Commercial Bank and Allied Bank Limited are privatized and transferred to private sector. And now United Bank and Habib Bank are also privatized. In addition to this policy Government has allowed the establishment of new private bank in August, 1991 as a result of which many new banks like Indus Bank, Mehran Bank, Soneri Bank, Khyber Bank, The Bank of Punjab etc are established having their branches almost in all important cities of the country with largest banking facilities and efficient administrations.

2.5) Types of banks:The important categories of banks are as follows

Central banks Commercial banks Saving banks Mortgage banks Consumer banks Investment banks Agriculture banks Industrial banks etc.

2.6) BRIEF INDUSTRY PROFILE

The Pakistan financial sector includes banking and non-banking financial institutes (NBFIs). Banking in Pakistan falls with in three segments, which are as follows

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2.6.1) SCHEDULED COMMERCIAL BANKS:

These include National Bank of Pakistan, and Habib Bank Ltd which are possible sector Banks, where as MCB and ABL were privatized in 1992 and UBL in 2004.These banks have significant market share due to large number of branches.

2.6.2) PRIVATE SECTOR BANKS:

Banks from this category are relatively new to the industry. As a result of the liberalization policies of GOP (government of pakistan) in 1991, Faisal Bank Ltd, Soneri Bank, Union Bank, Bank Al-Habib, Bolan Bank, Metropolitan bank, Platinum Bank, Askari Commercial Bank was given permission by State Bank of Pakistan to Commerce operations. All these banks are operating on a smaller scale than Public Sector banks and are targeting selective markets such as trade finance despite low marketed presence, they account for considerable market share of total profitability of Pakistani Banking sector.

2.6.3) FOREIGN BANKS:

There are about 16 foreign Banks operating in the country. They cater mostly to high profile corporate cleanest. The regulatory bodies that monitor the banking sector of finance and the regional Board.The following are the main foreign banks;

Bank Alfalah, City Bank, Standard Charter Bank, Pak Saudi Bank, Fasil Bank, Metropolitan Bank, ABN Amro Bank etc. Meezan Bank Ltd. Pak Aman bank Ltd. Alburaka islamia bank.

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Chapter No 3

NATIONAL BANK OF PAKISTAN

3.1) HISTORY OF NATIONAL BANK OF PAKISTAN

NAIONAL BANK OF PAKISTAN was established under the National Bank of Pakistan Ordinance, 1948. The bank provides all sorts of banking services to the Government and private sectors. It acts as an agent of central Bank wherever the SBP (state bank of Pakistan) does not have its own branched. The bank is scheduled commercial Bank and is principally engaged in the business of banking as defined in the banking companies’ ordinance 1962.

National bank of Pakistan was basically established for reducing the difficulties of East Pakistan farmers engaged in Jute and Patson after mass migration of community from East and West Pakistan to India. National Bank of Pakistan has a network of 1242 domestic branch 4 subsidiary (Overseas) all over the world. The local branches are controlled through 29 Regional Offices and overseas are managed through 4 overseas Regional Offices and 18 overseas branches.

In the year 2002, to improve its customer focus, reduced decision making layers restructured its entire command and control system in business and operational spheres Zones and Audit Offices, eliminated and total number of regions enhanced from 9 to 29 across the country. A new matrix structure has been introduced with the objective, to separate the front office and back offices, to improve the good governance and enhance the internal control.NBP also put in place the rationalization program by staff reduction and Branch closures to ensure optimum efficiency in staff levels whiles balancing the benefits of technology with the branch restructured network.

National Bank of Pakistan is the premier commercial institution of Pakistan cater the large diversified customer base of 9.009 million the biggest figure in the country and conduct the agency function of State Bank of Pakistan in addition to provision of other financial and allied services, these includes; Deposit Banking Advances Financing and credit Remittance facilities Collection Government Receipts and Payment Sale and Purchase of Government Securities, Bonds and Other certificates Foreign Exchange business Safe Custody, Safe Deposits Services and Safe Deposit Lockers Hajj facilities Utility bills Investment advice and other services

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Special deposits products/ schemes Pak rupee Travelers chouse New Product.

3.2) VISION AND MISION STATEMENTS

VISION STATEMENT: -

Our vision is that we want to be the pre-eminent financial institution in Pakistan and achieve market recognition both in quality and delivery of service as well as the range of product offering.

MISION STATEMENT: -

Our mission to be recognized in the market place by institutionalizing a merit and performance culture, creating a powerful and distinctive brand identity, achieving top-tier financial performance, and adopting and living out our core values.

3.3) VALUES THAT BANK WANTS TO DELIVER TO CUSTOMERS: -

We aim to be an organization that is founded on:

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

We shall work to:

● Meet expectations through market-based solutions and products● Reward entrepreneurial efforts● Create value for all our stakeholders

We aim to be peopling who:

● Care about relationships● Lead through the strength ● Practice integrity, honesty and hard work● We believe that these are measures of true success

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We have confidence that tomorrow we will be:

● Leaders in our industry● An organization maintaining the trust of our stakeholders ● An innovative, creative and dynamic institution responding to changing needs of the internal and external environment●After all, we are The Nation’s Bank

3.4) BANK PROFILE

National Bank of Pakistan has a network of 1242 domestic branch 4 subsidiaries,18 Overseas branches,4 Representative offices, one Joint Venture and one Subsidiary(Overseas) all over the world. The local branches are controlled through 29 Regional Offices and overseas are managed through 4 overseas regional offices. NATIONAL Bank of Pakistan was established under the NBP Ordinance 1948 in Pakistan. It also undertakes Government treasury operations. It is the largest contributory agent of Government and semi Government requirements. NBP provides wide range of services, including collection of taxes and deliveries of salaries, pension to public sector employees. It has lowest rates on exports and other borrowings. NBP not only occupies a unique position in the banking sector of Pakistan but also in the global banking and finance sector. NBP has been included in the top ten giant Banks of the world internationally. It is the only domestic bank of the country, which has been awarded “The Best Domestic Bank” consecutively in 2003, and 2004 by the renowned journal “The Banker UK”. It is also the only bank of the country which has been compared and concluded by prestigious journal, “The Asia Week” with other banks in the region. NBP is also the first bank in the country, which has completed its operational arrangements with Western union, which has setup 244 centers in 113 cities/towns to replace the “Hundi” money transfer system with e-remittance in the far-flung areas of the country. NBP is also the first bank which has started a, “Foreign Exchange Co” in order to facilitate the general masses, regularize the inflow of foreign money and control the undesirables blackmailing of private exchange companies in the country. According to Directors’ Report 2004; In the year 2004, 2005, 2006 NBP continue its journey of remarkable growth and performance as the bank once again posted the highest ever profit in the Pakistan’s financial sector history, this performance is a reflection of the strategic business and with the consistent and effective economic policies of the government leading to impressive growth in al the sectors of the economy.

For the year 2006 the bank earned a pre-tax profit of Rs.26,311 million as compare to 19056 million in 2005 shows 38% increase. The performance is based on growth in all the key performance indicators. Pre-tax return on equity stood at

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increase at rate of 40.9%, pre-tax return on assets further improved to 9.94% from 2.4% of the last year. Earning per share jumped to Rs.24,01 from Rs. 17.92 of last year, one of the highest in the banking sector. All the above-mentioned ratios are in the top tier by global standards.

It is also important to note that the increase in profit of Rs. 4.313 billion was achieved through strong growth in core banking income by Rs. 4 billion over last year.

Total assets at the year end stood at Rs. 635133 million an increase of Rs. 57414 million. Deposits increased by Rs. 38445 million to Rs. 501872 million. The bank remains well capitalized and its capital adequacy ratio is well above the banking industry average.With the focus on upgrading existing and developing new distribution channels, creating new and more competitive products, year 2006 was an excellent year for retail banking. During the year, the bank significantly grew its customer footings, continued to expand its delivery channels and further improve its process efficiencies, thus re-enforcing its leadership position in the market and enhancing its share of income contribution to the bank. This business segment posted excellent results with strong revenue growth.

The momentum picked up by NBP in 2003 further accelerated in 2006. “NBP Advance Salary” product alone showed exceptional growth both in terms of portfolio and number of borrowers, which swelled to over 500,000 customers. Similarly “NBP SME Karsaz”, a SME financing product has been disbursed to more then 18,000 customers. NBP is also the market leader in agriculture and commodity financing with approximately 300,000 customers.

There are new products also launch, for example “NBP Kisan Dost”, a programmed based lending product for dairy farmers and debit cards branded as “NBP cash card”. E-banking products are set to enhance NBP few based income considerably. The main objectives are to remain the market leader with effective MIS ensuring proper tracking and monitoring, to increase fee based revenue, and to provide best customer satisfaction as well as loyalty through top class branded products.

Progress was made in improving the overall risk architecture. A comprehensive risk management manual was put in place in line with Central Bank guidelines. The bank has initiated a well defined risk rating system. The bank is well aware of the challenges posed by risk management guidelines and Basel II accord and is continuously improving the posture to cope up with the challenges.

The bank firmly believes that a highly motivated and well trained workforce is the key factor to success. Heavy emphasis is being placed on institutionalizing a merit culture through performance based rewards and career development. The bank remains committed to improve the quality and banking skills of its human resource, to ensure its position as the market leader. The regular hiring of 70-80 MBA’s annually since 2002 will further improve the quality of the workforce.

The bank is about to install 70 new top of the line ATMs, set up a national cal centre, introduce on-line banking facilities and automates government business. NBP

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is also on track for acquisition of a new core banking application to improve operational efficiency and enhance customer service.

NBP branches are being upgraded with standardized premises and signage under the new brand. To cater to the needs for Islamic banking, the opening of the first Islamic banking branch is in the final stages. This initiative is expected to attract new customers besides increasing revenue.

The JCR-VIC Credit Rating Agency an affiliate of Japan’s Credit Rating Agency has awarded Credit Rating “AAA rating on September 20, 2005 which is more than stable in whole banking industry of Pakistan.NBP was listed on KSE in 2004. It paid up capital, as on 31.12.2005 was Rs. 7910 million. The Bank’s Rs. 10 share roes to 29.35 and fell to Rs. 24.01in 2006. The Bank is currently active in the areas of:

1. Corporate & Merchant Banking2. Consumer & Marketing Banking3. Investment Banking4. Treasury5. Sale & Purchase of Govt. Securities 6. Discounting of Bills7. Foreign Trade/International Banking8. Retail Banking9. Electronic Banking10. Trustee (NIT)

3.5) HEAD OFFICE NATIONAL BANK OF PAKISTAN.

Head Office is situated at I.I Chundigar Road Karachi.3.6) PRESIDENT AND BOARD OF DIRECTORS

Board of Directors

The board of directors nominates the members of executive committee and executive committee nominates group chiefs. Board of directors consists of chairman and President, six directors and one secretary. President is also the chief executive and chairman of the board of directors.

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Chairman and President

Member Member Member

Secretary

Member Member Member

NBP, Board of Directors list consist the following members and their designation.

NAME DISIGNATION

Ali Raza Chairman & President

Dr Waqar Masood khan Director

Ifthikhar Ali Malik Director

Syed Shafqat Ali Shah Jamote Director

M Zubair Motiwala Director

Sikandar Hayat Jamali Director

M. Khalid Malik Director

Azam Faruque Director

(Source:Annual Report 2006)

3.7) MANAGEMENT OF NBPSenior Management of NBP consists of following member and their respective designation.

Masood Karim SheikhSEVP & Group Chief, Corporate & Investment Banking Group.

Shahid Anwar KhanSEVP &Group Chief,Commercial Banking Group.

Dr.Asif A.Brohi SEVP & Group Chief, Operation Group.

Imam Bakhsh BalochSEVP & Group Chief, Audit & Inspection Group

Ziaullah Khan SEVP & Group Chief, Compliance Group.

Dr. Mirza Abrar BaigSEVP & Group Chief, HRM & Administration Group.

Amer Siddiqui SEVP & Group Chief, Retail Banking Group.

Syed Farhan Ahmed EVP & Chief Financial Officer.

Tahira RazaEVP & Group Chief (A), Risk Management Group

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Muhammad Nusrat VohraSEVP & Group Chief, Treasury Management Group

Amim Akhtar EVP & PSO to the President

Ekhlaq Ahmed EVP and Secretary Board of Director

Uzma Bashir Group Chief, Organization D&T Group

Mrs.Khurshid Masood AliEVP and Divisional Head,Employees Benefits,Disbursments and Trustee Division.

Nadeem Anwar IlyasEVP and Divisional Head,Special Assets Management Division.

Tahir YaqoobEVP & Group Chief, Overseas Coordination and Management Group.

Atif Hassan Khan Group Chief (A), IT Group

(Source:Annual Report 2006)

3.8) EXECUTIVE COMMITTEE

Executive committee consists of one president and nine members from whom one member also performs function of both as a member and secretary. Board of directors nominates executive committee and executive committee group chiefs.

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President

MemberSecretary member Member

MemberMember Member

MemberMember Member

3.9) OBJECTIVE AND VALUES OF NATIONAL BANK OF .

PAKISTAN

Translating the spirit of Sharia into modern financial products and services. Maintain a high of procedure in the financial community. Growth through creation of sustainable relationship with our customers.

Prudence to guide our business conduct. A national presence with a history of contribution to our communities. Create value for all our stakeholders. Care about relationships. Developing our operational infrastructure, system architecture and business

strategies focused to customer needs, with which it endeavors to share our success.

Focusing on quality training and management development programmers and equal opportunity employer.

Reflecting high standards of integrity, prosperity, goodwill and teamwork in conduct, with in the organization and the market place.

Late but not the least an innovative, creative and dynamic institution responding to the changing needs of internal, environment.

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3.10) NATIONAL BANK TIP BRANCH HARIPUR

To provide the banking facility to peoples of Haripur. National bank TIP branch Haripur was established in 1st September 1971A.D TIP Haripur. Khalid Pervaiz was the first manager of branch. TIP branch started its operations smoothly and profitable and with the passage of time management improved its efficiency and reputation.

Organizational Chart

3.10.1) BRANCH MANAGER Mr.RAZWAN AHMED

The branch manager shall look after the branch internal working in coordination with operation manager and other line functional officers/staff in addition to duties delegated by the HO(head office) vide instruction circular no, pertaining to advances, grievances and complaint handlings of staff/ customers in the best interest of this institution.

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Manager

Manager Operations

Foreign Ex Incharge

Establishment Incharge

Advances Incharge

Accounts/Deposits Inchrage

CashIncharge

Pls Savings A/C’s Incharge

RemittancesIncharge

Current A/C’sIncharge

Gov trans Incharge

Dispatch Incharge

Computer/IT Incharge

3.10.2) OPERATION MANAGERMr. MUHAMMAD RAFIQUE

Joint custodian of security stationary by the OPERATION MANAGER along with checking and counter signing of DTRS, Abstract, clean cash etc. and other administrative functions till sufficient staff is deputed at the branch.

3.10.3) (I/C DEPOSIT) Mr.IQBAL Passing officer of current account seat after verification of specimen signature Safe custody of all the specimen signature cards and keeping them under lock

ad key overnight Acting as 2nd signatory of saving bank accounts referring all cheques

exceeding Rs.100000 to Operational Manager Supervision of current account counter and problem solving of Cashier seat . Timely remittance of Govt. funds , B.I.S.E, PTCL, Hazara University and

funds of utility companies as per arrangements Maintaining of complete record of inoperative accounts, unclaimed deposit

accounts including recovery of service charges as prescribed Maintaining of sundry deposit register ensuring that all the entries must be

adjusted Preparation of State Bank Pakistan annual returns statements of unclaimed

deposit account Checking of DTR on daily basis and monitoring and reconciliation of DTRS

of computer centre Peshawar with the branch general ledger on weekly basis.

3.10.4) Subordinate 2 I/C Deposit Mr. WAQAZ (Assistant)

Not a passing officer Authorized to issuer tokens to all account holder and bank statements To post cheques in computer ledger initial scroll, affix To receive cheque deposited in accounts and issue receipt under the signature

of any of the officer working in the branch To write down the hazara university receipts scrolls of utility bills received in

transfer To prepare fan folds against cheques received in collections enter it in RBV

register and send it for signature of authorized officers To issue balance certificate as and when required by the client

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3.10.5) (Sub to I/C Deposit) Mr.SAFEER

To issue tokens against the cheques ,drafts , etc whenever required to pay in cash to all CA/SB accounts indiscriminately and maintain token register as well

To attend balance enquiry after satisfaction of being account holders evidencing through cheque books and the authorized person after getting verification of signature and by order of a senior bank officer. While attending balance enquiry the last two digest should be omitted. The balance of account and cheque series must not be disclosed to any person on telephone in any case

To issue bank statements to the account holders as and when required and only the authorized person

Authorized to post and pass cheques in accounts in the computer and marking significantly current and pls cheques assisting in identification for the signature verifying officer of current and saving accounts putting pay cash stamp scroll ,scroll number, initial and toll signature and adhere service standards.

To prepare FAN FOLDS of cheques as and when receive in DAK, enter in RBV register sign and pass under his joint signature

To transfer and remit the Govt. funds timely as per standing instruction To issue balance certificate to various organizations as per existing

arrangements after charging due commissions as given in tariff Balancing of Weekly and monthly balance books as and when allotted

3.10.6) I/C Credit Mr. AZAM

Processing of short/medium and long term financings and also passing officer of all cheques of credit/advance

Monitoring of finances from proposal to sanction recovery and adjustment of all type of financings.

Recording / passing of financing entries in books of accounts Equation of proper legal documents and keeping of their record in safe

custody Recovery of loan installments from the defaulters and

weekly/monthly/quarterly Preparation of weekly/monthly/quarterly/annual statements relating to

advances including SBP returns of classified advances Issuance cancellation, revocation and proper follow-up of Bank Guarantees,

keep up to date record of commission in the books of accounts Necessary correspondence relating to advances Checking of daily DTRs relating to advances and reconciling it with DTRs

received from the computer centre Peshawar

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Any other duty assigned by br/op manager

3.10.7) Mr.MUHAMMAD RAFIQUE

Processing of NBP Advance salary cases from sanction, disbursement to final adjustment and also a passing officer of advance cheques

Execution of legal documentation and safe custody of all the legal documents of NBP salary advance

Recovery and monitoring of all the NBP advance salary cases Preparation of NBP advance salary statements daily, monthly, half year,

yearly basis Updating of record of NBP advance salary as desired by RO/ HO

3.10.8) I/C Foreign Exchange Mr. AZAM

Opening of foreign currency accounts and issuance of FC cheque books Issuance of Token and cash payments of foreign currency notes/pak rupees to

the account holder Dispatch of foreign currency accounts statements to the a/c holders and

recovery of service charges on monthly basis Balancing of manual ledgers of FC deposits on monthly basis Revaluation of foreign currency and posting thereof in FC ledgers Issuance of foreign demand drafts, PO, MTS and TTS and realization of the

same whenever received from abroad Collection of FC cheques drafts in SC/LSC and cancellation Handling of import exports transactions and timely delivery to concerned

quarters Preparation of statements and timely delivery to the concerned quarters Timely disposal of FC notes whenever exceeding FC Insurance limits and

timely arrangements of FC notes to meet the FC customers demands To attend western union customers and release payments as per banks

procedureAny other duty assigned by manager/OP manager

3.10.9) I/C Remittance Mr. SHOKAT

To issue DD,PO,MT and Govt.DDs as and when demanded by the customers and adherence of HO

Passing officer all the DD advices To respond all the DD advices, after due verification of signature and test from

joint custodians Passing of SBP cheques and marking of date of payment at the advice and

keep a copy of SBP DD and advice in record file Payments of drafts, GDD,PO and responding of MTs after getting verified

signature and test

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Maintaining of Ex-Advice register ensuring that no entry is outstanding in Ex-Advice register

3.10.10) I/C Government Section Mr.M.MAJEED

Passing officer of all Govt. cheques receipts, payments including statements Receipt and marking of DAO advices central Govt. etc Noting and recording of all the cheques series in relevant register and keeping

an up to date record of the same Proper maintaining of Govt. contra register and reconciliation of the same on

monthly basis, statements duly verified and signed by the DAO on monthly basis

Preparation of error free F-110A/B Govt. memo and provincial register and files in proper order

Preparation of accounts statements. Supervising , monitoring and controlling and assisting the jobs being

performed by the subordinates working under his span of control Responsible for keeping and arranging old and current record whenever kept

in proper manner 3.10.11) Daftri Mr.PERVAIZ

To perform duties in Govt. Section. Cleaning , dusting of all the officers chairs and takes To stitch branch daily cheques separately and facilitating proper checking by

the concerned officers To maintain and look after branch old and current record in safe custody and

regulate the same through branch Ex custody register To arrange old record in proper form arranging on year wise basis Arrange and segregate the audit vouchers and sundry deposit vouchers and

keep an up to date record of the same To deliver Govt. vouchers along with contra register daily to DAO at 9-30 To maintain branch stationary ,office stationary , forms and books in sufficient

quantity and arrange well before they are completely exhausted3.10.12) SR. Assistance Mr. WAQAZ

Opening of current and saving bank accounts and completion of accounts KYC-Know your customer .To send F-528 and F-529 to the account holders

and the introducer and to keep a record of the same attaching to the opening form as per requirement of the audit

To realize LSC and SC deposited by the account holder from local and out station as required by the bank and SBP

To arrange to send Govt. and Dist Accounts officer and get the existing procedure

Any other duty assigned by the manager or operational manager

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3.10.13) I/C Computer Mr. IQBAL

Clean cash writer, posting s of all current saving accounts cash etc Printing of all the necessary day books subsidiary day books and maintaining

of record thereof Deduction of service charges on monthly basis from all current and savings

accounts inoperative and unclaimed accounts as per bank instructions and keeping record thereof as designed by HO

Weekly scheduled telegram and its timely transmission to Ro/Ho and payments of western union in case I/C FC absence

Preparation of computerized F-47/48 and other statement in new computer format

Preparation of CA/SB diskettes on daily weekly basis and timely transmission to regional computer section

To keep backup of computerized data on regular basis To reconcile accounts data with the data stored in main computer centre

Peshawar on regular basis To attend balance enquiry and issue accounts statements to the accounts

holder as and when required

3.11) FUNCTIONS OF NBP TIP BRANCH HARIPUR

Deposits Management

Advances

Foreign Exchange

Remittance

Clearing House Management

Cash Management

Government Business

Other Miscellanies

3.12) DEPOSITS DEPARTMENT: -

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Deposits are the life bloods of every commercial bank. At TIP branch these are subdivided into further three sections i.e. PLS saving bank deposits, current deposits and foreign currency deposits. This branch is rich in deposits portfolio owing to its particular nature of business.

3.13) TYPES OF DEPOSITS: -

Like any other bank NBP TIP Branch also accepts deposits from public. The following types of deposits/accounts are offered by bank.

3.13.1) Current Account: -

A current account is a running account which is continuously in operation. It is used by a customer to transfer money to withdraw deposits on demand. The current accounts of the customer are maintained in a Current Account Ledger by the bank. The customer can withdraw the current deposits without pervious notice to the bank. The bank has to honors the cheque provided they are within the limits of account.

A minimum requirement of opening a current account is Rs. 500/-. No profit is paid by bank on these accounts, there is no restriction on withdraw of funds on the account. Any person can draw any amount at any time. If balance in this reached to less then Rs. 5,000/- then bank charge commission of Rs. 50/- per month. These accounts are becoming very popular with the commercial banks in recent years. For drawing of money from these accounts the cheque book is provided to the customer.

3.13.2) PLS Saving Account: -

These accounts are in as a step to Islamisation of banking in Pakistan in January, 1982. These accounts are opened on the basis of profit and loss sharing between two parties, with a minimum amount of rupees one hundred.

These accounts are generally opened by the persons of fixed incomes and of low savings. Profit on these accounts is usually paid after 6 months. And the amount of profit is varying, and depends upon the actual amount remaining in account.

3.13.3) Time Deposit Account: -

Fixed accounts or time deposits are those deposits which are repayable after a certain period of time, which may vary from 3 months to 10 years. People with sufficient fund and also wish to have a safe investment, deposit their savings in this account.

The rate of interest on fixed deposits is higher than the other accounts. The longer the duration for which the amount is kept, the higher is the rate of interest and vice versa.The bank on receipt of funds for time deposits issues a fixed deposit receipt (FDR) on a specially printed form.

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3.13.4) NIDA Account: -

NIDA account can be opened with Rs. 20 lack. The process of opening of this account is same to other accounts. Profit is calculated on daily product basis. There is no restriction on withdraw of money.

This account is best for businessmen. If balance in this account is less then Rs. 20 lack then profit is provided on saving rate.

3.14) DEPOSIT SYSTEM

The process for the cash deposit/other instruments of the branch is as followCash deposit counter

The cash is received at the cash counter with the particular instrument The cash is sorted It is recorded in the relevant record books For the recording purpose two book are used at the cash counter for deposits Transfer book (for cheques etc) Cash receiving book (the most liquid cash) Checking process is conducted

3.14.1) ISSUNCE OF RECEIPT

The receipt is issued to the customer

3.14.2) CHECKING AND VERIFICATION

Needed vouchers are prepared The transaction is checked and verified The verification limit for verification officer is limited to Rs.5000 Transaction greater than 5000 is verified by the operation manager. A transaction will become a complete transaction when it checked and

verified.3.15) WITHDRAWAL SYSTEM THROUGH CHEQUE

The cheque is presented on the counter Then the cheque is passed through a verification process of its contents The payment is made of verified cheque

3.15.1) WHY THE CHEQUE PRESENTED IS NOT PAID

The cheque will remain unpaid when it contain any of the following reasons. The signature is different of the drawer of the cheque from the specimen Cheque is post dated Cheque is out of dated There is difference between figures and amount in words

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There is any alteration without verified signature Cheque is damaged Account has not sufficient balance to meet the requirement of the cheque Difference of account number and tile of account Any other reason may exist

3.16) FINANCE/ADVANCES DEPARTMENTTIP branch Haripur is dealing in both types of loans i.e. Short term loans and

long term loans. Bank is charging 13% Markup on their credits. Bank is promoting through different schemes time to time to attract their customers to expand their business. National bank also provides facility to small and medium business for expansion through credit and financial support.

3.17) PRODUCTS OFFERED BY BANK:-

Following are the products offered by the National Bank of Pakistan.

3.17.1) NBP ADVANCE SALARY

A Personal Financing Scheme for permanent employees of Provincial/ Central Government Autonomous, Semi Autonomous bodies Organization, Banks and Financial institutions,

Loans Up to Rs: 500,000/= Loan equal to 15 months take Home salary. Repayment period upto 60 months. Low rate of mark up 13% PA on reducing balance. Short processing time, sanction at branch level Minimum loan requirements. No processing fee, noncolaterals no guarantee, no insurance. Hastle free documentation.

3.17.2) AUTO ROLL OVER FACILITIES.

If you are paying your Installments regularly then you can avail Auto Roll over facility.

Original loan amount can be increased due to promotion/increment. No early payment surcharge.

3.17.3) NBP cash n gold

Meet your needs for ready cash against your idle Gold & Jewelry. Facility @ of Rs: 7,000/= per 10 gram of Gold.

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Period of repayment 9-15 months. Rate of mark up 12% P.A based on actual utilization (value). Quick processing at Branch level. Roll over on expiry subject to regular debt servicing. Minimum documentation. No penalty for early payment. No maximum limit.

3.17.4) NBP SME karsaz

Best suited for shopkeepers, retailers whole sellers, Traders, Small & medium Business men an manufacturer etc.

Maximum Financing limits upto Rs: 75 million. Repayment period 1-3 years. Rate of mark up 10%-13% P. based on actual utilization,(Fixed &floating

rates options available). Easy monthly/Quarterly Installments. Quick processing. Low processing fee. Minimum conditions for taking exposures. House/ constructed property acceptable as Collateral security situated in

Municipal/ Cantonments limits in addition to business Assets...

3.17.5) NBP running finance

In order to met personal needs of salaried class, business class, the Bank offers loan facility against pledge of SSC/DSC of NSC & Post officer, Prize Bonds, NIT Units, Insurance Policy, TDRS, Lien on PLS, CA, Foreign currency deposits and mortgage of residential and commercial property situated within municipal and/ or Cantonment limits.

o No maximum limit of financing (in case of SC/DSC per party limit of financing Rs: 20 million)

o Financing upto 90% of encashment value of security.o Repayment period 12-15 months.o Market based Mark up rates upto 13% P.A.(fixed & floating

rate options based on kibor available.)o Quick Processing.o No hidden cost.o NO penalty for early adjustment.o Roll over facility available (subject to regular payment of o markup)

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3.17.6) NBP kisan dost

Agricultural loans are available to farmers for; Production purpose, Livestock farming, Development purpose, Milk processing, Purchase of Tractors, Cold storage, Installation of tubewels, Bio-gas plants, Purchase of agriculture, Nurseries, Implements, Forestry, Fishing, Poultry etc. Loans are available against Pass Book upto 80%, SSC/DSC upto 75% of

encashment value, rural commercial and residential property upto 60%, gold & jewelry @

Rs: 7,000/= per 10 gram. Rate of markup upto 12% on actual utilization Revolving Credit Scheme available for 3 years. No penalty for early payment. Quick processing. Easy installments.

3.17.7) NBP PREMIUM AAMDANI

Unprecedented safety-Unprecedented Return

Monthly income scheme

Minimum deposit of Rs. 50,000 and maximum deposit of Rs. 5000,000 for 5 years

Free demand draft, Pay order and NBP online Aasan banking

Free check book/ NBP cash card (ATM+DEBIT)

Profit paid every month from 7.5% to 11% per annum from one year to five year

3.17.8) NBP PREMIUM SAVER (PLS SAVING ACCOUNTS)

Minimum saving balance of Rs. 20,001 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 transactions

Profit calculated monthly and paid on half yearly basis

Earning rate of interest is 7.25% per annum

3.17.9) NBP student loan scheme

Under the scheme the students are eligible to apply for loans provided:

He/she has obtained admission on merit in the approved universities/ colleges of the public sector mentioned hereunder.

He/she falls at the time of admission within the age bracket of:-

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For Graduation not exceeding 20 years

For post-Graduation not exceeding 30 years

For PhD not exceeding 35 years

3. He/she has secured 70% marks in the last public examination

He/she has undertaken the study of the subject given below

He/she is unable to pursue studies due to financial constraints.

REPAYMENT

The maximum period of repayment of loan is 10-Years from the date of disbursement of first installment .The borrower shall repay the loan in monthly installment after six months from the date of first employment or one year from the date of completion of studies, which ever is earlier.

3.17.10) NBP Karobar (self employment opportunities for un-employed)

Minimum down payment 10% of asset price and 5% for PCO & Tele center

Tenure: 1 to 5 years (for PCO 2 years)

Grace period : 3 months

Age 18 to 45 years

Mark-up (variable): for the first year mark up will be 12%

Life and disability insurance paid by government of Pakistan

3.17.11) NBP Saibaan

NBP has introduced an affordable, flexible & convenient House Financing scheme for all, equally suitable for salaried, self employed & professionals. Loan is provided for; Purchase of House, Construction of House, Renovation/ Home improvement and/ or refinance.

Minimum net tae home salary Rs: 5,000/=per month. Maximum loan amount upto Rs. 35 million (Renovation and House

improvement Rs.15 million). Period of repayment 3-20 years. Lowest mark up rates ranging 9% to 12.85% P.A Affordable monthly installments. Quick Processing. Minimum debt/ equity ration permissible 85:15. Low processing fee. Full Credit life/ Disability Insurance (Optional).

3.17.12) Margin finance facility

Comfortable and secure environment for trading

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Easy terms requiring minimum documentation

Minimum turnaround 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 shares

3.17.13) NBP Cash Card

NBP cash card as your Debit card.

Actual purchase payment is deducted while using NBP cash Card. Convenient, secure, quick & easy payment options. Nation wide acceptability at various merchant outlets

NBP cash card as your ATM Card.

Offers facilities for cash with drawls, funds transfer, balance enquiry, mini statements, and cheque book request.

Acceptable at al 1-link & NBP ATMS across the country. Only Rs: 15/- charged if ATM of other than NBP is used. Round the clock 24 hour’s facility available.

3.18) INTERNATIONAL BANKING DEPATMENT: -

This is the most significant and vital department which deals in international banking i.e. issued/ paid of Letter of credits (LC’s), Foreign Telegraph Transfer (FTT),Letter of guarantee (LG’s),Foreign Demand Draft (FDD) Western Union Money Transfer (WUMT)And foreign currency remittances. Foreign currency deposits accounts are maintained in all the key / hard currencies i.e.

U.S $, U.K Pound, And EURO.

A foreign exchange FE account will be opened with minimum US $1000 or equivalent. If amount/ balance in the account is less than $1000 or equivalent then bank deduct service charges $03 P.M. or equivalent.

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If a person withdraw amount in Pak Rupees than buying rate will be apply. And if a person withdraw amount in US$ or other foreign currency then updating rate will be apply. At 7 day (now last day) of the every month bank apply updating rate (Revaluation) given by H.O.(HEAD OFFICE) Due to the fluctuations in foreign currency every month bank pays exchange risk covering fee for F.C A/Cs to Treasury Management Group H.O. Karachi.

3.19) WESTERN UNION MONEY TRANSFER (WUMT)

Western Union Money Transfer is the fastest way to receive money world wide. NBP TIP Branch Haripur, also act as (paid only) agent of WUMT.

3.20) Main features of WUMT are;

RELIABLE: -

For nearly 150 years, millions of people have trusted western Union to support

family back home, rescue travelers in emergencies and keep business operating

smoothly. Each transfer is protected by and advanced world wide security system and

can be verified with a unique Money Transfer control Number as well as an original

password you chose. With Western Union, your money will be paid out quickly,

giving you peace of mind.

FAST: -

Money is revived minutes after it is sent. Western Union uses advanced electronic technology and a worldwide computer network for fast payout in more than 189 countries and territories.

CONVENIENT: -

Western Union agents are located where you need them: in banks, post offices, pharmacies, retail stores, jewelers, supermarkets, railway stations, airports and other places. Most agent locations offer convenient hours and service even on weekends. More than 130,000 agent locations make Western Union one of the world’s largest money transfer networks.

Process of WUMT.

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1) A person who wants to send money (e.g in other country) will go to the agent of WUMT and fill a proper form give money + commission to agent, agent will give him 10 digits specific code and enter the form in WUMT ONLINE SYSTEM.2) Then sender informs the receiver about 10 digits code and amount of money send.3) Now receiver can receive money form any where in the world through WUMT agent by providing specific information (i.e. sender name, receiver name, amount of money, code and some times secret question and answer) these information is given on specific form.

HOW TO RECIVE MONEY: -

Fill out the form of “To Receive Money”. Give form and ID to the agent. Agent gives you the money and a receipt.

3.21) REMATENCE DEPARTMENT: -

Remittance is the way through which we transfer money from one place to another. Remittance facilitates the customer and is a source of bank’s earning as well. The TIP branch always aims at customer satisfaction and facilitation. Remittance is further classified as in land remittance and origin remittance. This is very sensitive and critical portfolio into the present day domestic / international banking scenario of “Money laundering”

REMITTANCES

The National Bank of Pakistan provides the facility of safe transfer of money from one place to another. In the respect the following facilities are available. IBTS Local currency demand draft (DD) Foreign currency demand draft (FDD) Pay order Local fund transfer (TT) Foreign fund transfer (FTT)

3.21.1) IBTS (INTERNAL TRANSFER)

In internal transfer the important thing is that both the branches of the bank should be involved in online banking system through this the transfer is immediate and fast the process consist on manual system land mail system.

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3.21.2) TRANSFER THROUGH DEMAND DRAFTS (DD)

There are two type of DD depending on their denomination. When the DD is issued the recording of the transaction is as:

DR CRCash ---- *Pak a/c of relevant branch ----(*at which the DD is drawn)

Then an Ibo is issued to the relevant branch when that branch receives the Ibo, they record the transfer as:Pak A/C ---- DD payable ----

When the customer present the DD for payment then it is recorded as follows:DD payable ---- Customer A/C (cash) ----

The net effect of these transactions is:Cash ---- Customer A/C ----

The processes of recording other bill payable are the same like DDWhen the cash is received from the customer it is recorded as:Cash ----7 Customer A/C ----

When the cash is paid to the customer it is recorded as:Customer A/C ---- Cash ----

Through all these processes the element of security is uncompromised.

3.22) CLEARING DEPARTMENT: -

A clearing house is a place where the representatives of commercial banks meet to exchange cheques drawn on each other and then settle the difference owed to each other. It may be defined as an association of banks to facilitate the exchange, off-set and settlement of credit claims among them and to serve their mutual interest.The clearing system of function of State Bank of Pakistan. If the State Bank has no office at a place, then National Bank of Pakistan, as a representative of the State Bank of Pakistan, acts as a clearing house.

As every commercial bank keeps a certain percentage of the cash deposits with the central bank (or NBP as representative of SBP), the settlement of inter-banks obligations becomes easy by simple process of book entries.

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With the help of clearing house, the payments and receipts of large amounts become convenient and secure without involving any cash at once. The advantages of this system is not only that large payments are made without risk, loss of time and use of precious metal, but this facility also enables the central bank to carry on the Monetary policy of the country more effective.

3.22.1) PROCESS OF CLEARNING:

In the Clearing house of NBP Main Branch, daily the representatives of different commercial banks meet and clear their cheques. These representatives represent their branches all over the Pakistan. These banks include Muslim Commercial Bank, Habib Bank, Allied Bank, United Bank, Askari Bank, Bank Al-falah, Khyber Bank Ltd etc.

1) Clearing entry: -Every day the representative of different banks meet in clearing house twice.

First clearing 9:30amSecond clearing 1:30pmThey present their cheques drawn upon each other to clearing incharge. He makes the entry, add or subtract the amount from reserves and clear the cheques.

2) Endorsement: -

In this step bank crossing stamp is marked on the back of cheque, and bank become the owner of cheque, the entry will be;

Dr CrOur Branch Endorsement ----

Payee A/C ----

3) Bank Transfer Scroll: -

After the endorsement we write the entry in Bank Transfer Scroll, in whichDr are written in/under A/C No. ----Cr are written in/under F-15 (for recovery)

The Balance of Transfer scroll and clearing register must be equal.

3.23) CASH DEPARTMENT: -

Cash department deals with the cash transactions i.e. Payments to the clients and deposits are made trough cash department. In early 10 days of month bank deals cash transaction of about Rs. 50 lack. And in normal days it transacts about 20 lacks to 50 lacks. Cash department has 3 subsections;

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Cash Receipts Cash Payment Government section

3.23.1) CASH RECEIPTS; -

All the cash received by the bank is collect through cash receipts department. For this first a person who wants to deposits his amount filled the deposit slip. In deposit slip he writes the name his name and the A/C No in which we want to deposit money. He also writes the amount of money in words and figures and signed the slip, then he hand over that slip with cash to cashier.

Cashier received the slip, count the cash and register it in a book. On the back side of slip he writes the denomination of money. And one part of slip returned to customer with “Received stamp” and signature.

3.23.2) CASH PAYMENT: -Any client who wants to withdraw amount from his account, he presents the

cheque to the reception desk which give him token and send the cheque for verification to the officer and client will wait until the cheque reached to the cashier. Then cashier announces the token no and then client get the required amount from the cashier.

3.23.3) GOVERNMENT SECTION: -

Government cash section deals all the amount of Govt. revenues and payments. So it also has two subsections;1) Government Receipts: - All the Government revenues are transfer through this head of account. Simply, all the cash received by the Government goes in this head of account.2) Government Payment: - All the amount of cash paid by the Government is paid through this section. Usually in the early days of month the work in this section is more as compared to other days.Cash transactions are closed at 1:30 pm daily, and after this all the staff members of cash department balance the daily receipts and payments.

3.24) GOVERNMENT DEPARTMENT: -

Government department is most important department of the TIP branch as there is no State bank so this branch act as State bank of Pakistan Collect Fees for all types licenses, pensions and all utility bills and collection of B.I.S.E, PTCL, WAPDA, PESCO, Sales Taxes etc.

3.24.1) BILLING SECTION:

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Bills for collection amount for a handsome amount of commission / profit for commercial banks. The main branch has efficient and effective bills Section, which discharge its responsibilities in a decent manner.

3.24.2) PENSION SECTION:

These sections of the Government department facilitate the pensioners by keeping the pensioner’s record and pay pensions to them after proper verification of the person.

3.24.3) LICENSE RENEWAL SECTION

This section of the bank deals with Government licenses. License holders renew their licenses as they expired with the passage of time.

CHAPTER 4

FINANCIAL ANALYSIS

4.1) PERCENTAGE ANALYSIS OF BALANCE SHEET


BALANCE SHEETAs at 31st December 2006

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ASSETS 2005

(Rs.In“ooo)

2006

(Rs. In“ooo”)

(%)

Analysis

Cash and balances with treasury banks 71,196,956 78,625,227 10.012

Balances with other banks 31,019,330 40,641,679 31.02

Lending to financial institution 16,282,942 23,012,732 41.33

Investment 156,985,378 139,946,995 -11.16

Advances 268,838,779 316,110,406 17.58

Other assets 23,941,056 27,113,698 13.25

Operating fixed assets 9,454,365 9,681,7,974 24.06

Deferred tax assets ---- ----

Total assets 577718806 635138511 9.93

LIABILITIES

Bills payable 1,741,156 10,605,663 609.11

Borrowings from financial institutions 8,756,847 11,704,079 33.65

Deposits in other accounts 463,426,602 501,872,243 8.3

Sub-ordinated loans --- ---

Liabilities against assets subject to finance lease

16,629 13,235 -25.64

Other liabilities 23,496,910 26,596,300 13.13

Deferred tax liabilities 4,462,718 2,387,073 -56.51

Total liabilities 1079619668 553178593 -48.76

SHARE HOLDER EQUITIES

Share capital 5,908,927 7,090,712 19.99

Reserves 12,354256 13,879,260 12.34

Unappropriated profit 19,372,253 32,074,677 65.57

Surplus on revaluation 38,182,238 28,909,469 75.71

Total shareholder equities 75,817,674 81,954,118 8.01

Total shareholder equities & Total liabilities 1,237391460 635,132,711 - 48.67

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Through percent analysis of above balance sheet we know that cash and balance with treasury banks increase 10.012% while balances with other banks increase 31.01%. Lending to financial institutions increase 44.13% and investment is decrease 11.16%. Share capital increase 19.99 % and reserve increase 12.34 %. In the same way all the data is calculated.

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4.2) PERCENT ANALYSIS OF PROFIT AND LOSS ACCOUNT


PROFIT AND LOSS ACCOUNTFor the year ended 31st December 2006

PARTICULAR 2005

(Rs. In “ooo”)

2006

(Rs. In“ooo”)

Percent Analysis

Markup return/interest earned 33,692,665 437,88,628 29.96

Markup/return/interest expense 10,321,768 13,634,912 32.1

Net markup interest income 23,370,897 30,153,716 62.06

Provision against non performing advances 2,446,739 3,075,723 25.71

Provision for diminution in the value of investment

(245,881) (709,461) 188.5

Bad debts written off directly 23,069 5,284 0.229

2,223,927 2,371,546

Net markup/ interest income after provision 21,146,970 27,782,170

Non markup/interest income

Fee concession and brokerage income 4,926,604 6,144,628 24.7

Dividend income 1,718,478 2,891,755 68.27

Income from dealing in foreign currencies 1,205,638 1,333,840 10.633

Other income 177,839 627,618 252.91

Total non markup/interest income 8,028,559 10,997,841 36.9

29,175,529 38,780,011 32.9

Non markup interest expenses

Administrative expenses 11,221,789 13,443,441 19.8

Other provision write off 198,298 (17,283) 8.72

Other charges 63,206 208,327 229.6

Total non markup/interest expenses 11,483,293 13,634,485 18.73

19,056,028 11,977,601 62.85

Profit before tax 19,056,028 26,310,577 38

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Taxation-current 7,154,002 8,695,598 21.54

- Prior years (1,098,709) 530,652 -48.3

- Deferred 291,291 61,981 -21.27

6,346,584 9,288,231 46.35

Profit after tax 12,709,444 17,022,346 33.93

Inappropriate profit brought forward 10,885,184 19,372,523 77.79

Profit available for appropriation 23594628 36,394,869 54.25

Basic earning per share (Rs.) 17.92 24.1 34.5

Diluted earning pet share (Rs) 17.92 24.1 34.5

Through percent analysis we know that interest earned increase 29.96% while the interest expenses increase 32.1%. Net mark up increases 62.06%. Total markup interest income increase 36.9%. Profit before tax increase 38%. While profit available for appropriation increase 54.25 that shows sound financial position of the NBP the main reason of its strong position is that its expenses are low and its income is more.

4.3) VERTICAL ANAYSIS OF BALANCE SHEET 2006

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ASSETS 2005

(Rs.In“ooo)

2006

(Rs. In“ooo”)

Vertical Analysis

2006

Cash and balances with treasury banks 71,196,956 78,625,227 12.4%



Investment 156,985,378 139,946,995 22.034

Advances 268,838,779 316,110,406 49.77

Other assets 23,941,056 27,113,698 4.26

Operating fixed assets 9,454,365 96,817,974 15.24


Total assets 577718806 635,138,511 100

LIABILITIES

Bills payable 1,741,156 10,605,663 1.67





16,629 13,235 0.0021


Deferred tax liabilities 4,462,718 2,387,073 0..376

Total liabilities 1079619668 553178593 87.01


Share capital 5,908,927 7,090,712 1.12

Reserves 12,354256 13,879,260 2.185


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Total shareholder equities & Total liabilities 1,237391460 635,138,511 100

Vertical analysis compares each amount with a base amount selected from the same year. As clear from above that cash and balance with other bank are 12.4% of total Assets. While balances with other bank are 6.34% of total asset. Deposits in other account are 79.2% of Assets. Other data is also calculated in the same way.

4.4) VERTICAL ANALYSIS OF PROFIT AND LOSS ACCOUNT



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PARTICULAR 2005

(Rs. In “ooo”)

2006

(Rs. In“ooo”)

Vertical Analysis

2005

Markup return/interest earned 33,692,665 437,88,628 100%





(245,881) (709,461) -.0162

Bad debts written off directly 23,069 5,284 .00012

2,223,927 2,371,546 0.054

Net markup/ interest income after provision 21,146,970 27,782,170 6.35



Dividend income 1,718,478 2,891,755 6.604


Other income 177,839 627,618 1.433


29,175,529 38,780,011 88.56



Other provision write off 198,298 (17,283) -.0039

Other charges 63,206 208,327 .0048


19,056,028 11,977,601 27.35

Profit before tax 19,056,028 26,310,577 60.08


- Prior years (1,098,709) 530,652 1.211

- Deferred 291,291 61,981 .0014

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6,346,584 9,288,231 21.21

Profit after tax 12,709,444 17,022,346 38.87



Through vertical analysis of above profit and loss statement we know interest earned is 100% while interest expenses are 31.13% of interest earned. Provision against non performing advances is 2.51% and total non-markup income is 88.56% while total non-markup interest expenses are 31.13%. Profit before tax is 60.08%. While profit after tax is 21.21%. Profit carried forward is 44.24%. Financial position of NBP is strong in 2006 as compare to 2005 because its profit is more in 2006.

4.5) HORIZONTAL ANALYSIS OF BALANCE SHEET NATIONAL BANK OF PAKISTAN


ASSETS 2005

(Rs.In“ooo)

2006

(Rs. In“ooo”)

Horizental

Analysis

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Cash and balances with treasury banks 71,196,956 78,625,227 110.43%



Investment 156,985,378 139,946,995 89.15

Advances 268,838,779 316,110,406 117.58

Other assets 23,941,056 27,113,698 113.53

Operating fixed assets 9,454,365 96,817,974 1024


Total assets 577718806 635,138,511 108.21

LIABILITIES

Bills payable 1,741,156 10,605,663 609.12





16,629 13,235 79.59


Deferred tax liabilities 4,462,718 2,387,073 53.49

Total liabilities 501900862 553178593 110.22


Share capital 5,908,927 7,090,712 119.99

Reserves 12,354256 13,879,260 112.34




Total shareholder equities & Total liabilities 577,718,536 635,138,511 109.93

Horizontal Analysis compares each amount with a base amount for a selected base year. Cash and balances with treasury banks increase 110.43% of the 2005 level in 2006. Balances with other banks increase 131.02% in 2006. In the same way other data analyze.

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4.6) HORIZENTAL ANALYSIS OF PROFIT AND LOSS



PARTICULAR 2005

(Rs. In “ooo”)

2006

(Rs. In“ooo”)

Horizental

Analysis

Markup return/interest earned 33,692,665 437,88,628 129.96 %



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(245,881) (709,461) 288.53

Bad debts written off directly 23,069 5,284 22.9

2,223,927 2,371,546 106.64

Net markup/ interest income after provision 21,146,970 27,782,170 131.38



Dividend income 1,718,478 2,891,755 168.27


Other income 177,839 627,618 652.91


29,175,529 38,780,011 132.92



Other provision write off 198,298 (17,283) 8.72

Other charges 63,206 208,327 329.6


19,056,028 11,977,601 62.85

Profit before tax 19,056,028 26,310,577 138.07


- Prior years (1,098,709) 530,652 207.05

- Deferred 291,291 61,981 21.28

6,346,584 9,288,231 146.35

Profit after tax 12,709,444 17,022,346 1339.35



Basic earning per share (Rs.) 17.92 24.1 134.48

Diluted earning pet share (Rs) 17.92 24.1 134.48

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Horizontal analysis of profit and loss show interest earned increase 129.96% of the 2005 level in 2006. Interest expenses increase 132.1% in 2006.provision against non-performing advances increase 125.71 %.

CHAPTER 5

RATIO ANAYSIS

PARTICULAR 2005 2006

5.1)Current ratio= current assets /current liability

118,499,228/10,498,003

=11.287

142279638/12309742

=11.56

5.2)Net profit ratio = net profit 12,709,444/33,633,735 17022346/43788628*1

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*100/income 0.3778*100 = 37.78% 100%=38.87%

5.3)Debt to equity ratio = debt/ equity 503,378,402/74,340,712

=6.771

553178593/819*54118 =6.74

5.4)Total assets turnover ratio = net revenue (sale) /total asset

33,633,735/577,719,114

= 0.0582 Times

43788628/635132711

=0.0689 Times

5.5)Fixed assets turnover ratio = net revenue (sale) /fixed asset

33,633,735/459,219,886

= 0.0732 Times

43788628/492853073

= 0.0889 Times

5.6)Debt to total assets ratio = total debt/total assets

503,378,402/577,719,114

= 0.871 or 8.71%

553178593/635132711= .87 or 87.1%

5.7) COMMENTS ON EACH RATIO

For every one rupees of current liability the NBP have 11.287and 8.456 rupees current assets. It has strong financial position in 2006 as compare to 2005 to pay short-term obligation. Because it’s current assets are more than in 2006.

Net profit of 2006 is more preferable due to more revenue and less expenses.

In 2006 this ratio 6.771 while in 2005 this ratio is 6.74.

NBP’s strong financial position in 2006 because it generate more revenue through the use of more fixed assets. As compare to 2005.

NBP have sound financial position in 2006 because it generates more revenue through the use of assets. As compare to 2005.

2006 ratio is more preferable because its return on assets is more than as compare to 2005.

CHAPTER 6

SWOT ANALYSIS

On the basis of "SWOT" analysis, one can analyze the present status and performance of an organization and can make conclusions and recommendations.The "SWOT" analysis consists of four words that are S, W, 0 & T, which stand for Strengths, Weaknesses, Opportunities and Threats respectively.

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6.1) Major Strengths

National bank TIP branch Haripur is only public sector bank in the area of TIP.

●Nationalized Bank:

Being a nationalized bank the Govt. support to NBP, is the major strength of NBP.

●Largest Branch net work:

The network of the branches of NBP is largest then any other bank inside the Pakistan. i.e. 1242.

●Strongest capital structure:

The capital structure of NBP is very strong it is very easy to conduct operations with large capital.

●Monopolistic hold:

The NBP have monopolistic hold by capturing the govt. accounts and maintaining the confidence of the individuals by Govt. support.

●Greater Public confidence:

Being considered to be a Govt. bank the public have much confidence on NBP then any other national or multinational bank.

●Others strengths:Something an organization is good at doing is termed as its strength. NBP's other

strengths are: Handling thousand of customer per month

Collect about hundreds of thousand of electricity bills per month National bank TIP branch is authorized for collection on the behalf of B.I.S.E,

Abbottabad board, Hazara university, PTCL, WAPDA, SNGPL Etc. Easy transferring of money round the world through SWIFT and western

union.

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6.2) Major Weaknesses

The following are some critical issues which must seriously take under consideration for the betterment of the NBP TIP branch Haripur.

●Shortage of Staff:

In National bank TIP branch thousand of customers per month which is quite difficult to manage but shortage of staff is problem in the branch.

●No Proper Utilization of Technology:

National bank is one of the top most banks in Pakistan and only bank in public sector. National bank main branch is lacking the proper use of latest technology as other private banks are doing to make customers fully satisfied by providing them additional facilities.

●De Motivation:

De motivation in employees is one of the main problems in NBP TIP branch Haripur. Employees don’t have there keen interest in their jobs because of contract base job.

●Lack of Responsibility Taking:

Employees of the bank hesitate to take responsibility on their shoulders they try to shift their responsibilities to one another.

●Lack Of idea Generation:

For the success of any organization the main thing is idea, the organizations who concentrate on idea generation activities are most successful. National bank TIP branch is lacking in idea generation because employee are not trained and don’t have sufficient knowledge to give suggestion and new ideas to expand the business for the bank.

●Lack of Interest in Training and Development.

“Nothing is permanent except change in this world” this is universal truth no one can deny this fact .To keep yourself updated with the constantly changing

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environment you must required to participate in different seminars, trainings and new courses. Staff of the TIP branch is not in possession of the facts to improve their skills through training and no interest in their career development.

6.3) OPPORTUNITIES:An external situation, which an organization can benefit from, is called

opportunity for that organization. NBP can grab the following opportunities:

●Network in foreign countries:NBP starts opening branches in foreign countries and it has opportunities to

develop them very strongly, like it open a branch in Kabul, which prove to be very beneficial.

●Gain economies of scale:Being the bank with largest branch network and capital structure in Pakistan.

NBP can avail economies/of scale by increasing monopolistic hold.

●Conduct large workshops for training and development:Due to its strong financial position the bank can conduct workshops for the

development of its staff effectively and can bear all the costs easily.

●Support of SBP:The SBP is providing complete Support to the NBP by its different policies

and other supporting activities.

●Better competitive position:Having monopolistic hold on the economy the NBP gain competitive edge

over other banks, the bank maintain better financial as well as physical and other non physical advantages.

●Market RecognitionFor the second consecutive year, NBP was recognized as the best bank in

Pakistan by the prestigious periodical, “The Banker" UK (a subsidiary of Financial Times Group).

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6.4) THREATS:An external situation posed to harm organization's interests is regarded as

threat to that organization. NBP worries about the following;

●Globalization:In the era of globalization the bank is now going to face tuff competition with

multinational banks, which are interested in opening their branches in Pakistan.

●Increase in competition:The increasing competition in local as well as national and multinational level

also lower down the profitability of the bank and compelling the bank to use a large amount of funds to meet out competition.

● Privatization:Privatization policy of the Govt. also create tuff times for the bank because of

this reason the bank is going away and away from the Govt. support during hard times.

●Political instability in the country:The changing governments and their changing policies also prove a poison for

the banking industry especially for nationalized banks. The political loans and their remission also badly effect the nationalized banks specially NBP.

●Lack of Transparency in Govt. Policies:Lack of consistency in Government's polices regarding business and economic

sector leads to threat for NBP.

The SWOT analysis is a mirror to the bank of its present condition. From this analysis, we can conclude that the bank has done some professional changes in its banking system. But still there are chances for improvement. The management can develop elaborate strategic plans for capitalizing the available opportunities. One area where the bank has done some work is the improvement in customer services. But to get the desired results, the bank should develop long-term objectives and prepare appropriate courses in order to achieve them.The bank should maintain principle of professional management and adhere to the sound and sophisticated banking rules and regulations to build confidence of the people in the institution.

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CHAPTER 7

SUGGESTIONS AND RECOMMENDATIONS

National bank TIP branch Haripur has many opportunities available in local market. Main thing is how the efficiency and profitability of bank can be improved. For that purpose I suggest the following recommendation to the management of the bank.

7.1) Employee’s T raining:

To increase the efficiency and profitability of the bank management should arrange time to time training sessions for their employee’s to create awareness about the importance of customers and work well in team as well as well individually.

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7.2) Technology:

By the use latest technology and software’s, bank can satisfy their customers more efficiently and effectively. Bank can offer their services online as private banks.

7.3) Help Desk:

To improve the services and performance of the bank their must be help desk in the branch, which support the customer for help them to direct to the concern department.

7.4) Coordination:

National bank TIP branch Haripur is lacking coordination among the employee’s that create many conflicts. They must provide the environment in which they can discuss their problems and give suggestions to solve particular problem.

7.5) Idea Generation cell:

New ideas are very important for businesses to retain their customers. As customer needs, wants and demands are rapidly changing with the passage of time. For that purpose employees are provided such environment so that they can give new ideas in order to expand the business and increase profitability of the bank.

7.6) Feed back System:

To keep track of the employee’s behavior with the customer their must be efficient and effective feed back system through which customer can give feed back about the employee’s behavior ,bank services and products of the bank. This system help’s management to take corrective decisions to overcome particular problems and can monitor the over all performance of the employee’s and the bank.

7.7) Classification of Departments:

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There are many departments in the TIP branch Haripur, but these departments are not classified and distinguished through which customer can easily find the exact department concern.

7.8) Clear Responsibilities:

The employee’s of the bank is not clear about their duties, roles and responsibilities due to which they can not perform well. To over come this problem each and every employee must be assigned clear instructions about their job.

7.9) Organization Environment:

In order to motivate bank’s employee’s and for attracting more and more customers bank should maintain such a attractive and workable environment so that employee’s feel comfortable while working in the bank and this will ultimately increase the efficiency of the bank.

7.10) Motivation:

Human need appreciation in every aspect of their life. Employee’s must be motivated and appreciated by the management to boost their moral time to time. This will result in loyalty and improve the performance of the staff.

BIBLIOGRAPHY

Banking Currency & Finance by Prof, M. Saeed Nasir

Financial Statement Analysis by Charles H. Gibson (7th edition)

Management Internship Manual by Ziauddin (2nd edition)

NBP Annual Report 2006

www.nbp.com.pk

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http://www.nbp.com.pk/

www.sbp.org.pk

Bank Nationalization act 1974

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http://www.sbp.org.pk/

Documents

national report bank of pakistan(TIP)